nep-gth New Economics Papers
on Game Theory
Issue of 2009‒11‒07
ten papers chosen by
Laszlo A. Koczy
Budapest Tech and Maastricht University

  1. Existence of pure Nash equilibria in discontinuous and non quasiconcave games. By Philippe Bich
  2. Convex and Exact Games with Non-transferable Utility By Csóka Péter; Herings P. Jean-Jacques; Kóczy László Á.; Pintér Miklós
  3. Learning to Play Nash from the Best By Robert S. Gazzale
  4. Profit-Maximizing Matchmaker By Hideo Konishi; Chiu Yu Ko
  5. Confusion and Reinforcement Learning in Experimental Public Goods Games By Ralph-C Bayer; Elke Renner; Rupert Sausgruber
  6. Strategies in Social Network Formation By Anna Conte; Daniela Di Cagno; Emanuela Sciubba
  7. A Dynamic Game of Airline Network Competition: Hub-and-Spoke Networks and Entry Deterrence By Victor Aguirregabiria; Chun-Yu Ho
  8. Efficient coalition formation and stable coalition structures in a supply chain environment By Popp, Alexandru W. A.
  9. Robustness of Level-k Reasoning in Generalized Beauty Contest Games By Dmitry Shapiro; Xianwen Shi; Artie Zillante
  10. Both Sides of the Story: Skill-biased Technological Change, Labour Market Frictions, and Endogenous Two-Sided Heterogeneity By Fabio R. Aricó

