nep-gth New Economics Papers
on Game Theory
Issue of 2007‒10‒20
thirteen papers chosen by
Laszlo A. Koczy
University of Maastricht

  1. Multi-Choice Total Clan Games: Characterizations ansd Solution Concepts By Branzei, R.; Llorca, N.; Sanchez-Soriano, J.; Tijs, S.H.
  2. Games on lattices, multichoice games and the Shapley value: a new approach By Michel Grabisch; Fabien Lange
  3. The truncated core for games with limited aspirations By Anne van den Nouweland
  4. Agri-environmental auctions with synergies By Sandra Saïd; Sophie Thoyer
  5. Attitude toward imprecise information By Thibault Gajdos; Jean-Marc Tallon; Jean-Christophe Vergnaud; Takashi Hayashi
  6. Joint Hub Network Development By Cruijssen, F.C.A.M.; Borm, P.E.M.; Dullaert, W.; Hamers, H.J.M.
  7. Environmental lobbying with imperfect monitoring of environmental quality By Beard, Rodney; Mallawaarachchi, Thilak; Salerno, Gillian
  8. Many-to-One Matching when Colleagues Matter By Pablo Revilla
  9. Do binding agreements solve the social dilemma? By Emmanuel Sol; Sylvie Thoron; Marc Willinger
  10. Efficient and Stable Collective Choices under Gregarious Preferences By Jordi Massó; Antonio Nicolò
  11. The optimality of optimal punishments in Cournot supergames By Azacis, Helmuts; Collie, David R.
  12. Wage Flexibility in Ongoing Employment Relations - An Experiment with a Stochastic Labor Market - By Siegfried K. Berninghaus; Sabrina Bleich; Werner Gueth
  13. Unforeseen Contingency and Renegotiation with Asymmetric Information By Jihong Lee

  1. By: Branzei, R.; Llorca, N.; Sanchez-Soriano, J.; Tijs, S.H. (Tilburg University, Center for Economic Research)
    Abstract: This paper deals with a new class of multi-choice games, the class of multi- choice total clan games. The structure of the core of a multi-choice clan game is explicitly described. Furthermore, characterizations of multi-choice total clan games are given and bi-monotonic allocation schemes related to players' levels are introduced for such games. It turns out that some elements in the core of a multi- choice total clan game are extendable to such bi-monotonic allocation schemes via suitable compensation-sharing rules on the domain of multi-choice (total) clan games.
    Keywords: Multi-choice games;Clan games;Monotonic allocation schemes.
    JEL: C71
    Date: 2007
  2. By: Michel Grabisch (CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I]); Fabien Lange (CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I])
    Abstract: Multichoice games have been introduced by Hsiao and Raghavan as a generalization of classical cooperative games. An important notion in cooperative game theory is the core of the game, as it contains the rational imputations for players. We propose two definitions for the core of a multichoice game, the first one is called the precore and is a direct generalization of the classical definition. We show that the precore coincides with the definition proposed by Faigle, and that it contains unbounded imputations, which makes its application questionable. A second definition is proposed, imposing normalization at each level, causing the core to be a convex closed set. We study its properties, introducing balancedness and marginal worth vectors, and defining the Weber set and the pre-Weber set. We show that the classical properties of inclusion of the (pre)core into the (pre)-Weber set as well as their equality remain valid. A last section makes a comparison with the core defined by van den Nouweland et al.
    Keywords: multichoice game ; lattice ; core
    Date: 2007–02
  3. By: Anne van den Nouweland (University of Oregon; University of La Coruña; University of Santiago de Compostela; University of Santiago de Compostela)
    Abstract: We define and study games with limited aspirations. In a game with limited aspirations there are upper bounds on the possible payoffs for some coalitions. These restrictions require adjustments in the definitions of solution concepts. In the current paper we study the effect of the restrictions on the core and define and study the so-called truncated core.
    JEL: C71 C6
    Date: 2007–10–01
  4. By: Sandra Saïd; Sophie Thoyer
    Abstract: Auctions are increasingly used in agri-environmental contracting. However, the issue of synergy effect between agri-environmental measures has been consistently overlooked, both by decision-makers and by the theoretical literature on conservation auction. Based on laboratory experiments, the objective of this paper is to compare the performance of different procurement auction designs (simultaneous, sequential and combinatorial) in the case of multiple heterogeneous units where bidders may potentially want to sell more than one unit and where their supply cost structure displays positive synergies. The comparison is made by using two performance criteria: budget efficiency and allocative efficiency. We also test if performance results are affected by information feedback to bidders after each auction period. Finally we explain performance results by the analysis of bidding behaviour in the three mechanisms.
