• Open Access

Selection-free predictions in global games with endogenous information and multiple equilibria


  • George-Marios Angeletos,

    1. Department of Economics, Massachusetts Institute of Technology, and Department of Economics, University of Zurich; angelet@MIT.edu
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  • Alessandro Pavan

    1. Department of Economics, Northwestern University; alepavan@northwestern.edu
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    • This paper grew out of prior joint work with Christian Hellwig and would not have been written without our earlier collaboration; we are grateful for his contribution during the early stages of the project. Previous versions circulated under the title “Robust Predictions in Global Games With Multiple Equilibria: Defensive Policies Against Currency Attacks” and “Preempting Speculative Attacks: Robust Predictions in a Global Game With Multiple Equilibria.” We are thankful to a co-editor, Gadi Barlevy, and various anonymous referees for suggestions that helped us improve the paper. The usual disclaimer applies.


Global games with endogenous information often exhibit multiple equilibria. In this paper, we show how one can nevertheless identify useful predictions that are robust across all equilibria and that cannot be delivered in the common-knowledge counterparts of these games. Our analysis is conducted within a flexible family of games of regime change, which have been used to model, inter alia, speculative currency attacks, debt crises, and political change. The endogeneity of information originates in the signaling role of policy choices. A novel procedure of iterated elimination of nonequilibrium strategies is used to deliver probabilistic predictions that an outside observer—an econometrician—can form under arbitrary equilibrium selections. The sharpness of these predictions improves as the noise gets smaller, but disappears in the complete-information version of the model.