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Strategic Delay in Global Games

Authors :
Nathan Larson
Source :
The B.E. Journal of Theoretical Economics. 16:83-117
Publication Year :
2016
Publisher :
Walter de Gruyter GmbH, 2016.

Abstract

We study strategic uncertainty in an investment coordination game when players have the option to delay acting. Absent the option to delay, the global games literature shows that efficient equilibrium outcomes are possible only when they are also risk dominant. In contrast, we show that when delay is not too costly, strategic uncertainty can encourage delay in such a way that efficient investment occurs whenever it is “worth waiting for.”

Details

ISSN :
19351704 and 21946124
Volume :
16
Database :
OpenAIRE
Journal :
The B.E. Journal of Theoretical Economics
Accession number :
edsair.doi...........8a0f5796da4607e11cd9d6208d28a0a6
Full Text :
https://doi.org/10.1515/bejte-2014-0062