nep-gth New Economics Papers
on Game Theory
Issue of 2008‒11‒11
fifteen papers chosen by
Laszlo A. Koczy
Budapest Tech and Maastricht University

  1. An extension of Reny's theorem without quasiconcavity By Philippe Bich
  2. Von Neuman-Morgenstern farsightedly stable sets in two-sided matching By Ana, MAULEON; Vincent, VANNETELBOSCH; Wouter, VERGOTE
  3. Optimal firm behavior under environmental constraints By Raouf, BOUCEKKINE; Natali, HRITONENKO; Yuri, YATSENKO
  4. An answer to a question of herings et al By Philippe Bich
  5. A Long Run Collaboration on Long Run Games By Drew Fudenberg; David K Levine
  6. Decentralization of the core through Nash equilibrium By KOUTSOUGERAS, Leonidas; ZIROS, Nicholas
  8. Data games. Sharing public goods with exclusion. By DEHEZ, Pierre; TELLONE, Daniela
  9. Asymptotic Equivalence of Probabilistic Serial and Random Priority Mechanisms By Yeon-Koo Che; Fuhito Kojima
  10. Earned Wealth, Engaged Bidders? Evidence from a second price auction By Nicolas Jacquemet; Stephane Luchini; Robert-Vincent Joule; Jason Shogren
  11. Strategic communication: screening and signaling in a freelance journalist - editor game By Ascensión Andina-Díaz
  12. Crime Networks with Bargaining and Build Frictions By Bryan Engelhardt
  13. The core matchings of markets with transfers By Chambers, Christopher P.; Echenique, Federico
  14. Words Speak Louder Than Money By MaroÅ¡ Servátka; Steven Tucker; Radovan VadoviÄ
  15. Competing influence By Enrico Sette

  1. By: Philippe Bich (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: In a recent but well known paper, Reny has proved the existence of Nash equilibria for compact and quasiconcave games, with possibly discontinuous payoff functions. In this paper, we prove that the quasiconcavity assumption in Reny's theorem can be weakened: roughly, we introduce a measure allowing to localize the lack of quasiconcavity; this allows to refine the analysis of equilibrium existence
    Keywords: Nash equilibrium, existence, discontinuous games, non quasiconcave
    Date: 2008–09–20
  2. By: Ana, MAULEON; Vincent, VANNETELBOSCH (UNIVERSITE CATHOLIQUE DE LOUVAIN, Center for Operations Research and Econometrics (CORE)); Wouter, VERGOTE
    Abstract: We adopt the notion of von Neumann-Morgenstern farsightedly stable sets to predict with matchings are possibly stable when agents are farsighted in one-to-one matching problems. We provide the characterization of von Neumann-Morgenstern farsightedly stable sets : a set of matchings is a von Neumann-Morgenstern farsightedly stable set if and only if it is a singleton set and its element is a corewise stable matching. Thus, contrary to the von Neumann-Morgenstern (myopically) stable sets, von Neumann-Morgenstern farsightedly stable sets cannot include matchings thar are not corewise stable ones. Moreover, we show that our main result is robust to many-to-one matching problems with responsive preferences.
    Keywords: matching problem, von Neumann-Morgenstern stable sets, farsightedly stability
    JEL: C71 C78
    Date: 2008–04–13
    Abstract: The paper examines the Porter and induced-innovation hypotheses in a firm model where : (i) the firm has a vintage capital technology with two complementary factors, energy and capital; (ii) scrapping is endogenous; (iii) technological progress is energy-saving and endogenous trough purposive R&D investment; (iv) the innovation rate increases with R&D investment and decreases with complexity; (v) the firm is subject to emission quotas which put an upper bound on its energy consumption at any date; (vi) energy and capital prices are exogenous. Balanced growth paths are first characterized, and a comparative static analysis is performed to study a kind of long-term Porter and induced-innovation hypotheses. In particular, it is shown that tighter emission quotas do not prevent firms to grow in the long-run, thanks to endogenous innovation, but they have an inverse effect on the growth rate of profits. Some short-term dynamics are also produced, particularly, to analyze the role of initial conditions and energy prices in optimal firm behavior subject to environmental regulation. Among numerous results, we show that (i) firms which are historically ÒsmallÓ polluters find it optimal to massively pollute in the short run : during the transition, new and clean machines will co-exist with old and dirty machines in the productive sectors, implying an unambiguously dirty transition; (ii) higher energy prices induce a shorter lifetime for capital goods but they depress investment in both new capital and R&D, featuring a kind of reverse Hicksian mechanism.
