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

  1. Altruism, Turnout and Strategic Voting Behavior By Ozgur Evren
  2. A sociological perspective on measuring social norms by means of strategy method experiments By Heiko Rauhut; Fabian Winter
  3. Punishment with Uncertain Outcomes in the Prisoner’s Dilemma By Peter Duersch; Maroš Servátka
  4. Inequality-Seeking Punishment By Daniel Houser; Erte Xiao
  5. Explicating social action: arguing or bargaining By Erik Oddvar Eriksen
  6. The Resolution Game - A Multiple Selves Perspective By Dimitri Migrow; Matthias Uhl
  7. Evolutionary Dynamics of the Market Equilibrium with Division of Labor∗ By Haiou Zhou
  8. A Principal-Agent Model of Sequential Testing By Dino Gerardi; Lucas Maestri
  9. Voluntary contributions with risky and uncertain marginal returns: the importance of the minimal value By M. Vittoria Levati; Andrea Morone

  1. By: Ozgur Evren
    Date: 2009–07–28
  2. By: Heiko Rauhut (ETH Zurich, Swiss Federal Institute of Technology); Fabian Winter (Max Planck Institute of Economics)
    Abstract: The measurement of social norms plays a pivotal role in many social sciences. While economists predominantly conduct experiments, sociologists rather employ (factorial) surveys. Both methods, however, suffer from distinct weaknesses. Experiments, on the one hand, often fall short in the measurement of more complex elements, such as the conditionality or the level of consensus of social norms. Surveys, on the other, lack the ability to measure actual behavior. This paper argues that the so-called "strategy method" compensates for these weaknesses by combining the observational characteristic of experiments with the conditionality of factorial surveys. We can demonstrate the applicability of the strategy method for the measure- ment of conditional bargaining norms in the case of ultimatum games. To substantiate our claim, we conduct a methodological experiment in which we compare results for the strategy ultimatum game with those from a "conventional" ultimatum game. The strategy method yields higher levels of normative compliance in terms of rejecting "unfair" offers. We conclude that the strategy method rather measures normative expectations whereas the "conventional" ultimatum game the willingness to sacrifice own profits to adhere to these expectations. Our results are consistent with previous comparative research between factorial surveys and observational data.
    Keywords: Social norms, measurement, ultimatum game, strategy method, factorial surveys
    JEL: Z13 D63 C91
    Date: 2009–08–06
  3. By: Peter Duersch; Maroš Servátka (University of Canterbury)
    Abstract: This paper experimentally investigates whether risk-averse individuals punish less if the outcome of punishment is uncertain than when it is certain. Our design includes three treatments: Baseline in which the one-shot prisoner’s dilemma game is played; Certain Punishment in which the prisoner’s dilemma game is followed by a punishment stage allowing subjects to decrease the other player’s payoff by 2 Euros; and Uncertain Punishment in which subjects could decrease the other player’s payoff with a 50% probability by 1 Euro and with a 50% probability by 3 Euros. We find that in all cases the risk-averse subjects are equally likely to cooperate in the prisoner’s dilemma and equally likely to punish in the second stage in either of the two punishment treatments.
    Keywords: Experimental economics; prisoner’s dilemma; punishment; risk aversion; uncertainty
    JEL: C70 C91
    Date: 2009–07–25
  4. By: Daniel Houser (Interdsciplinary Center for Economic Science, George Mason University); Erte Xiao (Department of Social and Decision Science,Carnegie Mellon University)
    Abstract: Inequality aversion is a key motive for punishment, with many prominent studies suggesting people use punishment to reduce or eliminate inequality. Punishment in laboratory games, however, is nearly always designed to promote equality (e.g., rejections in standard ultimatum games) and the marginal cost of punishment is typically non-trivially positive. As a consequence, individual preferences over punishment outcomes remain largely uninformed. We here report data from a laboratory experiment using dictator games. We find that when people are treated unfairly they systematically prefer to use punishment to create advantageous inequality. Our results shed new light on human preferences over punishment outcomes, and have important implications for the design of mechanisms to deter misconduct.
  5. By: Erik Oddvar Eriksen
    Abstract: Jon Elster has a clear view of the role of norms and impartiality in collective decision making processes, but does not ascribe to them the power to explain action. Hence, the paradox: If it is only public reasons that can justify outcomes, how can private desires be the causes of the same outcomes? Reasons and norms must be given explanatory force, but this requires methodological individualism expanded to methodological interactionism. Here promises appear not merely as bargaining chips, arguing more than an aggregation device and normative questions not as irrational. Because both arguing and strategic communication exist, and it is as hard to identify the former as the latter, one should not let one take precedence over the other on theoretical grounds. The problem is not theoretical, but methodological.
