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  Observing Each Other's Observations in a Bayesian Coordination Game

Grafenhofer, D., & Kuhle, W. (2015). Observing Each Other's Observations in a Bayesian Coordination Game.

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 Creators:
Grafenhofer, Dominik1, Author
Kuhle, Wolfgang1, Author              
Affiliations:
1Max Planck Institute for Research on Collective Goods, Max Planck Society, ou_2173688              

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Free keywords: Coordination Games, Equilibrium Selection, Primary Signals, Secondary Signals
 Abstract: We study a Bayesian coordination game where agents receive private information on the game's payoff structure. In addition, agents receive private signals that inform them of each other's private information. We show that once agents possess these different types of information, there exists a coordination game in the evaluation of this information. Even though the precisions of both signal types is exogenous, the precision with which agents forecast each other's actions in equilibrium turns out to be endogenous. As a consequence, there exist multiple equilibria which differ with regard to the way that agents weight their private information to forecast each other's actions. Finally, even though all players' signals are of identical quality, it turns out that efficient equilibria are asymmetric.

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 Dates: 2015
 Publication Status: Published in print
 Pages: 17
 Publishing info: Bonn : Max Planck Institute for Research on Collective Goods
 Table of Contents: -
 Rev. Type: -
 Identifiers: Other: 2015/18
 Degree: -

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