Les Cahiers de Recherche - HEC Paris
Preopening and equilibrium selection
() and Ricardo Calcagno
Abstract: In this paper, the authors introduce a form of pre-play
communication that we call "preopening". During the preopening, players
announce their tentative actions to be played in the underlying game.
Announcements are made using a posting system which is subject to
stochastic failures. Posted actions are publicly observable and players
payo¤s only depend on the opening outcome, i.e. the action pro…le that is
posted at the end of the preopening phase. We show that when the posting
failures hit players idiosyncratically all equilibria of the preopening
game lead to the same opening outcome that corresponds to the most
"sensible" pure Nash equilibrium of the underlying game. By contrast
preopening does not operate an equilibrium selection when posting failure
hits players simultaneously.
Keywords: Preopening; equilibrium selection; bargaining; cheap talk; (follow links to similar papers)
JEL-Codes: C72; C73; C78; G10; (follow links to similar papers)
51 pages, February 16, 2010
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