Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/109057 
Year of Publication: 
2014
Series/Report no.: 
Cardiff Economics Working Papers No. E2014/24
Publisher: 
Cardiff University, Cardiff Business School, Cardiff
Abstract: 
We consider the well-analyzed abatement game (Barrett 1994) and prove that correlation among the players (nations) can strictly improve upon the Nash equilibrium payoffs. As these games are potential games, correlated equilibrium - CE - (Aumann 1974, 1987) cannot improve upon Nash; however we prove that coarse correlated equilibria - CCE - (Moulin and Vial 1978) may do so. We compute the largest feasible total utility and hence the efficiency gain in any CCE in those games: it is achieved by a lottery over only two pure strategy profiles.
Subjects: 
Abatement game
Coarse correlated equilibrium
Efficiency gain
JEL: 
C72
Q52
Document Type: 
Working Paper

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