Uncertainty, co-ordination and path dependence

Our objective is to assess whether dynamics hinder or assist coordination in a game with strategic complementarities. We study two dynamic aspects: different agents make decisions at different points in time; and extra information about a payoff-relevant state of nature becomes available over time. We find that the dynamic resolution of information matters most for uniqueness of equilibrium. This is demonstrated by showing that the condition for uniqueness is weaker when learning occurs. We also analyse how successfully agents coordinate when there is a unique equilibrium. Finally, we show that path dependence occurs: the order in which signals arrive matters, as well as the total amount of information received. In particular we thank J. Lee for helping us with the proof of Lemma 2. Remaining errors are ours. In Ho Lee and Robin Mason acknowledge financial support from the ESRC Research Fellowship Award R000271190 and R000271265, respectively.