nep-gth New Economics Papers
on Game Theory
Issue of 2005‒02‒13
ten papers chosen by
Gerald Pech
NUI Galway

  1. On the non-emptiness of the fuzzy core By Allouch,Nizar; Predtetchinski,Arkadi
  2. Announcement, Observation, and Honesty in the Voluntary Contributions Game By Laurent Denant-Boemont; David Masclet; Charles Noussair
  3. Avoiding the Curse of Dimensionality in Dynamic Stochastic Games By Ulrich Doraszelski; Kenneth L. Judd
  4. Security Strategies and Equilibria in Multiobjetives Matrix Games By Acosta-Ortega,F.; Rafels,R.
  5. Properties of Scoring Auctions By Asker, John; Cantillon, Estelle
  6. Strategic Interaction and Externalities: FD-games and pollution. By Reinoud Joosten
  7. Acquisitions as a real options bidding game By H. T.J. SMIT; W. A. VAN DEN BERG; W. DE MAESENEIRE
  8. Balance of Power By Boone, Jan
  9. Cooperative Models in Action: Simulation of a Nash-Bargaining Model of Household Labor Supply with Taxation By Bargain, Olivier; Moreau, Nicolas
  10. Speed and Quality of Collective Decision-Making II: Incentives for Information Provision By Grüner, Hans Peter; Schulte, Elisabeth

