nep-gth New Economics Papers
on Game Theory
Issue of 2005‒09‒11
thirteen papers chosen by
László Á. Kóczy
Universiteit Maastricht

  1. Finite perfect information extensive games with generic payoffs By Hummel, Patrick
  2. A Fictitious-Play Model of Bargaining To Implement the Nash Solution By Younghwan In
  3. The Economics of Shame: Evolutionary Dynamics for Large Populations in Games with Multiple Backward Induction Equilibria By Tomer Wexler
  4. Project games By Estevez-Fernandez,Arantza; Borm,Peter; Hamers,Herbert
  5. Balanced contributions for multi-issue allocation situations By Lorenzo-Freire,Silvia; Alonso-Meijide,Jose M.; Casas-Mendez,Balbina
  6. The cutting power of preparation By Tercieux,Olivier; Voorneveld,Mark
  7. Sequential vs. Single-Round Uniform-Price Auctions By Claudio Mezzetti; Aleksandar Pekec; Ilia Tsetlin
  8. How Best to Auction Oil Rights By Peter Cramton
  9. Random Graphs and Social Networks: An Economics Perspective By Yannis M. Ioannides
  10. Iterative elimination of weakly dominated strategies in binary voting agendas with sequential voting By Hummel, Patrick
  11. Conventions for Implementing Conventions An Evolutionary and Experimental Analysis By Susanne Büchner; Werner Güth; Luis M. Miller
  12. Endogenous preemption on both sides of a market By Gueth,Werner; Mueller,Wieland; Potters,Jan
  13. On the Choice between Strategic Alliance and Merger in the Airline Sector: the Role of Strategic Effects By Barla, Philippe; Constantatos, Christos

