nep-gth New Economics Papers
on Game Theory
Issue of 2007‒06‒02
nine papers chosen by
Laszlo A. Koczy
University of Maastricht

  1. On the Generic Finiteness of Equilibrium Outcome Distributions in Bimatrix Game Forms By Kukushkin, Nikolai S.; Litan, Cristian M.; Marhuenda, Francisco
  2. Undominated (and) perfect equilibria in Poisson games By Francesco De Sionopoli; Carlos Gonzalez Pimienta
  3. Cooperation in the Commons with Unobservable Actions By Nori Tarui; Charles Mason; Stephen Polasky; Greg Ellis
  4. Unawareness, Beliefs and Games By Aviad Heifetz; Martin Meier; Burkhard C. Schipper
  5. Affiliation, equilibrium existence and the revenue ranking of auctions By Luciano I. de Castro
  6. Optimal Risk Taking in an Uneven Tournament Game with Risk Averse Players By Matthias Kräkel
  7. Inference in a Synchronization Game with Social Interactions By Aureo de Paula
  8. The Ex Ante Auction Model for the Control of Market Power in Standard Setting Organizations By Geradin, Damien; Layne-Farrar, Anna; Padilla, Atilano Jorge
  9. Addiction and Self-Control: An Intrapersonal Game By Rafael López

  1. By: Kukushkin, Nikolai S.; Litan, Cristian M.; Marhuenda, Francisco
    Abstract: We provide an example of an outcome game form with two players for which there is in an open set of utilities for both players such that, in each of the associated games, the set of mixed Nash equilibria induces a continuum of outcome distributions.
    Keywords: Game form; Nash equilibrium; Generic finiteness
    JEL: C72
    Date: 2007–05–23
  2. By: Francesco De Sionopoli; Carlos Gonzalez Pimienta
    Abstract: In games with population uncertainty some perfect equilibria are in dominated strategies. We prove that every Poisson game has at least one perfect equilibrium in undominated strategies.
    Date: 2007–04
  3. By: Nori Tarui (Department of Economics, University of Hawaii at Manoa); Charles Mason (Department of Economics and Finance, University of Wyoming); Stephen Polasky (Department of Applied Economics, University of Minnesota); Greg Ellis (Department of Economics, University of Washington)
    Abstract: We model a dynamic common property resource game with unobservable actions and non-linear stock dependent costs. We propose a strategy profile that generates a worst perfect equilibrium in the punishment phase, thereby supporting cooperation under the widest set of conditions. We show under what set of parameter values for the discount rate, resource growth rate, harvest price, and the number of resource users, this strategy supports cooperation in the commons as a subgame perfect equilibrium. The strategy profile that we propose, which involves harsh punishment after a defection followed by forgiveness, is consistent with human behavior observed in experiments and common property resource case studies.
    Keywords: Common property resource, cooperation, dynamic game, unobservable actions
    JEL: D62 Q20
    Date: 2006–11
  4. By: Aviad Heifetz; Martin Meier; Burkhard C. Schipper
    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
  5. By: Luciano I. de Castro
    Abstract: We consider private value auctions where bidders’ types are dependent, a case usually treated by assuming affiliation. We show that affiliation is a restrictive assumption in three senses: topological, measure-theoretic and statistical (affiliation is a very restrictive characterization of positive dependence). We also show that affiliation’s main implications do not generalize for alternative definitions of positive dependence. From this, we propose new approaches to the problems of pure strategy equilibrium existence in first-price auctions (PSEE) and the characterization of the revenue ranking of auctions. For equilibrium existence, we slightly restrict the set of distributions considered, without loss of economic generality, and offer a complete characterization of PSEE. For revenue ranking, we obtain a characterization of the expected revenue differences between second and first price auctions with general dependence of types.
    Date: 2007–05
  6. By: Matthias Kräkel
    Abstract: We analyze the optimal choice of risk in a two-stage tournament game  between two players that have different concave utility functions. At the first stage, both players simultaneously choose risk. At the second stage, both observe overall risk and simultaneously decide on effort or investment. The results show that those two effects which mainly determine risk taking - an effort effect and a likelihood effect - are strictly interrelated. This finding sharply contrasts with existing results on risk taking in tournament games with symmetric equilibrium efforts where such linkage can never arise. Hence, previous findings based on symmetry at the effort stage turn out to be nongeneric.
    Keywords: asymmetric equilibria, rank-order tournaments, risk taking
    JEL: C72 J3 L1 M5
  7. By: Aureo de Paula (Department of Economics, University of Pennsylvania)
    Abstract: This paper studies inference in a continuous-time game where an agent’s decision to quit an activity depends on the participation of other players. In equilibrium, similar actions can be explained not only by direct influences, but also by correlated factors. Our model can be seen as a simultaneous duration model with multiple decision makers and interdependent durations. We study the problem of determining existence and uniqueness of equilibrium stopping strategies in this setting. This paper provides results and conditions for the detection of these endogenous effects. First, we show that the presence of such effects is a necessary and sufficient condition for simultaneous exits. This allows us to set up a nonparametric test for the presence of such influences which is robust to multiple equilibria. Second, we provide conditions under which parameters in the game are identified. Finally, we apply the model to data on desertion in the Union Army during the American Civil War and find evidence of endogenous influences.
    Keywords: duration models; social interactions; empirical games; optimal stopping
    JEL: C10 C70 D70
    Date: 2004–10–01
  8. By: Geradin, Damien; Layne-Farrar, Anna; Padilla, Atilano Jorge
    Abstract: RAND commitments - i.e., promises to license on reasonable and non-discriminatory terms - play a key role in standard setting processes. However, the usefulness of those commitments has recently been questioned. The problem allegedly lies in the absence of a generally agreed test to determine whether a particular license satisfies a RAND commitment. Swanson and Baumol have suggested that "the concept of a ‘reasonable’ royalty for purposes of RAND licensing must be defined and implemented by reference to ex ante competition." In their opinion, a royalty should be deemed 'reasonable' when it approximates the outcome of an ex ante auction process where IP owners submit RAND commitments coupled with licensing terms and selection to the standard is based on both technological merit and licensing terms. In this paper we investigate whether the ex ante auction approach proposed by Swanson and Baumol is likely to deliver efficient outcomes, both from static and dynamic standpoints. We find that given the peculiar characteristics of some of the industries where standardization takes place, in particular the many different business models adopted by innovating companies in those industries, the ex ante auction approach proposed by Swanson and Baumol may not always deliver the right outcomes from a social welfare viewpoint.
    Keywords: auctions; fairness; licensing; standard setting
    JEL: K21 L24
    Date: 2007–05
  9. By: Rafael López
    Abstract: In their model of addiction, O’Donoghue and Rabin obtain a counterintuitive result: a person that is fully aware of his self-control problems (sophisticate) is more prone to become addicted than one who is fully naware (na¨ıf). In this paper we show that this result arises from their particular equilibrium selection for the induced intra-personal game. We provide dominating Markov Perfect equilibria where the paradox vanishes and that seem more “natural” since they capture behaviors often observed in the realm of addiction. We also address the issue of why an unaddicted person could decide to start consuming and possibly develop an addiction. In particular, we show that their equilibrium implies that both naifs and sophisticates will slip into addiction. In contrast, by considering our results, only naifs will become addicted which is in accordance to the common intuition. Finally, we suggest a clear-cut way
    Date: 2006–08–01

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.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.