Complementarities and Macroeconomics: Poisson Games

Paper number: 06/02

Paper date: January 11, 2005

Year: 2006

Paper Category: Working Paper

Authors

Miltiadis Makris

Abstract

In many situations in macroeconomics strategic complementarities arise, and agents face a coordination problem. An important issue, from both a theoretical and a policy perspective, is equilibrium uniqueness. We contribute to this literature by focusing on the macroeconomic aspect of the problem: the number of potential innovators, speculators e.t.c. is large. In particular, we follow Myerson (1998, 2000) that in large games “a more realistic model should admit some uncertainty about the number of players in the game”. In more detail, we model the coordination problem as a Poisson game, and investigate the conditions under which unique equilibrium selection is obtained.

Complementarities and Macroeconomics: Poisson Games Complementarities and Macroeconomics: Poisson Games