nep-gth New Economics Papers
on Game Theory
Issue of 2007‒02‒24
seven papers chosen by
Laszlo A. Koczy
University of Maastricht

  1. Classic coordination failures revisited: the effects of deviation costs and loss avoidance By Giovanna Devetag; Andreas Ortmann
  2. Multiple-bidding in auctions as bidders become confident of their private valuations. By Cotton, Christopher
  3. Combination Bidding in Multi-Unit Auctions By Cantillon, Estelle; Pesendorfer, Martin
  4. Robustness of Sharing Rules under Climate Change - The Case of International Fisheries Agreements By Urs Steiner Brandt; Lone Grønbæk Kronbak
  5. Demand properties in household Nash equilibrium By Valérie Lechene; Ian Preston
  6. Unicidad del equilibrio de Nash-Cournot con correspondencias de mejor respuesta contractivas By Elvio Accinelli; Edgar Carrera
  7. Immediate Agreement in Interdependent Bilateral Bargaining By Björnerstedt, Jonas; Stennek, Johan

  1. By: Giovanna Devetag; Andreas Ortmann
    Abstract: Are communication failures common? We revisit a classic example of experimental coordination failure and explore, in a 2x2 design, the effects of deviation costs and loss avoidance. Our results suggest how to engineer coordination successes in the laboratory, and possibly in the wild.
    Keywords: coordination games, Pareto-ranked equilibria, payoff-asymmetric equilibria, optimization incentives, robustness, coordination failure
    JEL: C72 C92
    Date: 2007
  2. By: Cotton, Christopher
    Abstract: A bidder may increase his bid over the course of an auction when (1) he becomes more certain about his private valuation over time (as he has more time to consider using the item), and (2) there is a positive probability he is unable to return to the auction to submit a bid in a later period.
    Keywords: auction; multiple bidding; eBay; value discovery
    JEL: D83 D44
    Date: 2007–02–12
  3. By: Cantillon, Estelle; Pesendorfer, Martin
    Abstract: This paper considers the problem of identification and estimation in the first-price multi-unit auction. It is motivated by the auctions of bus routes held in London where bidders submit bids on combinations of routes as well as on individual routes. We show that submitting a combination bid lower than the sum of the bids on the constituent routes does not require cost synergies and can instead serve as a tool to leverage market power across the different routes. As a result, the welfare consequences of allowing combination bidding in the first price auction are ambiguous, and depend on the importance of the cost synergies. We provide conditions for non-parametric identification of the multidimensional private information in the multi-unit first price auction and derive partial identification results when they are not satisfied. We propose an estimation method consisting of two stages: In the first stage, the distribution of bids is estimated parametrically. In the second stage, the (set of) costs and distribution(s) of costs consistent with the observed behavior are inferred based on the first order conditions for optimally chosen bids. We apply the estimation method to data from the London bus routes market. We quantify the magnitude of cost synergies and assess possible efficiency losses arising in this market.
    Keywords: combinatorial auction; empirical; multi-unit auction; procurement
    JEL: D44
    Date: 2007–02
  4. By: Urs Steiner Brandt (Department of Environmental and Business Economics, University of Southern Denmark); Lone Grønbæk Kronbak (Department of Environmental and Business Economics, University of Southern Denmark)
    Abstract: Many international fisheries agreements involve sharing rules. The current pa-per analysis the stability of sharing rules when coping with long run changes in the composition of fish stocks in an international setting due to climate change. The exploitation of the cod stock in the Baltic Sea serves as an illustrative ex-ample. These rules are normally stable rules, but this is only true if they are not contingent on shifts in the relative distribution of density of the resource. Given the projected climatic changes in the latest IPCC report the stability of these agreements is not guaranteed. The lack of robustness of management systems of shared fish stocks with respect to exogenous changes has been addressed in sev-eral papers (see e.g. Miller (2005) and Miller and Munro (2004)). This paper builds, however, on a more rigorous game theoretic analysis conducted by Kronbak and Lindroos (2005). The main findings of this paper is that, when ex-ternalities are present, a decrease in the resource rent implies that the threat for not free riding become less serious and thereby leave less room for stable solu-tion. Generally speaking, this implies that climatic changes with a negative ef-fect on the resource rent make joint solutions less likely.
    Keywords: Climate Change, Cooperative Games, Stability of Fisheries Agreements
    JEL: C62 C70 Q22 Q54
    Date: 2006–12
  5. By: Valérie Lechene (Institute for Fiscal Studies and Wadham College, Oxford); Ian Preston (Institute for Fiscal Studies and University College London)
    Abstract: <p>We study noncooperative household models with two agents and several voluntarily contributed public goods, deriving the counterpart to the Slutsky matrix and demonstrating the nature of the deviation of its properties from those of a true Slutsky matrix in the unitary model. We demonstrate the importance of distinguishing between cases in which there are and are not jointly contributed public goods and provide results characterising both cases. Demand properties are contrasted with those for collective models and conclusions drawn regarding the possibility of empirically testing the collective model against noncooperative alternatives.</p>
    JEL: D11 C72
    Date: 2007–01
  6. By: Elvio Accinelli (Departamento de Economía, Universidad Autónoma Metropolitana); Edgar Carrera (Dipartimento di Economia, Facoltà di Economia, Richard M. Goodwin, Università di Siena.)
    Abstract: In this work we obtain new conditions to uniqueness of Nash equilibrium in the Cournot oligopoly model. These conditions assure that the reaction functions are contractions and they are not reduced to the obtained ones by Rosen, inasmuch as they do not demand the strict concavity of the bene¯t functions
    Keywords: mejor respuesta, contraccion, equilibrio de Cournot, unicidad
    JEL: C72
    Date: 2006–11
  7. By: Björnerstedt, Jonas (Swedish Competition Authority); Stennek, Johan (Research Institute of Industrial Economics)
    Abstract: This note provides sufficient conditions for immediate agreement in an extensive form model of interdependent bilateral bargaining. The model is suggested by Björnerstedt and Stennek (2006) as a work horse for studying bilateral oligopoly. The key feature of this model is that the firms are represented by separate agents in all negotiations in which they are involved. There is immediate agreement in equilibrium, essentially if production is strictly convex or if the agents use Markov strategies.
    Keywords: Bilateral Oligopoly; Intermediate Goods; Bargaining; Market Network; Trade Link
    JEL: C70 D20 D40 L10 L40
    Date: 2007–01–25

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