|
on Game Theory |
| By: | Du, Songzi |
| Abstract: | We study a model of correlated equilibrium where every player takes actions based on his hierarchies of beliefs (belief on what other players will do, on what other players believe about others will do, etc.) intrinsic to the game. Our model does away with messages from outside mediator that are usually assumed in the interpretation of correlated equilibrium. We characterize in every finite, complete information game the exact sets of correlated equilibria (both subjective and objective) that can be obtained conditioning on hierarchies of beliefs; the characterizations rely on a novel iterated deletion procedure. If the procedure ends after k rounds of deletion for a correlated equilibrium obtained from hierarchies of beliefs, then players in the equilibrium need to reason to at most k-th order beliefs. Further conceptual and geometric properties of the characterizations are studied. |
| Keywords: | game theory; correlated equilibrium; higher order beliefs; purification; intrinsic correlation |
| JEL: | D80 C72 |
| Date: | 2009–08–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:16926&r=gth |
| By: | Fioretti, Guido |
| Abstract: | This paper provides a general overview of theories and tools to model individual and collective decision-making. In particular, stress is laid on the interaction of several decision-makers. A substantial part of this paper is devoted to utility maximization and its application to collective decision-making, Game Theory. However, the pitfalls of utility maximization are thoroughly discussed, and the radically alternative approach of viewing decision-making as constructing narratives is presented with its emerging computational tools. |
| Keywords: | Interactions; Collective Decision-Making |
| JEL: | C79 D79 |
| Date: | 2009–08–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:16976&r=gth |
| By: | Wolff, Irenaeus |
| Abstract: | Evolutionary game theory has shown that in environments characterised by a social-dilemma situation punishment may be an adaptive behaviour. Experimental evidence closely corresponds to this finding but yields contradictory results on the cooperation-enhancing effect of punishment if players are allowed to retaliate against their punishers. The present study sets out to examine the question of whether cooperation will still be part of an evolutionary stable strategy if we allow for counterpunishment opportunities in a theoretic model and tries to reconcile the seemingly contradictory findings from the laboratory. We find that the apparent contradictions can be explained by a difference in the number of retaliation stages employed (one vs many) and even small differences in the degree of retaliativeness. |
| Keywords: | Public goods; Strong reciprocity; Conformism; Counter-punishment; Evolution of behavior |
| JEL: | H4 H41 C90 C7 C73 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:16923&r=gth |
| By: | Rockenbach, Bettina; Wolff, Irenaeus |
| Abstract: | Considerable experimental evidence has been collected on how to solve the public-good dilemma. In a 'first generation' of experiments, this was done by presenting subjects with a pre-specified game out of a huge variety of rules. A 'second generation' of experiments introduced subjects to two different environments and had subjects choose between those. The present study is part of a 'third generation', asking subjects not only to choose between two environments but to design their own rule sets for the public-good problem. Whereas preceding 'third-generation' experiments had subjects design and improve their strategies for a specified game, this study is the first to make an attempt at answering the question of how people would shape their environment to solve the public-good dilemma were they given full discretion over the rules of the game. We explore this question of endogenous institution design in an iterated design-and-play procedure. We observe a strong usage of punishment and redistribution components, which diminishes over time. Instead, subjects successfully contextualize the situation. Interestingly, feedback on fellow-players’ individual behavior tends to be rendered opaque. On average, rules do improve with respect to the welfare they elicit, albeit only to a limited degree. |
| Keywords: | Public good; strategy method; experiment; public choice |
| JEL: | C9 D7 D71 C92 D72 C72 |
| Date: | 2009–07–17 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:16922&r=gth |
| By: | Helmut Dietl (Institute for Strategy and Business Economics, University of Zurich); Egon Franck (Institute for Strategy and Business Economics, University of Zurich); Martin Grossmann (Institute for Strategy and Business Economics, University of Zurich); Markus Lang (Institute for Strategy and Business Economics, University of Zurich) |
| Abstract: | This paper explicates how the theory of contests is applied to professional team sports leagues. In the first part, we present the traditional Tullock contest and explain some basic properties of the equilibrium. We will then extend this static contest to a two-period model in order to analyze dynamic aspects of contests. In the second part, we will present applications of contest theory in sports. In particular, we will show how the Tullock framework is applied to models of team sports leagues. For this purpose, we will first explain the value creation process in team sports leagues and show how club revenues are related to the contest success function. Then, we present some basic modeling issues; for instance, we show how the assumption of flexible vs. fixed talent supply depends on the league under consideration and how it influences the equilibria. Furthermore, we explicate the effect of revenue sharing on competitive balance in the different models. Then we address the relationship between competitive balance and social welfare. Finally, we illustrate why many clubs tend to "overinvest" in playing talent in many team sports leagues. |
| Keywords: | Contest theory, Tullock contest, sports leagues, competitive balance, revenue sharing, social welfare, overinvestment |
| JEL: | C72 L83 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:iso:wpaper:0105&r=gth |