nep-gth New Economics Papers
on Game Theory
Issue of 2007‒06‒11
fourteen papers chosen by
Laszlo A. Koczy
University of Maastricht

  1. Which way to cooperate By Kaplan, Todd; Ruffle, Bradley
  2. Social Distance and Reciprocity By Lucy F. Ackert; Bryan K. Church; Shawn Davis
  3. Directed Networks with Global Spillovers By Sudipta Sarangi; Pascal Billand; Christophe Bravard
  4. Strongly Robust Equilibrium in Common Agency By Han, Seungjin
  5. Contractually Stable Networks By Jean-Francois Caulier; Ana Mauleon; Vincent VAnnetelbosch
  6. Characterization of Revenue Equivalence By Müller Rudolf; Uetz Marc; Vohra Rakesh; Heydenreich Birgit
  7. Updating Validations and Stochastic Dynamics on Coordination By Hideki Fujiyama
  9. Dynamic Recontracting processes with Multiple Indivisible Goods By Bochet Olivier; Klaus Bettina; Walzl Markus
  10. Self-enforcing Norms and the Efficient Non-cooperative Organization of Clans By Konrad, Kai A; Leininger, Wolfgang
  11. A Theory of Attribution By Feldman, Barry
  12. On the Emergence of Social Norms By Edward Cartwright
  13. Directed Altruism and Enforced Reciprocity in Social Networks: How Much is A Friend Worth? By Stephen Leider; Markus M. Möbius; Tanya Rosenblat; Quoc-Anh Do
  14. Implications of Trust, Fear, and Reciprocity for Modeling Economic Behavior By James C. Cox; Klarita Sadiraj; Vjollca Vjollca

  1. By: Kaplan, Todd; Ruffle, Bradley
    Abstract: Cooperation in real-world dilemmas takes many forms. We introduce a class of two-player games that permits two distinct ways to cooperate in the repeated game. One way to cooperate is to play cutoff strategies, which rely solely on a player's private value to defection. The second cooperative strategy is to take turns, which relies on publicly available information. Our initial experiments reveal that almost all cooperators adopt cutoff strategies. However, follow-up experiments in which the distribution of values to defection are made more similar show that all cooperators now take turns. Our results offer insight into what form a cooperative norm will take: for mundane tasks or where individuals otherwise have similar payoffs, taking turns is likely; for difficult tasks that differentiate individuals by skill or by preferences, cutoff cooperation will emerge.
    Keywords: experimental economics; cooperation; incomplete information; alternating; cutoff strategies; random payoffs.
    JEL: C90
    Date: 2007–06–01
  2. By: Lucy F. Ackert; Bryan K. Church; Shawn Davis
    Abstract: Contrary to the predictions of non-cooperative game theory, trust and reciprocity are commonly reported in simple games. We conduct a one-shot investment game to examine how social distance affects behavior in two-person exchanges. Two aspects of social distance are examined: ex post revelation of complete information on the second player’s choice set and ex post revelation of information regarding the second player’s identity. The results indicate that reciprocity is not affected by knowledge of the choice set, but depends critically on the possible revelation of the decision maker’s identity. That is, the possibility that the second player’s identity (picture) is revealed to his/her counterpart has a profound effect on the degree of reciprocity extended.
    Date: 2006–03
  3. By: Sudipta Sarangi; Pascal Billand; Christophe Bravard
    Abstract: This paper examines directed networks in which the payoff of a player depends on the total number links formed by her and the other players. After showing that these networks with global spillovers may not always have Nash equilibria in pure strategies, we introduce two additional properties for the payoff function. The first called increasing (or decreasing) difference property states that player i’s payoff increases (decreases) as the number of links between the other n - 1 players increases. The second condition called the strict smaller midpoint property imposes a monotonicity restriction on the payoff function. We show that pure strategy Nash networks always exist under both conditions. The paper then characterizes these Nash equilibria showing that symmetric networks play a crucial role.
