Game Theory
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Game Theory2014-04-11Laszlo A. KoczyOverlapping coalitions, bargaining and networks
http://d.repec.org/n?u=RePEc:shr:wpaper:14-02&r=gth
We introduce the game in cover function form, which is a bargaining game of sequential offers for endogenous overlapping coalitions. This extension of games in partition function form removes the restriction to disjoint coalitions. We discuss the existence of equilibria, and we develop an algorithm to compute equilibrium outcomes, under some conditions. We define the key properties that overlapping coalition structures must verify to uniquely identify networks. We show that each network is defined as an equilibrium outcome of a game in cover function form. Our results bridge the two strands of literature devoted to the formation networks and coalitions.Messan Agbaglah2014-03Overlapping coalitions, Bargaining, Network formation, Coalition formation, Game in cover function form, Symmetric gameOn the core and bargaining set of a veto game
http://d.repec.org/n?u=RePEc:vpi:wpaper:e07-47&r=gth
The notion of veto player was originally introduced in simple games [see Nakamura (1979)], for which every coalition has a value of 0 or 1. In this paper we extend it to monotonic cooperative games with transferable utility: a player has veto power if all coalitions not containing her are worthless. We examine and characterize the core for each one of these "veto games". Moreover, we show the equivalence of the core and the bargaining set. Our work extends the clan games and big-boss games introduced respectively by Potters et al. (1989) and Muto et al. (1988).Eric Bahel2014TU game, veto power, core, objection, bargaining set.Evolutionary Dynamics and Fast Convergence in the Assignment Game
http://d.repec.org/n?u=RePEc:oxf:wpaper:700&r=gth
We study evoloutionary, decentralized dynamics for the classic assignment game (Shapley and Shubik 1972).� Players encounter each other at random and agree to match if they are feasible.� We propose a variant of the behaviorally motivated model in Nax, Pradelski, and Young (2013) which converges to stable and optimal outcomes in polynomial time in the number of players.� This is achieved although players have no knowledge about other players' payoffs or actions.� Instead, there is a market sentiment: if negative players on one side of the market (workers) are asking for a bit less, if positive players on the other side of the market (firms) are offering a bit more.� We also show that the latter condition is necessary.Bary S.R. Pradelski2014-03-03assignment games, core, evolutionary game theory, matching markets, convergence timeOnline Concealed Correlation and Bounded Rationality
http://d.repec.org/n?u=RePEc:huj:dispap:dp659&r=gth
Correlation of players' actions may evolve in the common course of the play of a repeated game with perfect monitoring (``obline correlation''). In this paper we study the concealment of such correlation from a boundedly rational player. We show that ``strong'' players, i.e., players whose strategic complexity is less stringently bounded, can orchestrate the obline correlation of the actions of ``weak'' players, where this correlation is concealed from an opponent of ``intermediate'' strength. The feasibility of such ``\ol concealed correlation'' is reflected in the individually rational payoff of the opponent and in the equilibrium payoffs of the repeated game. This result enables the derivation of a folk theorem that characterizes the set of equilibrium payoffs in a class of repeated games with boundedly rational players and a mechanism designer who sends public signals. The result is illustrated in two models, each of which captures a different aspect of bounded rationality. In the first, players use bounded recall strategies. In the second, players use strategies that are implementable by finite automata.Gilad Bavly, Abraham Neyman2014-02Information Transmission in Nested Sender-Receiver Games
http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/5adcidkke9omt0s9p6m01j1rh&r=gth
We introduce a “nestedness” relation for a general class of sender-receiver games and compare equilibrium properties, in particular the amount of information transmitted, across games that are nested. Roughly, game is nested in game if the players’s optimal actions are closer in game. We show that under some conditions, more information is transmitted in the nested game in the sense that the receiver’s expected equilibrium payoff is higher. The results generalize the comparative statics and welfare comparisons with respect to preferences in the seminal paper of Crawford and Sobel (1982). We also derive new results with respect to changes in priors in addition to changes in preferences. We illustrate the usefulness of the results in three applications: (i) delegation to an intermediary with a different prior, the choice between centralization and delegation, and two-way communication with an informed principal.Sidartha Gordon, Ying Chen2014-04sender-receiver games, information transmission, nestedness, inter- mediary, delegation, informed principal.Stochastic Stability in Assignment Problems
http://d.repec.org/n?u=RePEc:lau:crdeep:14.02&r=gth
In a dynamic model of assignment problems, small deviations suffice to move between stable outcomes. This result is used to obtain no-selection and almost-no-selection results under the stochastic stability concept for uniform and payoff-dependent errors. There is no-selection of partner or payoff under uniform errors, nor for agents with multiple optimal partners under payoff-dependent errors. There can be selection of payoff for agents with a unique optimal partner under payoff-dependent errors. However, when every agent has a unique optimal partner, almost-no-selection is obtained.Bettina Klaus and, Jonathan Newton2014-04Assignment problem; (core) stability; decentralization; stochastic stabilityTargeted vs. collective information sharing in networks
