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on Game Theory |
| By: | Filippo L., CALCIANO |
| Abstract: | We introduce a class of games with complementarities that has the quasisupermodular games, hence the supermodular games, as a special case. Our games retain the main property of quasisupermodular games : the Nash set is a nonemply complete lattice. We use monotonicity properties on the best reply that are weaker than those in the literature, as well as pretty simple and linked with an intuitive idea of complementarity. The sufficient conditions on the payoffs are weaker than those in quasisupermodular games. We also separate the conditions implying existence of a greatest and a least Nash equilibrium from those, stronger, implying that the Nash set is a complete lattice |
| Keywords: | Complementarity, Quasisupermodularity, Supermodular games, Monotone comparative statics, Nash equilibria |
| JEL: | C60 C70 C72 |
| Date: | 2007–03–27 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvec:2007011&r=gth |
| By: | Fabrice Barthélémy (THEMA, University of Cergy Pontoise); Mathieu Martin (THEMA, University of Cergy Pontoise) |
| Abstract: | How can we count and list all the Banzhaf or Shapley-Shubik index of power configurations for a given number of players? There is no formula in the literature that may give the cardinal of such a set, and moreover, even if this formula had existed, there is no formula which gives the configuration vectors. Even if we do not present such a formula, we present a methodology which enables to determine the set of configurations and its cardinality. |
| JEL: | C7 D7 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:ema:worpap:2007-07&r=gth |
| By: | Rosenkranz, Stephanie; Weitzel, Utz |
| Abstract: | We model takeovers as a bargaining process and explain termination fees for, both, the target and the acquirer, subject to parties’ bargaining power and outside options. In equilibrium, termination fees are offered by firms with outside options in exchange for a greater share of merger synergies. Termination fees decrease in firms’ bargaining power, and increase in firms’ outside options. We find that a merger with the second highest bidder, including a termination fee, can lead to equally high premiums as a merger with the highest bidder, without a termination fee. This novel result directly contrasts the agency cost perspective, which argues that termination provisions may be used by managers to lock into acquirers that do not generate the highest shareholder value. Further, even in a merger with the highest bidder and in the absence of bidding related costs, a termination fee is not necessarily a deal protection device, but can be used to improve shareholder value. Our bargaining model offers an alternative to auction related explanations of termination fees, like cost compensation or seller commitment. |
| Keywords: | bargaining; break-up fees; lockups; mergers and acquisitions; outside option; termination fees |
| JEL: | C71 C78 D44 G34 K22 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6210&r=gth |
| By: | Andriy Zapechelnyuk |
| Abstract: | A decision maker (an agent) is engaged in a repeated interaction with Nature. The objective of the agent is to guarantee to himself the long-run average payoff as large as the best-reply payoff to Nature?s empirical distribution of play, no matter what Nature does. An agent with perfect recall can achieve this objective by a simple better-reply strategy. In this paper we demonstrate that the relationship between perfect recall and bounded recall is not straightforward: An agent with bounded recall may fail to achieve this objective, no matter how long recall he has and no matter what better-reply strategy he employs. |
| Keywords: | Better-Reply Strategies; Regret; Bounded Recall; Fictitious Play; Approachability |
| JEL: | C73 D81 D83 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:huj:dispap:dp449&r=gth |
| By: | Thierry, BRECHET (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics); Franois, GERARD; Henry, TULKENS |
| Abstract: | Using an updated version of the CWS model (introduced by Eyckmans and Tulkens in Resource and Energy Economics 2003), this paper intends to evaluate with numbers the respective merits of two competing notions of coalition stability in the standard global public goods model as customarily applied to the climate change problem. After a reminder of the model structure and of the definition of the two game theoretical stability notions involved - namely, core stabiilty and internal-external stability, the former property is shown to hold for the grand coalition in the CWS model only if resource transfers of a specific form between countries are introduced. It is further shown that while the latter property holds neither for the grand coalition nor for most large coalitions, it is nevertheless verified in a weak sense that involves transfers (dubbed Òpotential internal stabilityÓ) for most small coalitions. The reason for this difference is brought to light, namely the differing rationale that inspires the transfers in either case. Finally, it is shown that the stable coalitions that perform best (in termes of carbon concentration and global welfare) always are composed of both industrialized and developing countries. Two sensitivity analyses confirm the robustness of all these results. |
| Keywords: | climate change, coalitions, simulation, integrated assessment |
| JEL: | C71 C73 D9 F42 Q2 |
| Date: | 2007–02–15 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvec:2007006&r=gth |
