In some games, the impact of higher-order uncertainty is very large, implying that present economic theories may rely critically on the strong common knowledge assumptions they make. Focusing on normal-form games in which the players' action spaces are compact metric spaces, we show that our key condition, called " global stability under uncertainty, "… (More)
We provide a characterization of when an action is rationalizable in a binary action coordination game in terms of beliefs and higher order beliefs. The characterization sheds light on when a global game yields a unique outcome. In particular, we can separate those features of the noisy information approach to global games that are important for uniqueness… (More)
a r t i c l e i n f o a b s t r a c t Available online xxxx JEL classification: C72 C73 Keywords: Higher-order beliefs Incomplete information Robustness Sensitivity Universal type space We analyze " nice " games (where action spaces are compact intervals, utilities continuous and strictly concave in own action), which are used frequently in classical… (More)
Under weak assumptions on the solution concept, I construct an invariant selection across all finite type spaces, in which the types with identical information play the same action. Along the way, I establish an interesting lattice structure for finite type spaces and construct an equilibrium on the space of all finite types.
It is a common fear in many countries that ideological parties will come to power through elections but will implement extreme policies or even end the democratic regime. Many countries cope with this problem by overriding the election results when such parties are elected. In a two-period model, we demonstrate that the alternative approach of containing… (More)