Coordination with Independent Private Values: Why Pedestrians Sometimes Bump into Each Other
17 Pages Posted: 6 Feb 2014
Date Written: February 3, 2014
Motivated by trying to better understand the norms that govern pedestrian traffic, I study symmetric two-player coordination games with independent private values. The strategies of "always pass on the left" and "always pass on the right" are always equilibria of this game. Some such games, however, also have other (pure strategy) equilibria with a positive likelihood of mis-coordination. Perhaps surprisingly, in some such games, these Pareto-inefficient equilibria, with a positive likelihood of mis-coordination, are the only evolutionarily stable equilibria of the game.
Keywords: incomplete information, continuously stable strategy, CSS, evolutionary stability, best-response dynamics
JEL Classification: C72, C73, D82
Suggested Citation: Suggested Citation