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on Game Theory |
| By: | Palfrey, Thomas R.; Wang, Stephanie W. |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:clt:sswopa:1271&r=gth |
| By: | Jakub Steiner |
| Abstract: | Players repeatedly face a coordination problem in a dynamic global game. By choosing a risky action (invest) instead of waiting, players risk instantaneous losses as well as a loss of payoffs from future stages, in which they cannot participate if they go bankrupt. Thus, the total strategic risk associated with investment in a particular stage depends on the expected continuation payoff. High continuation payoff makes investment today more risky and therefore harder to coordinate on, which decreases today’s payoff. Thus, expectation of successful coordination tomorrow undermines successful coordination today, which leads to fluctuations of equilibrium behavior even if the underlying economic fundamentals happen to be the same across the rounds. The dynamic game inherits the equilibrium uniqueness of the underlying static global game. |
| Keywords: | Coordination, Crises, Cycles and Fluctuations, Equilibrium Uniqueness, Global Games. |
| JEL: | C72 C73 D8 E32 |
| URL: | http://d.repec.org/n?u=RePEc:edn:esedps:162&r=gth |
| By: | Leonardo Becchetti; Giacomo Degli Antoni; Marco Faillo; Luigi Mittone |
| Abstract: | The role of “relational goods” is almost unexplored in the literature, yet our experimental results document that, even in their weakest form (opportunity of meeting an unknown player at the end of an experimental game), they significantly affect important “lubricants” of economic activity such as trust and trustworthiness and generate significant departures from the standard Nash equilibrium outcome in trust (investment) games. Our findings suggest that relational goods are an important “source of energy” in economic interactions and that the study of this “neglected particle” of socioeconomic life may produce significant advancements on both positive and normative economics. |
| Keywords: | relational goods, trust, experimental games |
| JEL: | C72 C91 A13 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:trn:utwpce:0705&r=gth |
| By: | Antonio Cabrales; Roberto Serrano |
| Abstract: | We study the classic implementation problem under the behavioral assumption that agents myopically adjust their actions in the direction of better-responses within a given institution. We offer results both under complete and incomplete information. First, we show that a necessary condition for assymptotically stable implementation is a small variation of (Maskin) monotonicity, which we call quasimonotonicity. Under standard assumptions in economic environments, we also provide a mechanism for Nash implementation which has good dynamic properties if the rule is quasimonotonic. Thus, quasimonotonicity is both necessary and almost sufficient for assymptotically stable implementation. Under incomplete information, incentive compatibility is necessary for any kind of stable implementation in our sense, while Bayesian quasimonotonicity is necessary for assymptotically stable implementation. Both conditions are also essentially sufficient for assymptotically stable implementation. We then tighten the assumptions on preferences and mutation processes and provide mechanisms for stochastically stable implementation under more permissive conditions on social choice rules. |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:cte:werepe:we075731&r=gth |
| By: | Peeters Ronald; Strobel Martin; Vermeulen Dries; Walzl Markus (METEOR) |
| Abstract: | In a laboratory experiment, we investigate the impact of temporary buy-options on efficiency, revenues, and bidding behavior in online proxy-auctions when bidders have independent private valuations. We show that the introduction of a buy-option reduces efficiency and at the same time fails to enhance revenues. In particular, we observe that the former presence of a temporary buy-option lowers final prices in an auction (even though the option is no longer available once an auction has started). If bidders have imprecise information about their private value, auction prices are increasing in the price of the buy-option which suggests anchoring as an explanation. Surprisingly, the former presence of a temporary buy-option also tends to reduce final auction prices if bidders are perfectly informed about their private value. In fact, we demonstrate that bidders are reluctant to bid above the option price regardless of the precision of their private information and the price of the option. |
| Keywords: | microeconomics ; |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umamet:2007028&r=gth |
| By: | Goossens D.R.; Müller R.; Spieksma F.C.R. (METEOR) |
| Abstract: | A combinatorial auction is an auction where multiple items are for sale simultaneously to a set of buyers. Furthermore, buyers are allowed to place bids on subsets of the available items. This paper focuses on a combinatorial auction where a bidder can express his preferences by means of a so-called ordered matrix bid. Ordered matrix bids are a bidding language that allows a compact representation of a bidder''s preferences, and was developed by Day (2004). We give an overview of how a combinatorial auction with matrix bids works. We elaborate on the relevance of the matrix bid auction and we develop methods to verify whether a given matrix bid satisfies properties related to micro-economic theory as free disposal, subadditivity, submodularity and the gross substitutes property. Finally, we investigate how a collection of arbitrary bids can be represented as a matrix bid. |
