Unprecedented (by Satoshi Fukuda, Yuichiro Kamada)


Satoshi Fukuda, Yuichiro Kamada


This paper considers a dynamic game in which each player can take a new action only if either she privately learns it or the opponent takes it. The new action profile is a Nash equilibrium, and is Pareto dominated by the default action profile. Under the assumptions that taking the new action is an irreversible choice and moves are asynchronous, we show that there is a unique perfect Bayesian equilibrium when the probability of private learning is low and the players are patient. In the unique equilibrium, the new action is never taken, i.e., the new action remains unprecedented. This is the case even though, after many periods, it is almost common knowledge among the players that they have learned the new action.

Main file PDF

Appendix file PDF