Improving Nash by coarse correlation

Herve Moulin, Indrajit Ray, Sonali Sen Gupta

Research output: Contribution to journalArticlepeer-review

9 Citations (Scopus)

Abstract

We consider a class of symmetric two-person quadratic games where coarse correlated equilibria — CCE — (Moulin and Vial 1978) can strictly improve upon the Nash equilibrium payoffs, while correlated equilibrium — CE — (Aumann 1974, 1987) cannot, because these games are potential games with concave potential functions. We compute the largest feasible total utility in any CCE in those games and show that it is achieved by a CCE involving only two pure strategy profiles. Applications include the Cournot duopoly and the game of public good provision, where the improvement over and above the Nash equilibrium payoff can be substantial.
Original languageEnglish
Pages (from-to)852-865
JournalJournal of Economic Theory
Volume150
Early online date30 Oct 2013
DOIs
Publication statusPublished - Mar 2014
Externally publishedYes

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