    Date: 2007–09
  5. By: Thibault Gajdos (CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I], Ecole d'économie de Paris - Paris School of Economics - [Université Panthéon-Sorbonne - Paris I]); Jean-Marc Tallon (CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I], Ecole d'économie de Paris - Paris School of Economics - [Université Panthéon-Sorbonne - Paris I]); Jean-Christophe Vergnaud (CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I], Ecole d'économie de Paris - Paris School of Economics - [Université Panthéon-Sorbonne - Paris I]); Takashi Hayashi (Department of Economics, University of Texas at Austin - [University of Texas at Austin])
    Abstract: This paper presents an axiomatic model of decision making under uncertainty which incorporates objective but imprecise information. Information is assumed to take the form of a probability-possibility set, that is, a set $P$ of probability measures on the state space. The decision maker is told that the true probability law lies in $P$ and is assumed to rank pairs of the form $(P,f) $ where $f$ is an act mapping states into outcomes. The<br />key representation result delivers maxmin expected utility where the min operator ranges over a set of probability priors --just as in the maxmin expected utility (MEU) representation result of \cite{GILB/SCHM/89}. However, unlike the MEU representation, the representation here also delivers a mapping, $\varphi$, which links the probability-possibility set, describing the available<br />information, to the set of revealed priors. The mapping $\varphi$ is shown to represent the decision maker's attitude to imprecise information: under our axioms, the set of representation priors is constituted as a selection from the probability-possibility set.<br />This allows both expected utility when the selected set is a singleton and extreme pessimism when the selected set is the same as the probability-possibility set, i.e. , $\varphi$ is the identity mapping. We define a notion of comparative imprecision aversion and show it is characterized by inclusion of the sets of revealed<br />probability distributions, irrespective of the utility functions that capture risk attitude. We also identify an explicit attitude toward imprecision that underlies usual hedging axioms. Finally, we characterize, under extra axioms, a more specific functional form, in which the set of selected probability distributions is obtained by (i) solving for the ``mean value'' of the probability-possibility set, and (ii) shrinking the probability-possibility set toward the mean value to a degree determined by preferences.
    Keywords: precise information, imprecision aversion, multiple priors, Steiner point.
    Date: 2007
  6. By: Cruijssen, F.C.A.M.; Borm, P.E.M.; Dullaert, W.; Hamers, H.J.M. (Tilburg University, Center for Economic Research)
    Abstract: This paper introduces a framework for joint hub network development. Building a joint physical hub for transhipment of goods is expensive and therefore involves considerable risks for the cooperating companies. In a practical setting, it is unlikely that an entire network will be built at once. Rather, the partners will have a more cautious attitude and build the hub facilities one-by-one. In the proposed framework, every time a new hub is introduced, partners will have the opportunity to decide whether or not they participate (and thus invest) in this network extension. The framework is also applicable in cooperative situations other than hub network development. In cases where multiple (infrastructural) investments have to be made by a consortium of logistics companies, the participants are likely to take advantage of a step-wise approach with gain sharing at intermediate steps. More specifically, the procedure can also benefit maintenance groups, warehouse sharing initiatives, and intermodal groups.
    Keywords: Hub Networks; Horizontal Cooperation; Cooperative Game Theory
    JEL: C61 C71
    Date: 2007
  7. By: Beard, Rodney; Mallawaarachchi, Thilak; Salerno, Gillian
    Abstract: In this paper we present a two stage game of political lobbying for policies designed to enhance environmental quality. Unlike previous work which has tended to assume perfect monitoring of environmental quality in lobbying games we allow for imperfect monitoring of environmental quality. We characterize perfect public (politico-economic) equilibria in the game for the case of both perfect and imperfect monitoring of environmental quality and compare these with imperfect private monitoring of environmental quality. Results are discussed with respect to farmer behaviour in the context of non-point source pollution and implications for the political consequences of farm extension programmes highlighted.
    Keywords: Game theory; public choice; imperfect public monitoring; imperfect private monitoring; non-point source pollution; agricultural extension and public education
    JEL: Q5 Q1 C73
    Date: 2007–02
  8. By: Pablo Revilla (Universidad Pablo de Olavide)
    Abstract: This paper studies many-to-one matching market in which each agent’s preferences not only depend on the institution that hires her, but also on the group of her colleagues, which are matched to the same institution. With an unrestricted domain of preferences the non-emptiness of the core is not guaranteed. Under certain conditions on agents’ preferences, we show that two possible situations in which, at least, one stable allocation exists, emerge. The first condition, called Group Togetherness, reflects real-life situations in which agents are more concerned about an acceptable set of colleagues than about the firm hiring them. The second one, Common Best Colleague, refers to markets in which a workers’ ranking is accepted by workers and firms present in such markets.
