Di using Coordination Risk

Speaker: 周臻, PBC School of Finance, Tsinghua University

Topic:	Di using Coordination Risk
Date:	April 19, 2017
Venue:	Room 502, Daoyuan Building, CUHK(SZ)
Speaker:	周臻 PBC School of Finance, Tsinghua University
Detail/Abstract:	Agents face strategic uncertainty in a coordination problem akin to debt rollover or technology adoption. We model this as a regime change game. Global game theory uniquely identities the coordination risk that a viable regime may fail. A principal di uses this coordination risk by making a nite partition of the mass of agents and making different groups move sequentially. She commits to the rule that the game proceeds further only if her preferred regime continues to be viable. We show that with a su ciently di used policy, the risk that agents may attack the principal's preferred regime unravels from the end.