nep-gth New Economics Papers
on Game Theory
Issue of 2008‒03‒15
ten papers chosen by
Laszlo A. Koczy
University of Maastricht

  1. Characterizing Pure-strategy Equilibria in Large Games By Fu, Haifeng; Xu, Ying; Zhang, Luyi
  2. A minority-proof cheap-talk protocol By Heller, Yuval
  3. Three Very Simple Games and What It Takes to Solve Them By Ondrej Rydval,; Andreas Ortmann; Michal Ostatnicky
  4. The emergence of norms of cooperation in stag hunt games with production By L. Bagnoli; G. Negroni
  5. A remark on the experimental evidence from tacit coordination games By L. Bagnoli; G. Negroni
  6. Price Setting in a Decentralized Market and the Competitive Outcome By Stephan Lauermann
  7. Ex-vessel Pricing and IFQs: A Strategic Approach By Fell, Harrison
  8. Stable Economic Cooperation: A Relational Approach By Gilles, R.P.; Lazarova, E.A.; Ruys, P.H.M.
  9. Optimal Multi-Object Auctions with Risk Averse Buyers By Kumru, Cagri; Yektas, Hadi
  10. Ex-ante and ex-post strong correlated equilbrium By Heller, Yuval

  1. By: Fu, Haifeng; Xu, Ying; Zhang, Luyi
    Abstract: In this paper, we divide the players of a large game into countable different groups and assume that each player’s payoff depends on her own action and the distribution of actions in each of the subgroups. Focusing on the interaction between Nash equilibria and the best response correspondence of the players, we characterize the pure-strategy equilibria in three settings of such large games, namely large games with countable actions, large games with countable homogeneous groups of players and large games with an atomless Loeb agent space. Furthermore, we also present a counterexample showing that a similar characterization result does not hold for large games under a more general setting.
    Keywords: Large games; Pure strategy equilibrium; Characterization
    JEL: C72
    Date: 2007–10–12
  2. By: Heller, Yuval
    Abstract: This paper analyzes the implementation of correlated equilibria that are immune to joint deviations of coalitions by cheap-talk protocols. We construct a universal cheap-talk protocol (a polite protocol that uses only 2-player private channels) that is resistant to deviations of fewer than half the players, and using it, we show that a large set of correlated equilibria can be implemented as Nash equilibria in the extended game with cheap-talk. Furthermore, we demonstrate that in general there is no cheap-talk protocol that is resistant for deviations of half the players.
    Keywords: non-cooperative games; cheap-talk; correlated equilibrium; strong equilibrium; coalition-proof equilibrium; fault-tolerant distributed computation
    JEL: C72
    Date: 2005–08–19
  3. By: Ondrej Rydval,; Andreas Ortmann; Michal Ostatnicky
    Abstract: We study experimentally the nature of dominance violations in three minimalist dominancesolvable guessing games. We examine how subjects’ reported reasoning processes translate into their stated choices and beliefs about others’ choices, and how both reasoning processes and choices relate to their measured cognitive and personality characteristics. Only about a third of subjects reason in line with dominance; they all make dominant choices and almost all expect others to do so. By contrast, nearly two-thirds of subjects reason inconsistently with dominance, yet a quarter of them actually make dominant choices and half of those expect others to do so. Reasoning errors are more likely for subjects with lower ability to maintain and allocate attention, as measured by working memory, and for subjects with lower intrinsic motivation and premeditation attitude. Dominance-incompatible reasoning arises mainly from subjects misrepresenting the strategic nature (payoff structure) of the guessing games.
    Keywords: Cognition, bounded rationality, beliefs, guessing games, experiment.
    JEL: C72 C92 D83
    Date: 2008–01
  4. By: L. Bagnoli; G. Negroni
    Date: 2008–02
  5. By: L. Bagnoli; G. Negroni
    Date: 2008–02
  6. By: Stephan Lauermann (University of Bonn)
    Abstract: This paper studies a decentralized, dynamic matching and bargaining market: buyers and sellers are matched into pairs. Traders exit the market at a constant rate, inducing search costs (frictions). All price offers are made by sellers. Despite the fact that sellers have all the bargaining power we show that they set competitive prices in the limit when frictions become small. Previous literature has restricted the sellers' bargaining power. We dispense with this restriction and show that the convergence result does not depend on the distribution of bargaining power. Our model allows us to isolate basic market clearing forces that ensure the competitive outcome in the frictionless limit. For the particular case of homogeneous sellers we characterize the equilibrium price by the familiar Lerner formula. We use this formula to provide comparative static results of the decentralized trading outcome with respect to the level of the search frictions.
