Renegotiation and Coordination with Private Values

61 Pages Posted: 12 Sep 2019 Last revised: 30 Mar 2020

See all articles by Yuval Heller

Yuval Heller

Bar Ilan University

Christoph Kuzmics

University of Graz - Department of Economics

Date Written: March 8, 2020

Abstract

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

Heller, Yuval and Kuzmics, Christoph, Renegotiation and Coordination with Private Values (March 8, 2020). Available at SSRN: https://ssrn.com/abstract=3448035 or http://dx.doi.org/10.2139/ssrn.3448035

Yuval Heller

Bar Ilan University ( email )

Dept. of Economics, Building 504
Bar Ilan University
Ramat Gan, 5290002
Israel
+972 5252 82182 (Phone)

HOME PAGE: http://https://sites.google.com/site/yuval26/

Christoph Kuzmics (Contact Author)

University of Graz - Department of Economics ( email )

Universitaetsstrasse 15
RESOWI - F4
Graz, 8010
Austria

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