Econometrica: Sep, 1993, Volume 61, Issue 5

Global Games and Equilibrium Selection

https://doi.org/0012-9682(199309)61:5<989:GGAES>2.0.CO;2-K
p. 989-1018

Eric van Damme, Hans Carlsson

A global game is an incomplete information game where the actual payoff structure is determined by a random draw from a given class of games and where each player makes a noisy observation of the selected game. For $2 \times 2$ games, it is shown that, when the noise vanishes, iterated elimination of dominated strategies in the global game forces the players to conform to Harsanyi and Selten's risk dominance criterion.