nep-gth New Economics Papers
on Game Theory
Issue of 2010‒04‒17
fifteen papers chosen by
Laszlo A. Koczy
Obuda University

  1. Contributing or Free-Riding? Voluntary Participation in a Public Good Economy By Taiji Furusawa; Hideo Konishi
  2. A New Old Solution for Weak Tournaments By Vincent Anesi
  3. Tolerance, Cooperation, and Equilibrium Restoration in Repeated Games By Balanquit, Romeo
  4. Ambiguous Act Equilibria By Sophie Bade
  5. Hierarchy of Players in Swap Robust Voting Games and Minimal Winning Coalitions By Bishnu, Monisankar; Roy, Sonali
  6. A Characterization of the average tree solution for tree games By Debasis Mishra; Dolf Talman
  7. Equity versus Efficiency? - Evidence from Three-Person Generosity Experiments - By Werner Güth; Kerstin Pull; Manfred Stadler; Agnes Stribeck
  8. Institutions and Information in Multiple-Offer Multilateral Bargaining Games: Theory and Experimental Evidence By Kurtis Swope; Pamela Schmitt; John Cadigan; Robert Shupp
  9. "Voluntarily Separable Repeated Games with Social Norms" By Takako Fujiwara-Greve; Masahiro Okuno-Fujiwara; Nobue Suzuki
  10. Information and Beliefs in a Repeated Normal-form Game By Dietmar Fehr, Dorothea Kübler, David Danz
  11. Inference of Signs of Interaction Effects in Simultaneous Games with Incomplete Information By Aureo de Paula; Xun Tang
  12. Perfect Implementation By Sergei Izmalkov; Matt Lepinski; Silvio Micali
  13. An Axiomatization of the Serial Cost-Sharing Method By SPRUMONT, Yves
  14. Guilt from Promise-Breaking and Trust in Markets for Expert Services - Theory and Experiment By Adrian Beck; Rudolf Kerschbamer; Jianying Qiu; Matthias Sutter
  15. Quaternary dichotomous voting rules. By Annick Laruelle; Federico Valenciano

  1. By: Taiji Furusawa; Hideo Konishi
    Abstract: We consider a (pure) public goods provision problem with voluntary participation in a quasi-linear economy. We propose a new hybrid solution concept, the free-riding-proof core (FRP-Core), which endogenously determines a contribution group, public good provision level, and its cost-sharing. The FRP-Core is always nonempty in public good economies but does not usually achieve global efficiency. The FRP-Core has support from both cooperative and noncooperative games. In particular, it is equivalent to the set of perfectly coalition-proof Nash equilibrium (Bernheim, Peleg, and Whinston, 1987) of a dynamic game with players' participation decisions followed by a common agency game of public goods provision. We illustrate various properties of the FRPCore with an example. We also show that the equilibrium level of public good shrinks to zero as the economy is replicated.
    Keywords: endogenous coalition formation, externalities, public good, perfectly coalition-proof Nash equilibrium, free-riders, free-riding-proof core, lobbying, common agency game
    Date: 2010–03
  2. By: Vincent Anesi (University of Nottingham)
    Abstract: This note uncovers new properties of the von Neumann-Morgenstern solution in weak tournaments and majoritarian games. We propose a new procedure for the construction of choice sets from weak tournaments, based on dynamic stability criteria. The idea is to analyze dynamic versions of the tournament game introduced by Laffond, Laslier and Le Breton (1993) [The bipartisan set of a tournament game. Games and Economic Behavior 5, 182-201]. The exploration of a specific class of Markov perfect equilibria in these "dynamic tournament games" yields a new solution concept for weak tournaments - the A-stable set. The alternatives in an A-stable set constitute persistent, long-run policy outcomes in the corresponding dynamic tournament games. We find that, in any weak tournament, the class of A-stable sets coincides with that of von Neumann-Morgenstern stable sets.
    Keywords: Electoral competition, stable set, stationary Markov equilibrium, weak tournament, solution theory
    Date: 2010–03
  3. By: Balanquit, Romeo
    Abstract: This study shows that in a two-player infinitely repeated game where one is patient and the other is impatient, Pareto-superior subgame perfect equilibrium can be achieved. An impatient player in this paper is depicted as someone who can truly destroy the possibility of attaining any feasible and individually rational outcome that is supported in equilibrium in repeated games, as asserted by the Folk Theorem. In this scenario, the main ingredient for the restoration of equilibrium is to introduce the notion of tolerant trigger strategy. Consequently, the use of the typical trigger strategy is abandoned since it ceases to be efficient as it only brings automatically the game to its punishment path, therefore eliminating the possibility of extracting other feasible equilibria. I provide a simple characterization of perfect equilibrium payoffs under this scenario and show that cooperative outcome can be approximated.