| Keywords: | microeconomics ; |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umamet:2007017&r=gth |
| By: | Tore Ellingsen (Stockholm School of Economics†); Topi Miettinen (Max Planck Institute of Economics, Jena, Germany.) |
| Abstract: | Can two negotiators fail to agree when both the size of the surplus and the rationality of the negotiators are common knowledge? We show that the answer is affrmative. When the negotiators can make irrevocable commitments at a low but positive cost, the unique symmetric equilibrium entails disagreement with high probability. In the unique pair of pure strategy equilibria, one party gets all the surplus. Even though we impose no constraints on side-payments, effcient compromises are unattainable. A strongly asymmetric authority relationship is thus the only viable alternative to costly conflict. |
| Keywords: | Authority, Bargaining, Commitment, Disagreement, Transaction Costs |
| JEL: | C72 C78 |
| Date: | 2007–07–18 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2007-037&r=gth |
| By: | Dirk Bergemann (Cowles Foundation, Yale University); Juuso Valimaki (Dept. of Economics, Helsinki School of Economics) |
| Abstract: | We consider truthful implementation of the socially efficient allocation in a dynamic private value environment in which agents receive private information over time. We propose a suitable generalization of the Vickrey-Clarke-Groves mechanism, based on the marginal contribution of each agent. In the marginal contribution mechanism, the ex post incentive and ex post participations constraints are satisfied for all agents after all histories. It is the unique mechanism satisfying ex post incentive, ex post participation and efficient exit conditions. We develop the marginal contribution mechanism in detail for a sequential auction of a single object in which each bidders learn over time her true valuation of the object. We show that a modified second price auction leads to truthtelling. |
| Keywords: | Vickrey-Clarke-Groves mechanism, Pivot mechanism, Ex post equilibrium, Marginal contribution, Multi-armed bandit, Bayesian learning |
| JEL: | C72 C73 D43 D83 |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:1616&r=gth |
| By: | Klaus Bettina (METEOR) |
| Abstract: | We consider the problem of allocating an infinitely divisible commodity among a group of agents with single-peaked preferences. A rule that has played a central role in the previous analysis of the problem is the so-called uniform rule. Thomson (1995a) proved that the uniform rule is the only rule satisfying Pareto optimality, no-envy, one-sided population-monotonicity, and replication-invariance. Replacing one-sided population-monotonicity by one-sided replacement-domination} yields another characterization of the uniform rule (Thomson, 1997a). Until now, the independence of replication-invariance from the other properties in these characterizations was an open problem. In this note we prove this independence by means of a single example. |
| Keywords: | microeconomics ; |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umamet:2007030&r=gth |
| By: | Nicolas Carayol (ADIS, BETA); Pascale Roux (ADIS, BETA); Murat Yıldızoğlu (GREThA) |
| Abstract: | The modelling of networks formation has recently became the object of an increasing interest in economics. One of the important issues raised in this literature is the one of networks efficiency. Nevertheless, for non trivial payoff functions, searching for efficient network structures turns out to be a very difficult analytical problem as well as a huge computational task, even for a relatively small number of agents. In this paper, we explore the possibility of using genetic algorithms (GA) techniques for identifying efficient network structures, because the GA have proved their power as a tool for solving complex optimization problems. The robustness of this method in predicting optimal network structures is tested on two simple stylized models introduced by Jackson and Wolinski (1996), for which the efficient networks are known over the whole state space of parameters values. We also show that this approach can provide new exploratory results for the linear-spatialized connections model of Johnson and Gilles (2000), in which the efficient allocation of bilateral connections is driven by contradictory forces that push either for a centralized structure around a coordinating agent, or for only locally and evenly distributed connections. |
| Keywords: | Networks; Efficiency; Genetic Algorithms |
| JEL: | D85 C61 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:grt:wpegrt:2007-11&r=gth |
| By: | Iaryczower, Matias |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:clt:sswopa:1275&r=gth |
| By: | Gönül Dogan (Tilburg University); M.A.L.M. van Assen (Tilburg University); Arnout van de Rijt (Cornell University); Vincent Buskens (Utrecht University) |
| Abstract: | This paper develops a formal model of exchange network stability that combines expected value theory (Friedkin 1995) with the economic literature on network dynamics. We identify stable networks up to size 8 for varying costs and investigate whether they are Pareto efficient and egalitarian. Only a very small number of networks are stable. Odd cycles and networks consisting of dyads and at most one isolate are the only egalitarian, efficient, and stable networks for a large cost range. We show that some of these results are generalizable to networks of any size and are independent of using expected value theory. |
| Keywords: | Exchange Networks, Stability, Efficiency, Equity, Social Dilemma |
| JEL: | D85 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2007.66&r=gth |