Improving Nash by coarse correlation

Moulin, Herve and Ray, Indrajit and Sen Gupta, Sonali (2014) Improving Nash by coarse correlation. Journal of Economic Theory, 150. pp. 852-865. ISSN 0022-0531

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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.

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Journal Article
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Journal of Economic Theory
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18 Nov 2013 15:03
Last Modified:
22 Nov 2022 00:23