nep-gth New Economics Papers
on Game Theory
Issue of 2010‒05‒29
nineteen papers chosen by
Laszlo A. Koczy
Obuda University

  1. Subgame perfect implementation with almost perfect information and the hold-up problem. By Aghion, P.; Fudenberg, D.; Holden, R.T.
  2. One-dimensional bargaining with Markov recognition probabilities. By Herings, P. Jean-Jacques; Predtetchinski, Arkadi
  3. Coalition Formation among Farsighted Agents By Herings P. Jean-Jacques; Mauleon Ana; Vannetelbosch Vincent
  4. Marginalism and the Shapley value By Amandine Ghintran
  5. A probabilistic position value By Amandine Ghintran; Enrique Gonzalez-Arangüena; Conrado Manuel
  6. Amandine Ghintran By Amandine Ghintran
  7. Three Papers on Bargaining By Dan Usher
  8. Loss and risk aversion in games and decisions. By Driesen, Bram
  9. A characterization of the average tree solution for cycle-free graph games. By Mishra, D.; Talman, A.J.J.
  10. Coordination after gains and losses: Is prospect theoryâs value function predictive for games? By Schade, Christian; Schroeder, Andreas; Krause, Kai Oliver
  11. Truly Non-Cooperative Games: A Unified Theory By Funk, Matt
  12. Dependencies between players in Boolean games. By Bonzon, Elise; Lagasquie, Marie-Christine; Lang, Jérôme
  13. Definable and contractible contracts. By Peters, M.; Szentes, B.
  14. Punishment Cannot Sustain Cooperation in a Public Good Game with Free-Rider Anonymity By Patel, Amrish; Cartwright, Edward; Mark, Van Vugt
  15. Strategic Interaction and Networks By Yann Bramoullé; Rachel Kranton; Martin D'Amours
  16. Beliefs and actions in the trust game: creating instrumental variables to estimate the causal effect. By Costa-Gomes, M.A.; Huck, S.; Weizsäcker, G.
  17. Group Composition and Conditional Cooperation By Alexander Smith
  18. Communication, coordination and networks. By Choi, S.; Lee, J.
  19. Platforms and Limits to Network Effects By Hanna Halaburda; Mikolaj Jan Piskorski

  1. By: Aghion, P.; Fudenberg, D.; Holden, R.T.
    Abstract: The foundations of incomplete contracts have been questioned using or extending the subgame perfect implementation approach of Moore and Repullo (1988). We consider the robustness of subgame perfect implementation to the introduction of small amounts of asymmetric information. We show that Moore- Repullo mechanisms may not yield (even approximately) truthful revelation in pure or totally mixed strategies as the amount of asymmetric information goes to zero. Moreover, we argue that a wide class of extensive-form mechanisms are subject to this fragility.
    Date: 2009–07
  2. By: Herings, P. Jean-Jacques (Maastricht University); Predtetchinski, Arkadi
    JEL: C78
    Date: 2010
  3. By: Herings P. Jean-Jacques; Mauleon Ana; Vannetelbosch Vincent (METEOR)
    Abstract: A set of coalition structures P is farsightedly stable (i) if all possible deviations from any coalition structure p belonging to P to a coalition structure outside P are deterred by the threat of ending worse off or equally well off, (ii) if there exists a farsighted improving path from any coalition structure outside the set leading to some coalition structure in the set, and (iii) if there is no proper subset of P satisfying the first two conditions. A non-empty farsightedly stable set always exists. We provide a characterization of unique farsightedly stable sets of coalition structures and we study the relationship between farsighted stability and other concepts such as the largest consistent set and the von Neumann-Morgenstern farsightedly stable set. Finally, we illustrate our results by means of coalition formation games with positive spillovers.
    Keywords: microeconomics ;
    Date: 2010
  4. By: Amandine Ghintran (Óbuda University)
    Abstract: We survey axiomatic results concerning the Shapley value (Shapley (1953)). This marginalist allocation rule results from an axiomatic study of the class of coalitional games. Shapley (1953) specifies a list of desirable properties of solutions for this class of games, and he shows that the combination of these properties determines a unique allocation rule, now called the Shapley value. Several authors have enriched Shapley’s axiomatic study and have provided new characterizations of this allocation rule. The aim of this article is to put into perspective these characterizations. We highlight the logical relations between the axioms. Moreover, we show how the marginalist criterion, which was not explicitely present in Shapley’s characterisation, is progressively introduced into the axiomatic.
    Keywords: Shapley value - axiomatic study - marginalism; Shapley value - axiomatic study - marginalism
    Date: 2010
  5. By: Amandine Ghintran (Óbuda University); Enrique Gonzalez-Arangüena; Conrado Manuel
    Abstract: In this article, we generalize the position value, defined by Meessen (1988) for the class of deterministic communication situations, to the class of generalized probabilistic communication situations (G´omez et al. (2008)). We provide two characterizations of this new allocation rule. Following in Slikker’s (2005a) footsteps, we characterize the probabilistic position value using probabilistic versions of component eciency and balanced link contributions. Then we generalize the notion of link potential, defined by Slikker (2005b) for the class of deterministic communication situations, to the class of generalized probabilistic communication situations, and use it to characterize our allocation rule. Finally, we show that these two characterizations are logically equivalent.
