nep-gth New Economics Papers
on Game Theory
Issue of 2009‒08‒02
eight papers chosen by
Laszlo A. Koczy
Budapest Tech and Maastricht University

  1. A Stability Index for Local Effectivity Functions By Joseph Abdou
  2. Evaluating information in zero-sum games with incomplete information on both sides By Bernard De Meyer; Ehud Lehrer; Dinah Rosenberg
  3. Centralizing Information in Networks By Jeanne Hagenbach
  4. Strategic Communication Networks By Jeanne Hagenbach; Frédéric Koessler
  5. Enforcement of Contribution Norms in Public Good Games with Heterogeneous Populations By Reuben, Ernesto; Riedl, Arno
  6. The Structure of Unstable Power Systems By Joseph Abdou
  7. A Note on Adapting Propensity Score Matching and Selection Models to Choice Based Samples By Heckman, James J.; Todd, Petra E.
  8. Uncertainty and Climate Treaties: Does Ignorance Pay? By Finus, Michael; Dellink, Rob

  1. By: Joseph Abdou (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)
    Abstract: We study the structure of unstable local effectivity functions defined for n players and p alternatives. A stability index based on the notion of cycle is introduced. In the particular case of simple games, the stability index is closely related to the Nakamura Number. In general it may be any integer between 2 and p. We prove that the stability index for maximal effectivity functions and for maximal local effectivity functions is either 2 or 3.
    Keywords: Stability index, acyclicity, strong Nash Equilibrium, core, solvability, consistency, simple game, effectivity function.
    Date: 2009–01
  2. By: Bernard De Meyer (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I); Ehud Lehrer (School of Mathematical Sciences - Tel Aviv University); Dinah Rosenberg (LAGA - Laboratoire d'Analyse, Géométrie et Applications - CNRS : UMR7539 - Université Paris-Nord - Paris XIII)
    Abstract: In a Bayesian game some players might receive a noisy signal regarding the specific game actually being played before it starts. We study zero-sum games where each player receives a partial information about his own type and no information about that of the other player and analyze the impact the signals have on the payoffs. It turns out that the functions that evaluate the value of information share two property. The first is Blackwell monotonicity, which means that each player gains from knowing more. The second is concavity on the space of conditional probabilities.
    Keywords: Value of information, Blackwell monotonicity, concavity.
    Date: 2009–05
  3. By: Jeanne Hagenbach (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: In the dynamic game we consider, players are the members of a fixed network. Everyone is initially endowed with an information item that he is the only paper to hold. Players are offered a finite number of periods to centralize the initially dispersed items in the hands of any one member of the network. In every period, each agent strategically chooses whether or not to transmit the items he holds to this neighbors in the network. The sooner all the items are gathered by any individual, the better it is for the group of players as a whole. Besides, the agent who first centralizes all the items is offered an additional reward that he keeps for himself. In this framework where information transmission is strategic and physically restricted, we provide a necessary and sufficient condition for a group to pool information items in every equilibrium. This condition is independent of the network structure. The architecture of links however affects the time needed before items are centralized in equilibrium. This paper provides theoretical support to Bonacich (1990)'s experimental results.
    Keywords: Social network ; social dilemma ; dynamic network game ; strategic communication
    Date: 2009–03
  4. By: Jeanne Hagenbach (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I); Frédéric Koessler (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales - Ecole Nationale des Ponts et Chaussées - Ecole Normale Supérieure de Paris - ENS Paris)
    Abstract: We consider situations in which individuals would like to choose an action which is close to that of others, as well as close to a state of nature, with the ideal proximity to the state varying across agents. Before this coordination game is played, a cheap-talk communication stage is offered to the individuals who decide to whom they reveal their private information about the state. The information transmission occurring in the communication stage is characterized by a strategic communication network. We provide an explicit link between players' preferences and the equilibrium strategic communication networks. A key feature of our equilibrium characterization is that whether communication takes place between two agents not only depends on the conflict of interest between these agents, but also on the number and preferences of the other agents with whom they communicate. Apart from some specific cases, the equilibrium communication networks are quite complex despite our simple one-dimensional description of preference heterogeneity. In general, strategic communication networks cannot be completely Pareto-ranked, but expected social welfare always increases as the communication network expands.
    Keywords: Cheap talk ; coordination ; incomplete information ; networks
    Date: 2009–02
  5. By: Reuben, Ernesto (Columbia University); Riedl, Arno (Maastricht University)
    Abstract: Economic and social interaction takes place between individuals with heterogeneous characteristics. We investigate experimentally the emergence and informal enforcement of different contribution norms to a public good in homogeneous and different heterogeneous groups. When punishment is not allowed all groups converge towards free-riding. With punishment, contributions increase and differ distinctly across groups and individuals with different induced characteristics. We show econometrically that these differences are not accidental but enforced by punishment. The enforced contribution norms are related to fairness ideas of equity regarding contribution possibilities but not regarding earnings. Individuals with different characteristics tacitly agree on the norm to be enforced, even if this leads to large payoff differences. Our results also emphasize the role of details of the environment that may alter focal contribution norms in an important way.
    Keywords: public good, heterogeneous groups, punishment, cooperation, social norms, norm enforcement
    JEL: H41 C92 Z13
    Date: 2009–07
  6. By: Joseph Abdou (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)
    Abstract: A power system is modeled by an interaction form, the solution of which is called a settlement. By stability we mean the existence of some settlement for any preference profile. Like in other models of power structure, instability is equivalent to the existence of a cycle. Structural properties of the system like maximality, regularity, superadditivity and exactness are defined and used to determine the type of instability that may affect the system. A stability index is introduced. Loosely speaking this index measures the difficulty of the emergence of configurations that produce a deadlock. As applications we have a characterization of solvable game forms, an analysis of the structure of their instability and a localization of their stability index in case where solvability fails.
    Keywords: Interaction form, effectivity function, stability index, Nash equilibrium, strong equilibrium, solvability, acyclicity, Nakamura number, collusion.
    Date: 2009–05
  7. By: Heckman, James J. (University of Chicago); Todd, Petra E. (University of Pennsylvania)
    Abstract: The probability of selection into treatment plays an important role in matching and selection models. However, this probability can often not be consistently estimated, because of choice-based sampling designs with unknown sampling weights. This note establishes that the selection and matching procedures can be implemented using propensity scores fit on choice-based samples with misspecified weights, because the odds ratio of the propensity score fit on the choice-based sample is monotonically related to the odds ratio of the true propensity scores.
    Keywords: choice-based sampling, matching models, propensity scores, selection models
    JEL: C52
    Date: 2009–07
  8. By: Finus, Michael; Dellink, Rob
    Abstract: Uncertainty and learning play an important role in addressing the problem of climate change. In stylized game-theoretic models of international environmental treaty formation, which capture the strategic interactions between nations, it has been shown that learning usually has a negative impact on the success of cooperation. This paper asks the question whether this negative conclusion carries over to an applied multiregional climate model. This model captures the large heterogeneity between different world regions and considers not only uncertainty about the benefits but also about the costs from climate mitigation. By exploiting differences in costs and benefits between regions and allowing transfers to mitigate free-rider incentives, we derive much more positive conclusions about the role of learning.
    Keywords: cost-benefit analysis; game theory; learning; uncertainty; international climate agreements
    Date: 2009–07

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