nep-gth New Economics Papers
on Game Theory
Issue of 2006‒03‒05
nine papers chosen by
Laszlo A. Koczy
Universiteit Maastricht

  1. A constructive and elementary proof of Reny's theorem By Philippe Bich
  2. Switching Costs in Infinitely Repeated Games By Barton Lipman; Ruqu Wang
  3. Rationalizing Irrational Beliefs By Geoffrey Dunbar; Juan Tu; Ruqu Wang; Xiaoting Wang
  4. Sequential Formation of Coalitions through Bilateral Agreements in a Cournot Setting By Inés Macho-Stadler; David Pérez-Castrillo; Nicolás Porteiro
  5. Dynamic Matching and Bargaining: The Role of Deadlines. By Sjaak Hurkensy; Nir Vulkan
  6. Communication and the extraction of natural renewable resources with threshold externalities By C. Mónica Capra; Tomomi Tanaka
  7. Bargaining Multiple Issues with Leximin Preferences By Amparo M. Mármol Conde; Clara Ponsatí Obiols
  8. Conformity in contribution games: gender and group effects By C. Mónica Capra; Lei Li
  9. If multi-agent learning is the answer, what is the question? By Yoav Shoham; Rob Powers; Trond Grenager

  1. By: Philippe Bich (CES-CERMSEM)
    Abstract: In a recent but well known paper, Reny proved the existence of Nash equilibria for better-reply-secure games, with possibly discontinuous payoff functions. Reny's proof is purely existential, and is similar to a contradiction proof : it gives non hint of a method to compute a Nash equilibrium in the class of games considered. In this paper, we adapt the arguments of Reny in order to obtain, for better-reply-secure games : an elementary proof of Nash equilibria existence, which is a consequence of Kakutani's theorem, and a " constructive " proof, in the sense that we obtain Nash equilibria as limits of fixed-point of well chosen correspondences.
    Keywords: Reny's theorem, discontinuous payoffs.
    JEL: C7
    Date: 2006–01
  2. By: Barton Lipman (Boston University); Ruqu Wang (Queen's University)
    Abstract: We show that small switching costs can have surprisingly dramatic effects in infinitely repeated games if these costs are large relative to payoffs in a single period. This shows that the results in Lipman and Wang [2000] do have analogs in the case of infinitely repeated games. We also discuss whether the results here or those in Lipman–Wang [2000] imply a discontinuity in the equilibrium outcome correspondence with respect to small switching costs. We conclude that there is not a discontinuity with respect to switching costs but that the switching costs do create a discontinuity with respect to the length of a period.
    Keywords: infinite horizon, repeated games, switching costs, Folk Theorem
    JEL: C72
    Date: 2006–01
  3. By: Geoffrey Dunbar (Simon Fraser University); Juan Tu (Queen's University); Ruqu Wang (Queen's University); Xiaoting Wang (Brock University)
    Abstract: In this paper, we re-examine various previous experimental studies of the Centipede Game in the literature. These experiments found that players rarely follow the subgame-perfect equilibrium strategies of the game, and various modifications to the game were proposed to explain the outcomes of the experiments. We here offer yet another modification. Players have a choice of whether or not to believe that their opponents use subgame-perfect equilibrium strategies. We define a `behavioral equilibrium' for this game. This equilibrium concept can reproduce the outcomes of those experiments.
    Keywords: centipede games, game theory, experimental economics, behavioral economics
    JEL: C72 C91
    Date: 2006–02
  4. By: Inés Macho-Stadler (Department of Economics, Universidad Autónoma de Barcelona); David Pérez-Castrillo (Department of Economics, Universidad Autónoma de Barcelona); Nicolás Porteiro (Department of Economics, Universidad Pablo de Olavide)
    Abstract: We study a sequential protocol of endogenous coalition formation based on a process of bilateral agreements among the players. We apply the game to a Cournot environment with linear demand and constant average costs. We show that the final outcome of any Subgame Perfect Equilibrium of the game is the grand coalition, provided the initial number of firms is high enough and they are sufficiently patient.
    Keywords: Coalition formation, bilateral agreements, Cournot.
    JEL: C72 D62 D40
    Date: 2005–11
  5. By: Sjaak Hurkensy; Nir Vulkan
    Abstract: We consider a dynamic model where traders in each period are matched randomly into pairs who then bargain about the division of a fixed surplus. When agreement is reached the traders leave the market. Traders who do not come to an agreement return next period in which they will be matched again, as long as their deadline has not expired yet. New traders enter exogenously in each period. We assume that traders within a pair know each other's deadline. We define and characterize the stationary equilibrium configurations. Traders with longer deadlines fare better than traders with short deadlines. It is shown that the heterogeneity of deadlines may cause delay. It is then shown that a centralized mechanism that controls the matching protocol, but does not interfere with the bargaining, eliminates all delay. Even though this effiient centralized mechanism is not as good for traders with long deadlines, it is shown that in a model where all traders can choose which mechanism to use, no delay will be observed.
    Date: 2006
  6. By: C. Mónica Capra; Tomomi Tanaka
    Abstract: Non-binding communication, or cheap talk, has been associated with the resolution of coordination failures and social dilemmas in both laboratory and field experiments (see Cooper, et al., 1992, and Clark, Kay, and Sefton, 2000; Isaac and Walker, 1991, Ostrom and Walker, 1991, Ostrom, Gardner and Walker, 1994, and Cardenas, Ahn, and Ostrom, 2003). In simple coordination games, communication is expected to reduce the uncertainty of what other players are likely to do and hence facilitate coordination in the better equilibrium. In social dilemma games, the reasons why communication works are still unclear. Perhaps communication results in an increased sense of group identity, an enhancement of normative orientations toward cooperation, or a necessity to avoid (seek) verbal reprimand (approval) when promises of cooperation are violated (fulfilled). In this paper we use a simple neoclassical growth model with multiple equilibria to investigate the mechanism by which non-binding communication results in lower equilibrium resource extraction. We use a growth model because it provides an adequate dynamic framework for modeling extraction of a natural resource with threshold externalities.
    Date: 2006–02
  7. By: Amparo M. Mármol Conde (Universidad de Sevilla); Clara Ponsatí Obiols (Institut d'Anàlisi Econòmica. CSIC)
    Abstract: Global bargaining problems over a finite number of different issues, are formalized as cartesian products of classical bargaining problems. For maximin and leximin bargainers we characterize global bargaining solutions that are efficient and satisfy the requirement that bargaining separately or globally leads to equivalent outcomes. Global solutions in this class are constructed from the family of monotone path solutions for classical bargaining problems.
    Keywords: Global bargaining, maximin preferences, leximin preferences
    JEL: C7 C78
    Date: 2006
  8. By: C. Mónica Capra; Lei Li
    Abstract: Psychologists have established that task complexity, gender and group identity affect conformity rates. We test the effects of these variables in contribution games. Our experiments consist of two parts: a public goods and a dictator game, both are played once. After subjects make their initial choices, they can revise them. Before revising, they are allowed to choose among different payoff irrelevant information regarding choices made by other cohorts that differed in class and gender. Our data are consistent with some of the findings in the psychology literature. We find that complexity matters. We find no gender or group effects on conformity rates. However, gender has weak effects when combined with group identity.
    Date: 2006–01
  9. By: Yoav Shoham; Rob Powers; Trond Grenager
    Date: 2006–02–27

This nep-gth issue is ©2006 by Laszlo A. Koczy. 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.