Renegotiation and Coordination with Private Values
35 Pages Posted: 12 Sep 2019 Last revised: 7 Oct 2019
Date Written: October 7, 2019
We define and characterize the set of renegotiation-proof equilibrium strategies of coordination games with pre-play communication in which players have private preferences over the feasible coordinated outcomes. These strategies 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 do not depend on the distribution of private preferences, and are thus robust to changes in players' beliefs. Finally, they are 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