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- Title
A contraction principle for finite global games.
- Authors
Mathevet, Laurent
- Abstract
I provide a new proof of uniqueness of equilibrium in a wide class of global games. I show that the joint best-response in these games is a contraction. The uniqueness result then follows as a corollary of the contraction principle. Furthermore, the contraction-mapping approach provides an intuition for why uniqueness arises: complementarities in games generate multiplicity of equilibria, but the global-games structure dampens complementarities so that only one equilibrium exists.
- Subjects
ECONOMIC equilibrium; GAMES industry; MATHEMATICAL economics; ECONOMIC structure; RADICAL economics
- Publication
Economic Theory, 2010, Vol 42, Issue 3, p539
- ISSN
0938-2259
- Publication type
Article
- DOI
10.1007/s00199-008-0411-3