TY  - JOUR
AU  - Angeletos,George-Marios
AU  - Hellwig,Christian
AU  - Pavan,Alessandro
TI  - Information Dynamics and Equilibrium Multiplicity in Global Games of Regime Change
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11017
PY  - 2004
Y2  - December 2004
UR  - http://www.nber.org/papers/w11017
L1  - http://www.nber.org/papers/w11017.pdf
N1  - Author contact info:
George-Marios Angeletos
Department of Economics
MIT E52-251
50 Memorial Drive
Cambridge, MA  02142-1347
Tel: 617/452-3859
Fax: 617/253-1330
E-Mail: angelet@mit.edu

Christian Hellwig
Toulouse School of Economics
Manufacture de Tabacs,
21 Allées de Brienne,
31000 Toulouse
Tel: +33 5 61 12 85 93
Fax: +33 5 61 12 86 37
E-Mail: christian.hellwig@tse-fr.eu

Alessandro Pavan
Northwestern University
Department of Economics
2001 Sheridan Road
Arthur Andersen Hall 3239
Evanston, IL 60208
E-Mail: alepavan@northwestern.edu
AB  - Global games of regime change -- that is, coordination games of incomplete information in which a status quo is abandoned once a sufficiently large fraction of agents attacks it -- have been used to study crises phenomena such as currency attacks, bank runs, debt crises, and political change. We extend the static benchmark examined in the literature by allowing agents to accumulate information over time and take actions in many periods. It is shown that dynamics may lead to multiple equilibria under the same information assumptions that guarantee uniqueness in the static benchmark. Multiplicity originates in the interaction between the arrival of information over time and the endogenous change in beliefs induced by the knowledge that the regime survived past attacks. This interaction also generates interesting equilibrium properties, such as the possibility that fundamentals predict the eventual regime outcome but not the timing or the number of attacks, or that dynamics alternate between crises and phases of tranquility without changes in fundamentals.
ER  -