    Keywords: Game Theory, TU Games, Graph-restricted Games, Position Value.; Game Theory, TU Games, Graph-restricted Games, Position Value.
    Date: 2010
  6. By: Amandine Ghintran (Óbuda University)
    Abstract: We provide a generalization of the position value (Meessen 1988) that allows players to benefit from transfers of worth by investing in their communication links. The player who invests the most in a communication link obtains a compensation from the second one. We characterize this new allocation rule on the class of communication situations with cycle-free graphs by means of six axioms. The first two axioms, component efficiency and superfluous link property, are used to characterize the position value (Borm, Owen, and Tijs (1992)). Quasi-additivity is a weak version of the standard additivity axiom. Link decomposability captures the fact that the insurance system only allows compensations between players who share a link. Weak positivity states that if the communicative strength of a link is non null, its adjacent players cannot obtain a null payoff. Finally, weak power inversion reflects the compensation mechanism.
    Keywords: Weighted position value; Monotonicity; Weighted position value; Monotonicity
    Date: 2010
  7. By: Dan Usher (Queen's University)
    Abstract: 1) Bargaining Unexplained, page 2 2) Bargaining Assumptions in the Study of Politics, Law and War, page 27 3) Bargaining and Voting, page 49
    Keywords: bargaining, voting, fairness, equilibrium
    JEL: C70
    Date: 2010–05
  8. By: Driesen, Bram (Maastricht University)
    Date: 2010
  9. By: Mishra, D.; Talman, A.J.J. (Tilburg University)
    Date: 2010
  10. By: Schade, Christian; Schroeder, Andreas; Krause, Kai Oliver
    Abstract: We analyze the effects of prior gain and loss experiences on individualsâ behavior in two coordination games: battle of the sexes and simultaneous market entry. We propose subjectively transformed games that integrate elements of prospect theory, aggregation of prior and subsequent payoffs, and social projection. Mathematical predictions of behavior are derived based on equilibrium selection concepts. Malesâ behavior in our experimental studies is largely consistent with our predictions. However, the behavior of many female respondents appears to be rather consistent with interpreting the initial random lottery outcomes used to manipulate prior experiences as a signal for the playersâ abilities to compete. This could be related to femalesâ known uneasiness of competing against counterparts that might be male and thus, a generally higher salience of rivalry in our incentivized experiments. Females also chose to play far more mixed strategies than males indicating some uncertainty about what type of behavior is appropriate.
    Keywords: Prospect Game Theory, Prior Outcomes, Coordination, Equilibrium Selection, Economic Experiment, Agribusiness, Agricultural and Food Policy, Financial Economics, Institutional and Behavioral Economics, Research Methods/ Statistical Methods, Risk and Uncertainty,
    Date: 2010–02
  11. By: Funk, Matt
    Abstract: This dissertation introduces "Truly Non-Cooperative Games" – axioms and complimentary negotiation models developed to analyse the human "Struggle for Life" – and presents "The Principle of Relative Insularity", a unified theory of value which unites economics, astrophysics, and biology. In brief, we discover that, reductio ad absurdum, value is a derivative function of relative insularity.
    Keywords: non-cooperative games; theory of value; economic development strategy; systemic risks; global threat mitigation; national security; the problem of induction; relative insularity; international cooperation; human survival
    JEL: Y40 Q34 C72
    Date: 2010–04–05
  12. By: Bonzon, Elise; Lagasquie, Marie-Christine; Lang, Jérôme
    Abstract: Boolean games are a logical setting for representing static games in a succinct way, taking advantage of the expressive power and succinctness of propositional logic. A Boolean game consists of a set of players, each of them controlling a set of propositional variables and having a specific goal expressed by a propositional formula, or more generally a specification of the player’s preference relation in some logical language for compact preference representation, such as prioritized goals. There is a lot of graphical structure hidden in a Boolean game: the satisfaction of each player’s goal depends on players whose actions have an influence on her goals. Exploiting this dependency structure facilitates the computation of pure Nash equilibria, by partly decomposing a game into several sub-games that are only loosely related.
    Keywords: Problem decomposition; Compact preference representation; Game theory;
    JEL: C7
    Date: 2009–06
  13. By: Peters, M.; Szentes, B.
    Abstract: This paper analyzes a normal form game in which players write contracts that condition their actions on the contracts of the other players. These contracts are required to be representable in a formal language. This is accomplished by constructing contracts which are definable functions of the Godel code of every other player’s contract. We characterize the set of outcomes that are supportable as (pure strategy) equilibrium with such contracts. With symmetric information, this is all outcomes in which all players receive at least their min max payoff. With incomplete information this all allocation rules that are incentive compatible and satisfy an individual rationality condition that we describe. We contrast the set of allocation rules that can be supported by Bayesian equilibrium with those attainable by a mechanism designer.