    Keywords: collective bargaining; common interest; deliberative democracy; discourse; functionalism; institutionalism; legitimacy; methodological issues; normative political theory
    Date: 2009–08–15
  6. By: Dimitri Migrow (University of Regensburg, Economics Department, Chair for International and Monetary Economics); Matthias Uhl (Max Planck Institute of Economics, International Max Planck Research School on Adapting Behavior in a Fundamentally Uncertain World, Jena)
    Abstract: The notion of choice inconsistency is widely spread in the literature on behavioral economics. Several approaches were used to account for the observation that people reverse their choices over time. This paper aims to explain the formation of resolutions regarded as internal self-binding devices. It moves away from anthropocentric neoclassicism and embraces a more atomistic notion of a player by defining intrapersonal agents as strategic actors. The magnitude of state-dependency is seen as a key driver of intrapersonal conflict modelled by the incongruity of the preferences of two opposing agents. The sequential conceptualisation basically allows for experimental testing.
    Keywords: Multiple Selves, Agency, Intrapersonal Conflict, Resolutions, Self-Binding, Self-Control, Commitment
    JEL: C72 D01
    Date: 2009–08–06
  7. By: Haiou Zhou
    Abstract: Recently, a growing literature, known as the new classical economics, attempts to resurrect the classical economic thoughts on division of labor within an analytical framework inherited from neoclassical economics. The paper inspects the feasibility of this approach and finds that the current analytical framework of the new classical economics is not able to spell out how individuals’ decisions on specialization are coordinated and how division of labor is realized in a large and decentralized economy. Evolutionary dynamics are then introduced into the existing models. Using a simple economy for example, the paper shows that the equilibrium network of division of labor predicted by the new classical economics is supported by evolutionary stability and can be realized by the outcome of evolutionary processes, such as Replicator Dynamics. Mutation is important in the realization of division of labor since it provides an approach for the economy to escape from an initial state of autarky. The study implies that the inherent evolutionary process of the market constructs an “invisible handâ€, which can spontaneously coordinate self-interested individuals’ decentralized decisions on specialization to discover an efficient order of division of labor in a large economy.
    Keywords: division of labor, evolutionarily stable strategy, replicator dynamics, mutation
    JEL: C73 D23 D40 D51
    Date: 2009–08
  8. By: Dino Gerardi; Lucas Maestri
    Abstract: This paper analyzes the optimal provision of incentives in a sequential testing context. In every period the agent can acquire costly information that is relevant to the principal's decision. Neither the agent's effort nor the realizations of his signals are observable. First, we assume that the principal and the agent are symmetrically informed at the time of contracting. We construct the optimal mechanism and show that the agent is indifferent in every period between performing the test and sending an uninformative message which continues the relationship. Furthermore, in the first period the agent is indifferent between carrying out his task and sending an uninformative message which ends the relationship immediately. We then characterize the optimal mechanisms when the agent has superior information at the outset of the relationship. The principal prefers to offer different contracts if and only if the agent types are sufficiently diverse. Finally, all agent types benefit from their initial private information.
    Keywords: Dynamic Mechanism Design, Information Acquisition, Sequential Testing.
    JEL: C72 D82 D83
    Date: 2009
  9. By: M. Vittoria Levati (Max Planck Institute of Economics, Jena); Andrea Morone (Department of Economics and Mathematics, University of Bari)
    Abstract: Previous research indicates that risky and uncertain marginal returns from the public good significantly lower contributions. This paper presents experimental results illustrating that the effects of risk and uncertainty depend on the employed parameterization. Speci?cally, if the value of the marginal per capita return under the worst state of nature allows for some efficiency gains, the presence of risk and uncertainty about the public good's value is not detrimental to cooperation. This ?nding casts doubt on the hypothesis that risk and uncertainty, per se, weaken people's willingness to contribute.
    Keywords: Public goods experiments, Voluntary contributions, Risk, Uncertainty
    JEL: C72 C92 D81 H41
    Date: 2009–08–06

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