nep-gth New Economics Papers
on Game Theory
Issue of 2007‒03‒17
sixteen papers chosen by
Laszlo A. Koczy
University of Maastricht

  1. Sequential Share Bargaining By Herings P. Jean-Jacques; Predtetchinski Arkadi
  2. A `Super Folk Theorem' in Dynastic Repeated Games By Luca Anderlini; Dino Gerardi; Roger Lagunoff
  3. Do repeated game players detect patterns in opponents? Revisiting the Nyarko & Schotter belief elicitation experiment By Spiliopoulos, Leonidas
  4. Designing Efficient Mechanisms for Dynamic Bilateral Trading Games By Susan Athey; Ilya Segal
  5. Cooperation in Symmetric and Asymmetric Prisoner's Dilemma Games By Martin Beckenkamp; Heike Hennig-Schmidt; Frank P. Maier-Rigaud
  6. Humans versus computer algorithms in repeated mixed strategy games By Spiliopoulos, Leonidas
  7. A note on cooperative linear quadratic control By Engwerda,Jacob
  8. A discussion of the consistency axiom in cost-allocation problems By Justin Leroux
  9. Fatal Attraction: Salience, Naivete, and Sophistication in Experimental Hide-and-Seek Games By Vincent P. Crawford; Nagore Iriberri
  10. First-Price Equilibrium and Revenue Equivalence in a Sequential Procurement Auction Model By Reiss J. Philipp; Schöndube Jens Robert
  11. Unawareness, Beliefs and Games By Aviad Heifetz; Martin Meier; Burkhard C. Schipper
  12. Endogenous distributions in multi-agents models: the example of endogenization of ends and time constants By David Chavalarias
  13. Game Theoretic Models as a Framework for Analysis: The Case of Coordination Conventions By Aydinonat, N. Emrah
  14. Free Agent Auctions and Revenue Sharing: A Simple Approach By Rockerbie, Duane
  15. Auction with aftermarket for budget constrained bidders By Masili, Gustavo
  16. The Scope of Cooperation: Norms and Incentives By Guido Tabellini

  1. By: Herings P. Jean-Jacques; Predtetchinski Arkadi (METEOR)
    Abstract: This paper presents a new extension of the Rubinstein-St°ahl bargaining model to the case with n players, called sequential share bargaining. The bargaining protocol is natural and has as its main feature that the players’ shares in the cake are determined sequentially. The bargaining protocol requires unanimous agreement for proposals to be implemented. Unlike all existing bargaining protocols with unanimous agreement, the resulting game has unique subgame perfect equilibrium utilities for any value of the discount factor. In equilibrium, agreement is reached immediately. The results are therefore qualitatively the same as in the two player case. The result builds on an analysis of so-called one-dimensional bargaining problems. We show that also one-dimensional bargaining problems have unique subgame perfect equilibrium utilities for any value of the discount factor, and that also in one-dimensional bargaining problems agreement is reached immediately.
    Keywords: microeconomics ;
    Date: 2007
  2. By: Luca Anderlini; Dino Gerardi; Roger Lagunoff
    Date: 2007–03–14
  3. By: Spiliopoulos, Leonidas
    Abstract: The purpose of this paper is to reexamine the seminal belief elicitation experiment by Nyarko & Schotter (2002) under the prism of pattern recog- nition. Instead of modeling elicited beliefs by a simple weighted fictitious play model this paper proposes a generalized variant of fictitious play that is able to detect two period patterns in opponents’ behavior. Evidence is presented that these generalized pattern detection models provide a better fit than standard weighted fictitious play player. Heterogeneity amongst individuals was found as to the complexity of patterns that were detected and utilized in belief formation - a large percentage of players demon- strated the ability to detect two-period patterns in opponents’ play. For players using a variant of the weighted ficititious play belief formation rule without pattern detection it was found that the memory decay parameter was not significantly di
    Keywords: learning; game theory; behavioral game theory; fictitious play; repeated games; mixed strategy; non-cooperative games; pattern recognition; pattern detection; experimental economics; beliefs; belief elicitation; strategic
    JEL: C63 C72 C73
    Date: 2007–03–11
  4. By: Susan Athey; Ilya Segal
    Date: 2007–03–14
  5. By: Martin Beckenkamp (Max Planck Institute for Research on Collective Goods, Bonn); Heike Hennig-Schmidt (Laboratory for Experimental Economics, University of Bonn); Frank P. Maier-Rigaud (Laboratory for Experimental Economics, University of Bonn, Max Planck Institute for Research on Collective Goods)
    Abstract: We experimentally study the effect of asymmetry on cooperation in a 40 period prisoner's dilemma game in fixed partner design. We distinguish between a high and low payoff symmetric prisoner's dilemma and an asymmetric game combined out of both symmetric ones. Asymmetry significantly decreases cooperation, as low-type players are more likely to defect after mutual cooperation while high-type players initiate cooperation more often than the former. Asymmetry also has a significant negative effect on the stability of cooperation rendering long sequences of mutual cooperation extremely rare.
