nep-gth New Economics Papers
on Game Theory
Issue of 2009‒01‒24
eleven papers chosen by
Laszlo A. Koczy
Budapest Tech and Maastricht University

  1. A value for bi-cooperative games By Christophe Labreuche; Michel Grabisch
  2. How democracy resolves conflict in difficult games By Brams, Steven J.; Kilgour, D. Marc
  3. A Simple Supermodular Mechanism that Implements Lindahl Allocations By Van Essen, Matthew J.
  4. The undercut procedure: an algorithm for the envy-free division of indivisible items By Brams, Steven J.; Kilgour, D. Marc; Klamler, Christian
  5. Contests with Rank-Order Spillovers By Michael R. Baye; Dan Kovenock; Casper G. de Vries
  6. Directed Matching with Endogenous Markov Probability: Clients or Competitors? By Emanuela Ciapanna
  7. Cutting a pie is not a piece of cake By Barbanel, Julius B.; Brams, Steven J.; Stromquist, Walter
  8. On Species Preservation and Non-Cooperative Exploiters By Lone Grønbæk Kronbak; Marko Lindroos
  9. Voluntary participation and cooperation in a collective-good game. By Kene Boun My; Benoît Chalvignac
  10. Minimizing regret when dissolving a partnership By Athanassoglou, Stergios; Brams, Steven J.; Sethuraman, Jay
  11. Political Mergers as Coalition Formation: Evidence from Japanese Municipal Amalgamations By Eric Weese

