nep-gth New Economics Papers
on Game Theory
Issue of 2006‒01‒29
five papers chosen by
László Á. Kóczy
Universiteit Maastricht

  1. Games with Imperfectly Observable Actions in Continuous Time By Yuliy Sannikov
  2. Strongly Robust Equilibrium and Competing Mechanism Games By Han, Seungjin
  3. Repeated Games with Present-Biased Preferences By Hector Chade; Pavlo Prokopovych; Lones Smith
  4. Caller Number Five: Timing Games that Morph from One Form to Another By Andreas Park; Lones Smith
  5. Knowledge Integration and Network Formation. By Müge Ozman

  1. By: Yuliy Sannikov
    Date: 2006–01–25
  2. By: Han, Seungjin
    Abstract: This paper studies the competing mechanism games of complete information with multiple principals and multiple agents. This paper shows that any strongly robust pure-strategy equilibrium relative to single contract offers (that is, an equilibrium that persists no matter what continuation equilibrium agents play upon any principal's deviation to any single contract) persists no matter what continuation equilibrium agents play upon any principal's deviation to any complex mechanism, so it is strongly robust relative to any complex mechanisms. It is shown that in fact, any pure-strategy equilibrium of the single contract offer game in Prat and Rustichini (2003) is strongly robust to any complex mechanisms.
    Date: 2006–01–19
  3. By: Hector Chade (Dept. of Economics, Arizona State University); Pavlo Prokopovych (EERC); Lones Smith (Dept. of Economics, University of Michigan)
    Abstract: We study infinitely repeated games with observable actions, where players have present-biased (so-called beta-delta) preferences. We give a two-step procedure to characterize Strotz-Pollak equilibrium payoffs: compute the continuation payoff set using recursive techniques, and then use this set to characterize the equilibrium payoff set U(beta,delta). While Strotz-Pollak equilibrium and subgame perfection differ here, the generated paths and payoffs nonetheless coincide. We then explore the cost of the present-time bias. Fixing the total present value of 1 util flow, lower beta or higher delta shrinks the payoff set. Surprisingly, unless the minimax outcome is a Nash equilibrium of the stage game, the equilibrium payoff set U(beta,delta) is not separately monotonic in beta or delta. While U(beta,delta) is contained in payoff set of a standard repeated game with smaller discount factor, the present-time bias precludes any lower bound on U(beta,delta) that would easily generalize the beta=1 folk-theorem.
    Keywords: beta-delta preferences, repeated games, dynamic programming, Strotz-Pollak equilibrium
    JEL: C73
    Date: 2006–01
  4. By: Andreas Park (Economics Dept., University of Toronto); Lones Smith (Dept. of Economics, University of Michigan)
    Abstract: There are two varieties of timing games in economics: In a war of attrition, more predecessors helps; in a pre-emption game, more predecessors hurts. In this paper, we introduce and explore a spanning class with rank-order payoffs that subsumes both as special cases. In this environment with unobserved actions and complete information, there are endogenously-timed phase transition moments. We identify equilibria with a rich enough structure to capture a wide array of economic and social timing phenomena -- shifting between phases of smooth and explosive entry. We introduce a tractable general theory of this class of timing games based on potential functions. This not only yields existence by construction, but also affords rapid characterization results. We then flesh out the simple economics of phase transitions: Anticipation of later timing games influences current play -- swelling pre-emptive atoms and truncating wars of attrition. We also bound the number of phase transitions as well as the number of symmetric Nash equilibria. Finally, we compute the payoff and duration of each equilibrium, which we uniformly bound. We contrast all results with those of the standard war of attrition.
    Keywords: timing game, war of attrition, pre-emption game, potential function, Nash equilibrium
    JEL: C73
    Date: 2006–01
  5. By: Müge Ozman
    Abstract: In this paper, we highlight how inter-firm collaboration networks are influenced by the knowledge composition of goods in an industry. For this purpose, we carry out an agent based simulation study in which firms integrate their competencies under different knowledge base regimes. In this way networks form. The results reveal that, knowledge regime significantly influences the network structure, and interaction among firms is very intensive when the products are specialized but also have common knowledge among them.
    Date: 2006

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