Game Theory
http://lists.repec.org/mailman/listinfo/nep-gth
Game Theory
2018-03-19
Intuitive Solutions in Game Representations: The Shapley Value Revisited
http://d.repec.org/n?u=RePEc:nys:sunysb:18-01&r=gth
We show that any transferable utility game can be represented by an assignment of facilities to the players, in which it is intuitively obvious how to allocate the total cost of the facilities. The intuitive solution in the representation turns out to be the Shapley value of the game.
Pradeep Dubey
2018
Collusion and bargaining in asymmetric cournot duopoly: An experiment
http://d.repec.org/n?u=RePEc:zbw:dicedp:283&r=gth
In asymmetric dilemma games without side payments, players face involved cooperation and bargaining problems. The maximization of joint profits is implausible, players disagree on the collusive action, and the outcome is often inefficient. For the example of a Cournot duopoly with asymmetric cost, we investigate experimentally how players cooperate (collude implicitly and explicitly), if at all, in such games. We find that, without communication, players fail to cooperate and essentially play the static Nash equilibrium, confirming previous results. With communication, inefficient firms gain at the expense of efficient ones. When the role of the efficient firm is earned in a contest, the efficient firm earns higher profits than when this role is randomly allocated. Bargaining solutions do not satisfactorily predict collusive outcomes. Finally, when given the choice to talk, the efficient firms often decline that option.
Fischer, Christian
Normann, Hans-Theo
asymmetries,bargaining,cartels,communication,Cournot,earned role,experiments
2018
Competitive screening and information transmission
http://d.repec.org/n?u=RePEc:zbw:wzbmbh:spii2018202&r=gth
We consider a simple model of the competitive screening of students by schools and colleges. Students apply to schools which then perform costly screening procedures of the applicants to select those with high ability. Students who receive more than one offer may choose among those. Colleges select students and can observe the school which they attended. We show a channel through which students' preferences affect schools' screening decisions and outcomes: as schools increase the screening for high-ability students, a greater proportion of them is identified as such by multiple schools and are able to select one among them to attend. Schools' marginal gains from screening therefore depend on other schools' screenings and students' preferences. By focusing on the schools' screening choices (instead of the students' application decisions), we show how the competition for students between schools and colleges affect outcomes and students' welfare. We also show that, simply by observing which school a candidate attended, colleges can "free-ride" on the information produced by a fierce competition between schools for those students. Finally, we show that although colleges make full use of the information contained in the school a student attended, the extent to which students can improve the college that they are matched to by going to a (less desired) high-ranked school is fairly limited.
Bó, Inácio Guerberoff Lanari
Ko, Chiu Yu
information transmission,college admissions,screening,rankings
2018
Bargaining Foundation for Ratio Equilibrium in Public Good Economies
http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-01720001&r=gth
We provide a bargaining foundation for the concept of ratio equilibrium in public good economies. We define a bargaining game of alternating offers in which players bargain to determine their cost shares of public good production and a level of public good. We study the stationary subgame perfect equilibrium without delay of the bargaining game. We demonstrate that when the players are perfectly patient, they are indifferent between the equilibrium offers of all players. We also show that every stationary subgame perfect equilibrium without delay in which the ratios offered by all players are the same leads to a ratio equilibrium. In addition, we demonstrate that all equilibrium ratios are offered by the players at some stationary subgame perfect equilibrium without delay. We use these results to discuss the case when the assumption of perfectly patient players is relaxed and the cost of delay vanishes.
Anne Van den Nouweland
Agnieszka Rusinowska
stationary subgame perfect equilibrium,public good economy,bargaining game,ratio equilibrium,équilibre des ratios,économie des biens publics,jeu de négociation,équilibre parfait en sous-jeux
2018-02
Opinion formation and targeting when persuaders have extreme and centrist opinions
http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-01720017&r=gth
We consider a model of competitive opinion formation in which three persuaders characterized by (possibly unequal) persuasion impacts try to influence opinions in a society of individuals embedded in a social network. Two of the persuaders have the extreme and opposite opinions, and the third one has the centrist opinion. Each persuader chooses one individual to target, i.e., he forms a link with the chosen individual in order to spread his own “point of view” in the society and to get the average long run opinion as close as possible to his own opinion. We examine the opinion convergence and consensus reaching in the society. We study the existence and characterization of pure strategy Nash equilibria in the game played by the persuaders with equal impacts. This characterization depends on influenceability and centrality (intermediacy) of the targets. We discuss the effect of the centrist persuader on the consensus and symmetric equilibria, compared to the framework with only two persuaders having the extreme opinions. When the persuasion impacts are unequal with one persuader having a sufficiently large impact, the game has only equilibria in mixed strategies.
