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Information acquisition in global games of regime change

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  • Szkup, Michal
  • Trevino, Isabel

Abstract

We study costly information acquisition in global games of regime change (that is, coordination games where payoffs are discontinuous in the unobserved state and in the agents' average action). We show that only symmetric equilibria exist and provide sufficient conditions for uniqueness. We then characterize the value of information in these games and link it to the underlying parameters of the model. We investigate equilibrium efficiency, complementarities in information choices, and the trade-offs between public and private information. We show that information acquisition can be inefficient and that strategic complementarities in actions do not always translate into strategic complementarities in information acquisition. Finally, we find that public and private information can be complements. These results contrast findings in linear-quadratic models, where payoffs depend continuously on both the unobserved state and the agents' average action.

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  • Szkup, Michal & Trevino, Isabel, 2015. "Information acquisition in global games of regime change," Journal of Economic Theory, Elsevier, vol. 160(C), pages 387-428.
    • Handle: RePEc:eee:jetheo:v:160:y:2015:i:c:p:387-428
    DOI: 10.1016/j.jet.2015.10.005
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    Cited by:

    1. Dengwei Qi, 2022. "Learning and Strategic Delay in a Dynamic Coordination Game," KIER Working Papers 1087, Kyoto University, Institute of Economic Research.
    2. Stephen Morris & Ming Yang, 2016. "Coordination and Continuous Choice," Working Papers 087_2017, Princeton University, Department of Economics, Econometric Research Program..
    3. Sareh Vosooghi, 2019. "Panic-Based Overfishing in Transboundary Fisheries," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(4), pages 1287-1313, August.
    4. Schilling, Linda, 2023. "Smooth versus Harsh Regulatory Interventions and Policy Equivalence," CEPR Discussion Papers 17996, C.E.P.R. Discussion Papers.
    5. John Van Huyck & Ajalavat Viriyavipart & Alexander L. Brown, 2018. "When less information is good enough: experiments with global stag hunt games," Experimental Economics, Springer;Economic Science Association, vol. 21(3), pages 527-548, September.
    6. George-Marios Angeletos & Chen Lian, 2016. "Incomplete Information in Macroeconomics: Accommodating Frictions in Coordination," NBER Working Papers 22297, National Bureau of Economic Research, Inc.
    7. Szkup, Michal, 2020. "Multiplier effect and comparative statics in global games of regime change," Theoretical Economics, Econometric Society, vol. 15(2), May.
    8. König-Kersting, Christian & Trautmann, Stefan T. & Vlahu, Razvan, 2022. "Bank instability: Interbank linkages and the role of disclosure," Journal of Banking & Finance, Elsevier, vol. 134(C).
    9. de Martí, Joan & Milán, Pau, 2019. "Regime change in large information networks," Games and Economic Behavior, Elsevier, vol. 113(C), pages 262-284.
    10. Stephen Morris & Ming Yang, 2016. "Coordination and the Relative Cost of Distinguishing Nearby States," Working Papers 079_2016, Princeton University, Department of Economics, Econometric Research Program..
    11. Szkup, Michal & Trevino, Isabel, 2020. "Sentiments, strategic uncertainty, and information structures in coordination games," Games and Economic Behavior, Elsevier, vol. 124(C), pages 534-553.
    12. Cai, Zhifeng & Dong, Feng, 2023. "Public disclosure and private information acquisition: A global game approach," Journal of Economic Theory, Elsevier, vol. 210(C).
    13. Chen, Yan & He, YingHua, 2021. "Information acquisition and provision in school choice: An experimental study," Journal of Economic Theory, Elsevier, vol. 197(C).
    14. Wang, Bo, 2022. "Ambiguity aversion and amplification of financial crisis," Journal of Banking & Finance, Elsevier, vol. 142(C).
    15. repec:zbw:bofrdp:2020_014 is not listed on IDEAS
    16. Joan de Martí & Pau Milán, 2018. "Regime Change in Large Information Networks," Working Papers 1049, Barcelona School of Economics.
    17. König-Kersting, Christian & Trautmann, Stefan T. & Vlahu, Razvan, 2022. "Bank instability: Interbank linkages and the role of disclosure," Journal of Banking & Finance, Elsevier, vol. 134(C).

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    More about this item

    Keywords

    Global games; Information acquisition; Coordination; Value of information;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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