Announcement wars as an equilibrium selection device.
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Working paper
Issue number:
2009/77
Publisher:
Université catholique de Louvain
Year:
2009
This paper attempts to give a rationale to public announcements, so often observed in the real world, and to formalize the idea that they can be used as a form of equilibrium selection device when multiple equilibria arise. It also shows how announcements solve the problems of coordination failures as predicted by the empirical literature based on experimental studies.