Achieving Coordination Under Privacy Concerns

Two players choose whether to coordinate on a project. Each of them is endowed with some information, and if both possess a sufficient amount then coordination is profitable. In order to facilitate coordination the players reveal information to one another. However, some players are concerned about privacy, and so revelation of information that does not result in coordination is costly. We show that gradual information revelation can arise in equilibrium, may be necessary for coordination, and, under some conditions, is optimal. We also show that when all players have privacy concerns, long and gradual information revelation may allow players to preserve their privacy completely.