TY - JOUR

T1 - Improving Nash by coarse correlation

AU - Moulin, Herve

AU - Ray, Indrajit

AU - Sen Gupta, Sonali

PY - 2014/3

Y1 - 2014/3

N2 - 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.

AB - 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.

KW - Coarse correlated equilibrium

KW - Quadratic games

KW - Duopoly models

KW - Public good

U2 - 10.1016/j.jet.2013.10.008

DO - 10.1016/j.jet.2013.10.008

M3 - Journal article

VL - 150

SP - 852

EP - 865

JO - Journal of Economic Theory

JF - Journal of Economic Theory

SN - 0022-0531

ER -