    Keywords: matching problem, von Neumann-Morgenstern stable sets, farsighted stability
    JEL: C71 C78
    Date: 2008–06–18
  4. By: Philippe Bich (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: One answers to an open question of Herings et al. (2008), by proving that their fixed point theorem for discontinuous functions works for mappings defined on convex compact subset of $\R^n$, and not only polytopes. This fixed point theorem can be applied to the problem of Nash equilibrium existence in discontinuous games.
    Keywords: fixed point theorem; discontinuity; nash equilibrium
    Date: 2008–02
  5. By: Drew Fudenberg; David K Levine
    Date: 2008–10–26
  6. By: KOUTSOUGERAS, Leonidas; ZIROS, Nicholas
    Abstract: We show that in large finite economies, core allocations can be approximately decentralized as Nash (rather than Walras) equilibrium. We argue that this excrcise is an essential complement to asymptotic core equivalence results, because it implies that in some approximate sense individual attempts to manipulate the decentralizing prices cannot be beneficial, which fits precisely the interpretation of asymptotic core convergence, namely the emergence of price taking.
    Keywords: core, Nash equilibrium, asymptotic proximity, decentralization.
    JEL: D43 D50 C72
    Date: 2008–05
  7. By: Andrea Morone
    Abstract: In his ‘Simple model of herd behaviour’, Banerjee (1992) shows that – in a sequential game – if the first two players have chosen the same action, all subsequent players will ignore their own information and start a herd, an irreversible one. The points of strength of Banerjee’s model are its simplicity and the robustness of its results. Its weakness is that it is based on three tie-breaking assumptions, which according to Banerjee minimise herding probabilities. In this paper we analyse the role played by the tie-breaking assumptions in reaching the equilibrium. Even if the overall probability of herding does not change dramatically, the results obtained, which differ from Banerjee's are the following: players' strategies are parameter dependent; an incorrect herd could be reversed; a correct herd is irreversible. There are, in addition, some several cases where available information allows players to find out which action is correct, and so an irreversible correct herd starts.
    Keywords: Herd behaviour
    JEL: D8
    Date: 2008–10–22
  8. By: DEHEZ, Pierre (Université catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE)); TELLONE, Daniela (CEREC, Facultés Universitaires Saint-Louis)
    Abstract: A group of agents considers collaborating on a project which requires putting together elements owned by some of them. These elements are pure public goods with exclusion i.e. nonrival but excludable goods like for instance knowledge, data or information, patents or copyrights. The present paper addresses the question of how should agents be compensated for the goods they own. It is shown that this problem can be framed as a cost sharing game – called "data game" – to which standard cost sharing rules like the Shapley value or the nucleolus can then be applied and compared.
    Keywords: cost sharing, compensation, Shapley value.
    JEL: C71 D46 M41
    Date: 2008–02
  9. By: Yeon-Koo Che (Columbia University - Department of Economics); Fuhito Kojima (Cowles Foundation, Yale University)
    Abstract: The random priority (random serial dictatorship) mechanism is a common method for assigning objects to individuals. The mechanism is easy to implement and strategy-proof. However this mechanism is inefficient, as the agents may be made all better off by another mechanism that increases their chances of obtaining more preferred objects. Such an ineciency is eliminated by the recent mechanism called probabilistic serial, but this mechanism is not strategy-proof. Thus, which mechanism to employ in practical applications has been an open question. This paper shows that these mechanisms become equivalent when the market becomes large. More specifically, given a set of object types, the random assignments in these mechanisms converge to each other as the number of copies of each object type approaches infinity. Thus, the inefficiency of the random priority mechanism becomes small in large markets. Our result gives some rationale for the common use of the random priority mechanism in practical problems such as student placement in public schools.