    Keywords: Dynamic Matching and Bargaining Games, Decentralized Markets, Non-cooperative Foundations of Competitive Equilibrium, Search Frictions, Rationing
    Date: 2008–01
  7. By: Fell, Harrison (Resources for the Future)
    Abstract: In this paper, intraseasonal fishing is modeled as a differential game between fishermen in a total allowable catch–regulated fishery with and without individual fishing quotas (IFQs). Heterogeneous harvest values are included by incorporating time-specific harvest costs and a stock effect into fishermen’s profit functions. I also allow for strategic interaction among fishermen via ex-vessel price dynamics. The equilibrium harvest strategies of the differential games are solved numerically through the use of a genetic algorithm. I demonstrate how different harvesting sector environments lead to varying degrees of ex-vessel price increases when IFQs are implemented. The primary result shows that possible margins for competition among fishermen, beyond competition for a greater share of the total allowable catch, can still exist under IFQ management and may be substantial enough to be able to prevent sizeable rent transfers from the processing sector to the harvesting sector.
    Keywords: individual fishing quotas, property rights, differential games, genetic algorithm
    JEL: Q22 C73 C61
    Date: 2008–02–01
  8. By: Gilles, R.P.; Lazarova, E.A.; Ruys, P.H.M. (Tilburg University, Center for Economic Research)
    Abstract: We consider a relational economy in which economic agents participate in three types of relational economic activities: autarkic activities; binary matching activities; and plural cooperative activities. We introduce a stability notion and characterize stable interaction structures, both in the absence of externalities from cooperation as well as in the presence of size-based externalities. It is shown that institutional elements such as the emergence of socio-economic roles and organizations based on hierarchical leadership structures support and promote stable economic development.
    Keywords: Cooperatives;Networks;Clubs;Relational economies;Stable matchings
    JEL: C72 D71 D85
    Date: 2008
  9. By: Kumru, Cagri; Yektas, Hadi
    Abstract: We analyze the optimal auction of multiple non-identical objects when buyers are risk averse. We show that the auction formats that yield the maximum revenue in the risk neutral case are no longer optimal. In particular, selling the goods independently does not maximize the seller's revenue. We observe that seller's incentive for bundling arises solely due to the risk aversion of the buyers. The optimal auction which remains weakly efficient has the following properties: The seller perfectly insures all buyers against the risk of losing the object(s) for which they have high valuation. While the buyers who have high valuation for both objects are compensated if they do not win either object, the buyers who have low valuation for both objects incur a positive payment to the seller in the same event.
    Keywords: Multi-object Auctions; Optimal Auctions; Multi-dimensional Screening; Risk Averse Buyers; Bundling
    JEL: D81 D44
    Date: 2008–03–09
  10. By: Heller, Yuval
    Abstract: A strong correlated equilibrium is a strategy profile that is immune to joint deviations. Different notions of strong correlated equilibria were defined in the literature. One major difference among those definitions is the stage in which coalitions can plan a joint deviation: before (ex-ante) or after (ex-post) the deviating players receive their part of the correlated profile. In this paper we prove that if deviating coalitions are allowed to use new correlating devices, then an ex-ante strong correlated equilibrium is also immune to deviations at the ex-post stage. Thus the set of ex-ante strong correlated equilibria of Moreno & Wooders (1996) is included in all other sets of strong correlated equilibria.
    Keywords: correlated equilibrium; strong equilbrium; coaliton-proof equilbrium; ex-ante; ex-post; common knowledge
    JEL: C72
    Date: 2008–03–11

This nep-gth issue is ©2008 by Laszlo A. Koczy. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.