Common Belief Foundations of Global Games
27 Pages Posted: 30 May 2015 Last revised: 5 Dec 2015
Date Written: November 1, 2015
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.
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