Efficiency and Equilibrium in the EMAIL Game; The General Case

Nicola Dimitri

Theoretical Computer Science, 314, 335-349, (2003).

Abstract

In the Email Game (Amer. Econom. Rev. 79 (1989) 385) noisy information channels may prevent risky-efficient coordination, even when the game is almost common knowledge. In this paper, we show that this is the case whenever message failure probabilities are not sufficiently different. Quite intuitively, the extent of the difference is governed by the game payoffs, and in particular by the mixed Nash Equilibrium strategy of one of the two games to be played. This is because, conditionally to having observed one’s type, a player’s beliefs on the opponent’s choices are governed by the reliability of communication channels.