nep-gth New Economics Papers
on Game Theory
Issue of 2008‒08‒31
eleven papers chosen by
Laszlo A. Koczy
University of Maastricht

  1. Imperfect Information Processing in Sequential Bargaining Games with Present Biased Preferences By Zafer Akin
  2. A Decomposition Algorithm for N-Player Games By Govindan, Srihari; Wilson, Robert B.
  3. Decision-Theoretic Forward Induction By Govindan, Srihari; Wilson, Robert B.
  4. Global Newton Method for Stochastic Games By Govindan, Srihari; Wilson, Robert B.
  5. Computing Equilibria of N-Player Games with Arbitrary Accuracy By Govindand, Srihari; Wilson, Robert B.
  6. Average tree solutions for graph games By Baron, Richard; Béal, Sylvain; Remila, Eric; Solal, Philippe
  7. Updating Claims in Bankruptcy Problems By M. Josune Albizuri; Justin Leroux; José Manuel Zarzuelo
  8. Inference in a Synchronization Game with Social Interactions, Second Version By Aureo de Paula
  9. Marriage Matching and Intercorrelation of Preferences By James W. Boudreau; Vicki Knoblauch
  10. Gender in Job Negotiations: A Two-Level Game By Bowles, Hannah Riley; McGinn, Kathleen
  11. Herding and Bank Runs By Gu, Chao