Agnieszka Rusinowska
Akylai Taalaibekova
social network,opinion formation,targeting,extreme and centrist persuaders,réseau social,formation d'opinion,consensus,ciblage,lobbying
2018-02
BARGAINING IN LEGISLATURES OVER PRIVATE AND PUBLIC GOODS WITH ENDOGENOUS RECOGNITION
http://d.repec.org/n?u=RePEc:met:wpaper:1805&r=gth
This paper studies a sequential model of multilateral bargaining with a majority rule in which legislators can make decisions over both private and public good dimensions with endogenous recognition process. Legislators expend resources to be the proposer and make proposals about the allocation of private and public goods. We show that legislators can exert effort to be the proposer and make proposals in both dimensions depending on legislative preferences. Effort choices in equilibrium mainly depend on preferences over both distributional and ideological dimensions, as well as the patience level of legislators and the size of the legislature. We also show that in a diverse legislature, it may be possible to have distributive policies when the majority has collective desires or vice-versa.
Hakan Genç
Serkan Küçükşenel
Multilateral bargaining, majority rule, public goods
2018-03
Assignment maximization
http://d.repec.org/n?u=RePEc:zbw:wzbmbh:spii2018201&r=gth
We evaluate the goal of maximizing the number of individually rational assignments. We show that it implies incentive, fairness, and implementation impossibilities. Despite that, we present two classes of mechanisms that maximize assignments. The first are Pareto efficient, and undominated - in terms of number of assignments - in equilibrium. The second are fair for unassigned students and assign weakly more students than stable mechanisms in equilibrium. We provide comparisons with well-known mechanisms through computer simulations. Those show that the difference in number of matched agents between the proposed mechanisms and others in the literature is large and significant.
Afacan, Mustafa Oğuz
Bó, Inácio Guerberoff Lanari
Turhan, Bertan
market design,matching,maximal matching,fairness,object allocation,school choice
2018
3 Persons, 2 Cuts: A Maximin Envy-Free and a Maximally Equitable Cake-Cutting Algorithm
http://d.repec.org/n?u=RePEc:pra:mprapa:84683&r=gth
We describe a 3-person, 2-cut envy-free cake-cutting algorithm, inspired by a continuous moving-knife procedure, that does not require that the players continuously move knifes across the cake. By having the players submit their value functions over the cake to a referee—rather than move knives according to these functions—the referee can ensure that the division is not only envy-free but also maximin. In addition, the referee can use the value functions to find a maximally equitable division, whereby the players receive equally valued shares that are maximal, but this allocation may not be envy-free.
Brams, Steven
Landweber, Peter
Fair division; cake-cutting; envy-freeness; equitability
2018-02-18
Targeted Search in Matching Markets
http://d.repec.org/n?u=RePEc:red:sed017:1413&r=gth
We endogenize the degree of randomness in the matching process by proposing a model where agents have to pay a search cost to locate potential matches more accurately. The model features a tension between an agent's desire to nd a more productive match and to maximize the odds of nding a match. This tension drives a wedge between the shape of sorting patterns and the shape of the underlying match payo function. We show the empirical relevance of the latter prediction by applying the model to the U.S. marriage market.
