Informational Puts

Andrew Koh; Sivakorn Sanguanmoo; Kei Uzui

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arXiv · 2411.09191

Informational Puts

Andrew Koh·Sivakorn Sanguanmoo·Kei Uzui

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Abstract

We analyze how dynamic information should be provided to uniquely implement the largest equilibrium in binary-action coordination games. The designer offers an informational put: she stays silent if players choose her preferred action, but injects asymmetric and inconclusive public information if they lose faith. There is (i) no multiplicity gap: the largest (partially) implementable equilibrium can be implemented uniquely; and (ii) no commitment gap: the policy is sequentially optimal. Our results have sharp implications for the design of policy in coordination environments.

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econ.TH cs.MA

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Andrew Koh, Sivakorn Sanguanmoo, Kei Uzui. 2024-11-14. Informational Puts. https://arxiv.org/abs/2411.09191

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