  1. By: Zafer Akin
    Date: 2008–08
  2. By: Govindan, Srihari (U of Iowa); Wilson, Robert B. (Stanford U)
    Abstract: An N-player game can be approximated by adding a coordinator who interacts bilaterally with each player. The coordinator proposes strategies to the players, and his payoff is maximized when each player's optimal reply agrees with his proposal. When the feasible set of proposals is finite, a solution of an associated linear complementarity problem yields an approximate equilibrium of the original game. Computational efficiency is improved by using the vertices of Kuhn's triangulation of the players’ strategy space for the coordinator's pure strategies. Computational experience is reported.
    Date: 2007–08
  3. By: Govindan, Srihari (U of Iowa); Wilson, Robert B. (Stanford U)
    Abstract: A player's pure strategy is called relevant for an outcome of a game in extensive form with perfect recall if there exists a weakly sequential equilibrium with that outcome for which the strategy is an optimal reply at every information set it does not exclude. The outcome satisfies forward induction if it results from a weakly sequential equilibrium in which players' beliefs assign positive probability only to relevant strategies at each information set reached by a profile of relevant strategies. We prove that if there are two players and payoffs are generic then an outcome satisfies forward induction if every game with the same reduced normal form after eliminating redundant pure strategies has a sequential equilibrium with an equivalent outcome. Thus in this case forward induction is implied by decision-theoretic criteria.
    Date: 2008–01
  4. By: Govindan, Srihari (U of Iowa); Wilson, Robert B. (Stanford U)
    Abstract: The Global Newton Method for games in normal form and in extensive form is shown to have a natural extension to computing Markov-perfect equilibria of stochastic games.
    Date: 2008–02
  5. By: Govindand, Srihari (U of Iowa); Wilson, Robert B. (Stanford U)
    Abstract: From a variant of Kuhn's triangulation we derive a discrete version of the Global Newton Method that yields an epsilon-equilibrium of an N-player game and then sequentially reduces epsilon toward zero to obtain any desired precision or the best precision for any number of iterations.
    Date: 2008–02
  6. By: Baron, Richard; Béal, Sylvain; Remila, Eric; Solal, Philippe
    Abstract: In this paper we consider cooperative graph games being TU-games in which players cooperate if they are connected in the communication graph. We focus our attention to the average tree solutions introduced by Herings, van der Laan and Talman [6] and Herings, van der Laan, Talman and Yang [7]. Each average tree solution is defined with re- spect to a set, say T , of admissible rooted spanning trees. Each average tree solution is characterized by efficiency, linearity and an axiom of T - hierarchy on the class of all graph games with a fixed communication graph. We also establish that the set of admissible rooted spanning trees introduced by Herings, van der Laan, Talman and Yang [7] is the largest set of rooted spanning trees such that the corresponding aver- age tree solution is a Harsanyi solution. One the other hand, we show that this set of rooted spanning trees cannot be constructed by a dis- tributed algorithm. Finally, we propose a larger set of spanning trees which coincides with the set of all rooted spanning trees in clique-free graphs and that can be computed by a distributed algorithm.
    JEL: C71
    Date: 2008–07–31
  7. By: M. Josune Albizuri; Justin Leroux (IEA, HEC Montréal); José Manuel Zarzuelo
    Abstract: We reexamine the consistency axiom in bankruptcy problems and propose arguments in favor of an alternative definition of a reduced problem. The classical definition updates the size of the estate while keeping agents' claims unaffected. Instead, we suggest updating agents' claims along with the estate. The resulting consistency axiom characterizes the well-known Random Arrival rule as the unique bilaterally consistent extension of the Contested Garment rule to many agents. We also establish that our definition of a reduced bankruptcy problem corresponds to the definition of a reduced TU game proposed in Hart & Mas-Colell (Econometrica, 1989).
    JEL: C7
    Date: 2008–08
  8. By: Aureo de Paula (Department of Economics, University of Pennsylvania)
    Abstract: This paper studies inference in a continuous time game where an agent's decision to quit an activity depends on the participation of other players. In equilibrium, similar actions can be explained not only by direct influences but also by correlated factors. Our model can be seen as a simultaneous duration model with multiple decision makers and interdependent durations. We study the problem of determining the existence and uniqueness of equilibrium stopping strategies in this setting. This paper provides results and conditions for the detection of these endogenous effects. First, we show that the presence of such effects is a necessary and sufficient condition for simultaneous exits. This allows us to set up a nonparametric test for the presence of such influences which is robust to multiple equilibria. Second, we provide conditions under which parameters in the game are identified. Finally, we apply the model to data on desertion in the Union Army during the American Civil War and find evidence of endogenous influences.
    Keywords: duration models, social interactions, empirical games, optimal stopping
    JEL: C10 C70 D70
    Date: 2004–10–01
  9. By: James W. Boudreau (University of Connecticut); Vicki Knoblauch (University of Connecticut)
    Abstract: Men's and women's preferences are intercorrelated to the extent that men rank highly those women who rank them highly. Intercorrelation plays an important but overlooked role in determining outcomes of matching mechanisms. We study via simulation the effect of intercorrelated preferences on men's and women's aggregate satisfaction with the outcome of the Gale-Shapley matching mechanism. We conclude with an application of our results to the student admission matching problem.
    Keywords: Two-Sided Matching, intercorrelated preferences, Gale-Shapley algorithm
    JEL: C78 D63 C15
    Date: 2008–08
  10. By: Bowles, Hannah Riley (Harvard U); McGinn, Kathleen
    Abstract: We propose a two-level-game (Putnam, 1988) perspective on gender in job negotiations. At Level 1, candidates negotiate with the employers. At Level 2, candidates negotiate with domestic partners. In order to illuminate the interplay between these two levels, we review literature from two separate bodies of literature. Research in psychology and organizational behavior on candidate-employer negotiations sheds light on the effects of gender on Level 1 negotiations. Research from economics and sociology on intra-household bargaining elucidates how negotiations over the allocation of domestic labor at Level 2 influence labor force participation at Level 1. In conclusion, we integrate practical implications from these two bodies of literature to propose a set of prescriptive suggestions for candidates to approach job negotiations as a two-level game and to minimize disadvantageous effects of gender on job negotiation outcomes.
    Date: 2008–05
  11. By: Gu, Chao (U of Missouri, Columbia)
    Abstract: Traditional models of bank runs do not allow for herding effects, because in these models withdrawal decisions are assumed to be made simultaneously. I extend the banking model to allow a depositor to choose his withdrawal time. When he withdraws depends on his liquidity type (patient or impatient), his private, noisy signal about the quality of the bank's portfolio, and the withdrawal histories of the other depositors. In some cases, the optimal banking contract permits herding runs. Some of these "runs" are efficient in that the bank is liquidated before the portfolio worsens. Others are not efficient; these are cases in which the herd is misled.
    JEL: C73
    Date: 2007–10

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