Coordination in a Mobile World

We study coordination failures in many simultaneously occurring coordination problems called projects. Players encounter one of these projects, but have an outside option to search for another of the projects. Drawing on the global games approach, we show that such a mobile game has a unique equilibrium which allows us to examine comparative statics. The endogeneity of the outside option value and of the search activity leads to non-monotonicity of welfare with respect to search costs; high mobility may hurt players. Moreover, outcomes of the mobile game are remarkably robust to changes in the exogenous parameters. In contrast to the “static” benchmark global game without a search option, successful coordination is frequent in the mobile game even for extremely poor distributions of economic fundamentals, and coordination failures are common even for extremely good distributions. The strategic consequences of the search option are robust to various modifications of the model.

[1]  R. Nagel,et al.  THE THEORY OF GLOBAL GAMES ON TEST: EXPERIMENTAL ANALYSIS OF COORDINATION GAMES WITH PUBLIC AND PRIVATE INFORMATION , 2004 .

[2]  Information Dynamics and Multiplicity in Global Games of Regime Change ∗ , 2004 .

[3]  Stephen Morris,et al.  A Theory of the Onset of Currency Attacks , 1998 .

[4]  S. Morris,et al.  Global Games: Theory and Applications , 2001 .

[5]  Jakub Steiner,et al.  Coordination of mobile labor , 2008, J. Econ. Theory.

[6]  H. Carlsson,et al.  Global Games and Equilibrium Selection , 1993 .

[7]  S. Morris,et al.  Coordination Risk and the Price of Debt , 2002 .

[8]  Sanjeev Goyal,et al.  Learning, Network Formation and Coordination , 2000 .

[9]  Alessandro Pavan,et al.  Information Dynamics and Equilibrium Multiplicity in Global Games of Regime Change , 2004 .

[10]  Itay Goldstein,et al.  Demand Deposit Contracts and the Probability of Bank Runs , 2002 .

[11]  R. Rob,et al.  Learning, Mutation, and Long Run Equilibria in Games , 1993 .

[12]  Byeongju Jeong,et al.  The welfare effects of mobility restrictions , 2003 .

[13]  Amil Dasgupta,et al.  Coordination, learning, and delay , 2002 .

[14]  Kiminori Matsuyama,et al.  Increasing Returns, Industrialization, and Indeterminacy of Equilibrium , 1991 .

[15]  J. Oechssler,et al.  Decentralization and the Coordination Problem , 1994 .

[16]  R. Cooper,et al.  Coordination Games: Technological Complementarities , 1999 .

[17]  S. Morris,et al.  Unique Equilibrium in a Model of Self-Fulfilling Currency Attacks" American Economic Review , 1996 .