    Keywords: Symmetry, Asymmetry, Prisoner's Dilemma, Experiments
    JEL: C81 D70 C91
    Date: 2007–03
  6. By: Spiliopoulos, Leonidas
    Abstract: This paper addresses the question of strategic change in humans’ be- havior conditional on opponents’ play. In order to implement this e
    Keywords: learning; artifical intelligence; mixed strategy; game theory; repeated games; behavioral game theory; ewa; reinforcement learning; fictitious play; simulations; experimental economics; computational economics; non-cooperative games
    JEL: C91 C72 C73
    Date: 2007–03–11
  7. By: Engwerda,Jacob (Tilburg University, Center for Economic Research)
    Abstract: In this note we consider the cooperative linear quadratic control problem. That is, the problem where a number of players, all facing a (different) linear quadratic control problem, decide to cooperate in order to optimize their performance. It is well-known, in case the performance criteria are positive definite, how one can determine the set of Pareto efficient equilibria for these games. In this note we generalize this result for indefinite criteria.
    Keywords: LQ theory;Riccati equations;Cooperative differential games;Pareto frontier
    JEL: C61 C71 C73
    Date: 2007
  8. By: Justin Leroux (IEA, HEC Montréal)
    Abstract: The recent literature on cost allocation lacks consensus on what is an appropriate definition of the consistency axiom. We take this as evidence that a careful reexamination is necessary. The starting point of our critique is the widely adopted definition proposed in Moulin and Shenker (1994), which we show to be conceptually flawed. Rectifying this flaw leads to a definition of consistency which already appeared in the recent literature though without satisfactory conceptual justification. We offer a classification of the existing definitions of the consistency axiom by relating them to the definitions of consistency in cooperative games suggested in Davis and Maschler (1965) and Hart and Mas-Colell (1989). We argue that only the latter leads to a meaningful interpretation of consistency when production externalities are present.
    Date: 2006–11
  9. By: Vincent P. Crawford; Nagore Iriberri
    Date: 2007–03–14
  10. By: Reiss J. Philipp; Schöndube Jens Robert (METEOR)
    Abstract: We analyze first-price equilibrium bidding behavior of capacity-constrained firms in a sequence of two procurement auctions. In the model, firms with a cost advantage in completing the project auctioned off at the end of the sequence may enter the unfavored first auction hoping to lose it. Equilibrium bidding in both auctions deviates from the standard Symmetric Independent Private Value auction model (SIPV) due to opportunity costs of bidding created by possibly employed capacity.For this sequential auction model with non-identical objects, we show that revenue equivalence holds.
    Keywords: microeconomics ;
    Date: 2007
  11. By: Aviad Heifetz (The Economics and Management Department, The Open University of Israel.; Martin Meier (Instituto de Analisis Economico - CSIC, Barcelona. Email:; Burkhard C. Schipper (Department of Economics, University of California, Davis.
    Abstract: We define a generalized state-space model with interactive unawareness and probabilistic beliefs. Such models are desirable for many potential applications of asymmetric unawareness. We develop Bayesian games with unawareness, define equilibrium, and prove existence. We show how equilibria are extended naturally from lower to higher awareness levels and restricted from higher to lower awareness levels. We use our unawareness belief structure to show that the common prior assumption is too weak to rule out speculative trade in all states. Yet, we prove a generalized “No-trade” theorem according to which there can not be common certainty of strict preference to trade. Moreover, we show a generalization of the “No-agreeing-to-disagree” theorem.