    Date: 2008
  10. By: Nicolas Jacquemet (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Stephane Luchini (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales - CNRS : UMR6579); Robert-Vincent Joule (LPS - Laboratoire de Psychologie Sociale - Ecole des Hautes Etudes en Sciences Sociales); Jason Shogren (Departement Economy and Finance, University of Wyoming - University of Wyoming)
    Abstract: Recent work in experimental economics has explored whether observed behavior depends on whether wealth was windfall or earned. This paper extends this work by considering whether earned wealth ffects bidding behavior in an induced-value second-price auction. We find people bid more sincerely in the auction with earned wealth given monetary incentives; earned wealth did not induce sincere bidding in hypothetical auctions.
    Keywords: Auctions; Demand revelation; Experimental valuation; Hypothetical bias; Earned Money
    Date: 2008–05–06
  11. By: Ascensión Andina-Díaz (Department of Economic Theory, Universidad de Málaga)
    Abstract: We model strategic communication as a two-period game between an advisor and a decision maker, in which the advisor has private information on a policy-relevant state of the world but does not know the motives of the decision maker. If the advisor has the desire to please the decision maker and there is a positive probability that the decision maker values information, we identify different modes of communication that lead to information disclosure. We discuss our results in the context of a freelance journalist - editor game. Among the results is that if the journalist sufficiently values second period payoff, no information is transmitted in period one and the only equilibria implies information manipulation. Additionally, we show that the quality of the communication process does not depend on who manipulates the information although welfare does.
    Keywords: Strategic Communication, Conformity, Screening, Signaling; Mass Media
    JEL: C72 D72 D83
    Date: 2008–11
  12. By: Bryan Engelhardt (Department of Economics, College of the Holy Cross)
    Abstract: How does the timing, targets and types of anti-crime policies affect a network when criminal retailers search sequentially for wholesalers and crime opportunities? Given the illicit nature of crime, I analyze a non-competitive market where players bargain over the surplus. In such a market, some anti-crime policies distort revenue sharing, reduce matching frictions and increase market activity or crime. As an application, the model provides a new perspective on why the U.S. cocaine market saw rising consumption after the introduction of the “War on Drugs.”
    Keywords: crime, networks, search, matching
    JEL: C78 K42 L14
    Date: 2008–09
  13. By: Chambers, Christopher P.; Echenique, Federico
    Date: 2008–10
  14. By: MaroÅ¡ Servátka (University of Canterbury); Steven Tucker (University of Canterbury); Radovan VadoviÄ
    Abstract: This paper reports on an experiment studying the effectiveness of two types of mechanisms for promoting trust: pecuniary and non-pecuniary as well as their mutual interaction. Our data provide evidence that both mechanisms significantly enhance trust in comparison to the standard investment game. However, we find that the pecuniary mechanism performs significantly worse than the non-pecuniary one. Our results also point to the fact that pecuniary mechanism, which depends on monetary incentives, can be counterproductive when combined with mechanism which relies primarily on psychological incentives.
    Keywords: Communication; Deposit; Experimental economics; Trust; Trustworthiness
    JEL: C70 C91
    Date: 2008–10–29
  15. By: Enrico Sette (Bank of Italy, Economics, Research and International Relations area)
    Abstract: This paper investigates the incentives of experts competing to influence decision making. Competition for influence is shown to have an ambiguous effect on truthtelling incentives and a decision maker might be better off relying on one source of information only. This result has important implications for organizational design: the paper shows that delegation and favoritism can arise as a way to promote the correct flow of information within an organization. Delegation can lead to stronger truthtelling incentives than communication and it can be optimal when the importance of the decision is intermediate or high. Favoritism, consisting in biasing the competition for influence in favour of one expert, can further increase truthtelling incentives.
    Keywords: reputation, competition, delegation, favoritism
    JEL: C73 D82 L23
    Date: 2008–09

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.
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