Selection-free predictions in global games with endogenous information and multiple equilibria

George Marios Angeletos*, Alessandro Pavan

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

19 Scopus citations


Global games with endogenous information often exhibit multiple equilibria. In this paper, we show how one can nevertheless identify useful predictions that are robust across all equilibria and that cannot be delivered in the common-knowledge counterparts of these games. Our analysis is conducted within a flexible family of games of regime change, which have been used to model, inter alia, speculative currency attacks, debt crises, and political change. The endogeneity of information originates in the signaling role of policy choices. A novel procedure of iterated elimination of nonequilibrium strategies is used to deliver probabilistic predictions that an outside observer-an econometrician-can form under arbitrary equilibrium selections. The sharpness of these predictions improves as the noise gets smaller, but disappears in the complete-information version of the model.

Original languageEnglish (US)
Pages (from-to)883-938
Number of pages56
JournalTheoretical Economics
Issue number3
StatePublished - Sep 2013


  • C7
  • D8
  • E5
  • E6
  • Endogenous information
  • F3
  • Global games
  • Multiple equilibria
  • Robust predictions

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

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