ECON-221 Lecture Notes - Lecture 29: Margina, Mira-Bhayandar Municipal Corporation, Social Network Analysis
24 Sep 2020
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Document Summary
Coordination games are types of games that capture those situations where the players benefit from coordinating their decisions. If a and b decide to engage in different activities they achieve 0 utils. If a and b engage in the same activity they obtain a positive amount of utils, but players get more utils depending on activity: there are no dominant strategies, hence a need for new solution concept. Neither a nor b can benefit from unilaterally changing their strategies. This strategy profile constitutes the nash equilibria of the game: nash equilibria a strategy profile is nash equilibria if no player can benefit from unilaterally changing their strategy. Thus, the nash equilibrium gives no clue regarding to which equilibrium would be chosen: there is a fair distribution of utils and it gives collectively more of them. Positive consumption externality represents a benefit accrued to someone who is not involved in the consumption of a given good.