    Date: 2009–02
  14. By: Patel, Amrish (Department of Economics, School of Business, Economics and Law, Göteborg University); Cartwright, Edward (Department of Economics, Keynes College, University of Kent); Mark, Van Vugt (Department of Work and Organizational Psychology, VU University Amsterdam)
    Abstract: Individuals often have legitimate but publicly unobservable reasons for not partaking in cooperative social endeavours. This means others who lack legitimate reasons may then have the opportunity to behave uncooperatively, i.e. free-ride, and be indistinguishable from those with legitimate reasons. Free-riders have a degree of anonymity. In the context of a public good game we consider the e¤ect of free-rider anonymity on the ability of voluntary punishment to sustain cooperative social norms. Despite only inducing a weak form of free-rider anonymity, punishment falls and cannot sustain cooperation.<p>
    Keywords: Anonymity; free-riding; public goods experiment; punishment
    JEL: C92 D82 H41
    Date: 2010–05–19
  15. By: Yann Bramoullé; Rachel Kranton; Martin D'Amours
    Abstract: This paper brings a general network analysis to a wide class of economic games. A network, or interaction matrix, tells who directly interacts with whom. A major challenge is determining how network structure shapes overall outcomes. We have a striking result. Equilibrium conditions depend on a single number: the lowest eigenvalue of a network matrix. Combining tools from potential games, optimization, and spectral graph theory, we study games with linear best replies and characterize the Nash and stable equilibria for any graph and for any impact of players’ actions. When the graph is sufficiently absorptive (as measured by this eigenvalue), there is a unique equilibrium. When it is less absorptive, stable equilibria always involve extreme play where some agents take no actions at all. This paper is the first to show the importance of this measure to social and economic outcomes, and we relate it to different network link patterns.
    Keywords: Networks, potential games, lowest eigenvalue, stable equilibria, asymmetric equilibria
    JEL: C72 D00
    Date: 2010
  16. By: Costa-Gomes, M.A.; Huck, S.; Weizsäcker, G.
    Abstract: In many economic contexts, an elusive variable of interest is the agent's expectation about relevant events, e.g. about other agents' behavior. Recent experimental studies as well as surveys have asked participants to state their beliefs explicitly, but little is known about the causal relation between beliefs and other behavioral variables. This paper discusses the possibility of creating exogenous instrumental variables for belief statements, by shifting the probabilities of the relevant events. We conduct trust game experiments where the amount sent back by the second player (trustee) is exogenously varied by a random process, in a way that informs only the …first player (trustor) about the realized variation. The procedure allows detecting causal links from beliefs to actions under plausible assumptions. The IV estimates indicate a signi…ficant causal effect, comparable to the connection between beliefs and actions that is suggested by OLS analyses.
    Date: 2010–02
  17. By: Alexander Smith
    Abstract: This paper examines how group composition affects conditional cooperation in a repeated voluntary contribution mechanism linear public good game. Identity was created using a team-building activity and subjects were assigned to groups of six consisting of a varying number of subjects from two teams. Contributions to the public good were decreasing in polarization within the group and were higher among majority members than minority members. Also, the relationships between contributions and beliefs about the contributions of others indicate that conditional cooperation was stronger among subjects from the same team than among subjects from different teams.
    JEL: C7 C9 H4
    Date: 2010–01–19
  18. By: Choi, S.; Lee, J.
    Abstract: We study experimentally how the network structure and length of pre-play communication affect behavior and outcome in a multi-player coordination game with conflicting preferences. Network structure matters but the interaction between network and time effects is more subtle. Under each time treatment, substantial variations are observed in both the rate of coordination and distribution of coordinated outcomes across networks. But, increasing the communication length improves both efficiency and equity of coordination. In all treatments, coordination is mostly explained by convergence in communication. We also identify behaviors that explain variations in the distribution of coordinated outcomes both within and across networks.
    Date: 2009–11
  19. By: Hanna Halaburda (Harvard Business School, Strategy Unit); Mikolaj Jan Piskorski (Harvard Business School, Strategy Unit)
    Abstract: We model conditions under which agents in two-sided matching markets would rationally prefer a platform limiting choice. We show that platforms that offer a limited set of matching candidates are attractive by reducing the competition among agents on the same side of the market. An agent who sees fewer candidates knows that these candidates also see fewer potential matches, and so are more likely to accept the match. As agents on both sides have access to more candidates, initially positive indirect network effects decrease in strength, reach their limit and eventually turn negative. The limit to network effects is different for different types of agents. For agents with low outside option the limit to network effects is reached relatively quickly, and those agents choose the platform with restricted number of candidates. This is because those agents value the higher rate of acceptance more than access to more candidates. Agents with higher outside option choose the market with larger number of candidates. The model helps explain why platforms offering restricted number of candidates coexist alongside those offering larger number of candidates, even though the existing literature on network effects suggests that the latter should always dominate the former.
    Keywords: matching platform, indirect network effects, limits to network effects
    JEL: C7 D8
    Date: 2010–03

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