Coordination need not be a problem |
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| Institution: | 1. Institute of Mathematics, Department of Economics, and Center for the Study of Rationality, Hebrew University of Jerusalem, Israel;2. School of Computer Science and Engineering, and Center for the Study of Rationality, Hebrew University of Jerusalem, Israel;1. Dipartimento di Scienze per l''Economia e l''Impresa, Università degli Studi di Firenze, Via delle Pandette 9, 50127 Firenze, Italy;2. Dipartimento di Scienze delle Decisioni, IGIER and BIDSA, Università Commerciale Luigi Bocconi, Via Roentgen 1, 20136 Milano, Italy;1. Department of Economics, Finance and Legal Studies, University of Alabama, Box 870224, Tuscaloosa, AL 35487, United States;2. Department of Economics, University of Mississippi, Holman 373, University, MS 38655, United States;1. Department of Information Technology, National Engineering College, Kovilpatti, Tamil Nadu 628503, India;2. Department of Computer Science and Engineering, National Engineering College, Kovilpatti, Tamil Nadu 628503, India |
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| Abstract: | In a game of common interest there is one action vector that all players prefer to every other. Yet there may be multiple Pareto-ranked Nash equilibria in the game and the “coordination problem” refers to the fact that rational equilibrium play cannot rule out Pareto-dominated equilibria. In this paper, I prove that two elements — asynchronicity and a finite horizon — are sufficient to uniquely select the Pareto-dominant action vector (in subgame perfect equilibrium play). Asynchronicity may be exogenously specified by the rules of the game. Alternatively, in a game where players choose when to move, asynchronicity may emerge as an equilibrium move outcome. |
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