Inertial Coordination Games
Theoretical Economics
2025-08-14 v3 Multiagent Systems
Abstract
We analyze inertial coordination games: dynamic coordination games with an endogenously changing state that depends on (i) a persistent fundamental players privately learn about over time; and (ii) past play. The speed of learning determines long-run equilibrium dynamics: the risk-dominant action is played in the limit if and only if learning is slow such that posterior precisions grow sub-quadratically. This generalizes results from static global games and endows them with a learning foundation. Conversely, when learning is fast such that posterior precisions grow super-quadratically, shocks can propagate and generate self-fulfilling spirals.
Keywords
Cite
@article{arxiv.2409.08145,
title = {Inertial Coordination Games},
author = {Andrew Koh and Ricky Li and Kei Uzui},
journal= {arXiv preprint arXiv:2409.08145},
year = {2025}
}