The Role of Large Players in Global Games with Strategic Complements and Substitutes

Abstract

This study analyzes global games with strategic complements and substitutes where a large player influences the behavior of small players. Specifically, we examine the protest decision of a group of citizens, which consists of a large civic group and small groups of citizens. They decide whether to participate in a protest against a government based on their private information about the government's strength. Protest participation features strategic complementarity since the protest is more likely to succeed as more citizens participate in it, while it also features strategic substitutability since a larger protest leads to a higher probability of a government crackdown. Our model demonstrates that the presence of the large civic group affects the outcome of the protest. Moreover, we find a non-monotonic relationship between the probability of protest success and the size of the large civic group, as opposed to when protest participation exhibits only strategic complementarities.