| By: | Jean J. GABSZEWICZ (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics); Didier, LAUSSEL; Tanguy, VAN YPERSELE; S, ZANAJ |
| Abstract: | This paper first introduces an approach relying on market games to examine how successive oligopolies do operate between downstream and upstream markets. This approach is then compared with the traditional analysis of oligopolistic interaction in successive markets. The market outcomes resulting from the two approaches are analysed under different technological regimes, decreasing vs constant returns |
| Keywords: | D43, L1, L13, L22 |
| Date: | 2007–03–26 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvec:2007009&r=gth |
| By: | David Bartolini |
| Abstract: | We consider a three-stage game in which symmetric firms decide whether to invest in a cost-reducing technology, then they have the possibility to merge (forming coalitions), and eventually, in the third stage, a Cournot oligopoly game is played by the resulting firms (coalitions). We show that, contrary to the existing literature, the monopoly market structure may fail to form even when the number of initial firms is just three. We then introduce a weighted sharing rule and show that a situation in which all firms acquire the cost-reducing asset cannot be sustained as a Subgame Perfect Equilibrium. |
| Date: | 2007–03–28 |
| URL: | http://d.repec.org/n?u=RePEc:esx:essedp:628&r=gth |
| By: | martawardaya, Berly; Salotti, Simone |
| Abstract: | Policymakers in modern and open economies face a macroeconomic trilemma (Obstfeld, Shambaugh, and Taylor 2005). There are three main sought-after objectives: 1. to stabilize the exchange rate; 2. to enjoy free international capital mobility 3. to engage in a monetary policy oriented toward domestic goals. Three main questions that we try to answer are : How the crisis exacerbated by international investor racing to pull out their capital from affected coutnries? Can capital control reduce it? Can capital control reduce contagion effect and regional financial instability? Using game theoritical framework and insight from behavioral economics, we analyzed herd behaviour of international investors in the time of financial crisis. Under free international capital mobility, uncertainty and lack of coordination among investors with short-horizon, we found prisoner dilemma type of arrangement that exacerbated financial crisis. Applying the anylisis to multi-stage game with government, we found that a credible threat of capital control could reduce herd behaviour and escape the worst of financial crisis. Therefore, fredom to employ capital control is a policy tool that enable escape from the trilemma and pursue all three goals at the same time. We modify the framework to include multiple countries under financial crisis and fear of contagion. We found the ability to impose capital control, under certain conditions, will isolate the crisis and reduce contagion effect. We also explore the critical value when capital control should be enacted with regard to domestic economic condition, on which government political mandate base upon, and differences of reactions in relation to political regime. We conclude by citing incidences of insistance toward comitment against capital control by IMF in loans approcal and US in free trade agreement as misdirected, unncessesary and even harmful in some cases. |
| Keywords: | Asiena crisis; game theory; capital control |
| JEL: | F32 C72 |
| Date: | 2006–11–24 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:2073&r=gth |
| By: | Lei Zhang; David Levinson; Shanjiang Zhu (Nexus (Networks, Economics, and Urban Systems) Research Group, Department of Civil Engineering, University of Minnesota) |
| Abstract: | Using consistent agent-based techniques, this research models the decision-making processes of users and infrastructure owner/operators to explore the welfare consequence of price competition, capacity choice, and product differentiation on congested transportation networks. Component models include: (1) An agent-based travel demand model wherein each traveler has learning capabilities and unique characteristics (e.g. value of time); (2) Econometric facility provision cost models; and (3) Representations of road authorities making pricing and capacity decisions. Different from small-network equilibrium models in prior literature, this agent-based model is applicable to pricing and investment analyses on large complex networks. The subsequent economic analysis focuses on the source, evolution, measurement, and impact of product differentiation with heterogeneous users on a mixed ownership network (with tolled and untolled roads). Two types of product differentiation in the presence of toll roads, path differentiation and space differentiation, are defined and measured for a base case and several variants with different types of price and capacity competition and with various degrees of user heterogeneity. The findings favor a fixed-rate road pricing policy compared to complete pricing freedom on toll roads. It is also shown that the relationship between net social benefit and user heterogeneity is not monotonic on a complex network with toll roads. |
| Keywords: | Network dynamics, road pricing, autonomous links, privatization, price competition, product differentiation, agent-based transportation model |
| JEL: | R40 R42 R48 D10 D21 D23 D24 D43 D83 D85 H21 H23 H44 L92 O33 C72 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:nex:wpaper:agentpricecompetition&r=gth |