Equilibrium Selection in Global Games with Strategic Complementarities
We study games with strategic complementarities, arbitrary numbers of players and actions, and slightly noisy payoﬀ signals. We prove limit uniqueness: as the signal noise vanishes, the game has a unique strategy proﬁle that survives iterative dominance. This generalizes a result of Carlsson and van Damme (1993) for two player, two action games. The surviving proﬁle, however, may depend on ﬁne details of the structure of the noise. We provide suﬀicient conditions on payoﬀs for there to be noise-independent selection.
Frankel, David M.; Morris, Stephen; and Pauzner, Ady, "Equilibrium Selection in Global Games with Strategic Complementarities" (2001). Cowles Foundation Discussion Papers. 1598.