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Technical Note—Coordination with Local Information

Author

Listed:
  • Munther A. Dahleh

    (Laboratory for Information and Decision Systems, Massachusetts Institute of Technology, Cambridge, Massachusetts 02139)

  • Alireza Tahbaz-Salehi

    (Columbia Business School, Columbia University, New York, New York 10027)

  • John N. Tsitsiklis

    (Laboratory for Information and Decision Systems, Massachusetts Institute of Technology, Cambridge, Massachusetts 02139)

  • Spyros I. Zoumpoulis

    (Decision Sciences Area, INSEAD, 77300 Fontainebleau, France)

Abstract

We study the role of local information channels in enabling coordination among strategic agents. Building on the standard finite-player global games framework, we show that the set of equilibria of a coordination game is highly sensitive to how information is locally shared among different agents. In particular, we show that the coordination game has multiple equilibria if there exists a collection of agents such that (i) they do not share a common signal with any agent outside of that collection and (ii) their information sets form an increasing sequence of nested sets. Our results thus extend the results on the uniqueness and multiplicity of equilibria beyond the well-known cases in which agents have access to purely private or public signals. We then provide a characterization of the set of equilibria as a function of the penetration of local information channels. We show that the set of equilibria shrinks as information becomes more decentralized.

Suggested Citation

  • Munther A. Dahleh & Alireza Tahbaz-Salehi & John N. Tsitsiklis & Spyros I. Zoumpoulis, 2016. "Technical Note—Coordination with Local Information," Operations Research, INFORMS, vol. 64(3), pages 622-637, June.
    • Handle: RePEc:inm:oropre:v:64:y:2016:i:3:p:622-637
    DOI: 10.1287/opre.2015.1378
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    References listed on IDEAS

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