nep-gth New Economics Papers
on Game Theory
Issue of 2006‒07‒21
nine papers chosen by
Laszlo A. Koczy
Universiteit Maastricht

  1. Coalition Formation in Simple Games: The Semistrict Core By Dinko Dimitrov; Claus-Jochen Haake
  2. Applications of Relations and Graphs to Coalition Formation By Agnieszka Rusinowska; Rudolf Berghammer; Harrie de Swart
  3. Bounded Rationality and Repeated Network Formation By Nicolas Querou; Sylvain Beal
  4. Bilateral Commitment By Guillaume Haeringer; Sophie Bade; Ludovic Renou
  5. Inequity Aversion May Increase Inequity By Maria Montero
  6. Purification in the Infinitely Repeated Prisoner's Dilemma By V Bhaskar; George J. Mailath; Stephen Morris
  7. Coalition Governments in a Model of Parliamentary Democracy By Siddhartha Bandyopadhyay; Mandar Oak
  8. Introducing Social Norms in Game Theory By Raúl López-Pérez
  9. Proportionate flow shop games By Estevez-Fernandez,Arantza; Mosquera,Manuel A.; Borm,Peter; Hamers,Herbert

  1. By: Dinko Dimitrov (Bielefeld University); Claus-Jochen Haake (Bielefeld University)
    Abstract: We consider the class of proper monotonic simple games and study coalition formation when an exogenous share vector and a solution concept are combined to guide the distribution of coalitional worth. Using a multiplicative composite solution, we induce players' preferences over coalitions in a hedonic game, and present conditions under which the semistrict core of the game is nonempty.
    Keywords: Coalition Formation, Paradox of Smaller Coalitions, Semistrict Core, Simple Games, Winning Coalitions
    JEL: D72 C71
    Date: 2006–05
  2. By: Agnieszka Rusinowska (Radboud University Nijmegen); Rudolf Berghammer (University of Kiel); Harrie de Swart (Tilburg University)
    Abstract: A stable government is by definition not dominated by any other government. However, it may happen that all governments are dominated. In graph-theoretic terms this means that the dominance graph does not possess a source. In this paper we are able to deal with this case by a clever combination of notions from different fields, such as relational algebra, graph theory, social choice and bargaining theory, and by using the computer support system RelView for computing solutions and visualizing the results. Using relational algorithms, in such a case we break all cycles in each initial strongly connected component by removing the vertices in an appropriate minimum feedback vertex set. So, we can choose an un-dominated government. To achieve unique solutions, we additionally apply social choice rules. The main parts of our procedure can be executed using the RelView tool. Its sophisticated implementation of relations allows to deal with graph sizes that are sufficient for practical applications of coalition formation.
    Keywords: Graph Theory, RELVIEW, Relational Algebra, Dominance, Stable Government
    JEL: D85 C63 C88 D71 D72
    Date: 2006–05
  3. By: Nicolas Querou (Queen's University Belfast); Sylvain Beal (CREUSET, University of Saint-Etienne)
    Abstract: We define a finite-horizon repeated network formation game with consent, and study the differences induced by different levels of individual rationality. We prove that perfectly rational players will remain unconnected at the equilibrium, while nonempty equilibrium networks may form when, following Neyman (1985), players are assumed to behave as finite automata. We define two types of equilibria, namely the Repeated Nash Network (RNN), in which the same network forms at each period, and the Repeated Nash Equilibrium (RNE), in which different networks may form. We state a sufficient condition under which a given network may be implemented as a RNN. Then, we provide structural properties of RNE. For instance, players may form totally different networks at each period, or the networks within a given RNE may exhibit a total order relationship. Finally we investigate the question of efficiency for both Bentham and Pareto criteria.
    Keywords: Repeated Network Formation Game, Two-sided Link Formation Costs, Bounded Rationality, Automata
    JEL: C72
    Date: 2006–05
  4. By: Guillaume Haeringer (Universitat Autònoma de Barcelona); Sophie Bade (Penn State University); Ludovic Renou (Napier Building)
    Abstract: We consider non-cooperative environments in which two players have the power to commit but cannot sign binding agreements. We show that by committing to a set of actions rather than to a single action, players can implement a wide range of action profiles. We give a complete characterization of implementable profiles and provide a simple method to find them. Profiles implementable by bilateral commitments are shown to be generically inefficient. Surprisingly, allowing for gradualism (i.e., step by step commitment) does not change the set of implementable profiles.
    Keywords: Commitment, Self-enforcing, Treaties, Inefficiency, Agreements, Pareto-improvement
    JEL: C70 C72 H87
    Date: 2006–05
  5. By: Maria Montero (University of Nottingham)
    Abstract: Inequity aversion models have been used to explain equitable payoff divisions in bargaining games. I show that inequity aversion can actually increase the asymmetry of payoff division if unanimity is not required. This is due to the analogy between inequity aversion and risk aversion. Inequity aversion may also affect comparative statics: the advantage of being proposer can decrease as players become more impatient.
    Keywords: Noncooperative Bargaining, Coalition Formation, Inequity Aversion
    JEL: A13 C78
    Date: 2006–05
  6. By: V Bhaskar; George J. Mailath; Stephen Morris
    Date: 2006–07–15
  7. By: Siddhartha Bandyopadhyay (University of Birmingham); Mandar Oak (Williams College)
    Abstract: We analyze the relative importance of party ideology and rents from office in the formation of coalitions in a parliamentary democracy. In equilibrium, the types of coalitions that are formed may be minimal winning, minority or surplus and they may be ideologically `disconnected'. The coalitions that form depend upon the relative importance of rents of office and seat shares of the parties. If rents are high, governments cannot be surplus. With low rents or the formateur close to the median, minority governments occur for a wider ideological dispersion. Further, there is a non-monotonic relationship between connectedness of coalitions and rents.
    Keywords: Coalitions, Ideology, Rents
    JEL: C72 D72 H19
    Date: 2006–06
  8. By: Raúl López-Pérez
    Abstract: This paper explicitly introduces norms in games, assuming that they shape (some) players’ utility and beliefs. People feel badly when they deviate from a binding norm, and the less other players deviate, the more badly they feel. Further, people anger at transgressors and get pleasure from punishing them. I then study how social norms and emotions affect cooperation, coordination, and punishment in a variety of games. The model is consistent with abundant experimental evidence that alternative models of social preferences cannot explain.
    Keywords: Cooperation, Emotions, Focal Points, Punishment, Reciprocity, Social Norms
    JEL: C72 D02 D62 D64 Z13
    Date: 2006–06
  9. By: Estevez-Fernandez,Arantza; Mosquera,Manuel A.; Borm,Peter; Hamers,Herbert (Tilburg University, Center for Economic Research)
    Abstract: In a proportionate flow shop problem several jobs have to be processed through a fixed sequence of machines and the processing time of each job is equal on all machines. By identifying jobs with agents, whose costs linearly depend on the completion time of their jobs, and assuming an initial processing order on the jobs, we face an additional problem: how to allocate the cost savings obtained by ordering the jobs optimally? In this paper, PFS games are defined as cooperative games associated to proportionate flow shop problems. It is seen that PFS games have a nonempty core. Moreover, it is shown that PFS games are convex if the jobs are initially ordered in decreasing urgency. For this case an explicit expression for the Shapley value and a specific type of equal gain splitting rule which leads to core elements of the PFS game are proposed.
    Keywords: Proportionate flow shop problems;core;convexity
    JEL: C71
    Date: 2006

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