Common Belief Foundations of Global Games

27 Pages Posted: 30 May 2015 Last revised: 5 Dec 2015

See all articles by Stephen Morris

Stephen Morris

MIT

Hyun Song Shin

Bank for International Settlements (BIS)

Muhamet Yildiz

Massachusetts Institute of Technology (MIT) - Department of Economics

Date Written: November 1, 2015

Abstract

We study coordination games under general type spaces. We characterize rationalizable actions in terms of the properties of the belief hierarchies and show that there is a unique rationalizable action played whenever there is approximate common certainty of rank beliefs, defi…ned as the probability the players assign to their payoff parameters being higher than their opponents’. We argue that this is the driving force behind selection results for the specifi…c type spaces in the global games literature.

Suggested Citation

Morris, Stephen Edward and Shin, Hyun Song and Yildiz, Muhamet, Common Belief Foundations of Global Games (November 1, 2015). Princeton University William S. Dietrich II Economic Theory Center Research Paper No. 069_2015. Available at SSRN: https://ssrn.com/abstract=2611792 or http://dx.doi.org/10.2139/ssrn.2611792

Stephen Edward Morris (Contact Author)

MIT ( email )

77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States

HOME PAGE: http://https://economics.mit.edu/faculty/semorris

Hyun Song Shin

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

HOME PAGE: http://www.bis.org/author/hyun_song_shin.htm

Muhamet Yildiz

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

50 Memorial Drive
Room E52-522
Cambridge, MA 02142
United States
617-253-5331 (Phone)
617-253-6915 (Fax)

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