Public information and global games with strategic complements and substitutes

Abstract

This study examines the effects of public information on players’ actions in global games with strategic complements and substitutes. Specifically, we consider the protest game, wherein a group of citizens decide whether to participate in a protest against a government. After observing private signals and a public signal about the government’s strength, each citizen decides whether or not to participate in the protest. The participation can be both strategic complements and strategic substitutes because the number of protesters increases both the probability of protest success and the probability of a government crackdown. We find that the likelihood of protest success decreases (increases) with the precision of the public signal if the government’s strength is expected to be strong (weak). However, increasing the precision of the public signal is more likely to reduce citizens’ participation as protest decisions exhibit more strategic substitutability.