nep-gth New Economics Papers
on Game Theory
Issue of 2006‒10‒07
five papers chosen by
Laszlo A. Koczy
Universiteit Maastricht

  1. Strategy-Proof Coalition Formation By Carmelo Rodríguez Álvarez
  2. Institution Formation in Public Goods Games By Michael Kosfeld; Akira Okada; Arno Riedl
  3. When and Why? A Critical Survey on Coordination Failure in the Laboratory By Giovanna Devetag; Andreas Ortmann
  4. Continuous Time Models of Repeated Games with Imperfect Public Monitoring By Drew Fudenberg; David K Levine
  5. Asymmetric Auctions: Analytic Solutions to the General Uniform Case By Todd R. Kaplan; Shmuel Zamir

  1. By: Carmelo Rodríguez Álvarez (Universidad de Málaga)
    Abstract: We analyze coalition formation problems in which a group of agents is partitioned into coalitions and agents' preferences only depend on the coalition they belong to. We study rules that associate to each profile of agents' preferences a partition of the society. We focus on strategy-proof rules on restricted domains of preferences, as the domains of additively representable or separable preferences. In such domains, the only strategy-proof and individually rational rules that satisfy either Pareto efficiency or non-bossiness and flexibility are single-lapping rules. Single-lapping rules are characterized by severe restrictions on the set of feasible coalitions that are consisitent with hierarchical organizations. These restrictions are necessary and sufficient for the existence of a unique core-stable partition. This fact implies that single-lapping rules always select the associated unique core-stable partition. Thus, our results highlight the relation between the non-cooperative concept of strategy-proofness and the cooperative concept of uniqueness of core-stable partitions.
    Keywords: Coalition Formation; Strategy-Proofness; Single-Lapping Property; Core-Stability; Matching Problems.
    JEL: C71 C78 D71
    Date: 2006
  2. By: Michael Kosfeld; Akira Okada; Arno Riedl
    Abstract: Centralized sanctioning institutions are of utmost importance for overcoming free-riding tendencies and enforcing outcomes that maximize group welfare in social dilemma situations. However, little is known about how such institutions come into existence. In this paper we investigate, both theoretically and experimentally, the endogenous formation of institutions in a public goods game. Our theoretical analysis shows that players may form sanctioning institutions in equilibrium, including those where institutions govern only a subset of players. The experiment confirms that institutions are formed frequently as well as that institution formation has a positive impact on cooperation rates and group welfare. However, the data clearly reveal that players are unwilling to implement institutions in which some players have the opportunity to free ride. In sum, our results show that individuals are willing and able to create sanctioning institutions, but that the institution formation process is guided by behavioral principles not taken into account by standard theory.
    Keywords: public goods, institutions, sanctions, cooperation
    JEL: C72 C92 D72
    Date: 2006
  3. By: Giovanna Devetag; Andreas Ortmann
    Abstract: Coordination games with Pareto-ranked equilibria have attracted major theoretical attention over the past two decades. Two early path-breaking sets of experimental studies were widely interpreted as suggesting that coordination failure is a common phenomenon in the laboratory. We identify the major determinants that seem to affect the incidence, and/or emergence, of coordination failure in the lab and review critically the existing experimental studies on coordination games with Pareto-ranked equilibria since that early evidence emerged. We conclude that coordination failure is likely to be the exception rather than the rule, both in the lab and outside of it.
    Keywords: Coordination games, Pareto-ranked equilibria, Payoff-asymmetric equilibria, Stag-hunt games, Optimization incentives, Robustness, Coordination, Coordination failure
    JEL: C72 C92
    Date: 2006–09
  4. By: Drew Fudenberg; David K Levine
    Date: 2006–09–30
  5. By: Todd R. Kaplan; Shmuel Zamir
    Abstract: While auction research, including asymmetric auctions, has grown significantly in recent years, there is still little analytical solutions of first-price auctions outside the symmetric case. Even in the uniform case, Griesmer et al. (1967) and Plum (1992) find solutions only to the case where the lower bounds of the two distributions are the same. We present the general analytical solutions to asymmetric auctions in the uniform case for two bidders, both with and without a minimum bid. We show that our solution is consistent with the previously known solutions of auctions with uniform distributions. Several interesting examples are presented including a class where the two bid functions are linear. We hope this result improves our understanding of auctions and provides a useful tool for future research in auctions.
    Date: 2006–09

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