  1. By: Allouch,Nizar; Predtetchinski,Arkadi (METEOR)
    Abstract: The seminal contribution of Debreu-Scarf [4] connects the two concepts of core and competitive equilibrium in exchange economies. In effect, their core-equilibrium equivalence result states that, when the set of economic agents is replicated, the set of core allocations of the replica economy shrinks to the set of competitive allocations. Florenzano [6] defines the fuzzy core as the set of allocations which cannot be blocked by any coalition with an arbitrary rate of participation and then shows the asymptotic limit of cores of replica economies coincides with the fuzzy core. In this note, we provide an elementary proof of the non-emptiness of the fuzzy core for an exchange economy. Unlike the classical Debreu-Scarf limit theorem [4] and its numerous extensions our result does not require any asymptotic intersection -or limit- of the set of core allocations of replica economies.
    Keywords: Economics ;
    Date: 2005
  2. By: Laurent Denant-Boemont; David Masclet; Charles Noussair
    Abstract: In this paper, we study the effect of announcement and observation on voluntary public good provision. We find that requiring individuals to make a non-binding prior public announcement about their contribution level has no significant effect on average contributions. Making public each individual’s contribution decision also has no significant impact on contribution levels. However, requiring announcements, in conjunction with making contribution decisions public, has a significantly positive effect on the average level of contributions. The treatments, in which announcements were elicited, permit the truthfulness of subjects’ announcements to be measured. We find that high contributors are more honest, the truthfulness of others is reciprocated with greater honesty, and announcements are more honest when contribution decisions are observable.
    Date: 2005–02
  3. By: Ulrich Doraszelski; Kenneth L. Judd
    Abstract: Continuous-time stochastic games with a finite number of states have substantial computational and conceptual advantages over the more common discrete-time model. In particular, continuous time avoids a curse of dimensionality and speeds up computations by orders of magnitude in games with more than a few state variables. The continuous-time approach opens the way to analyze more complex and realistic stochastic games than is feasible in discrete-time models.
    JEL: C63
    Date: 2005–01
  4. By: Acosta-Ortega,F.; Rafels,R. (Universitat de Barcelona)
    Abstract: Multiobjective matrix games have been traditionally analyzed from two different points of view: equiibrium concepts and security strategies. This paper is based upon the idea that both players try to reach equilibrium points playing pairs of security strategies, as it happens in scalar matrix games. We show conditions guaranteeing the existence of equilibria in security strategies, named security equilibria
    Date: 2005
  5. By: Asker, John; Cantillon, Estelle
    Abstract: This Paper studies scoring auctions, a procedure commonly used to buy differentiated products: suppliers submit offers on all dimensions of the good (price, level of non monetary attributes), and these are evaluated using a scoring rule. We provide a systematic analysis of equilibrium behaviour in scoring auctions when suppliers’ private information is multidimensional (characterization of equilibrium behaviour and expected utility equivalence) and show that scoring auctions dominate several other commonly used procedures for buying differentiated products.
    Keywords: auction; multi-attribute; multidimensional private information; procurement
    JEL: D44 L14 L24
    Date: 2004–11
  6. By: Reinoud Joosten
    Abstract: To analyze strategic interaction which may induce externalities, we designed Bathroom Games with frequency-dependent stage payoffs. Two people regularly use a bathroom, before leaving they can either clean up the mess made, or not. Cleaning up involves an effort, so this option always gives a lower immediate utility than not cleaning up. The immediate utility of using the bathroom depends on its condition: the cleaner it is, the higher the utility. The pollution at a certain point in time depends on how often the players did not clean up in the past. Furthermore, as the bathroom's condition deteriorates, cleaning up becomes more burdensome, leading to increasing disutilities. We follow the analysis of repeated games and find that if the agents are sufficiently patient, individually-rational rewards can be supported by (subgame perfect) equilibria involving threats. In almost every such equilibrium, the bathroom is cleaned up regularly.
    JEL: C72 C73
    Abstract: This paper uses a unified treatment of real options and game theory to examine the occurrence of bidding contests within a competitive environment of imperfect information and asymmetric bidders. Competing potential buyers may sequentially perform due diligence and incur costs (option premium) to become informed about their firm-specific target value (underlying value) before making a bid (exercise price). The first player’s bid reveals a signal on its own and the rival’s target value, thereby affecting the value of the rival’s option to bid on the target and the probability of a bidding contest. We find that bidding contests are more likely to take place between moderately correlated buyers, whereas rather diverse or just very similar buyers are less likely to compete.
    Date: 2005–01
  8. By: Boone, Jan
    Abstract: This Paper argues that the efficiency distribution of players in a game determines how aggressively these players interact. We formalize the idea of balance of power: players fight very inefficient players but play softly versus equally (or more) efficient players. This theory of conduct predicts that entry by new firms leads to a less aggressive outcome if it creates a balance of power. A balance of power is created if more players get technologies that are close to the most efficient technology. Using a related argument, we show that an increase in entry costs can lead to more aggressive outcomes.
    Keywords: contestable market; folk theorem; pricing games; refinement of predicted outcomes; supergames
    JEL: C72 D43 L41
    Date: 2004–11
  9. By: Bargain, Olivier (IZA Bonn); Moreau, Nicolas (GREMAQ and LIRHE, University of Toulouse 1)
    Abstract: Several theoretical contributions, starting with McElroy and Horney (1981) and Manser and Brown (1980), have suggested to model household behavior as a Nash-bargaining game. Since then, very few attempts have been made to operationalize cooperative models of household labor supply for policy analysis. In this paper, we implement a Nash-bargaining model with external threat points (divorce) into the microsimulation of tax policy reforms in France. Following the suggestion of McElroy (1990) to achieve identification, we assume that the observation of single individuals can be used to predict outside options. Individual preferences in couples are allowed to display caring between spouses and are simulated in a way which guarantee consistency with the Nash bargaining setting, regularity conditions and observed behaviors. An extensive sensitivity analysis is provided in order to examine the various implications from using the cooperative model for tax policy analysis and the likely role of taxation on intra-household negotiation.
    Keywords: collective model, Nash-bargaining model, intrahousehold allocation, household labor supply, tax reform, microsimulation
    JEL: C25 C52 C71 D11 D12 H31 J22
    Date: 2005–01
  10. By: Grüner, Hans Peter; Schulte, Elisabeth
    Abstract: This Paper provides a game theoretic extension of Radner's (1993) model of hierarchical information aggregation. It studies the role of the hierarchy design for the speed and quality of a collective decision process. The hierarchy is described as a programmed network of agents. The programme describes how information is processed within the network. The network of P identical managers has to aggregate information in the form of a set of n data items in order to make an informed decision. Each manager benefits from reaching an accurate decision but suffers from an individual cost of effort, which has to be provided in order to understand the information contained in a data item properly. We find that decentralized information processing increases incentives for information provision. There may be boundaries on the appropriate extend of decentralization, however. We also compare three different hierarchy designs: two balanced hierarchies and the fastest (skip-level) hierarchy, proposed by Radner. Skip-level reporting outperforms balanced hierarchies in terms of decision speed and in terms of decision quality.
    Keywords: hierarchies; incentives for information provision; information processing
    JEL: D23 D70 D83 L22 P51
    Date: 2004–04

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