Title

Coordination and Continuous Choice

Author(s)

Stephen Morris Stephen Morris (Princeton University)

Ming Yang Ming Yang (Duke University)

Abstract

We study a coordination game where players choose what information to acquire about payoffs prior to the play of the game. We allow general information acquisition technologies, modeled by a cost functional defined on information structures. A cost functional satisfies continuous choice if players choose a continuous decision rule even in a decision problem with discontinuous payoffs. If continuous choice holds, there is a unique equilibrium; if it fails, there are multiple equilibria. We show how continuous choice captures the idea that it is sufficiently harder to distinguish states that are close to each other relative to far away states.

Creation Date

2016-12

Section URL ID

Paper Number

087_2017

URL

http://detc.princeton.edu/wp-content/uploads/2017/01/wp087_2017_Morris-Yang_Coordination-and-Continuous-Choice.pdf

File Function

Jel

C72, D82

Keyword(s)

coordination, endogenous information acquisition, continuous choice, higher order beliefs

Suppress

false

Series

10