Binary games with many players

Menezes, F. and Pitchford, R. (2006) Binary games with many players. Economic Theory, 28 1: 125-143. doi:10.1007/s00199-005-0611-z

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Author Menezes, F.
Pitchford, R.
Title Binary games with many players
Journal name Economic Theory   Check publisher's open access policy
ISSN 0938-2259
Publication date 2006-05
Sub-type Article (original research)
DOI 10.1007/s00199-005-0611-z
Volume 28
Issue 1
Start page 125
End page 143
Total pages 19
Place of publication Berlin, Germany
Publisher Springer-International
Language eng
Subject 1401 Economic Theory
Abstract We examine a problem with n players each facing the same binary choice. One choice is superior to the other. The simple assumption of competition - that an individual's payoff falls with a rise in the number of players making the same choice, guarantees the existence of a unique symmetric equilibrium (involving mixed strategies). As n increases, there are two opposing effects. First, events in the middle of the distribution - where a player finds itself having made the same choice as many others - become more likely, but the payoffs in these events fall. In opposition, events in the tails of the distribution - where a player finds itself having made the same choice as few others - become less likely, but the payoffs in these events remain high. We provide a sufficient condition (strong competition) under which an increase in the number of players leads to a reduction in the equilibrium probability that the superior choice is made.
Keyword Economics
Binary Choices
Competition
Entry
Entry Games
Coordination
Q-Index Code C1

Document type: Journal Article
Sub-type: Article (original research)
Collections: Excellence in Research Australia (ERA) - Collection
School of Economics Publications
 
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Created: Mon, 13 Aug 2007, 15:20:27 EST