  1. By: Christophe Labreuche (UMP CNRS/THALES - Unité mixte de physique CNRS/Thalès - CNRS : UMR137 - THALES); Michel Grabisch (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: Bi-cooperative games were introduced by Bilbao et al. as a generalization of TU cooperative games, in which each player can participate positively, negatively, or not at all. In this paper, we propose a definition of a share of the worth obtained by some players after they decided on their participation in the game. It turns out that the cost allocation rule does not look for a given player to her contribution at the opposite participation option to the one she chooses. The relevance of the value is discussed on several examples.
    Keywords: Bi-cooperative games - Value - Efficiency
    Date: 2008
  2. By: Brams, Steven J.; Kilgour, D. Marc
    Abstract: Democracy resolves conflicts in difficult games like Prisoners’ Dilemma and Chicken by stabilizing their cooperative outcomes. It does so by transforming these games into games in which voters are presented with a choice between a cooperative outcome and a Pareto-inferior noncooperative outcome. In the transformed game, it is always rational for voters to vote for the cooperative outcome, because cooperation is a weakly dominant strategy independent of the decision rule and the number of voters who choose it. Such games are illustrated by 2-person and n-person public-goods games, in which it is optimal to be a free rider, and a biblical story from the book of Exodus.
    Keywords: Democracy; voting; social choice; public goods; game theory; Prisoners' Dilemma; Bible
    JEL: D7 D6 C72
    Date: 2008–10
  3. By: Van Essen, Matthew J.
    Abstract: This paper introduces a new incentive compatible mechanism which for general preference environments implements Lindahl allocations as Nash equilibria. The mechanism does not increase in structural complexity as consumers are added to the economy, the minimum dimension of data needed to compute payoffs is smaller than other mechanisms with comparable properties; and for quasi-linear environments, the mechanism induces a supermodular game for appropriate choices of the mechanism parameters. Thus, this new Lindahl mechanism provides a connection between the desirable welfare properties of Lindahl allocations and the desirable theoretical/ convergence properties of supermodular games.
    Keywords: Lindahl Equilibrium; Nash Implementation; Supermodular Games
    JEL: H21 D02 C62 C72
    Date: 2008–01–15
  4. By: Brams, Steven J.; Kilgour, D. Marc; Klamler, Christian
    Abstract: We propose a procedure for dividing indivisible items between two players in which each player ranks the items from best to worst and has no information about the other player’s ranking. It ensures that each player receives a subset of items that it values more than the other player’s complementary subset, given that such an envy-free division is possible. We show that the possibility of one player’s undercutting the other’s proposal, and implementing the reduced subset for himself or herself, makes the proposer “reasonable” and generally leads to an envy-free division, even when the players rank items exactly the same. Although the undercut procedure is manipulable, each player’s maximin strategy is to be truthful. Applications of the undercut procedure are briefly discussed.
    Keywords: Fair division; allocation of indivisible items; envy-freeness; ultimatum game
    JEL: D63 D74 C72
    Date: 2009–01
  5. By: Michael R. Baye (Department of Business Economics and Public Policy, Indiana University Kelley School of Business); Dan Kovenock (University of Iowa); Casper G. de Vries (Tinbergen Institute and Erasmus University Rotterdam)
    Abstract: This paper presents a unified framework for characterizing symmetric equilibrium in simultaneous move, two-player, rank-order contests with complete information, in which each player’s strategy generates direct or indirect affine “spillover” effects that depend on the rank-order of her decision variable. These effects arise in natural interpretations of a number of important economic environments, as well as in classic contests adapted to recent experimental and behavioral models where individuals exhibit inequality aversion or regret. We provide the closed-form solution for the symmetric Nash equilibria of this class of games, and show how it can be used to directly solve for equilibrium behavior in auctions, pricing games, tournaments, R&D races, models of litigation, and a host of other contests.
    Date: 2008–11
  6. By: Emanuela Ciapanna (Bank of Italy, Economic Research Department)
    Abstract: We analyze the problem of strategic poaching of consultants by clients with particular reference to the business consulting industry. This article presents a market equilibrium in a mixed economy where three categories of agents, consulting groups, client firms and consultants strategically interact with each other. At each date the consulting group faces a new client firm that requires a task to be implemented. We show that under very general conditions, when a matching pair of clients and consultants meets, a dominant strategy will be played, where the consultant is captured by the client and the consulting group matches (whenever possible) the client's request. The novelty of this model is that the quality of the consulting services does not only depend on the consulting group's assignment strategy , but also on the capturing behavior of the clients. In this sense, the clients impose a consumption externality on each other, which is a source of inefficiency in this otherwise competitive market.
    Keywords: strategic poaching, two-sided matching, Nash bargaining, consumption externality.
    JEL: D62 J41 L22 L84 M54
    Date: 2008–04
  7. By: Barbanel, Julius B.; Brams, Steven J.; Stromquist, Walter
    Abstract: Is there a division among n players of a cake using n-1 parallel vertical cuts, or of a pie using n radial cuts, that is envy-free (each player thinks he or she receives a largest piece and so does not envy another player) and undominated (there is no other allocation as good for all players and better for at least one)? David Gale first asked this question for pies. We provide complete answers for both cakes and pies. The answers depend on the number of players (two versus three or more players) and whether the players' preferences satisfy certain continuity assumptions. We also give some simple algorithms for cutting a pie when there are two or more players, but these algorithms do not guarantee all the properties one might desire in a division, which makes pie-cutting harder than cake-cutting. We suggest possible applications and conclude with two open questions.
    Keywords: Fair division; cake-cutting; pie-cutting; divisible good; envy-freeness; allocative efficiency
    JEL: D7 D6 C7
    Date: 2008–12
  8. By: Lone Grønbæk Kronbak (Department of Environmental and Business Economics, University of Southern Denmark); Marko Lindroos (Department of Economics and Management, University of Helsinki)
    Abstract: Game-theoretic fisheries models typically consider cases where some players harvest a single common fish stock. It is, however, the case that these types of models do not capture many real world mixed fisheries, where species are bio-logical independent or dependent. The present paper considers cases where several non-cooperative exploiters are involved in mixed fisheries. This paper is targeting biodiversity preservation by setting up a two species model with the aim of ensuring both species survive harvesting of exploiters adapting a non-cooperative behaviour. The model starts out as a multi-species model without biological dependency and is then modified to include also biological dependency. We contribute to the literature by analytically finding the limits on the number of players preserving both species including the conditions to be satisfied. For visual purposes we simulate a two species model with different kind of interrelationship.
    Keywords: Biodiversity preservation, non-cooperative game, multi-species fisheries, bio-economic modelling
    JEL: C70 Q22 Q28
    Date: 2008–08
  9. By: Kene Boun My; Benoît Chalvignac
    Abstract: We study the effect of voluntary participation in the context of a collective-good experiment. We investigate whether the freedom to participate in the game or not increases contribution levels and enhances their evolution. The analysis of two voluntary participation treatments supports a positive effect of an attractive exit option on both contribution levels and their sustainability. We conclude that the voluntary contribution mechanism can provide sustainable cooperation levels and that the usually observed decay of average contribution levels can be counteracted by voluntary participation in the game..
    Keywords: Collective Goods; Cooperation; Voluntary participation ; Laboratory experiments.
    JEL: H41 C92
    Date: 2009
  10. By: Athanassoglou, Stergios; Brams, Steven J.; Sethuraman, Jay
    Abstract: We study the problem of dissolving an equal-entitlement partnership when the objective is to minimize maximum regret. We initially focus on the family of linear-pricing mechanisms and derive regret-optimizing strategies. We also demonstrate that there exist linear-pricing mechanisms satisfying ex-post efficiency. Next, we analyze a binary-search mechanism which is ex-post individually rational. We discuss connections with the standard Bayesian-Nash framework for both linear and binary-search mechanisms. On a more general level, we show that if entitlements are unequal, ex-post efficiency and ex-post individual rationality impose significant restrictions on permissible mechanisms. In particular, they rule out both linear and binary-search mechanisms.
    Keywords: Partnership dissolution; minimax regret; fair division; allocative efficiency
    JEL: D63 C78 D74 C72
    Date: 2008–11
  11. By: Eric Weese
    Abstract: Political coalition formation games can describe the formation and dissolution of nations, as well as the creation of coalition governments, the establishment of political parties, and other similar phenomena. These games have been studied from a theoretical perspective, but the models have not been used extensively in empirical work.This paper presents a method of estimating political coalition formation models with many-player coalitions, and then applies this method to the recent heisei municipal amalgamations in Japan to estimate structural coefficients that describe the behaviour of municipalities. The method enables counterfactual analysis, which in the Japanese case shows that the national government could increase welfare via a counter-intuitive policy involving transfers to richer municipalities conditional on their participation in a merger.
    Keywords: Coalition Formation, Municipal Mergers, Japan
    JEL: C71 H77
    Date: 2008–12

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