nep-gth New Economics Papers
on Game Theory
Issue of 2008‒01‒26
thirteen papers chosen by
Laszlo A. Koczy
University of Maastricht

  2. Information Acquisition in Interdependent Value Auctions By Dirk Bergemann; Xianwen Shi; Juuso Valimaki
  3. Cournot-Walras Equilibrium as a Subgame Perfect Equilibrium By Busetto, Francesca; Codognato, Giulio; Ghosal, Sayantan
  4. Modifying the Hoede-Bakker index to the Shapley-Shubik and Holler-Packel indices By Agnieszka Rusinowska
  5. Telling the Truth May Not Pay Off By Sebastian Braun; Nadja Dwenger; Dorothea Kübler
  6. The Drama of Fishing Commons: Cournot-Nash Model and Cooperation By José António Filipe
  7. Some order dualities in logic, games and choices By Bernard Monjardet
  8. Interdependent Preferences, Potential Games and Household Consumption By Deb, Rahul
  9. Power distribution and endogenous segregation By Catherine Bros
  10. Agreeing to disagree in a countable space of equiprobable states By João Correia-da-Silva
  11. Is observed other-regarding behavior always genuine? By Astrid Matthey; Tobias Regner
  12. Attitude polarization By Alexander Zimper; Alexander Ludwig
  13. Dynamic Relational Contracts with Consumption Constraints By Jonathan P Thomas; Tim Worrall

