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- Information Economics
- Game Theory
Two-Dimensional Information Design (Job Market Paper)
``I study two-dimensional information design setting, in which the ex-ante information correlation constrains the sender's ability to design information for each dimension. The receiver has to make two decisions. The sender can influence each of the decisions by providing information. I study two game forms - in the simultaneous game the receiver makes two decisions simultaneously; in the sequential game the receiver makes decisions sequentially. I show that if two dimensions are not negatively correlated, then in the sequential game the sender is able to overcome the correlation constraint, even if the sender is only allowed to inform directly only about one dimension at a time. I compare equilibrium payoffs in the simultaneous game and the sequential game with constrained strategy set. I also analyse the sequential game with unconstrained strategy set of the sender."
In this paper, we use a laboratory experiment to investigate the effect of absence of common knowledge on the outcomes of coordination games. We introduce cognitive types into a pure coordination game in which there is no common knowledge about the distribution of cognitive types. In our experiment, around 76% of the subjects managed to coordinate on the payoff-dominant equilibrium despite the absence of common knowledge. However, around 9% of the players had first-order beliefs that lead to coordination failure and another 9% exhibited coordination failure due to higher-order beliefs. Furthermore, we compare our results with predictions of different models of higher-order beliefs, commonly used in the literature.