nep-gth New Economics Papers
on Game Theory
Issue of 2009‒03‒28
sixteen papers chosen by
Laszlo A. Koczy
Budapest Tech and Maastricht University

  1. Cores of combined games By Francis Bloch; Geoffroy De Clippel
  2. Explicit Formulas for Repeated Games with Absorbing States By Rida Laraki
  3. The maximun and the addition of assigment games By Silvia Miquel; Marina Nunez
  4. Implementing the Nash Programin Stochastic Games By Dilip Abreu; David Pearce
  5. A Foundation for Markov Equilibria in Infinite Horizon Perfect Information Games By V. Bhaskar; George J. Mailathy; Stephen Morris
  6. Language, meaning and games A model of communication, coordination and evolution By Stefano Demichelis; Jörgen Weibull
  7. A Ramsey Bound on Jordan Stable Sets By Manfred Kerber; Colin Rowat
  8. Markovian assignment rules By Francis Bloch; David Cantala
  9. Testing the TASP: An Experimental Investigation of Learning in Games with Unstable Equilibria By Timothy N. Cason; Daniel Friedman; Ed Hopkins
  10. Convergence in the Finite Cournot Oligopoly with Social and Individual Learning By Thomas Vallée; Murat Yildizoglu
  11. An Experimental Analysis of Parallel Multiple Auctions By Tim Hoppe
  12. Generosity, Greed and Gambling: What difference does asymmetric information in bargaining make? By Charlotte Klempt; Kerstin Pull
  13. Shedding Light into Preference Heterogeneity: Why Players of Traveller’s Dilemma Depart from Individual Rationality? By Leonardo Becchetti; Giacomo Degli Antoni; Marco Faillo
  14. Saliency of Outside Options in the Lost Wallet Game By James C. Cox; Maroš Servátka; Radovan Vadovic
  15. Favoritism and allocative efficiency: a game theoretic approach By Farida, Moe; Ahmadi-Esfahani, Fredoun Z.
  16. Zur Ökonomie von Bildungsnetzwerken By Klaus Abbink; Abdolkarim Sadrieh

  1. By: Francis Bloch (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X); Geoffroy De Clippel (Department of Economics - Brown University)
    Abstract: This paper studies the core of combined games, obtained by summing two coalitional games. It is shown that the set of balanced transferable utility games can be partitioned into equivalence classes of component games whose core is equal to the core of the combined game. On the other hand, for non balanced games, the binary relation associating two component games whose combination has an empty core is not transitive. However, we identify a class of non balanced games which, combined with any other non balanced game, has an empty core.
    Keywords: Cooperative games, Core, Additivity, Issue Linkage, Multi Issue Bargaining
    Date: 2008–07
  2. By: Rida Laraki (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X)
    Abstract: Explicit formulas for the asymptotic value and the asymptotic minmax of finite discounted absorbing games are provided. New simple proofs for the existence of the limits when the players are more and more patient (i.e. when the discount factor goes zero) are given. Similar characterizations for stationary Nash equilibrium payoffs are obtained. The results may be extended to absorbing games with compact action sets and jointly continuous payoff functions.
    Keywords: Repeated games, stochastic games, value, minmax, Nash equilibrium
    Date: 2009–02–27
  3. By: Silvia Miquel; Marina Nunez (Universitat de Barcelona)
    Abstract: In the framework of two-sided assignment markets, we first consider that among several markets, the players may choose where to trade. It is shown that the corresponding game, represented by the maximum of a finite set of assignment games, may not be balanced. Some conditions for balancedness are provided and, in that case, properties of the core are analyzed. Secondly, we consider that players may trade simultaneously in more than one market and then add the profits. The corresponding game, represented by the sum of a finite set of assignment games, is balanced. Moreover, under some conditions, the sum of the cores of two assignment games coincides with the core of the sum game.
    Keywords: core, nucleolus, assignment game
    JEL: C71 C78
    Date: 2009
  4. By: Dilip Abreu; David Pearce
    Date: 2009–03–19
  5. By: V. Bhaskar; George J. Mailathy; Stephen Morris
    Date: 2009–03–19
  6. By: Stefano Demichelis (University of Pavia - Department of Mathematics); Jörgen Weibull (SSE - Department of Economics - Stockholm School of Economics, Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X)
    Abstract: Language is arguably a powerful coordination device in real-life interactions. We here develop a game-theoretic model of pre-play communication that generalizes the cheap-talk approach by way of introducing a meaning correspondence between messages and actions, and postulating two axioms met by natural languages. Deviations from this correspondence are called dishonest and players have a lexicographic preference for honesty, second to material payoffs. The model is first applied to two-sided preplay communication in finite and symmetric two-player games and we establish that, in generic and symmetric n × n - coordination games, a Nash equilibrium component in such a lexicographic communication game is evolutionarily stable if and only if it results in the unique Pareto efficient outcome of the underlying game. We extend the approach to one-sided communication in finite, not necessarily symmetric, two-player games.
