The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Global Games

  • Stephen Morris
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_2506

Abstract

Global games are a class of incomplete information games where small uncertainty about payoffs implies a significant failure of common knowledge. This allows strategic uncertainty to play a crucial and natural role in pinning down equilibrium play. Introduced in the context of two player, two action games by Carlsson and van Damme (Econometrica 61:989–1018, 1993), global games have inspired tractable modelling frameworks that have been used in a wide variety of applications. This article reviews the key ideas that have played a role in theoretical analysis and creating useful applied tools.

Keywords

Comparative statics Complete information games Currency crises Equilibrium selection Global games Incomplete information games Limit dominance Limit uniqueness Multiple equilibria Noise Noise independent selection Regime change game Risk dominance Robustness herding Signalling Strategic complementarities Sunspot equilibrium Supermodularity Threshold strategies 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Stephen Morris
    • 1
  1. 1.