  4. By: Han, Seungjin
    Abstract: This paper studies the notion of strongly robust equilibrium in common agency that persists regardless of the continuation equilibrium that the agent may play off the equilibrium path following any principal's deviation to any complex mechanism. It is shown that the set of strongly robust equilibrium allocations relative to any arbitrary set of complex mechanisms is equal to the set of strongly robust equilibrium allocations relative to the set of menus where the agent plays a pure-strategy continuation equilibrium. Furthermore, an equilibrium relative to the set of menus is strongly robust if and only if it survives in every pure-strategy continuation equilibrium. This makes it tractable to derive a strongly robust equilibrium relative to any arbitrary set of complex mechanisms. This paper shows how to derive a strongly robust equilibrium in various common-agency problems.
    JEL: C72 D89
    Date: 2007–05–29
  5. By: Jean-Francois Caulier; Ana Mauleon; Vincent VAnnetelbosch
    Date: 2007–06–02
  6. By: Müller Rudolf; Uetz Marc; Vohra Rakesh; Heydenreich Birgit (METEOR)
    Abstract: The property of an allocation rule to be implementable in dominant strategies by a unique payment scheme is called revenue equivalence. In this paper we give a characterization of revenue equivalence based on a graph theoretic interpretation of the incentive compatibility constraints. The characterization holds for any (possibly infinite) outcome space and many of the known results about revenue equivalence are immediate consequences.
    Keywords: computer science applications;
    Date: 2007
  7. By: Hideki Fujiyama
    Abstract: This work studies an equilibrium selection of infinitely repeated symmetric 2x2 coordination games that show a tension between Pareto efficiency and risk dominance, in which bounded rational agents adopt the following simple behavior rule: each agent has a valuation of actions, and chooses the highest one. Valuations are updated according to the sign of the difference between the current valuation and the realized payoff. By applying techniques from stochastic stable states (Kandori et al. 1993 and Young 1993), it is shown that the risk dominant outcome is selected; that is, it is realized more frequently in the long run.
  8. By: José Alcalde (Universidad de Alicante); Matthias Dahm (Universitat Rovira i Virgili)
    Abstract: We introduce the serial contest by building on the desirable properties of two prominent contest games. This family of contest games relies both on relative efforts (as Tullock's proposal) and on absolute effort differences (as difference-form contests). An additional desirable feature is that the serial contest is homogeneous of degree zero in contestant's efforts. The family is characterized by a parameter representing how sensitive the outcome is to contestants' efforts. It encompasses as polar cases the (fair) lottery and the (deterministic) all-pay auction. Equilibria have a close relationship to those of the (deterministic) all-pay auction and important properties of the latter hold for the serial contest, too.
    Keywords: rent-seeking, (non-) deterministic contest, contest success function, all-pay auction, rent dissipation, exclusion principle, preemption effect, cap, campaign contributions.
    JEL: C72 D72 D44
    Date: 2007–05
  9. By: Bochet Olivier; Klaus Bettina; Walzl Markus (METEOR)
    Abstract: We consider multiple-type housing markets. To capture the dynamic aspect of trade in such markets, we study a dynamic recontracting process similar to the one introduced by Serrano and Volij (2005). First, we analyze the set of recurrent classes of this process as a (non-empty) solution concept. We show that each core allocation always constitutes a singleton recurrent class and provide examples of non-singleton recurrent classes consisting of blocking-cycles of individually rational allocations. For multiple-type housing markets stochastic stability never serves as a selection device among recurrent classes. Next, we propose a method to compute the limit invariant distribution of the dynamic recontracting process. The limit invariant distribution exploits the interplay of coalitional stability and accessibility that determines a probability distribution over final allocations. We provide various examples to demonstrate how the limit invariant distribution discriminates among stochastically stable allocations: surprisingly, some core allocations are less likely to be final allocations of the dynamic process than cycles composed of non-core allocations.
    Keywords: microeconomics ;
    Date: 2007
  10. By: Konrad, Kai A; Leininger, Wolfgang
    Abstract: We study how norms can solve distributional conflict inside a clan and the efficient coordination of collective action in a conflict with an external enemy. We characterize a fully non-cooperative equilibrium in a finite game in which a self-enforcing norm coordinates the members on efficient collective action and on a peaceful distribution of the returns of collective action.
