nep-gth New Economics Papers
on Game Theory
Issue of 2005‒12‒09
sixteen papers chosen by
László Á. Kóczy
Universiteit Maastricht

  1. Bargaining with Non-Monolithic Players By Jean Christophe Pereau; Alejandro Caparrós; Tarik Tazdaït
  2. Bargaining Set and Anonymous Core without the Monotonicity Assumption By Chiaki Hara
  3. Cooperation and Network Formation By Felipe Balmaceda
  4. Incomplete Information Games with Multiple Priors By Atsushi Kajii; Takashi Ui
  5. Correlated Equilibrium and Behavioral Conformity By Edward Cartwright; Myrna Wooders
  6. Choosing Opponents in Prisoners' Dilemma: An Evolutionary Analysis By Engseld, Peter; Bergh, Andreas
  7. On Choosing Which Game to Play When Ignorant of the Rules By Murali Agastya
  8. Coalition Formation under Uncertainty: The Stability Likelihood of an International Climate Agreement By Rob Dellink; Michael Finus; Niels Olieman
  9. Who’s Who in Networks. Wanted: The Key Player By Ballester, Coralio; Calvó-Armengol, Antoni; Zenou, Yves
  10. Regret in Dynamic Decision Problems By Daniel Krähmer; Rebecca Stone
  11. Coordination in Networks Formation: Experimental Evidence on Learning and Salience By Matteo Galizzi; Michele Bernasconi
  12. Agreeable Bets with Multiple Priors By Atsushi Kajii; Takashi Ui
  13. Tinbergen and Theil Meet Nash: Controllability in Policy Games By Giovanni Di Bartolomeo; Nicola Acocella
  14. Preference Rapresentation for Multicriteria Decision Making By Marta Cardin
  15. A Solution to Matching with Preferences over Colleagues By Federico Echenique; Mehmet B. Yenmez
  16. Dynamic Controllability with Overlapping targets: A Generalization of the Tinbergen-Nash Theory of Economic Policy By Giovanni Di Bartolomeo; Nicola Acocella; Andrew Hughes Hallett

  1. By: Jean Christophe Pereau (Université de Marne-la-Vallée); Alejandro Caparrós (Spanish Council for Scientific Research (CSIC) and Institute of Economics and Geography (IEG)); Tarik Tazdaït (C.N.R.S - E.H.E.S.S - CIRED)
    Abstract: This paper analyses strategic bargaining in negotiations between non-monolithic players, i.e. agents starting negotiations can split up in smaller entities during the bargaining process. We show that the possibility of scission in the informed coalition implies that it loses its information advantages. We also show that when the possibility of a scission exists the uninformed player does not focus on his or her beliefs about the strength of the informed coalition but on the proportion of weak/strong players within this coalition. Finally, our results show that the possibility of a scission reduces the incentives for the leader to propose a high offer to ensure a global agreement. We apply this framework to international negotiations on global public goods and to wage negotiations.
    Keywords: Strategic bargaining, Non-monolithic players, Scission, Noncooperative game-theory
    JEL: C72 D74 Q28
    Date: 2005–07
  2. By: Chiaki Hara (Institute of Economic Research, Kyoto University and Faculty of Economics, University of Cambridge)
    Abstract: We give an example of an atomless exchange economy in which consumersfpreference relations are not monotone and in which the bargaining set of Mas-Colell (1989) consists of all allocations satisfying resource constraints, although the set of all Walrasian equilibrium allocations, the core, and the anonymous core of Hara (2002) are all empty. We also give an equivalence theorem for the anonymous core when the preference relations may not be monotone.
    Keywords: Atomless exchange economies, core, bargaining set, anonymous core, equivalence theorems
    JEL: C62 C71 D41 D51 D82 Q53
    Date: 2004–11
  3. By: Felipe Balmaceda
    Abstract: The present paper proposes a simple model for studying the interplay between self-enforcing cooperation and network formation. In particular, the model provides an answer to the ancient question of how cooperative behavior emerges in different communities and how the possibility of behaving cooperatively shapes the social structure of a community. In a sense, I provide an explanation of how trust, by which I mean the existence of self-sustainable cooperation, can emerge in a society and how the society is shaped by third-party enforcement.
    Date: 2005
  4. By: Atsushi Kajii (Institute of Economic Research, Kyoto University); Takashi Ui (Faculty of Economics, Yokohama National University)
    Abstract: We present a model of incomplete information games with sets of priors. Upon arrival of private information, each player gupdatesh by the Bayes rule each of priors in this set to construct the set of posteriors consistent with the arrived piece of information. Then the player uses a possibly proper subset of this set of posteriors to form beliefs about the opponentsf strategic choices. And finally the player evaluates his actions by the most pessimistic posterior beliefs `a la Gilboa and Schmeidler (1989). So each playerfs preferences may exhibit non-linearity in probabilities which can be interpreted as the playerfs aversion to ambiguity or uncertainty. In this setup, we define a couple of equilibrium concepts, establish existence results for them, and demonstrate by examples how playersf views on uncertainty about the environment affect the strategic outcomes.
