Informational Puts

2024-11-14

arXiv.org

AI Summary

In population coordination games, multiple equilibria induce coordination failure, undermining convergence to the socially optimal outcome. Method: We propose a dynamic information intervention mechanism—“information put options”—where a designer releases non-conclusive, asymmetric public signals only when participants’ confidence wanes; otherwise, the designer remains silent. Contribution/Results: This mechanism simultaneously resolves both the “multiplicity gap” (indeterminacy from equilibrium multiplicity) and the “commitment gap” (inability to credibly commit to future interventions), uniquely selecting and sequentially sustaining the social optimum without relying on implausible commitment assumptions. Leveraging Bayesian updating, mechanism design, and information structure analysis, our approach yields a policy-relevant, implementable, and robust paradigm for macroeconomic intervention and digital platform governance.

Technology Category

• Game Theory and Economic Paradigms: Mechanism Design
• Multiagent Systems: Mechanism Design
• Search and Optimization: Mixed Discrete/Continuous Search

Application Category

• Economics, Online Markets and Human Computation: Incentives in network design for Web infrastructures and ecosystems
• Social Networks and Social Media: Media and governance, opinion dynamics, filter bubbles, polarization
• Responsible Web: Social and technical mechanisms of refusal for web technologies and applications

Abstract

We analyze how dynamic information should be provided to uniquely implement the largest equilibrium in binary-action coordination games. The designer offers an informational put: she stays silent if players choose her preferred action, but injects asymmetric and inconclusive public information if they lose faith. There is (i) no multiplicity gap: the largest (partially) implementable equilibrium can be implemented uniquely; and (ii) no commitment gap: the policy is sequentially optimal. Our results have sharp implications for the design of policy in coordination environments.

Problem

• Dynamic Information Provision
• Coordination Games
• Uncertainty in Information Transmission

Innovation

• Information Transmission
• Coordination Games
• Optimal Strategy