The Value of a Coordination Game

47 Pages Posted: 29 Mar 2021

See all articles by Willemien Kets

Willemien Kets

University of Oxford - Department of Economics

Wouter Kager

University of Amsterdam

Alvaro Sandroni

University of Pennsylvania - Department of Economics; Northwestern University - Kellogg School of Management

Date Written: March 2, 2021

Abstract

The value of a game is the payoff a player can expect from playing the game. Wecharacterize how the value of a coordination game depends on the economic environment.The central insight is that players face two types of coordination problems: (1) How tocoordinate on a Nash equilibrium (i.e., avoid miscoordination); (2) How to coordinate onthe efficient Nash equilibrium (i.e., avoid coordination failure). We show in the context ofapplications that understanding which type of problem dominates is critical for assessingwelfare implications and for policy design.

Suggested Citation

Kets, Willemien and Kager, Wouter and Sandroni, Alvaro, The Value of a Coordination Game (March 2, 2021). Available at SSRN: https://ssrn.com/abstract=3796188 or http://dx.doi.org/10.2139/ssrn.3796188

Willemien Kets (Contact Author)

University of Oxford - Department of Economics ( email )

10 Manor Rd
Oxford, OX1 3UQ
United Kingdom

HOME PAGE: http://wkets.org

Wouter Kager

University of Amsterdam ( email )

Spui 21
Amsterdam, 1018 WB
Netherlands

Alvaro Sandroni

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
133 South 36th Street
Philadelphia, PA 19104-6297
United States

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States
847-491-5461 (Phone)
847-467-1220 (Fax)

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