    Keywords: incomplete information games; multiple priors; ambiguity aversion; uncertainty aversion
    JEL: C72 D81 D82
    Date: 2004–05
  5. By: Edward Cartwright (Department of Economics, Keynes College, University of Kent); Myrna Wooders (Department of Economics, Vanderbilt University)
    Abstract: Is conformity amongst similar individuals consistent with self-interested behavior? We consider a model of incomplete information in which each player receives a signal, interpreted as an allocation to a role, and can make his action choice conditional on his role. Our main result demonstrates that 'near to' any correlated equilibrium is an approximate correlated equilibrium 'with conformity' -- that is, an equilibrium where all 'similar players' play the same strategy, have the same probability of being allocated to each role, and receive approximately the same payoff; in short, similar players 'behave in an identical way' and are treated nearly equally. To measure 'similarity' amongst players we introduce the notions of approximate substitutes and a (delta,Q)-class games -- a game with Q classes of players where all players in the same class are delta-substitutes for each other.
    JEL: C72 C73 D82
    Date: 2005–11
  6. By: Engseld, Peter (Department of Economics, Lund University); Bergh, Andreas (Department of Economics, Lund University)
    Abstract: We analyze a cooperation game in an evolutionary environment. Agents make noisy observations of opponents’ propensity to cooperate, called reputation, and form preferences over opponents based on their reputation. A game takes place when two agents agree to play. Pareto optimal cooperation is evolutionarily stable when reputation perfectly reflects propensity to cooperate. With some reputation noise, there will be at least some cooperation. Individual concern for reputation results in a seemingly altruistic behavior. The degree of cooperation is decreasing in anonymity. If reputation is noisy enough, there is no cooperation in equilibrium.
    Keywords: Cooperation; Conditioned Strategies; Prisoners Dilemma; Signaling; Reputation; Altruism; Evolutionary Equilibrium
    JEL: C70 C72
    Date: 2005–11–29
  7. By: Murali Agastya
    Date: 2005–11–04
  8. By: Rob Dellink (Wageningen University); Michael Finus (Institute of Economic Theory and University of Hagen); Niels Olieman (Wageningen University)
    Abstract: Results derived from empirical analyses on the stability of climate coalitions are usually very sensitive to the large uncertainties associated with the benefits and costs of climate policies. This paper provides the methodology of Stability Likelihood that links uncertainty about benefits and costs of climate change to the stability analysis of coalitions in a stochastic, empirical setting. We show that the concept of Stability Likelihood improves upon the robustness and interpretation of stability analysis. Our numerical application is based on a modified version of the climate model STACO. It turns out that the only non-trivial coalition structure with a relatively high Stability Likelihood (around 25 percent) is a coalition between the European Union and Japan, though quantitative results depend especially on the variance in regional benefits from abatement.
    Keywords: Climate change, Coalition formation, International environmental agreements, Uncertainty
    JEL: C79 H87 Q54
    Date: 2005–07
  9. By: Ballester, Coralio; Calvó-Armengol, Antoni; Zenou, Yves
    Abstract: Finite population non-cooperative games with linear-quadratic utilities, where each player decides how much action she exerts, can be interpreted as a network game with local payoff complementarities, together with a globally uniform payoff substitutability component and an own concavity effect. For these games, the Nash equilibrium action of each player is proportional to her Bonacich centrality in the network of local complementarities, thus establishing a bridge with the sociology literature on social networks. This Bonacich-Nash linkage implies that aggregate equilibrium increases with network size and density. We then analyze a policy that consists in targeting the key player, that is, the player who, once removed, leads to the optimal change in aggregate activity. We provide a geometric characterization of the key player identified with an inter-centrality measure, which takes into account both a player’s centrality and her contribution to the centrality of the others.
    Keywords: centrality measures; peer effects; policies; social networks
    JEL: A14 C72 L14
    Date: 2005–11
  10. By: Daniel Krähmer (Freie Universität Berlin, Institut für Wirtschaftstheorie, Boltzmannstr. 20, 14195 Berlin, Germany, +49-(0)30-83855223,; Rebecca Stone (ELSE - Department of Economics, University College London, Gower Street, London WC1E 6BT, UK, +44-(0)20-7679 5894,
    Abstract: The paper proposes a framework to extend regret theory to dynamic contexts. The key idea is to conceive of a dynamic decision problem with regret as an intra-personal game in which the agent forms conjectures about the behaviour of the various counterfactual selves that he could have been. We derive behavioural implications in situations in which payoffs are correlated across either time or contingencies. In the first case, regret might lead to excess conservatism or a tendency to make up for missed opportunities. In the second case, behaviour is shaped by the agent’s self-conception. We relate our results to empirical evidence.
