nep-gth New Economics Papers
on Game Theory
Issue of 2008‒02‒16
eleven papers chosen by
Laszlo A. Koczy
University of Maastricht

  1. Generic Finiteness of Outcome Distributions for Two Person Game Forms with Three Outcomes By Carlos Pimienta
  2. On Best-Response Bidding in GSP Auctions By Matthew Cary; Aparna Das; Benjamin Edelman; Ioannis Giotis; Kurtis Heimerl; Anna R. Karlin; Claire Mathieu; Michael Schwarz
  3. Contributing or Free-Riding?  A Theory of Endogenous Lobby Formation By Taiji Furusawa; Hideo Konishi
  4. On the Role of Non-equilibrium Focal Points as Coordination Devices By Antoni Bosch-Domènech; Nicolaas J. Vriend
  5. Matching Markets under (In)complete Information By EHLERS, Lars; MASSÓ, Jordi
  6. Rank-Based Methods for the Analysis of Auctions By Ed Hopkins
  7. The Dynamic Interplay of Inequality and Trust - An Experimental Study By Ben Greiner; Axel Ockenfels; Peter Werner
  8. Effects of Profitable Downsizing on Collective Bargaining By Sven Fischer; Werner Güth; Christoph Köhler
  9. Learning within a Markovian Environment By Javier Rivas
  10. Applications of a generalized Ky Fan's matching theorem in minimax and variational inequality. By Pascal Gourdel; Hakim Hammami
  11. A generalized FKKM theorem and variational inequality. By Hakim Hammami