  1. By: Hummel, Patrick
    Keywords: perfect information games, extensive games, backward induction, Weakly dominated strategies, iterative elimination of weakly dominated strategies, generic payoffs
    Date: 2005–08
  2. By: Younghwan In (National University of Singapore)
    Abstract: We present a fictitious-play model of bargaining, where two bargainers play the Nash demand game repeatedly. The bargainers make a deliberate decision on their demands in the initial period and then follow a fictitious play process subsequently. If the bargainers are patient, the set of epsilon -equilibria of the initial-demand game is in a neighborhood of the division corresponding to the Nash bargaining solution. As the bargainers make a more accurate comparison of payoffs and become more patient accordingly, the set of epsilon-equilibria shrinks and the only equilibrium left is the division of the Nash bargaining solution.
    Keywords: fictitious play, Nash demand game, epsilon-equilibrium, Nash bargaining solution, Nash program.
    JEL: C71 C72 C78 D83
    Date: 2005–01
  3. By: Tomer Wexler
    Abstract: This work follows “Evolutionary dynamics and backward induction” (Hart [2000]) in the study of dynamic models consisting of selection and mutation, when the mutation rate is low and the populations are large. Under the assumption that there is a single backward induction (or subgame perfect) equilibrium of a perfect information game, Hart [2000] proved that this point is the only stable state. In this work, we examine the case where there are multiple backward induction equilibria.
    Date: 2005–09
  4. By: Estevez-Fernandez,Arantza; Borm,Peter; Hamers,Herbert (Tilburg University, Center for Economic Research)
    Abstract: This paper studies situations in which a project consisting of several activities is not executed as planned. It is divided into three parts. The first part analyzes the case where the activities may be delayed; this possibly induces a delay on the project as a whole with additional costs. Associated delayed project games are defined and are shown to have a nonempty core. The second part considers the case where the activities may be expedited; this possibly induces an expedition of the project as a whole creating profits. Corresponding expedited project games are introduced and are shown to be convex. The third and last part studies situations where some activities may be delayed and some activities may be expedited. Related project games are defined and shown to have a nonempty core.
    Keywords: delay;expedition;cooperative games;convexity; project planning
    JEL: C71
    Date: 2005
  5. By: Lorenzo-Freire,Silvia; Alonso-Meijide,Jose M.; Casas-Mendez,Balbina (Tilburg University, Center for Economic Research)
    Abstract: In this paper we introduce a property of balanced contributions in the context of multi-issue allocation situations. Using this property, we characterise the run-to-thebank rule for multi-issue allocation situations.
    Keywords: multi-isssue allocation situations;run-to-the-bank rule;balanced contributions
    JEL: C71
    Date: 2005
  6. By: Tercieux,Olivier; Voorneveld,Mark (Tilburg University, Center for Economic Research)
    Abstract: In a strategic game, a curb set [Basu and Weibull, Econ. Letters 36 (1991) 141-146] is a product set of pure strategies containing all best responses to every possible belief restricted to this set. Prep sets [Voorneveld, Games Econ. Behav. 48 (2004) 403-414] relax this condition by only requiring the presence of at least one best response to such a belief. The purpose of this paper is to provide sufficient conditions under which minimal prep sets give sharp predictions. These conditions are satisfied in many economically relevant classes of games, including supermodular games, potential games, and congestion games with player-specific payoffs. In these classes, minimal curb sets generically have a large cutting power as well, although it is shown that there are relevant subclasses of coordination games and congestion games where minimal curb sets have no cutting power at all and simply consist of the entire strategy space.
    Keywords: curb sets;prep sets;supermodular games;potential games;congestion games
    JEL: C72
    Date: 2005
  7. By: Claudio Mezzetti; Aleksandar Pekec; Ilia Tsetlin
    Abstract: We study sequential and single-round uniform-price auctions with affiliated values. We derive symmetric equilibrium for the auction in which k1 objects are sold in the first round and k2 in the second round, with and without revelation of the first-round winning bids. We demonstrate that auctioning objects in sequence generates a lowballing effect that reduces first-round revenue. Thus, revenue is greater in a single-round, uniform auction for k = k1 + k2 objects than in a sequential uniform auction with no bid announcement. When the first-round winning bids are announced, we also identify two informational effects: a positive effect on second-round price and an ambiguous effect on first-round price. The expected first-round price can be greater or smaller than with no bid announcement, and greater or smaller than the expected price in a single-round uniform auction. As a result, total expected revenue in a sequential uniform auction with winning- bids announcement can be greater or smaller than in a single-round uniform auction.
    Keywords: Multi-Unit Auctions; Sequential Auctions; Uniform-Price Auction; Affiliated Values; Information Revelation
    JEL: D44 D82
    Date: 2005–08
  8. By: Peter Cramton (Economics Department, University of Maryland)
    Abstract: I study the design of oil rights auctions. A good auction design promotes both an efficient assignment of rights and competitive revenues for the seller. The structure of bidder preferences and the degree of competition are key factors in determining the best design. With weak competition and additive values, a simultaneous first-price sealed-bid auction may suffice. With more complex value structures, a dynamic auction with package bids, such as the clock-proxy auction, likely is needed to promote the efficiency and revenue objectives. Bidding on production shares, rather than bonuses, typically increases government take by reducing oil company risk.
    Keywords: Auctions, Oil Auctions, Market Design, Clock Auctions
    JEL: D44
    Date: 2005
  9. By: Yannis M. Ioannides
    Abstract: This review of current research on networks emphasizes three strands of the literature on social networks. The first strand is composed of models of endogenous network formation from both the economics and the computer science literature. The review highlights the sen- sitive dependence of the topology of endogenous networks on parameters of the behavioral models employed. The second strand draws from the recent econophysics literature in order to review the recent revival of interest in the random graph theory. This mathematical tool allows one to study social networks that result from uncoordinated random action of indi- viduals in setting up connections with others. The review explores a number of examples to assess the potential of recent research on random graphs with arbitrary degree distributions in accommodating more general behavioral motivations for social network formation. The third strand focuses on a specific model of social networks, Markov random graphs, that is quite central in the mathematical sociology and spatial statistics literatures but little known outside those literatures. These are random graphs where the events that different edges are present are dependent, if edges are incident to the same node, and independent, otherwise. The paper assesses the potential for economic applications with this particular tool. The paper concludes with an assessment of observable consequences of optimizing behavior in networks for the purpose of estimation.
    Date: 2005
  10. By: Hummel, Patrick
    Keywords: perfect information games, extensive games, backward induction, weakly dominated strategies, iterative elimination of weakly dominated strategies, binary voting agendas, sequential voting
    Date: 2005–08
  11. By: Susanne Büchner; Werner Güth; Luis M. Miller
    Abstract: Conventions are interpreted in the narrow sense of coordinated equilibrium selection, i.e. a behavioral convention tells all players in a game with multiple strict equilibria which strict equilibrium to play. What we are interested in are more realistic environments where coordination takes place before learning about the games to be played. Here coordination aims at a normative convention, i.e. a principle of equilibrium selection, which selects a strict equilibrium for all games with multiple equilibria. In a subclass class of 2x2-bimatrix games with two strict equilibria we analyze the evolutionary stability of various normative conventions. In our experiment, we allow participants to first coordinate on a normative convention before playing various games. Agents in different treatments do this behind a complete (they know neither their role nor the game parameters), a partial (they know either their role or the game parameters) veil of ignorance, or with no ignorance (they know their role and the game parameters).
    Keywords: coordination games, conventions, experimental economics, evolutionary stability
    JEL: C72 C91
    Date: 2005–08
  12. By: Gueth,Werner; Mueller,Wieland; Potters,Jan (Tilburg University, Center for Economic Research)
    Abstract: We study a market in which both buyers and sellers can decide to preempt and set their quantities before market clearing. Will this lead to preemption on both sides of the market, only one side of the market, or to no preemption at all? We find that preemption tends to be asymmetric in the sense that it is restricted to only one side of the market (buyers or sellers).
    Keywords: preemption;endogenous timing
    JEL: C72 D43 L11
    Date: 2005
  13. By: Barla, Philippe; Constantatos, Christos
    Abstract: We consider a market with three competitors, two of which decide to cooperate. Firms first choose capacity under demand uncertainty then compete in quantities after the uncertainty has been resolved. We specify strategic alliance (SA) as an agreement where two airlines jointly choose capacity and divide it among themselves. Contrary to the full merger case, after demand is revealed the alliance members market their capacity shares independently. Our main result is that the profit of the cooperating firms is greater under SA than under full merger.
    Keywords: Strategic alliance, capacity, airline industry
    JEL: L13 L24 L93
    Date: 2005

This nep-gth issue is ©2005 by László Á. Kóczy. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.