    Keywords: unawareness, awareness, type-space, Bayesian games, incomplete information, equilibrium, common prior, agreement, speculative trade, interactive epistemology
    JEL: C70 C72 D80 D82
    Date: 2007–03
  12. By: David Chavalarias (CREA - Centre de recherche en épistémologie appliquée - [CNRS : UMR7656] - [Polytechnique - X])
    Abstract: Multi-agents modelers recurrently face the problem of the choice of their parameters' values while most of them are exogenous. In this paper we address the issue of endogenization of these parameters when it makes sense in a social learning perspective within the formalism of metamimetic games. We first show how its is possible to endogeneize the agents' ends distribution with a spatial prisoner's dilemma as case study. Then we apply the method to endogenization of time constants in the model, each agent having its own subjective perception of time. In this perspective, the values of endogenous parameters are the outcome of a dynamical process characterized by agent's cognitive capacities and environmental constraints.
    Keywords: parameters endogenization, endogenous distributions, spatial games, time constants, evolution of cooperation, metamimetic games
    Date: 2007–03–09
  13. By: Aydinonat, N. Emrah
    Abstract: This paper examines game theoretic models of coordination conventions. Firstly, the paper shows that static models of coordination cannot explain the emergence of coordination conventions. The best interpretation of these models is that they study the conditions under which coordination is possible. The examination of these conditions suggests that history and existing institutions are important in the process of emergence of institutions. Secondly, an examination of dynamic models of coordination conventions reveals that some of these models explicate some of the ways in which coordination may be brought about in the model world. Nevertheless, consideration of these models fortifies the point that history and existing institutions are crucial for explaining the emergence of conventions in the real world. Based on these observations, the paper suggests that game theory as a framework of analysis is the best possible interpretation of game theoretic models of coordination conventions.
    Keywords: Game Theory; Coordination; Convention
    JEL: B41 C70
    Date: 2006–06–01
  14. By: Rockerbie, Duane
    Abstract: This paper uses a simple approach to address the issue of how revenue sharing in professional sports leagues can affect the allocation of free agent players to teams. To affect the allocation of free agents, the imposition of revenue sharing must alter the ranking of bidding teams in terms of maximum salary offers. Two types of revenue sharing systems are considered: traditional gate revenue sharing and pooled revenue sharing. The paper suggests that team rankings for ability to pay are not affected by pooled revenue sharing, however the distribution of player salaries will be compressed. Traditional gate revenue sharing can alter the ability to pay rankings for teams, depending upon playing schedules and the closeness of revenues between closely ranked teams.
    Keywords: revenue sharing; professional sports; free agents; labor surplus; auction
    JEL: L83
    Date: 2007–03
  15. By: Masili, Gustavo
    Abstract: The paper compares different auction formats for sale of a single patented innovation for budget constrained bidders. This unit decreases the marginal cost of production in the aftermarket for its owner by an amount which depends on the money invested on the development of this technology. As the bidders have a fixed budget that must be used to pay the final auction price and also to develop the new technology, the winner has incentives to pay a low amount for his unit to increase the amount available to invest in cost reduction. Conversely the loser has incentives to induce induce a higher price to be paid by the winner in order to increase aftermarket profits. This conflict of interest generates the willingness to pay (WTP) for the patent through an endogenous process, which may end up by stablishing a higher WTP for the lowest financed firm. Given this background, the case in which the players have different initial budgets may generate multiple equilibria for all studied auction mechanisms. These equilibria produce di¤erent consumer surplus and, thus, a central government with an unti-trust behavior is able to choose the auction that generates the re…ned equilibrium leading to the highest consumer surplus.
    Keywords: Market design; auction; aftermarket; budget constraints; investment
    JEL: L11 C72 D44
    Date: 2006–07–24
  16. By: Guido Tabellini
    Date: 2007–03–14

This nep-gth issue is ©2007 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.
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