I study an example of a coordination game, and examine the robustness of equilibrium predictions with respect to changes in the information structure. I find two main results: First, the critique of Morris and Shin (1998) is not robust in the sense that if perfect common knowledge is viewed as the limit of imperfect information structures, multiple equilibria are maintained, as long as there exist some valuable public information. I also find that in general, the possibility of coordination is more likely to arise when the overall level of noise is low and when the public information is relatively informative. These results can be related to the structure of higher-order uncertainty: With a public signal., higher-order uncertainty vanishes, as the noise in the signals disappears.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Publisher Info
Paper provided by Financial Markets Group in its series FMG Discussion Papers with number
dp361.