Dynamic coordination games

Douglas Gale

    Research output: Contribution to journalArticle

    Abstract

    Gains from coordination provide incentives for delay. In this paper, the extent of delay is studied in a dynamic, N-person, coordination game. There is no social gain from delay, so an equilibrium with delay is always inefficient. For fixed N, there is no coordination failure when the period length is short: all equilibrium outcomes converge to the Pareto efficient outcome as the period length converges to zero. On the other hand, holding period length fixed, there exist equilibria in which delay is proportional to N, for arbitrarily large values of N. In addition, it can be shown that the possibility of delay depends on the "timing" of strategic complementarities. However, under certain conditions, delay is shown to be a robust phenomenon, in the sense that "well-behaved" equilibria exhibit infinite delay for N sufficiently large.

    Original languageEnglish (US)
    Pages (from-to)1-18
    Number of pages18
    JournalEconomic Theory
    Volume5
    Issue number1
    DOIs
    StatePublished - Feb 1995

    Keywords

    • Coordination
    • delay
    • dynamic games
    • strategic complementarities

    ASJC Scopus subject areas

    • Economics and Econometrics

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