    Keywords: Many-to-one matching, Hedonic, Coalitions, Stability, Colleagues
    JEL: C78 D71
    Date: 2007–09
  9. By: Emmanuel Sol; Sylvie Thoron; Marc Willinger
    Abstract: We investigate whether "binding agreements" can provide a solution to the social dilemma that arises in the presence of pure public goods. Signing a binding agreement can prevent players to free ride on the contributions to the public good. However, a well known theoretical result is that the outcome of the endogenous formation of agreements is not necessarily efficient. In our setting, the individual level of contribution to the public good increases with the size of the coalition reaching an agreement and the global agreement is always the socially optimal structure. Agreements form sequentially. The equilibrium outcome is an asymmetric structure, which consists of two coalitions of different sizes, the small one free riding on the contributions of the bigger one. In our experiment, we propose two treatments which differ in the degree of strategic uncertainty with which the subjects are faced. The results lend force to the theoretical conclusion that outcomes may be inefficient. The average gains achieved are sub-optimal. They are even lower than predicted by the equilibrium agreement structure in the treatment in which the strategic uncertainty is high. They are larger than predicted in the treatment in which the strategic uncertainty is limited. However, it seems that subjects "learn to cooperate" over time and reach the global agreement more often towards the end of sessions.
    Date: 2007–10
  10. By: Jordi Massó; Antonio Nicolò
    Abstract: We consider collective choice problems where a set of agents have to choose an alternative from a finite set and agents may or may not become users of the chosen alternative. An allocation is a pair given by the chosen alternative and the set of its users. Agents have gregarious preferences over allocations: given an allocation, they prefer that the set of users becomes larger. We require that the final allocation be efficient and stable (no agent can be forced to be a user and no agent who wants to be a user can be excluded). We propose a two-stage sequential mechanism whose unique subgame perfect equilibrium outcome is an efficient and stable allocation which also satisfies a maximal participation property.
    Keywords: Public Goods, Gregarious Preferences, Subgame Perfect Implementation
    JEL: D62 D71 H41
    Date: 2007–10–15
  11. By: Azacis, Helmuts (Cardiff Business School); Collie, David R. (Cardiff Business School)
    Abstract: The result of Colombo and Labrecciosa (2006) that optimal punishments are inferior to Nash-reversion trigger strategies with decreasing marginal costs is due to the output when a firm deviates from the punishment path being allowed to become negative.
    Keywords: Optimal punishments; trigger strategies; collusion; cartels
    JEL: C73 D43 L13
    Date: 2007–10
  12. By: Siegfried K. Berninghaus (Institut fuer Wirtschaftstheorie und Operations Research, University of Karlsruhe); Sabrina Bleich (Institut fuer Wirtschaftstheorie und Operations Research, University of Karlsruhe); Werner Gueth (Max Planck Institute of Economics, Jena, Germany)
    Abstract: Facing a stochastic market wage, which is independent of their own hiring policy, employers offer contracts specifying ï¬xed wage, revenue share and employment duration. In ongoing employment relations it depends on the treatment whether ï¬xed wages can be only increased or also decreased. Will the uncertainty of the future market wage and less wage flexibility lead to temporary employment? And, if not, will employers adjust wages to changing market wages and will workers in ongoing employment relations react to wage decreases via effort choices? Our results partly question empirical claims, e.g. of Bewley (1995), and conï¬rm the tendency to establish ongoing employment relations. Granting more wage flexibility to employers altogether questions rather than enhances effciency since it induces opportunistic wage cuts to which employees react with lower efforts.
    Keywords: noncooperative game, labor contracts, labor market flexibility, principal-agent theory, experimental economics
    JEL: C72 C90 F16 J21 J24 L10
    Date: 2007–10–10
  13. By: Jihong Lee (School of Economics, Mathematics & Statistics, Birkbeck)
    Abstract: This paper considers a buyer-seller contracting model in which the seller possesses private information about all relevant aspects of the state of nature, including how much each action is worth to the buyer. We argue that, given asymmetric information, the buyer may not entirely dismiss an unforeseen contingency claim by the seller. Then, if the buyer lacks the foresight/awareness to “expect the unexpected”, the model admits an equilibrium in which a seemingly complete contract is written and then renegotiated along its outcome path to generate inefficiency ex post.
    JEL: C79 D82 D86 L14
    Date: 2007–10

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