http://d.repec.org/n?u=RePEc:zur:econwp:152&r=gth
We introduce a simple two-stage game of endogenous network formation and information sharing for reasoning about the optimal design of social networks like Facebook or Google+. We distinguish between unilateral and bilateral connections and between targeted and collective information sharing. Agents value being connected to other agents and sharing and receiving information. We consider multiple utility specifications. We show that the game always has an equilibrium in pure strategies and then we study how the network design and the utility specifications affect welfare. Surprisingly, we find that in general, targeted information sharing is not necessarily better than collective information sharing. However, if all agents are either "babblers" or "friends", irrespective of whether the network is unilateral or bilateral, in equilibrium, targeted information sharing yields higher welfare than collective information sharing.Alexey Kushnir, Alexandru Nichifor2014-04Networks, network formation, unilateral connections, bilateral connections, targeted information sharing, collective information sharing, Google, Facebook, babblers, friendsDisclosure of information in matching markets with non-transferable utility
http://d.repec.org/n?u=RePEc:mod:recent:094&r=gth
We present a model of two-sided matching where utility is non-transferable and information about individuals’skills is private, utilities are strictly increasing in the partner’s skill and satisfy increasing differences. Skills can be either revealed or kept hidden, but while agents on one side have verifiable skills, agents on the other side have skills that are unverifiable unless certified, and certification is costly. Agents who have revealed their skill enter a standard matching market, while others are matched randomly. We find that in equilibrium only agents with skills above a cutoff reveal, and then they match assortatively. We show that an equilibrium always exists, and we discuss multiplicity. Increasing differences play an important role to shape equilibria, and we remark that this is unusual in matching models with non-transferable utility. We close the paper with some comparative statics exercises where we show the existence of non-trivial externalities and welfare implications.Ennio Bilancini, Leonardo Boncinelli2014-03costly disclosure of information; matching markets; non-transferable utility; partial unraveling; positive assortative matching; increasing differencesBetween-group conflict and other-regarding preferences in nested social dilemmas
http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2014-011&r=gth
We investigate experimentally the underlying motivations and individual dierences with regard to the participation in between-group conflict in nested social dilemmas. In our nested social dilemmas, the collective is divided into two groups, and individuals allocate tokens between a private, a group-specific, and a collective good. We vary the marginal per capita return of the group-specific and collective good in order to manipulate the motivational within- and between group conflicts. A first experiment shows that a between-group conflict leads to within-group cooperation and particularly individuals with positive other-regarding preferences (prosocials) react to a between-group conflict by contributing to the group-specific good. Hence, paradoxically, individuals with positive other-regarding preferences may foster between-group conflicts. A second experiment reveals that prosocials' contributions to the group-specific or collective good vary as a function of the personal costs of within-group versus collective cooperation, supporting the weighted average social preference theory by Charness and Rabin (2002).Robert Böhm, Gary Bornstein, Hannes Koppel2014-03-31between-group conflict, nested social dilemma, other-regarding preferences, local and global public goodsHousehold Consumption When the Marriage Is Stable
http://d.repec.org/n?u=RePEc:iza:izadps:dp8070&r=gth
We develop a novel framework to analyze the structural implications of the marriage market for household consumption patterns. We start by defining a revealed preference characterization of efficient household consumption when the marriage is stable. In particular, stability means that the marriage matching is individually rational and has no blocking pairs. We show that this revealed preference characterization generates testable conditions even if there is only a single consumption observation per household and individual preferences are heterogeneous across households. In addition, the characterization allows for identifying the intrahousehold decision structure (including the sharing rule) under the same minimalistic assumptions. An application to Dutch household data demonstrates the empirical usefulness of our theoretical results.Cherchye, Laurens, Demuynck, Thomas, De Rock, Bram, Vermeulen, Frederic2014-03marriage market, stable matching, Pareto efficient household consumption, testable implications, sharing rule identification, preference heterogeneityWeighted Majoritarian Rules for the Location of Multiple Public Facilities
http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/6ggbvnr6munghes9oc5kng5b4&r=gth
