Sequential Global Games

Abstract

Global games are incomplete information games where players receive private noisy signals about the true game played. In a sequential global game, the set of players is partitioned into subsets. Players within a subset (of the partition) play simultaneously but no two subsets move at the same time. The resulting sequence of stages introduces intricate dynamics not encountered in static global games. We show that a sequential global game with strategic complementarities and binary actions has at least one equilibrium in monotone strategies. When signals are sufficiently precise, the sequential global game has a unique equilibrium satisfying iterated dominance, forward induction, and backward induction, even if the complete information game (given the partition of the player set) has multiple equilibria. Several applications are discussed.

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