Paulina Restrepo-Echavarria
Antonella Tutino
Anton Cheremukhin
2017
Allocating the costs of cleaning a river; estimating responsibilities versus incentive compatibility
http://d.repec.org/n?u=RePEc:gra:wpaper:18/02&r=gth
We model a river as a segment divided into subsegments, each occupied by one region, from upstream to downstream. The waste is transferred from one region to the next at some rate t. Given that t may be unknown, Alcalde-Unzu et al. (2015) proposed the UR method to allocate the costs of cleaning a river in which each region pays the responsibility that it would have if t was its expected value. We prove in this paper that this allocation di ers from the expected responsibility of each region and propose and characterize a new solution, the EUR, that assigns to each region precisely its expected responsibility. We show that although this new solution improves the estimation of responsibilities, there is a trade-o in terms of incentive compatibility: meanwhile with the EUR solution it is possible that a region can reduce the cost allocated to it by discharging more waste, this could not happen with the UR. Moreover, the UR solution is, between the ones that do not have this problem in a general family, the solution that minimizes the bias with respect to the EUR.
Jorge Alcalde-Unzu
Maria Gomez-Rua
Elena Molis
Cost allocation; waste river; responsibility; incentive compatibility; characterization
2018-03-04
The Principle of Minimum Differentiation Revisited: Return of the Median Voter *
http://d.repec.org/n?u=RePEc:hal:cesptp:hal-01714582&r=gth
We study a linear location model (Hotelling, 1929) in which n (with n ≥ 2) boundedly rational players follow (noisy) myopic best-reply behavior. We show through numerical and mathematical analysis that such players spend almost all the time clustered together near the center, re-establishing Hotelling's " Principle of Minimum Differentiation " that had been discredited by equilibrium analyses. Thus, our analysis of the best-response dynamics shows that when considering e.g. market dynamics as well as their policy and welfare implications, it may be important to look beyond equilibrium analyses
Nobuyuki Hanaki
Emily Tanimura
Nicolaas Vriend
Invariant measures,Hotelling location model, Principle of Minimum Differentiation,Nash equilibrium, Best-response dynamics, Stochastic stability
2018
Social Capital and the Status Externality
http://d.repec.org/n?u=RePEc:ces:ceswps:_6820&r=gth
This paper investigates how the presence of social capital affects the externality arising from status-seeking preference as a parable for inefficient antagonistic behavior. It is assumed that the stock of social capital is accumulating through joint social interaction between rational individuals who are forward looking. Using a differential game, we show that although the presence of social capital mitigates the tendency of overconsumption over time, social capital ends up declining to zero. It is also shown that the benefits from social capital enhance the motivation of individuals to accumulate social capital thereby leading to deter overaccumulation and thus possibly improving social welfare.
Jun-ichi Itaya
Chris Tsoukis
social capital, status externality, Markov perfect, equilibrium, differential game
2017
Contagion and information frictions in emerging markets: the role of joint signals
http://d.repec.org/n?u=RePEc:pra:mprapa:84872&r=gth
We show that information frictions can explain financial contagion without correlated fundamentals and explain why emerging markets are more susceptible to contagion. Costly information may cause investors to group country signals, because such imprecise signals are cheaper. These joint signals then cause asset prices to comove, which can be observed as contagion. Due to lower demand for country-specific information and lower risk weighted returns, it is likelier that investors group signals of emerging markets, thereby making them more prone to contagion. We find empirical evidence for our predictions using a novel data set on the number of joint news articles and exploit exogenous variation in news due to terrorism.
Avdiu, Besart
Gruhle, Tobias
Financial Crises, Emerging Markets, Contagion, Information Choice, News
2018-02-28
Group Punishments without Commitment
http://d.repec.org/n?u=RePEc:red:sed017:1496&r=gth
This paper re-examines the importance of separation between ownership and labor in team production models that feature free riding. In models of team production subject to moral hazard, conventional wisdom suggests an outsider is needed to administer incentive schemes that do not balance the budget. We analyze the ability of insiders to to administer such incentive schemes in a dynamic setting by developing a repeated model of moral hazard in teams. In our setting, after team outcomes are observed, a benevolent planner who lacks commitment has the opportunity to impose group punishments which do not balance the budget. We extend techniques from \citet{abreu1986extremal} to characterize the entire set of subgame perfect equilibrium payoffs and find that insiders are capable of enforcing group punishments when they are sufficiently patient. When these group punishments are enforceable, they are welfare enhancing for the team of producers relative to an environment where such punishments are exogenously restricted.
Benjamin Tengelsen
Ariel Zetlin-Jones
Emilio Bisetti
2017