nep-gth New Economics Papers
on Game Theory
Issue of 2007‒08‒18
seven papers chosen by
Laszlo A. Koczy
University of Maastricht

  1. Bargaining, Search, and Outside Options By Anita Gantner
  2. Characterization of Revenue Equivalence By First:Birgit Heydenreich; Rudolf Muller; Marc Uetz; Rakesh Vohra
  3. Games in Coalitional Form By Ehud Kalai
  4. Games in Coalitional Form By Hamid Nazerzadeh; Amin Saberi; Rakesh Vohra
  5. Self-enforcing Norms and the Efficient Non-cooperative Organization of Clans By Kai A. Konrad; Wolfgang Leininger
  6. Almost transferable utility, changes in production possibilities, and the Nash Bargaining and the Kalai-Smorodinsky Solutions By Elisabeth Gugl
  7. The target projection dynamic By Tsakas, Elias; Voorneveld, Mark

  1. By: Anita Gantner
    Abstract: This paper studies a two-sided incomplete information bargaining model between a seller and a buyer. The buyer has an outside option, which is modeled as a sequential search process during which he can also choose to return to bargaining at any time. Two cases considered: In Regime I, both agents have symmetric information about the search parameters. We find that, in contrast to bargaining with complete information, the option to return to bargaining is not redundant in equilibrium. However, the no-delay result still holds. In Regime II, where agents have asymmetric information about the outside option, delay is possible. The solution characterizes the parameters for renegotiation and those for search with no return to the bargaining table.
    Keywords: Bargaining, Two-sided Incomplete Information, Outside Option, Search
    JEL: C78 D83 C61
    Date: 2007–08
  2. By: First:Birgit Heydenreich; Rudolf Muller; Marc Uetz; Rakesh Vohra
    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 in¯nite) outcome space and many of the known results about revenue equivalence are immediate consequence
    JEL: D44
    Date: 2007–05
  3. By: Ehud Kalai
    Abstract: How should a coalition of cooperating players allocate payoffs to its members? This question arises in a broad range of situations and evokes an equally broad range of issues. For example, it raises technical issues in accounting, if the players are divisions of a corporation, but involves issues of social justice when the context is how people behave in society. Despite the breadth of possible applications, coalitional game theory offers a uni…ed framework and solutions for addressing such questions. This brief survey presents some of its major models and proposed solutions.
    Keywords: Stock Options, Incentives, Agency Model
    JEL: C61 D82 D86 J33 J41
    Date: 2007–06
  4. By: Hamid Nazerzadeh; Amin Saberi; Rakesh Vohra
    Abstract: We examine the problem of allocating a resource repeatedly over time amongst a set of agents. The utility that each agent derives from consumption of the item is private information to that agent and, prior to consumption may be unknown to that agent. The problem is motivated by keyword auctions, where the resource to be allocated is a slot on a search page. We describe a mechanism based on a sampling-based learning algorithm that under suitable assumptions is asymptotically individually rational, asymptotically Bayesian incentive compatible and asymptotically ex-ante efficient. The mechanism can be interpreted as a cost per action keyword auction.
    Keywords: dynamic auctions, sponsored search
    JEL: D44
    Date: 2007–07
  5. By: Kai A. Konrad; Wolfgang Leininger
    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: Free-riding, defence, collective action, distributional conflict, war, norms
    JEL: D72 D74 H41
    Date: 2007–06
  6. By: Elisabeth Gugl (Department of Economics, University of Victoria)
    Abstract: Consider a two-person economy in which allocative efficiency is independent of distribution but cardinality of the agents' utility functions precludes transferable utility. I show that both agents either benefit or lose with any change of production possibilities under the Nash Bargaining and the Kalai-Smorodinsky solutions.
    Keywords: Axiomatic bargaining, resource monotonicity, transferable utility, risk aversion
    JEL: C71 D13 D63
    Date: 2007–08–09
  7. By: Tsakas, Elias (Department of Economics); Voorneveld, Mark (Dept. of Economics, Stockholm School of Economics)
    Abstract: This paper studies the target projection dynamic, which is a model of myopic adjustment for population games. We put it into the standard microeconomic framework of utility maximization with control costs. We also show that it is well-behaved, since it satisfies the desirable properties: Nash stationarity, positive correlation, and existence, uniqueness, and continuity of solutions. We also show that, similarly to other well-behaved dynamics, a general result for elimination of strictly dominated strategies cannot be established. Instead we rule out survival of strictly <p> dominated strategies in certain classes of games. We relate it to the projection dynamic, by showing that the two dynamics coincide in <p> a subset of the strategy space. We show that strict equilibria, and evolutionarily stable strategies in $2\times2$ games are asymptotically stable under the target projection dynamic. Finally, we show that the stability results that hold under the projection dynamic for stable games, hold under the target projection dynamic <p> too, for interior Nash equilibria.
    Keywords: target projection dynamic; noncooperative games; adjustment
    JEL: C72
    Date: 2007–08–13

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