  1. By: Philippe Bich (Centre d'Economie de la Sorbonne)
    Abstract: In a recent but well known paper, Reny has proved the existence of Nash equilibria for compact and quasiconcave games, with possibly discontinuous payoff functions. In this paper, we prove that the quasiconcavity assumption in Reny's theorem can be weakened : we introduce a measure allowing to localize the lack of quasiconcavity, which allows to refine the analysis of equilibrium existence.
    Keywords: Nash equilibrium, discontinuity, quasiconcavity.
    JEL: C70
    Date: 2009–10
  2. By: Csóka Péter; Herings P. Jean-Jacques; Kóczy László Á.; Pintér Miklós (METEOR)
    Abstract: We generalize exactness to games with non-transferable utility (NTU). In an exact game for each coalition there is a core allocation on the boundary of its payoff set. Convex games with transferable utility are well-known to be exact. We study five generalizations of convexity in the NTU setting. We show that each of ordinal, coalition merge, individual merge and marginal convexity can be unified under NTU exactness. We provide an example of a cardinally convex game which is not NTU exact. Finally, we relate the classes of II-balanced, totally II-balanced, NTU exact, totally NTU exact, ordinally convex, cardinally convex, coalition merge convex, individual merge convex and marginal convex games to one another.
    Keywords: operations research and management science;
    Date: 2009
  3. By: Robert S. Gazzale (Williams College)
    Abstract: I experimentally investigate the effects of the ability to imitate successful others on convergence to the one-shot Nash equilibrium. I study a two-player game (Potters and Suetens Forthcoming) in which a single parameter determines the existence of strategic complementarities. I generally confirm previous findings when learning from others is not possible: games with strategic complementarities converge more robustly to the Nash equilibrium than those without. However, I find the reverse with the ability to learn from successful others as this information significantly improves convergence in games without strategic complementarities but has no effect and possibly a negative effect on games with complementarities.
    JEL: C90 D70
    Date: 2009–06
  4. By: Hideo Konishi (Boston College); Chiu Yu Ko (Boston College)
    Abstract: This paper considers a matchmaker game in the Shapley-Shubik (1971) (one-to-one) assignment problem. Each firm proposes how much it is willing to pay each worker if they are matched. Each worker also proposes which salary she is willing to accept from each firm if they are matched. The matchmaker chooses a matching to maximize profit (the sum of the difference between the offering and asking salaries from each matched firm-worker). First, we show that Nash equilibrium may generate inefficient outcomes, but the matchmaker's profit is always zero in every Nash equilibrium. Second, we show that the sets of stable assignments and strong Nash equilibria are equivalent. These results extend to the Kelso-Crawford (1982) many-to-one assignment problem. Interestingly, in the one-to-one matching case, our results are closely related to the common agency game by Bernheim and Whinston (1986), while in the many-to-one assignment problem, such relationships break down completely.
    Keywords: two-sided matching problem, stable assignment, strong Nash equilibrium, coalition-proof Nash equilibrium, no-rent property, implementation theory
    JEL: C71 C72 C78
    Date: 2009–10–28
  5. By: Ralph-C Bayer; Elke Renner (School of Economics, University of Nottingham, United Kingdom); Rupert Sausgruber
    Abstract: We use a limited information environment to mimic the state of confusion in an experimental, repeated public goods game. The results show that reinforcement learning leads to dynamics similar to those observed in standard public goods games. However, closer inspection shows that individual decay of contributions in standard public goods games cannot be fully explained by reinforcement learning. According to our estimates, learning only accounts for 41 percent of the decay in contributions in standard public goods games. The contribution dynamics of subjects, who are identified as conditional cooperators, differ strongly from the learning dynamics, while a learning model estimated from the limited information treatment tracks behavior for subjects, who cannot be classified as conditional cooperators, reasonably well.
    Keywords: public goods experiments, learning, limited information, confusion, conditional cooperation
    JEL: C90 D83 H41
    Date: 2009–10
  6. By: Anna Conte; Daniela Di Cagno; Emanuela Sciubba (School of Economics, Mathematics & Statistics, Birkbeck)
    Abstract: We run a computerised experiment of network formation where all connections are beneficial and only direct links are costly. Players simultaneously submit link proposals; a connection is made only when both players involved agree. We use both simulated and experimentally generated data to test the determinants of individual behaviour in network formation. We find that approximately 40% of the network formation strategies adopted by the experimental subjects can be accounted for as best responses. We test whether subjects follow alternative patterns of behaviour and in particular if they: propose links to those from whom they have received link proposals in the previous round; propose links to those who have the largest number of direct connections. We find that together with best response behaviour, these strategies explain approximately 75% of the observed choices. We estimate individual propensities to adopt each of these strategies, controlling for group effects. Finally we estimate a mixture model to highlight the proportion of each type of decision maker in the population.
    Date: 2009–06
  7. By: Victor Aguirregabiria; Chun-Yu Ho
    Abstract: In a hub-and-spoke network, the total profit function of an airline is supermodular with respect to its entry decisions at different city-pairs. This source of complementarity implies that a hub-and-spoke network can be an effective strategy to deter entry of competitors. This paper presents a dynamic game of airlines network competition that incorporates this entry deterrence motive for using hub-and-spoke networks. We summarize the results of the estimation of the model, with particular attention to empirical evidence on the entry deterrence motive.
    Keywords: Airline networks; Hub-and-spoke; Entry deterrence; Dynamic games; Supermodularity
    JEL: C73 L13 L41 L93
    Date: 2009–10–28
  8. By: Popp, Alexandru W. A.
    Abstract: We study a real supply chain environment from which specific information and knowledge can be extrapolated for other similar environments. We focus our research on the analysis of the interactions between members forming different teams (and between the teams themselves), and on the leader’s management of the supply chain. We note that there are many elements that contribute to the profitability of the network, which is dependent on the actions of the actors involved. We analyze certain characteristics that the actors have, such as their behavior, adaptation and learning levels, effort and willingness. Based on these components, we examine the performance of our actors and of the teams that the actors form. We provide specific calculations that take into account most of the components determining the added value to the system. One of the advantages of our main formula is that it can be used to monitor the progress of the actors, as well as it can help in the identification of problematic aspects impeding in the creation of value for the system. Our formula is very flexible and a modeler is able to adapt it to similar environments, providing him with great insight in the structures that he investigates. We study certain theoretical games from which we uncover certain information and characteristics of similar environments and settings. Moreover, we provide a real life example in order to truly understand the mechanism of the network, and validate our theoretical assessments. Moreover, we provide certain recommendations for a leader that is responsible for the supervision of actors (which have specific responsibilities) and the administration of a supply chain environment.
    Keywords: coalition; supply chain management; core; value of the game; Coalition Factor Estimation
    JEL: M12 D23 M11 B40 C71 C44 D74 J21 L23 C72
    Date: 2009–10–27
  9. By: Dmitry Shapiro; Xianwen Shi; Artie Zillante
    Abstract: We study how the predictive power of level-k models changes as we perturb the classical beauty contest setting along two dimensions: the strength of the coordination motive and the information symmetry. We use the Morris and Shin (2002) model as the unified framework for our study, and find that the predictive power of level-k models varies considerably along these two dimensions. Level-k models are successful in predicting subject behavior in settings with symmetric information and a strong coordination motive. When we introduce private information or weaken the strength of the coordination motive, the predictive power of level-k models decreases significantly.
    Keywords: level-k models, beauty contest, coordination
    JEL: C72 C92 D83
    Date: 2009–10–28
  10. By: Fabio R. Aricó
    Abstract: This paper presents a stylised framework to examine how skill-biased tech¬nological change and labour market frictions affect the relationship between economic expansion and unskilled unemployment. The first part of the analysis focuses on the investment decisions in skill-acquisition and technology adoption activities faced by workers and firms in response to the introduction of an inno¬vative technology. The second part examines how endogenous two-sided hetero¬geneity in the labour market affects the macroeconomic outcomes in terms of unemployment, technological diffusion, and economic expansion. To conclude, the framework is used to discuss the effects of alternative forms of policy inter¬vention on agents' investment decisions and on the macroeconomic outcomes.
    Keywords: skill-biased technological change, market frictions, two-sided het¬erogeneity.
    JEL: C78 J24 J64 O33
    Date: 2009–09

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