This chapter studies how incomplete information helps accommodate frictions in coordination, leading to novel insights on the joint determination of expectations and macroeconomic outcomes. We review and synthesize recent work on global games, beauty contests, and their applications. We...

This chapter studies how incomplete information helps accommodate frictions in coordination, leading to novel insights on the joint determination of expectations and macroeconomic outcomes. We review and synthesize recent work on global games, beauty contests, and their applications. We...

The extensive form game we study has multiple perfect equilibria, but it has a unique limiting logit equilibrium (QRE) and a unique level-k prediction as k approaches infinity. The convergence paths of QRE and level-k are different, but they converge to the same limit point. We analyze whether...

This paper studies the incentives for interim voluntary disclosure of verifiable information in probabilistic all-pay contests. Provided that the contest is uniformly asymmetric, full revelation is the unique perfect Bayesian equilibrium outcome. This is so because the weakest type of the...

The paper is the first to derive and analyse theoretically the equilibrium properties of 'revenue neutral auctions', in the context of tradable pollution rights. By 'revenue neutrality' we mean that the objective of the agency distributing the rights is not to maximize earnings from the auction...

The paper is the first to derive and analyse theoretically the equilibrium properties of 'revenue neutral auctions', in the context of tradable pollution rights. By 'revenue neutrality' we mean that the objective of the agency distributing the rights is not to maximize earnings from the auction...

This paper investigates the role of endogenous timing of decisions on coordination under asymmetric information. In the equilibrium of a global coordination game, where players choose the timing of their decision, a player who has sufficiently high beliefs about the state of the economy...

This paper studies policy in a class of economies in which information about commonly-relevant fundamentals -- such as aggregate productivity and demand conditions -- is dispersed and can not be centralized by the government. In these economies, the decentralized use of information can fail to...

This paper examines equilibrium and welfare in a tractable class of economies with externalities, strategic complementarity or substitutability, and incomplete information. In equilibrium, complementarity amplifies aggregate volatility by increasing the sensitivity of actions to public...

In recent years there has been a growing interest in macro models with heterogeneity in information and complementarity in actions. These models deliver promising positive properties, such as heightened inertia and volatility. But they also raise important normative questions, such as whether...