  1. By: Carlos Pimienta (School of Economics, The University of New South Wales)
    Keywords: Generic finiteness; game forms; Nash equilibrium
    JEL: C72
    Date: 2007–07
  2. By: Matthew Cary; Aparna Das; Benjamin Edelman; Ioannis Giotis; Kurtis Heimerl; Anna R. Karlin; Claire Mathieu; Michael Schwarz
    Abstract: How should players bid in keyword auctions such as those used by Google, Yahoo! and MSN? We model ad auctions as a dynamic game of incomplete information, so we can study the convergence and robustness properties of various strategies. In particular, we consider best-response bidding strategies for a repeated auction on a single keyword, where in each round, each player chooses some optimal bid for the next round, assuming that the other players merely repeat their previous bids. We focus on a strategy we call Balanced Bidding (bb). If all players use the bb strategy, we show that bids converge to a bid vector that obtains in a complete information static model proposed by Edelman, Ostrovsky and Schwarz (2007). We prove that convergence occurs with probability 1, and we compute the expected time until convergence.
    JEL: C15 D44 L86 M37
    Date: 2008–02
  3. By: Taiji Furusawa (Hitotsubashi University); Hideo Konishi (Boston College)
    Abstract: We consider a two-stage public goods provision game: In the first stage, players simultaneously decide if they will join a contribution group or not. In the second stage, players in the contribution group simultaneously offer contribution schemes in order to influence the government's choice on the level of provision of public goods. Using perfectly coalition-proof Nash equilibrium (Bernheim, Peleg and Whinston, 1987 JET), we show that the set of equilibrium outcomes is equivalent to an "intuitive" hybrid solution concept, the free-riding-proof core, which is always nonempty but does not necessarily achieve global efficiency. It is not necessarily true that an equilibrium lobby group is formed by the players with highest willingness-to-pay, nor is it a consecutive group with respect to their willingnesses-to-pay. We also show that the equilibrium level of public goods provision shrinks to zero as the economy is replicated.
    Keywords: common agency, public good, free rider, core, lobby, coalition formation, coalition-proof Nash equilibrium
    JEL: C71 C72 F13 H41
    Date: 2008–02–11
  4. By: Antoni Bosch-Domènech (Universitat Pompeu Fabra and CREA, Barcelona); Nicolaas J. Vriend (Queen Mary, University of London)
    Abstract: Considering a pure coordination game with a large number of equivalent equilibria, we argue, first, that a focal point that is itself not a Nash equilibrium and is Pareto dominated by all Nash equilibria, may attract the players' choices. Second, we argue that such a non-equilibrium focal point may act as an equilibrium selection device that the players use to coordinate on a closely related small subset of Nash equilibria. We present theoretical as well as experimental support for these two new roles of focal points as coordination devices.
    Keywords: Coordination game, Focal point, Nash equilibrium, Equilibrium selection, Coordination device
    JEL: C72 C91
    Date: 2008–02
  5. By: EHLERS, Lars; MASSÓ, Jordi
    Abstract: We are the first to introduce incomplete information to centralized many-to-one matching markets such as those to entry-level labor markets or college admissions. This is important because in real life markets (i) any agent is uncertain about the other agents' true preferences and (ii) most entry-level matching is many-to-one (and not one-to-one). We show that for stable (matching) mechanisms there is a strong and surprising link between Nash equilibria under complete information and Bayesian Nash equilibria under incomplete information. That is,given a common belief, a strategy profile is a Bayesian Nash equilibrium under incomplete information in a stable mechanism if and only if, for any true profile in the support of the common belief, the submitted profile is a Nash equilibrium under complete information at the true profile in the direct preference revelation game induced by the stable mechanism. This result may help to explain the success of stable mechanisms in these markets.
    Keywords: Many-To-One Matching Market ; Incomete Information ; Stability
    Date: 2007
  6. By: Ed Hopkins
    Date: 2008–02–10
  7. By: Ben Greiner (Harvard Business School); Axel Ockenfels (University of Cologne, Department of Economics); Peter Werner (University of Cologne, Department of Economics)
    Abstract: We study the interplay of inequality and trust in a dynamic game, where trust increases efficiency and thus allows higher growth of the experimental economy in the future. We find that trust is initially high in a treatment starting with equal endowments, but decreases over time. In a treatment with unequal endowments, trust is initially lower yet remains relatively stable. The difference seems partly due to the fact that equal start positions increase subjects' inclination to condition their trust decisions on wealth comparisons, whereas conditional trust is much less prevalent with unequal initial endowments. As a result, with respect to efficiency, the initially more unequal economy fares worse in the short run but better in the long run, and the disparity of wealth distributions across economies mitigates over time.
    Keywords: inequality, trust, growth, laboratory experiments
    JEL: C73 C92 D63 E25 O15
    Date: 2007–10
  8. By: Sven Fischer (Department of Economics, University College London); Werner Güth (Max Planck Institute of Economics, Jena); Christoph Köhler (Friedrich-Schiller-University Jena, Institute for Sociology, Economic and Social Structure Group)
    Abstract: We experimentally test how acceptance thresholds react to the decision of the proposer in a three party ultimatum game to exclude one of two responders with veto power from the game. We elicit responder acceptance thresholds in case the proposer decides to exclude one of them, what increases the available pie, and in case he doesn't exclude him despite strong monetary incentives. We ?nd that on the aggregate level the proposer's decision has no effect on acceptance thresholds. However, if the proposer excludes one responder, the distribution of thresholds becomes bimodal, indicating a polarization in behavior.
    Keywords: bargaining, experiment, labor markets
    JEL: C91 J52
    Date: 2008–02–12
  9. By: Javier Rivas
    Abstract: We investigate learning in a setting where each period a population has to choose between two actions and the payoff of each action is unknown by the players. The population learns according to reinforcement and the environment is non-stationary, meaning that there is correlation between the payoff of each action today and the payoff of each action in the past. We show that when players observe realized and foregone payoffs, a suboptimal mixed strategy is selected. On the other hand, when players only observe realized payoffs, a unique action, which is optimal if actions perform different enough, is selected in the long run. When looking for efficient reinforcement learning rules, we find that it is optimal to disregard the information from foregone payoffs and to learn as if only realized payoffs were observed.
    Keywords: Adaptive Learning, Markov Chains, Non-stationarity, Reinforcement Learning
    JEL: C73
    Date: 2008
  10. By: Pascal Gourdel (Paris School of Economics - Centre d'Economie de la Sorbonne); Hakim Hammami (Ecole Polytechnique de Tunisie et Centre d'Economie de la Sorbonne - Paris School of Economics)
    Abstract: We present some application of the generalized Ky Fan's Matching Theorem stated by Chebbi, Gourdel and Hammami in minimax and variational inequalities using a generalized coercivity type condition for correspondences defined in L-space.
    Keywords: L-structures, L-spaces, L-KKM correspondences, L-coercing family, minimax and variational inequalities.
    JEL: C02 C69 C72
    Date: 2007–12
  11. By: Hakim Hammami (Ecole Polytechnique de Tunisie et Centre d'Economie de la Sorbonne - Paris School of Economics)
    Abstract: We present a generalized FKKM Theorem and it's application to the existence of solution for the variationals inequalities using a generalized coercivity type condition for correspondences defined in L-space.
    Keywords: L-structure, L-spaces, L-KKM correspondences, L-coercing family and variational inequality.
    JEL: C02 C69 C72
    Date: 2007–12

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