    Date: 2009–01
  7. By: Manfred Kerber; Colin Rowat
    Abstract: Jordan [2006] defined ‘pillage games’, a class of cooperative games whose dominance operator represents a ‘power function’ constrained by monotonicity axioms. In this environment, he proved that stable sets must be finite. We bound their cardinality above by a Ramsey number and show this bound to be tight for two agents. More generally, it is not tight as it does not make use of structural information across partial orders on the stable set.
    Keywords: Pillage, cooperative game theory, stable sets
    JEL: C71 P14
    Date: 2009–03
  8. By: Francis Bloch (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X); David Cantala (El Colegio de Mexico - El Colegio de México)
    Abstract: We analyze dynamic assignment problems where agents successively receive different objects (positions, offices, etc.). A finite set of n vertically differentiated indivisible objects are assigned to n agents who live n periods. At each period, a new agent enters society, and the oldest agent retires, leaving his object to be reassigned. We define independent assignment rules (where the assignment of an object to an agent is independent of the way other objects are allocated to other agents), efficient assignment rules (where there does not exist another assignment rule with larger expected surplus), and fair assignment rules (where agents experiencing the same circumstances have identical histories in the long run). When agents are homogenous, we characterize efficient, independent and fair rules as generalizations of the seniority rule. When agents draw their types at random, we prove that independence and efficiency are incompatible, and that efficient and fair rules only exist when there are two types of agents. We characterize two simple rules (type-rank and type-seniority) which satisfy both efficiency and fairness criteria in dichotomous settings.
    Keywords: dynamic assignment, finite Markov chains, seniority, promotion rules
    Date: 2008–11
  9. By: Timothy N. Cason; Daniel Friedman; Ed Hopkins
    Abstract: We report experiments designed to test between Nash equilibria that are stable and unstable under learning. The “TASP” (Time Average of the Shapley Polygon) gives a precise prediction about what happens when there is divergence from equilibrium under fictitious play like learning processes. We use two 4 x 4 games each with a unique mixed Nash equilibrium; one is stable and one is unstable under learning. Both games are versions of Rock-Paper-Scissors with the addition of a fourth strategy, Dumb. Nash equilibrium places a weight of 1/2 on Dumb in both games, but the TASP places no weight on Dumb when the equilibrium is unstable. We also vary the level of monetary payoffs with higher payoffs predicted to increase instability. We find that the high payoff unstable treatment differs from the others. Frequency of Dumb is lower and play is further from Nash than in the other treatments. That is, we find support for the comparative statics prediction of learning theory, although the frequency of Dumb is substantially greater than zero in the unstable treatments.
    Keywords: games, experiments, TASP, learning, unstable, mixed equilibrium, fictitious play.
    JEL: C72 C73 C92 D83
    Date: 2009–03–16
  10. By: Thomas Vallée (LEMNA - Université de Nantes); Murat Yildizoglu (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)
    Abstract: Convergence to the Nash equilibrium in a Cournot oligopoly is a question that recurrently arises as a subject of controversy in economics. The development of evolutionary game theory has provided an equilibrium concept more directly connected with adjustment dynamics, and the evolutionary stability of the equilibria of the Cournot game has been extensively studied in the literature. Several articles show that the Walrasian equilibrium is the stable ESS of the Cournot game. But no general result has been established for the difficult case of simultaneous heterogenous mutations.Authors propose specific selection dynamics to analyze this case. Vriend (2000) proposes using a genetic algorithm for studying learning dynamics in this game and obtains convergence to Cournot equilibrium with individual learning. The resulting convergence has been questioned by Arifovic and Maschek (2006). The aim of this article is to clarify this controversy: it analyzes the mechanisms that are behind these contradictory results and underlines the specific role of the spite effect. We show why social learning gives rise to the Walrasian equilibrium and why, in a general setup, individual learning can effectively yield convergence to the Cournot equilibrium. We also illustrate these general results by systematic computational experiments.
    Keywords: Cournot oligopoly; Learning; Evolution; Selection; Evolutionary stability; Nash equilibrium; Genetic algorithms
    Date: 2009–03–15
  11. By: Tim Hoppe (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg)
    Abstract: At online auction platforms we often observed that substitutable goods are auctioned concurrently with auctions ending at the same time. I introduce an experimental setup of three sellers and four buyers in an ascending second price auction environment where every seller runs one auction with a homogeneous good and the buyers are confronted with single unit demand. I find that sellers revenue is significantly lower than theory predicts due to the fact that some auctions did not receive bids whereas other auctions concentrated the bids of all bidders. Moreover, I observe a statistically higher revenue of sellers setting the minimum starting price. Furthermore, my study shows that the buyers submit bids which are significantly lower than the private valuation every buyer receives. Comparing the efficiency of the parallel multiple auction setup to a double auction control experiment, I find a significant lower efficiency in parallel multiple auctions due to the coordination failure of the buyers.