We consider collective decision problems given by a profile of single-peakedpreferences defined over the real line and a set of pure public facilities to be located on the line. In this context, Bochet and Gordon (2012) provide a large class of priority rules based on efficiency, object-population monotonicity and sovereignty. Each such rule is described by a fixed priority ordering among interest groups. We show that any priority rule which treats agents symmetrically - anonymity - , respects some form of coherence across collective decision problems - reinforcement - and only depends on peak information - peak-only -, is a weighted majoritarian rule. Each such rule defines priorities based on the relative size of the interest groups and specific weights attached to locations. We give an explicit account of the richness of this class of rules.Sidartha Gordon, Olivier Bochet, René Saran2013-10Multiple Public Facilities; Priority Rules; Weighted Majori- tarian Rules; Object-Population Monotonicity; Sovereignty; Reinforcement; Anonymity.Bidimensional Matching with Heterogeneous Preferences: Smoking in the Marriage Market
http://d.repec.org/n?u=RePEc:oxf:wpaper:696&r=gth
We develop a bidimensional matching model under transferable utility, where individuals are characterized by a continuous trait (e.g., socioeconomic status) and a binary attribute (e.g., smoking status).� The model is "truly multidimensional", in the sense that the impact of the traits cannot be summarized by a one-dimensional index.� We present a general resolution strategy based on optimal control theory, and characterize the stable matching.� We derive testable predictions about equilibrium matching patterns.� Using US data, we find that the observed marital sorting of smokers and non-smokers by education is consistent with our model.Climent Quintana-Domeque, Pierre-Andre Chiappori, Sonia Oreffice2014-01-29Marriage market, multidimensional matching, continuous and discrete characteristics, heterogeneous preferencesExperience in Public Goods Experiments
http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2014-010&r=gth
We use information on students' past participation in economic experiments, as stored in our database, to analyze whether behavior in public goods games is affected by experience (i.e., previous participation in social dilemma-type experiments) and history (i.e., participation in experiments of a different class than the social dilemma). We have three main results. First, at the aggregate level, the amount subjects contribute and expect others to contribute decrease with experience. Second, a mixture model reveals that the proportion of unconditional cooperators decreases with experience, while that of selfish individuals increases. Finally, history also influences behavior, although to a lesser extent than experience. Our findings have important methodological implications for researchers, who are urged to control for subjects' experience and history in their experiments if they want to improve the external validity and replicability of their results.Anna Conte, M. Vittoria Levati, Natalia Montinari2014-03-31Public goods experiments, Social preferences, Mixture models, Experience, HistoryPublic Goods: Voluntary Contributions and Risk
http://d.repec.org/n?u=RePEc:ivi:wpasad:2014-02&r=gth
We analyze two incentive mechanisms as a way of financing public goods. Our mechanism can be interpreted as a variation of a parimutuel lottery in which the total rebate (prize) is made endogenous by setting it equal to a non-increasing function of total bets. The mechanism changes the nature of the standard VCM from a Prisoner’s Dilemma to a Stag-Hunt game. We tested —and found support for— the theoretical predictions of the model by means of a computer-based experiment. The theoretical model and the supporting experimental evidence both suggest the mechanism is an efficient and equitable means to finance public goods through voluntary contributions. In policy terms, and beyond the efficiency and equity considerations, the mechanism would be easy to implement and run given its simplicity and self-sufficiency.Miguel Sánchez Villalba, Silvia Martínez-Gorricho2014-03Public Goods, Voluntary Contribution Mechanism, Subsidy Schemes, Laboratory ExperimentsMonkey see, monkey do: Truth-telling in matching algorithms and the manipulation of others
http://d.repec.org/n?u=RePEc:zbw:wzbmbh:spii2014202&r=gth
We test the effect of the amount of information on the strategies played by others in the theoretically strategy-proof Top Trading Cycles (TTC) mechanism. We find that providing limited information on the strategies played by others has a negative and significant effect in truth-telling rates relative to full or no information about others' strategies. Subjects report truthfully more often when either full information or no information on the strategies played by others is available. Our results have potentially important implications for the design of markets based on strategy-proof matching algorithms. --Guillen, Pablo, Hakimov, Rustamdjan2014school choice,top trading cycles,strategy-proofnessInstrumental Cardinal Concerns for Social Status in Two-Sided Matching with Non-Transferable Utility
http://d.repec.org/n?u=RePEc:mod:recent:095&r=gth
In this paper we apply the instrumental approach to social preferences in order to distinguish among various shapes of preferences for social status. In particular, we consider the shape of reduced preferences that emerge in the equilibrium of a two-sided matching model with non-transferable utility. Cole et al. (1992, 1995) show that, under full observability of potential mates’ attributes, instrumental concerns for social status are ordinal, i.e., only one’s own rank in the distribution of attributes matters. We show that when we depart from full observability, instrumental concerns for social status become cardinal, i.e., also other features of the distribution of attributes matter. We also show that the actual shape of cardinal concerns depends on how individuals can deal with the informational asymmetry, alternatively leading to upward concerns – i.e., making comparisons with higher rank people – downward concerns – i.e., making comparisons with lower rank people – or bidirectional concerns – i.e, being both upward and downward.Ennio Bilancini, Leonardo Boncinelli2014-03