Renegotiation and Coordination with Private Values
61 Pages Posted: 12 Sep 2019 Last revised: 30 Mar 2020
Date Written: March 8, 2020
We define and characterize the set of renegotiation-proof equilibria of coordination games with pre-play communication in which players have private preferences over the feasible coordinated outcomes. Renegotiation-proof equilibria provide a narrow selection from the large set of qualitatively diverse Bayesian Nash equilibria in such games. They are such that players never miscoordinate, play their jointly preferred outcome whenever there is one, and communicate only the ordinal part of their preferences. Moreover, they are robust to changes in players’ beliefs, interim Pareto efficient, and evolutionarily stable.
Keywords: coordination games, renegotiation-proof, equilibrium entrants, secret handshake, incomplete information, evolutionary robustness
JEL Classification: C72, C73, D82
Suggested Citation: Suggested Citation