nep-gth New Economics Papers
on Game Theory
Issue of 2007‒10‒13
five papers chosen by
Laszlo A. Koczy
University of Maastricht

  1. Strategic Basins of Attraction, the Path Dominance Core, and Network Formation Games By Frank Page; Myrna Wooders
  2. Cooperation through Imitation and Exclusion in Networks By Mengel, Friederike; Fosco, Constanza
  3. Knowing What Others Know: Coordination Motives in Information Acquisition By Hellwig, Christian; Veldkamp, Laura
  4. Cooperation without Punishment By Stefania Ottone; Ferruccio Ponzano
  5. Strategic Information Transmission through the Media By Jung, Hanjoon Michael

  1. By: Frank Page (Indiana University Bloomington); Myrna Wooders (Vanderbilt University)
    Abstract: Given the preferences of players and the rules governing network formation, what networks are likely to emerge and persist? And how do individuals and coalitions evaluate possible consequences of their actions in forming networks? To address these questions we introduce a model of network formation whose primitives consist of a feasible set of networks, player preferences, the rules of network formation, and a dominance relation on feasible networks. The rules of network formation may range from non-cooperative, where players may only act unilaterally, to cooperative, where coalitions of players may act in concert. The dominance relation over feasible networks incorporates not only player preferences and the rules of network formation but also assumptions concerning the degree of farsightedness of players. A specification of the primitives induces an abstract game consisting of (i) a feasible set of networks, and (ii) a path dominance relation defined on the feasible set of networks. Using this induced game we characterize sets of network outcomes that are likely to emerge and persist. Finally, we apply our approach and results to characterize the equilibrium of well known models and their rules of network formation, such as those of Jackson and Wolinsky (1996) and Jackson and van den Nouweland (2005).
    Keywords: basins of attraction, network formation games, stable sets, path dominance core, Nash networks
    JEL: A14 C71 C72
    Date: 2007–10
  2. By: Mengel, Friederike; Fosco, Constanza
    Abstract: We develop a simple model to study the coevolution of interaction structures and action choices in prisoners' dilemma games. Agents are boundedly rational and choose both actions and interaction partners via payoff-biased imitation. The dynamics of imitation and exclusion yields polymorphic outcomes under a wide range of parameters. Whenever agents hold some information beyond their interaction neighbors defectors and cooperators always coexist in disconnected components. Otherwise polymorphic networks can emerge with a center of cooperators and a periphery of defectors. Any stochastically stable state has at most two disconnected components. Simulations confirm our analytical results and show that the share of cooperators increases with the speed at which the network evolves, increases with the radius of interaction and decreases with the radius of information.
    Keywords: Game Theory; Cooperation; Imitation Learning; Network Formation.
    JEL: C70 C73 C72
    Date: 2007–10–10
  3. By: Hellwig, Christian; Veldkamp, Laura
    Abstract: We explore how optimal information choices change the predictions of strategic models. When a large number of agents play a game with strategic complementarity, information choices exhibit complementarity as well: If an agent wants to do what others do, they want to know what others know. This makes heterogeneous beliefs difficult to sustain and may generate multiple equilibria. In models with substitutability, agents prefer to differentiate their information choices. We use these theoretical results to determine the role of information choice in recent price-setting models and to propose modeling techniques that ensure equilibrium uniqueness.
    Keywords: Costly Information Acquisition; Price-setting; Strategic Complementarities
    JEL: C72 D82 D83 E31
    Date: 2007–10
  4. By: Stefania Ottone; Ferruccio Ponzano
    Abstract: Our experiment is made by three treatments. The first one reproduces the classical public good game. The second environment represents a perfect competition market where the contribution of a representative player to the private good gives a positive rent if and only if it is not lower than the highest contribution of the other players in the group. In the third treatment we consider a winner-take-all market where we have only a winner per group. The aim is to test whether the level of cooperation is minimum under the hypothesis of perfect competition.
    Date: 2007–10
  5. By: Jung, Hanjoon Michael
    Abstract: We model media manipulation in which a sender or senders manipulate information through the media to influence receivers. We show that if there is only one sender who has a conditional preference for maintaining its credibility in reporting accurate information and if the receivers face a coordination situation without information about their opponents' types, the sender could influence the receivers to make decisions according to the sender's primary preference by manipulating the information through the media, which makes the report common knowledge. This is true even when the sender and the receivers have contradictory primary preferences. This result extends to the cases in which the sender has imperfect information or in which the sender's primary preference is to maintain its credibility. In the case of multiple senders, however, when there is enough media competition or when simultaneous reporting takes place, the receivers could play their favored outcome against senders' preferences, which sheds light on a solution to the media manipulation problem.
    Keywords: Arms Race; Common Knowledge; Information Transmission; Media Bias; Media Competition; Media Manipulation.
    JEL: D83 D82 C72
    Date: 2007–08

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