Published December 2005
| Submitted
Working Paper
Open
A Contraction Principle for Finite Global Games
- Creators
- Mathevet, Laurent
Chicago
Abstract
I provide a new proof of uniqueness of equilibrium in a wide class of global games. I show that the joint best-response in these games is a contraction. The uniqueness result then follows as a corollary of the contraction property. Furthermore, the contraction mapping approach provides a revealing intuition for why uniqueness arises: Complementarities in games generate multiplicity of equilibria, but the global games structure dampens complementarities so that only one equilibrium exists. I apply my result to show that uniqueness is obtained through contraction in currency crises and Diamond's search models.
Additional Information
Revised (this verison) March 2006. This paper is a shortened version of the first chapter of my dissertation at Caltech. I am profoundly grateful to my advisors, Federico Echenique and Matt Jackson, for their help and encouragement. I also wish to thank Kim Border, Chris Chambers, Jon Eguia, Chryssi Giannitsarou, Preston McAfee, Andrea Mattozzi, Stephen Morris, Laura Panattoni, Flavio Toxvaerd, and David Young for helpful comments and suggestions. The Division of Humanities and Social Sciences at Caltech and Matt Jackson are gratefully acknowledged for financial support.Attached Files
Submitted - sswp1243_-_revised.pdf
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Additional details
- Eprint ID
- 79763
- Resolver ID
- CaltechAUTHORS:20170802-112102549
- Caltech Division of Humanities and Social Sciences
- Matthew O. Jackson
- Created
-
2017-08-02Created from EPrint's datestamp field
- Updated
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2019-10-03Created from EPrint's last_modified field
- Caltech groups
- Social Science Working Papers
- Series Name
- Social Science Working Paper
- Series Volume or Issue Number
- 1243