Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/109057
Authors: 
Moulin, Herve
Ray, Indrajit
Gupta, Sonali Sen
Year of Publication: 
2014
Series/Report no.: 
Cardiff Economics Working Papers E2014/24
Abstract: 
We consider the well-analyzed abatement game (Barrett 1994) and prove that correlation among the players (nations) can strictly improve upon the Nash equilibrium payoffs. As these games are potential games, correlated equilibrium — CE — (Aumann 1974, 1987) cannot improve upon Nash; however we prove that coarse correlated equilibria — CCE — (Moulin and Vial 1978) may do so. We compute the largest feasible total utility and hence the efficiency gain in any CCE in those games: it is achieved by a lottery over only two pure strategy profiles.
Subjects: 
Abatement game
Coarse correlated equilibrium
Efficiency gain
JEL: 
C72
Q52
Document Type: 
Working Paper

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