nep-gth New Economics Papers
on Game Theory
Issue of 2008‒08‒21
eight papers chosen by
Laszlo A. Koczy
University of Maastricht

  2. Externalities, Potential, Value and Consistency By DUTTA, Bhaskar; EHLERS, Lars; KAR, Anirban
  3. Priorities in the Location of Multiple Public Facilities By BOCHET, Olivier; GORDON, Sidartha
  4. Equilibrium Rejection of a Mechanism By Celik, Gorkem; Peters, Michael
  5. Sharp identification regions in games By Arie Beresteanu; Ilya Molchanov; Francesca Molinari
  6. Dynamics and Stability of Constitutions, Coalitions, and Clubs By Daron Acemoglu; Georgy Egorov; Konstantin Sonin
  7. Evolutionarily Stable Preferences in Contests By Wolfgang Leininger
  8. Manipulation of market equilibrium via endowments By Lahiri, Somdeb

  1. By: Roberto Serrano; Rene Saran (CEMFI, Centro de Estudios Monetarios y Financieros)
    Abstract: We apply stochastic stability to study the evolution of bidding behaviour in private-value second-price, first-price and k-double auctions. The learning process has a strong component of inertia but with a small probability, the bids are modified in the direction of ex-post regrets. We identify essentially a unique bid that will be used by each type in the long run. In the second-price auction, this is the truthful bid. In the first-price auction, bidding half of one’s valuation is stable. The stable bid in the k-double auction is a toughening of the Chatterjee-Samuelson linear equilibrium strategy. If we add a friction in changing one’s dib, then truth-telling behaviour is also obtained in the firstprice and k-double auctions. Intuitively, the stochastically stable bid minimizes the maximal regret.
    Keywords: Stochastic stability, ex-post regret, second-price auction, first-price auction, k-double auction.
    JEL: C73 C78 D44 D83
    Date: 2007–08
  2. By: DUTTA, Bhaskar; EHLERS, Lars; KAR, Anirban
    Abstract: We provide new characterization results for the value of games in partition function form. In particular, we use the potential of a game to dene the value. We also provide a characterization of the class of values which satises one form of reduced game consistency.
    Keywords: Shaey value, tential, consistency, games in rtition function form
    Date: 2008
  3. By: BOCHET, Olivier; GORDON, Sidartha
    Abstract: A collective decision problem is described by a set of agents, a profile of single-peaked preferences over the real line and a number k of public facilities to be located. We consider public facilities that do not su¤er from congestion and are non-excludable. We provide a characterization of the class of rules satisfying Pareto-efficiency, object-population monotonicity and sovereignty. Each rule in the class is a priority rule that selects locations according to a predetermined priority ordering among interest groups. We characterize each of the subclasses of priority rules that respectively satisfy anonymity, hiding-proofness and strategy-proofness. In particular, we prove that a priority rule is strategy-proof if and only if it partitions the set of agents into a fixed hierarchy. Alternatively, any such rule can be viewed as a collection of fixed-populations generalized peak-selection median rules (Moulin, 1980), that are linked across populations, in a way that we describe.
    Keywords: Multie blic facilities, Priority rules, Hierarchical rules, Object-lation-monotonicity, Sovereignty, Anonymity, Strategy-oofness, Generalized median rules, Hiding-oofness.
    JEL: D60 D63 D70 D71 H41
    Date: 2008
  4. By: Celik, Gorkem; Peters, Michael
    Abstract: We study a design setup, where players can take part in a mechanism to coordinate their actions in a default game. By refusing to participate in the mechanism, a player can revert to playing the default game non-cooperatively. We illustrate with an example that there are allocation rules that can only be supported by equilibria in which some types of some players are not participating in the mechanism.
    Keywords: Mechanism design; Default game; Cartel agreements
    Date: 2008–08–06
  5. By: Arie Beresteanu (Institute for Fiscal Studies and Duke); Ilya Molchanov; Francesca Molinari
    Abstract: <p>We study identification in static, simultaneous move finite games of complete information, where the presence of multiple Nash equilibria may lead to partial identification of the model parameters. The identification regions for these parameters proposed in the related literature are known not to be sharp. Using the theory of random sets, we show that the sharp identification region can be obtained as the set of minimizers of the distance from the conditional distribution of game's outcomes given covariates, to the conditional Aumann expectation given covariates of a properly defined random set. This is the random set of probability distributions over action profiles given profit shifters implied by mixed strategy Nash equilibria. The sharp identification region can be approximated arbitrarily accurately through a finite number of moment inequalities based on the support function of the conditional Aumann expectation. When only pure strategy Nash equilibria are played, the sharp identification region is exactly determined by a finite number of moment inequalities. We discuss how our results can be extended to other solution concepts, such as for example correlated equilibrium or rationality and rationalizability. We show that calculating the sharp identification region using our characterization is computationally feasible. We also provide a simple algorithm which finds the set of inequalities that need to be checked in order to insure sharpness. We use examples analyzed in the literature to illustrate the gains in identification afforded by our method.</p></p>
    Keywords: Identification, Random Sets, Aumann Expectation, Support Function, Capacity Functional, Normal Form Games, Inequality Constraints.
    JEL: C14 C72
    Date: 2008–06
  6. By: Daron Acemoglu; Georgy Egorov; Konstantin Sonin
    Abstract: A central feature of dynamic collective decision-making is that the rules that govern the procedures for future decision-making and the distribution of political power across players are determined by current decisions. For example, current constitutional change must take into account how the new constitution may pave the way for further changes in laws and regulations. We develop a general framework for the analysis of this class of dynamic problems. Under relatively natural acyclicity assumptions, we provide a complete characterization of dynamically stable states as functions of the initial state and determine conditions for their uniqueness. We show how this framework can be applied in political economy, coalition formation, and the analysis of the dynamics of clubs. The explicit characterization we provide highlights two intuitive features of dynamic collective decision-making: (1) a social arrangement is made stable by the instability of alternative arrangements that are preferred by sufficiently many members of the society; (2) efficiency-enhancing changes are often resisted because of further social changes that they will engender.
    JEL: C71 D71 D74
    Date: 2008–08
  7. By: Wolfgang Leininger
    Abstract: We define an indirect evolutionary approach formally and apply it to (Tullock)contests. While it is known (Leininger, 2003) that the direct evolutionary approach in the form of finite population ESS (Schaffer, 1988) yields more aggressive behavior than in Nash equilibrium, it is now shown that the indirect evolutionary approach yields the same more aggressive behavior, too. This holds for any population size N, if evolution of preferences is determined by behavior in two-player contests. The evolutionarily stable preferences (ESP) of the indirect approach turn out to be negatively interdependent, thereby “rationalizing” the more aggressive behavior.
    JEL: C79 D72
    Date: 2008–07
  8. By: Lahiri, Somdeb
    Abstract: In this paper we show that in an exchange economy with quasi-linear preferences it is possible to manipulate market equilibrium by destroying and withholding ones initial endowments.
    JEL: C79
    Date: 2008–08–08

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