    Keywords: simultaneous auctions, internet auctions, market design, electronic business
    JEL: D44 C92
    Date: 2008–11
  12. By: Charlotte Klempt (Max Planck Institute of Economics, Jena); Kerstin Pull (University of Tübingen, Faculty of Economics and Business Administration)
    Abstract: We analyze the effects of asymmetric information concerning the size of a pie on proposer behavior in three different bargaining situations: the ultimatum game, the Yes-No-game and the dictator game. Our data show that (a) irrespective of the information condition, proposer generosity increases with responder veto power, (b) informed proposers in the ultimatum game try to exploit their superior information and hide their greed by a seemingly fair offer, and (c) uninformed proposers in the dictator game exhibit gambling behavior by asking for more than potentially is at stake. While the results of our experimental analysis are interesting as such, they may also yield interesting practical implications.
    Keywords: Bargaining, Information, Experimental Games
    JEL: C72 C91
    Date: 2009–03–23
  13. By: Leonardo Becchetti (University of Rome Tor Vergata); Giacomo Degli Antoni (EconomEtica); Marco Faillo (University of Trento - Faculty of Economics)
    Abstract: We analyse the experimental outcome of the Traveller's Dilemma under three different treatments - baseline (BT), compulsory ex post players' meeting (CET) and voluntary ex post players' meeting (VET) - to evaluate the effects of removal of anonymity (without preplay communication) in a typical one shot game in which there is a dilemma between individual rationality and aggregate outcome. We show that deviations from the Nash equilibrium outcome are compatible with the joint presence in the sample of individually rational, team-rational, (gift giving), "irrational" and (opportunistic) "one-shot-cooperator" types. The two main factors affecting deviations from the standard individually rational behaviour are male gender and the interaction of generalised trust with the decision of meeting the counterpart in the VET design.
    Keywords: Traveller’s Dilemma, Team Preferences, Social Distance, Generalised Trust, Relational Goods
    JEL: C72 C91 A13
    Date: 2009–03
  14. By: James C. Cox; Maroš Servátka (University of Canterbury); Radovan Vadovic
    Abstract: This paper reports an experiment designed to shed light on an empirical puzzle observed by Dufwenberg and Gneezy (2000) that the size of the foregone outside option by the first mover does not affect the behavior of the second mover in a lost wallet game. Our conjecture was that the original protocol may not have made the size of the forgone outside option salient to second movers. Therefore, we change two features of the Dufwenberg and Gneezy protocol: (i) instead of the strategy method we implement a direct response method (sequential play) for the decision of the second mover; and (ii) we use paper money certificates that are passed between the subjects rather than having subjects write down numbers representing their decisions. We observe that our procedure yields qualitatively the same result as the Dufwenberg and Gneezy experiment, i.e., the second movers do not respond to the change in the outside option of the first movers.
    Keywords: Experimental economics; Lost wallet game; Outside option
    JEL: C70 C91
    Date: 2009–01–10
  15. By: Farida, Moe; Ahmadi-Esfahani, Fredoun Z.
    Abstract: This paper seeks to investigate the interaction between favoritism and allocative efficiency. The issue of whether corruption distorts allocative efficiency in a bribery game under a pre-existing environment of alleged favoritism is considered. It is demonstrated that if there is no unambiguous favoritism, observed favoritism in bribery game may disrupt allocative efficiency. A bribery game under corruption and favoritism is developed. The model and some possible equilibria are discussed. A simple numerical example from Lebanon is also presented.
    Keywords: favoritism, allocative efficiency, bribery game.,
    Date: 2009
  16. By: Klaus Abbink; Abdolkarim Sadrieh (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg)
    Abstract: Unternehmensnetzwerke (vielfach auch als Netzwerkorganisationen oder schlicht als Netzwerke bezeichnet) werden als moderne Organisationsformen in den letzten Jahren im wissenschaftlichen Schrifttum intensiv diskutiert sowie in der Wirtschaftspraxis zunehmend praktiziert. Sie zählen zu den sog. hybriden Organisationsformen im Williamsonschen Sinne, sind somit zwischen rein marktlicher (Stichwort: Fremdbezug) und rein hierarchischer (Stichwort: Eigenfertigung) Koordination angesiedelt. Man unterscheidet u.a. interne von externen (unternehmensübergreifenden) Netzwerken. Der vorliegende Beitrag fokussiert den letztgenannten Netzwerktypus, und zwar in einem spezifischen Feld: den sog. Bildungsnetzwerken. Die Organisationsform des Bildungsnetzwerkes hat im Bereich der Berufsaus- und Weiterbildung in den letzten Jahren zunehmend an Popularität gewonnen. In einschlägigen Publikationen finden sich einige Beschreibungen von Bildungsnetzwerken, bei denen vornehmlich die Bedeutung dieser Organisationsform für die Vermittlung von Wissen und den Erwerb beruflicher Handlungskompetenz herausgestellt wird. Bisher vernachlässigt wurde jedoch die Betrachtung der ökonomischen Effizienz von Bildungsnetzwerken. Deshalb wird neben Ausführungen zur Historie sowie zu Arten und Anlässen der Gründung von Bildungsnetzwerken ein Leitfaden für deren Effizienz vorgestellt. Dieser besteht aus acht notwendigen (nicht hinreichenden) Effizienzbedingungen.
    Keywords: Spite, nastiness, money-burning, anti-social behavior
    JEL: C72 C90 D82
    Date: 2008–12

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