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Global Games and Equilibrium Selection
Hans Carlsson
Eric van Damme
Abstract
A global game is an incomplete information game where the actual payoff structure is determined by a random draw from a given class of games and where each player makes a noisy observation of the selected game. For $2 \times 2$ games, it is shown that, when the noise vanishes, iterated elimination of dominated strategies in the global game forces the players to conform to Harsanyi and Selten's risk dominance criterion.
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