Signaling in a Global Game : Coordination and Policy Traps ∗

  title={Signaling in a Global Game : Coordination and Policy Traps ∗},
  author={George-Marios Angeletos Christian Hellwig Alessandro Pavan},
  • George-Marios Angeletos Christian Hellwig Alessandro Pavan
  • Published 2006
This paper introduces signaling in a global game so as to examine the informational role of policy in coordination environments such as currency crises and bank runs. While exogenous asymmetric information has been shown to select a unique equilibrium, we show that the endogenous information generated by policy interventions leads to multiple equilibria. The policy maker is thus trapped into a position in which self-fulfilling expectations dictate not only the coordination outcome but also the… CONTINUE READING
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