  1. By: Miguel A. Meléndez-Jiménez (Universidad de Alicante)
    Abstract: This paper presents a model in which players interact via the formation of costly links and the benefits of bilateral interactions are determined by a coordination game. A novel contribution of this paper is that the fraction of the cost borne by each player involved in a bilateral link is not fixed exogenously, but results from bargaining. We analyze the model both in a static and a dynamic setting. Whereas the static game has multiplicity of equilibria, we show that only one is stochastically stable.
    Keywords: Coordination; Nash bargaining solution; Risk-dominance; Stochastic stability
    JEL: C72 C73 C78
    Date: 2007–12
  2. By: Dirk Bergemann; Xianwen Shi; Juuso Valimaki
    Abstract: We consider an auction environment with interdependent values. Each bidder can learn her payoff type through costly information acquisition. We contrast the socially optimal decision to acquire information with the equilibrium solution in which each agent has to privately bear the cost of information acquisition. In the context of the generalized Vickrey-Clarke-Groves mechanism, we establish that the equilibrium level exceeds the socially optimal level of information with positive interdependence. The individual decisions to acquire information are strategic substitutes. The difference between the equilibrium and the efficient level of information acquisition is increasing in the interdependence of the bidders' valuations and decreasing in the number of informed bidders.
    Keywords: Vickrey-Clarke-Groves Mechanism, Information Acquisition, Strategic Substitutes, Informational Efficiency
    JEL: C72 C73 D43 D83
    Date: 2008–01–18
  3. By: Busetto, Francesca (University of Udine); Codognato, Giulio (University of Udine); Ghosal, Sayantan (Department of Economics, University of Warwick)
    Abstract: In this paper, we investigate the problem of the strategic foundation of the Cournot-Walras equilibrium approach. To this end, we respecify a'la Cournot-Walras the mixed version of a model of simultaneous, noncooperative exchange, originally proposed by Lloyd S.Shapley. We show, through an example, that the set of the Cournot-Walras equilibrium allocations of this respecification does not coincide with the set of the Cournot-Nash equilibrium allocations of the mixed version of the original Shapley's model. As the nonequivalence, in a one-stage setting, can be explained by the intrinsic two-stage nature of the Cournot-Walras equilibrium concept, we are led to consider a further reformulation of the Shapley's model as a two-stage game, where the atoms move in the first stage and the atomless sector moves in the second stage. Our main result shows that the set of the Cournot-Walras equilibrium allocations coincides with a specific set of subgame perfect equilibrium allocations of this two-stage game, which we call the set of the Pseudo-Markov perfect equilibrium allocations.
    JEL: C72 D51
    Date: 2008
  4. By: Agnieszka Rusinowska (GATE - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines)
    Abstract: In the paper, we present some modifications of the Hoede-Bakker index defined in a social network in which players may influence each other. Due to influences of the other actors, the final decision of a player may be different from his original inclination. These modifications are defined for an arbitrary probability distribution over all inclination vectors. In particular, they concern a situation in which the inclination vectors may be not equally probable. Furthermore, by<br />assuming special probability distributions over all inclination vectors, we construct modifications<br />of the Hoede-Bakker index that coincide with the Shapley-Shubik index and with the Holler-Packel<br />index, respectively.
    Keywords: Hoede-Bakker index ; inclination vector ; probability distribution ; Shapley-Shubik index ; Holler-Packel index
    Date: 2007–12
  5. By: Sebastian Braun; Nadja Dwenger; Dorothea Kübler
    Abstract: We investigate the matching algorithm used by the German central clearinghouse for university admissions (ZVS) in medicine and related subjects. This mechanism consists of three procedures based on final grades from school ("Abiturbestenverfahren", "Auswahlverfahren der Hochschulen") and on waiting time ("Wartezeitverfahren"). While these procedures differ in the criteria applied for admission they all make use of priority matching. In priority matching schemes, it is not a dominant strategy for students to submit their true preferences. Thus, strategic behaviour is expected. Using the full data set of applicants, we are able to detect some amount of strategic behaviour which can lead to inefficient matching. Alternative ways to organize the market are briefly discussed.
    Keywords: Matching, university admissions, strategic behaviour
    JEL: C78 D02 D78 I29
    Date: 2007
  6. By: José António Filipe
    Keywords: Cournot-Nash model; drama of the commons; cooperation; game theory; fishing effort.
    Date: 2007
  7. By: Bernard Monjardet (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: We first present the concept of duality appearing in order theory, i.e. the notions of dual isomorphism and of Galois connection. Then, we describe two fundamental dualities, the duality extension/intention associated with a binary relation between two sets, and the duality between implicational systems and closure systems. Finally, we present two "concrete" dualities occuring in social choice and in choice functions theories.
    Keywords: antiexchange closure operator, Galois connection, implicational system, path-independent choice function, simple game.
    Date: 2007–03
  8. By: Deb, Rahul
    Abstract: This paper presents a nonparametric model of interdependent preferences, where an individual’s consumption may be an externality on the preferences of other consumers. We assume that individual price consumption data is observed for all consumers and prove that the general model imposes few restrictions on the observed data, where the consistency requirement is Nash rationalizability. We motivate potential games as an important sub class of games where the family of concave potential games is refutable and imposes stronger restrictions on observed data. As an application of this model, we discuss inter-household consumption data. Finally, we use this framework to extend the analysis of Brown and Matzkin (1996) on refutable pure exchange economies to pure exchange economies with externalities.
    Keywords: Potential games; Externalities; Nonparametric restrictions; Revealed Preference; Household consumption; Nash-Walras equilibrium.
    JEL: D11 C14 D51 C72
    Date: 2008–01
  9. By: Catherine Bros (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: The aim of this paper is to provide a detailed analysis of the process of segregation formation. The claim is that segregation does not originate from prejudice or exogenous psychological factors. Rather it is the product of strategic interactions among social groups in a setting where one group has captured power. While using a model featuring random matching and repeated games, it is shown that whenever one group seizes power, members of other groups will perceive additional value in forging long term relationships with the mighty. They will systematically cooperate with the latter either because it is in their interest to do so or because they do not have other choice. The mighty natural response to this yearning to cooperate is to refuse intergroup relationships. The dominated group will best reply to this new situation by in turn rejecting the relationships and a segregation equilibrium emerges. Segregation stems from the systematic cooperation by one group with another. However, not all societies that have experienced power captures converge towards segregation. It is shown that the proportion of individuals that are actually powerful within the mighty group determines convergence towards segregation.
    Keywords: Segration, discrimination, power, caste, repeated games, prisoner's dilemma, clubs, status, social organizations.
    Date: 2008–01
  10. By: João Correia-da-Silva (CEMPRE and Faculdade de Economia da Universidade do Porto, Portugal)
    Abstract: An example is given in which agents agree to disagree, showing that Aumann's (1976) Agreement Theorem does not extend to a countable space of equiprobable states of nature. Even in this unorthodox setting, if the sets of the information partitions are intervals, an agreement theorem holds. A result that describes the margin for disagreement is also obtained.
    Keywords: Agreeing to disagree, Interactive epistemology, Bounded rationality.
    JEL: D82 D84
    Date: 2008–01
  11. By: Astrid Matthey (Max Planck Institute of Economics, Jena, Germany); Tobias Regner (Friedrich Schiller University, Jena, Germany)
    Abstract: We investigate to what extent genuine social preferences can explain observed other-regarding behavior. In a social dilemma situation (a dictator game variant), people can choose whether to learn about the consequences of their choice for the receiver. We ï¬nd that a majority of the people that show other-regarding behavior when the payoffs of the receiver are known chose to ignore them if possible. This behavior is inconsistent with genuine other-regarding preferences. Our model explains other-regarding behavior as avoiding cognitive dissonance: People do not behave fairly because they genuinely care for others, but because they like to think of themselves as being fair. The model can explain our data as well as earlier experimental data.
    Keywords: social preferences, experiments, social dilemma, cognitive dissonance
    JEL: C9 C7 D8
    Date: 2007–12–21
  12. By: Alexander Zimper; Alexander Ludwig (Mannheim Research Institute for the Economics of Aging (MEA))
    Abstract: Psychological evidence suggests that people’s learning behavior is often prone to a “myside bias”or “irrational belief persistence”in contrast to learning behav- ior exclusively based on objective data. In the context of Bayesian learning such a bias may result in diverging posterior beliefs and attitude polarization even if agents receive identical information. Such patterns cannot be explained by the standard model of rational Bayesian learning that implies convergent beliefs. As our key contribution, we therefore develop formal models of Bayesian learning with psychological bias as alternatives to rational Bayesian learning. We derive condi- tions under which beliefs may diverge in the learning process and thus conform with the psychological evidence. Key to our approach is the assumption of am- biguous beliefs that are formalized as non-additive probability measures arising in Choquet expected utility theory. As a speci…c feature of our approach, our models of Bayesian learning with psychological bias reduce to rational Bayesian learning in the absence of ambiguity.
    JEL: C79 D83
    Date: 2007–12–31
  13. By: Jonathan P Thomas (Economics, University of Edinburgh); Tim Worrall (Economics, Keele University)
    Abstract: This paper considers a long-term relationship between two agents who undertake costly actions or investments which produce a joint benefit. Agents have an opportunity to expropriate some of the joint benefit for their own use. The question asked is how to structure the investments and division of the surplus over time so as to avoid expropriation. It is shown that investments may be either above or below the efficient level and that actions and the division of the surplus converges to a stationary solution at which either both investment levels are efficient or both are below the efficient level.
    Keywords: Consumption constraints; relational contracts; self-enforcement.
    JEL: C61 C73 D74 D92 L22
    Date: 2007–12

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