Reversibility in Dynamic Coordination Problems

Eugen Kovac, Jakub Steiner

Research output: Working paperDiscussion paper

Abstract / Description of output

Agents at the beginning of a dynamic coordination process (1) are uncertain
about actions of their fellow players and (2) anticipate receiving strategically
relevant information later on in the process. In such environments, the
(ir)reversibility of early actions plays an important role in the choice among
them. We characterize the strategic effects of the reversibility option on the
coordination outcome. Such an option can either enhance or hamper efficient
coordination, and we determine the direction of the effect based only on simple
features of the coordination problem. The analysis is based on a generalization
of the Laplacian property known from static global games: players at the
beginning of a dynamic game act as if they were entirely uninformed about
aggregate play of fellow players in each stage of the coordination process.
Original languageEnglish
PublisherEdinburgh School of Economics Discussion Paper Series
Number of pages48
Publication statusPublished - 16 Jul 2008

Publication series

NameESE Discussion Papers

Keywords / Materials (for Non-textual outputs)

  • delay
  • exit
  • global games
  • laplacian belief
  • learning
  • option
  • reversibility
  • C7
  • D8


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