    Keywords: infinitely-repeated games; tolerant trigger strategy
    JEL: C70 C73
    Date: 2010–03–25
  4. By: Sophie Bade (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: A game-theoretic framework that allows for explicitly randomized strategies is used to study the effect of ambiguity aversion on equilibrium outcomes. The notions of "independent strategies" as well as of "common priors" are amended to render them applicable to games in which players lack probabilistic sophistication. Within this framework the equilibrium predictions of two player games with ambiguity averse and with ambiguity neutral players are observationally equivalent. This equivalence result does not extend to the case of games with more than two players. A translation of the concept of equilibrium in beliefs to the context of ambiguity aversion yields substantially dierent predictions – even for the case with just two players.
    Keywords: Uncertainty Aversion, Nash Equilibrium, Ambiguity
    JEL: C72 D81
    Date: 2010–03
  5. By: Bishnu, Monisankar; Roy, Sonali
    Abstract: Ordinarily, the process of decision making by a committee through voting is modelled by a monotonic game the range of whose characteristic function is restricted to {0,1}. The decision rule that governs the collective action of a voting body induces a hierarchy in the set of players in terms of the a-priori influence that the players have over the decision making process. In order to determine this hierarchy in a swap robust game, one has to either evaluate a number-based power index (e.g., the Shapley-Shubik index, the Banzhaf-Coleman index) for each player or conduct a pairwise comparison between players in order to find out whether there exists a coalition in which player i is desirable over another player j as a coalition partner. In this paper we outline a much simpler and more elegant mechanism to determine the ranking of players in terms of their a-priori power using only minimal winning coalitions, rather than the entire set of winning coalitions.
    Keywords: simple game; swap robust game; desirability; weak desirability; lexicographic ordering
    JEL: C71 D71
    Date: 2009–10–01
  6. By: Debasis Mishra (Indian Statistical Institute, New Delhi); Dolf Talman (Tilburg University)
    Abstract: For the class of tree games, a new solution called the average tree solution has been proposed recently. We provide a characterization of this solution. This characterization underlines an important difference, in terms of symmetric treatment of the agents, between the average tree solution and the Myerson value for the class of tree games.
    Keywords: tree, graph games, Myerson value, Shapley value
    JEL: C71
    Date: 2009–12
  7. By: Werner Güth (Max Planck Institute of Economics, Jena); Kerstin Pull (University of Tübingen); Manfred Stadler (University of Tübingen); Agnes Stribeck (University of Tübingen)
    Abstract: In two-person generosity games the proposer's agreement payoff is exogenously given whereas that of the responder is endogenously determined by the proposer's choice of the pie size. Earlier results for two-person generosity games show that participants seem to care more for efficiency than for equity. In three-person generosity games equal agreement payoffs for two of the players are either exogenously excluded or imposed. We predict that the latter crowds out - or at least weakens - efficiency seeking. Our treatments rely on a 2x3 factorial design differing in whether the responder or the third (dummy) player is the residual claimant and whether the proposer's agreement payoff is larger, equal, or smaller than the other exogenously given agreement payoff.
    Keywords: generosity game, equity, efficiency, experiment
    JEL: C7 C91 D3
    Date: 2010–03–22
  8. By: Kurtis Swope (United States Naval Academy); Pamela Schmitt (United States Naval Academy); John Cadigan (Gettysburg College); Robert Shupp (Michigan State University)
    Abstract: No abstract available
    Date: 2009–09
  9. By: Takako Fujiwara-Greve (Department of Economics, Keio University); Masahiro Okuno-Fujiwara (Faculty of Economics, University of Tokyo); Nobue Suzuki (Faculty of Economics, Komazawa University)
    Abstract: We extend the voluntarily separable repeated Prisoner's Dilemma (Fujiwara-Greve and Okuno-Fujiwara, 2009) to continuous actions. We show that there is a (constrained) efficient bimorphic equilibrium which is robust under evolutionary pressure. It consists of a cooperative strategy and a myopic defection strategy so that our model provides a foundation to incomplete information models as well.