    Keywords: Regret, Counterfactual Reasoning, Reference Dependence, Information Aversion
    JEL: C72 D11 D81
    Date: 2005–07
  11. By: Matteo Galizzi (Università di Brescia); Michele Bernasconi (Università dell’Insubria)
    Abstract: We present experiments on repeated non-cooperative network formation games, based on Bala and Goyal (2000). We treat the one-way and the two-ways flow models, each for high and low link costs. The models show both multiple equilibria and coordination problems. We conduct experiments under various conditions which control for salient labeling and learning dynamics. Contrary to previous experiments, we find that coordination on non-empty Strict Nash equilibria is not an easy task for subjects to achieve, even in the mono-directional model where the Strict Nash equilibria is a wheel. We find that salience significantly helps coordination, but only when subjects are pre-instructed to think of the wheel network as a reasonable way to play the networking game. Evidence on learning behavior provides support for subjects choosing strategies consistent with various learning rules, which include as the main ones Reinforcement and Fictitious Play.
    Keywords: Experiments, Networks, Behavioral game theory, Salience, Learning dynamics
    JEL: C92 C72 D83
    Date: 2005–09
  12. By: Atsushi Kajii (Institute of Economic Research, Kyoto University); Takashi Ui (Faculty of Economics, Yokohama National University)
    Abstract: This paper considers a two agent model of trade with multiple priors. First, we characterize the existence of an agreeable bet on some event in terms of the set of priors. It is then shown that the existence of an agreeable bet on some event is a strictly stronger condition than the existence of an agreeable trade, whereas the two conditions are equivalent in the standard Bayesian framework. Secondly, we show that the two conditions are equivalent when the set of priors is the core of a convex capacity.
    Keywords: multiple priors, convex capacity, agreeing and disagreeing, Choquet integralm
    JEL: C70 D81
    Date: 2004–02
  13. By: Giovanni Di Bartolomeo (University of Rome I); Nicola Acocella (University of Rome I)
    Abstract: This paper generalizes the classical theory of economic policy to a static LQ-strategic context between n players. We show how this generalized version of controllability can profitably be used to deal with policy ineffectiveness issues and Nash equilibrium existence.
    Keywords: Policy games, policy ineffectiveness, static controllability, Nash equilibrium existence
    JEL: C72 E52 E61
    Date: 2005–10
  14. By: Marta Cardin (Deptartment of AppliedMathematics University of Venice)
    Abstract: In this note we consider a multicriteria decision problem where the decision maker know the the state of the world but the set of consequences is multidimensional. We suppose that a value function is specified over the attribute of the decision problem and we analyze some classes of non additive functions that can represent interaction between criteria.
    Keywords: Multicriteria decision making, value functions, Choquet signed integral, Schur decreasing functions. functions
    JEL: C6 D5 D9
    Date: 2005–11–30
  15. By: Federico Echenique (California Institute of Technology); Mehmet B. Yenmez (California Institute of Technology)
    Abstract: We study many-to-one matchings, such as the assignment of students to colleges, where the students have preferences over the other students who would attend the same college. It is well known that the core of this model may be empty, without strong assumptions on agents' preferences. We introduce a method that finds all core matchings, if any exist. The method requires no assumptions on preferences. Our method also finds certain partial solutions that may be useful when the core is empty.
    Keywords: Matching markets, Core, Lattice, Gale-Shapley algorithm
    JEL: C65 C78
    Date: 2005–09
  16. By: Giovanni Di Bartolomeo (Univeristy of Rome I and University of Teramo); Nicola Acocella (University of Rome I); Andrew Hughes Hallett (Vanderbilt University and CEPR)
    Abstract: We generalize some recent results developed in static policy games with multiple players, to a dynamic context. We find that the classical theory of economic policy can be usefully applied to a strategic context of difference games: if one player satisfies the Golden Rule, then either all other players’ policies are ineffective with respect to the dynamic target variables shared with that player; or no Nash Feedback Equilibrium can exist, unless they all share target values for those variables. We extend those results to the case where there are also non-dynamic targets, to show that policy effectiveness (a Nash equilibrium) can continue to exist if some players satisfy the Golden Rule but target values differ between players in the non-dynamic targets. We demonstrate the practical importance of these results by showing how policy effectiveness (a policy equilibrium) can appear or disappear with small variations in the expectations process or policy rule in a widely used model of monetary policy.
    Keywords: Policy games, Policy ineffectiveness, Static controllability, Existence of equilibria, Nash feedback equilibrium
    JEL: C72 E52 E61
    Date: 2005–10

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