The value of a coordination game
The value of a game is the payoff a player can expect (ex ante) from playing the game. Understanding how the value changes with economic primitives is critical for policy design and welfare. However, for games with multiple equilibria, the value is difficult to determine. We therefore develop a new...
| Main Authors: | , , |
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| Format: | Journal article |
| Language: | English |
| Published: |
Elsevier
2022
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| Summary: | The value of a game is the payoff a player can expect (ex ante) from playing the
game. Understanding how the value changes with economic primitives is critical for policy
design and welfare. However, for games with multiple equilibria, the value is difficult to
determine. We therefore develop a new theory of the value of coordination games. The
theory delivers testable comparative statics on the value and delivers novel insights relevant
to policy design. For example, policies that shift behavior in the desired direction can make
everyone worse off, and policies that increase everyone’s payoffs can reduce welfare. |
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