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I am reading the paper "The Blockchain Folk Theorem" by Biais et al (2019) (http://publications.ut-capitole.fr/26234/1/32/5/1662/5427771). It is a stochastic game and the authors include a sunspot random variable to "enable players to coordinate their actions using a public randomization device". I went around and tried to look more into this and I couldn't really find any intuitive explanation for what a public randomization device is (there seems to be some information on the mathematical properties of including such a device, specifically the authors reference a paper on noisy stochastic games by Duggan (2012) (https://onlinelibrary.wiley.com/doi/abs/10.3982/ECTA10125)).

I guess my question is, could anyone here provide some explanation of this concept? Or even just some reference to better understanding the concept of public randomization devices?

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A sunspot is just a publicly observed random variable upon which players can condition their actions (formally it's part of the history of the game).

It's helpful because it is a nice easy way to convexify the set of equilibrium payoff vectors. In many papers (in my experience) it is a convenient assumption that simplifies things, yet may not be necessary--that is the effect of sunspots can be accomplished without their use, it's just more of a hassle.

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