Minimum-Effort Coordination Games: Stochastic Potential and Logit Equilibrium

doi:10.1006/game.2000.0800

Games and Economic Behavior

Volume 34, Issue 2, February 2001, Pages 177-199

https://doi.org/10.1006/game.2000.0800 Get rights and content

Abstract

This paper revisits the minimum-effort coordination game with a continuum of Pareto-ranked Nash equilibria. Noise is introduced via a logit probabilistic choice function. The resulting logit equilibrium distribution of decisions is unique and maximizes a stochastic potential function. In the limit as the noise vanishes, the distribution converges to an outcome that is analogous to the risk-dominant outcome for 2 × 2 games. In accordance with experimental evidence, logit equilibrium efforts decrease with increases in effort costs and the number of players, even though these parameters do not affect the Nash equilibria. Journal of Economic Literature Classification Numbers: C72, C92.

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^☆: This research was funded in part by the National Science Foundation (SBR-9617784 and SBR-9818683). We thank John Bryant and Andy John for helpful discussion, and two referees for their suggestions.

^†: To whom correspondence should be addressed at Department of Economics, 114 Rouss Hall, University of Virginia, Charlottesville VA 22903-3328. E-mail: [email protected].

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Regular ArticleMinimum-Effort Coordination Games: Stochastic Potential and Logit Equilibrium☆

Abstract

Games Econom. Behav.

Games Econom. Behav.

Theoret. Population Biol.

Games Econom. Behav.

Games Econom. Behav.

Q. Rev. Econom. Fin.

Discrete Choice Theory of Product Differentiation

Rent Seeking with Bounded Rationality: An Analysis of the All-Pay Auction

J. Polit. Econ.

A Simple Rational Expectations Keynes-Type Model

Q. J. Econom.

Progress in Behavioral Game Theory

J. Econ. Perspec.

Anomalous Behavior in a Traveler's Dilemma?

Amer. Econom. Rev.

Global Games and Equilibrium Selection

Econometrica

Coordinating Coordination Failures in Keynesian Models

Q. J. Econom.

Regular Article
Minimum-Effort Coordination Games: Stochastic Potential and Logit Equilibrium☆