    Keywords: collective action; defence; distributional conflict; free-riding; norms; war
    JEL: D72 D74 H11 H41
    Date: 2007–06
  11. By: Feldman, Barry
    Abstract: Attribution of economic joint effects is achieved with a random order model of their relative importance. Random order consistency and elementary axioms uniquely identify linear and proportional marginal attribution. These are the Shapley (1953) and proportional (Feldman (1999, 2002) and Ortmann (2000)) values of the dual of the implied cooperative game. Random order consistency does not use a reduced game. Restricted potentials facilitate identification of proportional value derivatives and coalition formation results. Attributions of econometric model performance, using data from Fair (1978), show stability across models. Proportional marginal attribution (PMA) is found to correctly identify factor relative importance and to have a role in model construction. A portfolio attribution example illuminates basic issues regarding utility attribution and demonstrates investment applications. PMA is also shown to mitigate concerns (e.g., Thomas (1977)) regarding strategic behavior induced by linear cost attribution.
    JEL: D00 C71 C10
    Date: 2007–03–14
  12. By: Edward Cartwright
    Abstract: We consider a model of conformity that permits a non-conformist equilibrium and multiple conformist equilibria. Agents are assumed to behave according to a best reply learning dynamic. We details the conditions under which a social norm and conformity emerge. The emergence of conformity depends on the distribution of intrinsic preferences, the relative costs and benefits of conformity and the topology of agent interaction.
    Keywords: Social norms; conformity; best reply
    JEL: C7 D11
    Date: 2007–01
  13. By: Stephen Leider; Markus M. Möbius; Tanya Rosenblat; Quoc-Anh Do
    Abstract: We conduct field experiments in a large real-world social network to examine why decision makers treat friends more generously than strangers. Subjects are asked to divide surplus between themselves and named partners at various social distances, where only one of the decisions is implemented. In order to separate altruistic and future interaction motives, we implement an anonymous treatment where neither player is told at the end of the experiment which decision was selected for payment and a non-anonymous treatment where both players are told. Moreover, we include both games where transfers increase and decrease social surplus to distinguish between different future interaction channels including signaling one's generosity and enforced reciprocity, where the decision maker treats the partner to a favor because she can expect it to be repaid in the future. We can decompose altruistic preferences into baseline altruism towards any partner and directed altruism towards friends. Decision makers vary widely in their baseline altruism, but pass at least 50 percent more surplus to friends compared to strangers when decision making is anonymous. Under non-anonymity, transfers to friends increase by an extra 24 percent relative to strangers, but only in games where transfers increase social surplus. This effect increases with density of the network structure between both players, but does not depend on the average amount of time spent together each week. Our findings are well explained by enforced reciprocity, but not by signaling or preference-based reciprocity. We also find that partners' expectations are well calibrated to directed altruism, but that they ignore decision makers' baseline altruism. Partners with high baseline altruism have friends with higher baseline altruism and are therefore treated better.
    JEL: C73 C91 D64
    Date: 2007–05
  14. By: James C. Cox; Klarita Sadiraj; Vjollca Vjollca
    Abstract: This paper reports three experiments with triadic or dyadic designs. The experiments include the moonlighting game in which first-mover actions can elicit positively or negatively reciprocal reactions from second movers. First movers can be motivated by trust in positive reciprocity or fear of negative reciprocity, in addition to unconditional other-regarding preferences. Second movers can be motivated by unconditional other-regarding preferences as well as positive or negative reciprocity. The experimental designs include control treatments that discriminate among actions with alternative motivations. Data from our three experiments and a fourth one are used to explore methodological questions, including the effects on behavioral hypothesis tests of within-subjects vs. across-subjects designs, single-blind vs. double-blind payoffs, random vs. dictator first-mover control treatments, and strategy responses vs. sequential play.
    JEL: C70 C91 D63 D64

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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