    Date: 2010–02
  10. By: Dietmar Fehr, Dorothea Kübler, David Danz
    Abstract: We study beliefs and choices in a repeated normal-form game. In addition to a baseline treatment with common knowledge of the game structure, feedback about choices in the previous period and random matching, we run treatments (i) with fixed matching, (ii) without information about the opponent’s payoffs, and (iii) without feedback about previous play. Using Stahl and Wilson’s (1995) model of limited strategic reasoning, we classify behavior with regard to its strategic sophistication and consider its development over time. In the treatments with feedback and full information about the game, we observe more strategic play, more best-responses to beliefs and more accurate beliefs over time. While feedback is the main driving force of learning to play strategically and for forming beliefs that accurately predict the behavior of the opponent, both incomplete information about the opponent’s payoffs or lack of feedback lead to a stagnation of best-response rates over time. <br> <br> <i>ZUSAMMENFASSUNG - (Information und Erwartungen in einem wiederholten Normalformspiel) <br>Wir untersuchen die Entwicklung von den Erwartungen über das Verhalten des anderen Spielers und den Entscheidungen in einem wiederholten Normalformspiel. Zusätzlich zum Haupttreatment mit common knowledge über das Spiel, Feedback über das Ergebnis in der vorigen Runde und zufälliger Zuordnung der Spieler, gibt es Kontrolltreatments mit (i) festen paarweisen Zuordnungen der Spieler, (ii) ohne Information über die Auszahlungen des anderen Spielers und (iii) ohne Feedback über das Ergebnis der vorigen Runde. Mit Hilfe von Stahl und Wilsons (1995) Modell begrenzten strategischen Verhaltens klassifizieren wir das Verhalten der Teilnehmer im Hinblick auf die strategische Sophistikation. In den Treatments mit Feedback und vollständiger Information über das Spiel nehmen strategisches Verhalten, beste Antworten auf die eigenen Erwartungen und die Akkuratheit der Erwartungen über die Zeit zu. Während Feedback der Hauptgrund dafür ist, dass die Teilnehmer lernen, sich strategisch zu verhalten und korrekte Erwartungen über das Verhalten des anderen Spielers zu bilden, führen sowohl unvollständige Information über die Auszahlungen des Gegenspielers als auch fehlendes Feedback zu einer Stagnation der Rate der besten Antworten über die Zeit.<i>
    Date: 2010–03
  11. By: Aureo de Paula (Department of Economics, University of Pennsylvania); Xun Tang (Department of Economics, University of Pennsylvania)
    Abstract: This paper studies the inference of interaction effects, i.e., the impacts of players' actions on each other's payoffs, in discrete simultaneous games with incomplete information. We propose an easily implementable test for the signs of state-dependent interaction effects that does not require parametric specifications of players' payoffs, the distributions of their private signals or the equilibrium selection mechanism. The test relies on the commonly invoked assumption that players' private signals are independent conditional on observed states. The procedure is valid in the presence of multiple equilibria, and, as a by-product of our approach, we propose a formal test for multiple equilibria in the data-generating process. We provide Monte Carlo evidence of the test's good performance in finite samples. We also implement the test to infer the direction of interaction effects in couples' joint retirement decisions using data from the Health and Retirement Study.
    Keywords: identification, inference, multiple equilibria, incomplete information games
    JEL: C01 C72
    Date: 2010–04–01
  12. By: Sergei Izmalkov (New Economic School); Matt Lepinski; Silvio Micali
    Abstract: Privacy and trust aect our strategic thinking, yet they have not been precisely modeled in mechanism design. In settings of incomplete information, traditional implementations of a normal-form mechanism - by disregarding the players' privacy, or assuming trust in a mediator - may fail to reach the mechanism's objectives. We thus investigate implementations of a new type. We put forward the notion of a perfect implementation of a normal-form mechanism M: in essence, a concrete extensive-form mechanism exactly preserving all strategic properties of M, without relying on a trusted mediator or violating the privacy of the players. We prove that any normal-form mechanism can be perfectly implemented by a verifiable mediator using envelopes and an envelope-randomizing device (i.e., the same tools used for running fair lotteries or tallying secret votes). Differently from a trusted mediator, a veriable one only performs prescribed public actions, so that everyone can verify that he is acting properly, and that he never learns any information that should remain private
    Date: 2010–01
  13. By: SPRUMONT, Yves
    Abstract: We offer an axiomatization of the serial cost-sharing method of Friedman and Moulin (1999). The key property in our axiom system is Group Demand Monotonicity, asking that when a group of agents raise their demands, not all of them should pay less.
    Keywords: Cost sharing, serial method, Group Demand Monotonicity, Shapley value
    JEL: C71 D63
    Date: 2010
  14. By: Adrian Beck; Rudolf Kerschbamer; Jianying Qiu; Matthias Sutter
    Abstract: We examine the influence of guilt and trust on the performance of credence goods markets. An expert can make a promise to a consumer first, whereupon the consumer can express her trust by paying an interaction price before the expert's provision and charging decisions. We argue that the expert's promise induces a commitment that triggers guilt if the promise is broken, and guilt is exacerbated by higher interaction prices. An experiment qualitatively confirms our predictions: (1) most experts make the predicted promise; (2) proper promises induce consumer-friendly behavior; and (3) higher interaction prices increase the commitment value of proper promises.
    Keywords: Promises, Guilt, Trust, Credence Goods, Experts, Reciprocity
    JEL: C72 C91 D82
    Date: 2010–03
  15. By: Annick Laruelle (UPV/EHU); Federico Valenciano (UPV/EHU)
    Abstract: In this paper we provide a general model of \"quaternary\" dichotomous voting rules (QVRs), namely, voting rules for making collective dichotomous decisions (to accept or reject a proposal), based on vote pro.les in which four options are available to each voter: voting (\"yes\", \"no\".or \"abstaining\") or staying home and not turning out. The model covers most of actual real-world dichotomus rules, where quorums are often required, and some of the extensions considered in the literature. In particular, we address and solve the question of the representability of QVRs by means of weighted rules and extend the notion of \"dimension\"of a rule.
    JEL: C71 D71
    Date: 2010–03–11

This nep-gth issue is ©2010 by Laszlo A. Koczy. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.