nep-gth New Economics Papers
on Game Theory
Issue of 2010‒07‒03
thirteen papers chosen by
Laszlo A. Koczy
Obuda University

  1. A direct proof of the existence of pure strategy equilibria in large generalized games with atomic players By Alvaro Riascos V.; Juan Pablo Torres-Martínez
  2. A Full Characterization of Nash Implementation with Strategy Space Reduction By Lombardi, Michele; Yoshihara, Naoki
  3. Strategic truth and deception By Carlos Oyarzun; Paan Jindapon
  4. Unraveling Fairness in Simple Games? The Role of Empathy and Theory of Mind By Florian Artinger; Fillipos Exadaktylos; Lauri Sääksvuori; Hannes Koppel
  5. Noncooperative justifications for old bankruptcy rules By José M. Jiménez Gómez
  6. Some game-theoretic grounds for meeting people half-way By José M. Jiménez Gómez; María del Carmen Marco Gil; Pedro Gadea Blanco
  7. Rationality and the Nash Solution to Non-convex Bargaining Problems By Xu, Yongsheng; Yoshihara, Naoki
  8. Does Hidden Information Make Trade Liberalization More Fragile? By Herzing, Mathias
  9. Strong ties in a small world By Marco van der Leij; Sanjeev Goyal
  10. Coordination and Culture By Jean-Paul Carvalho
  11. An Experiment on Intercultural Tacit Coordination - Preliminary Report By Abitbol, Pablo
  12. Social Communication and Discrimination: A Video Experiment By Ben Greiner; Werner Güth; Ro'i Zultan
  13. Do social networks prevent bank runs? By Alfonso Rosa García; Hubert Janos Kiss; Ismael Rodríguez Lara

  1. By: Alvaro Riascos V.; Juan Pablo Torres-Martínez
    Abstract: Consider a game with a continuum of players where only a finite number of them are atomic. Objective functions and admissible strategies may depend on the actions chosen by atomic players and on aggregate information about the actions chosen by non-atomic players. Only atomic players are required to have convex sets of admissible strategies and quasi-concave objective functions. In this context, we prove the existence of pure strategy Nash equilibria, a result that extends Rath (1992, Theorem 2) to generalized games and gives a direct proof of a special case of Balder (1999, Theorem 2.1). Our proof has the merit of being simple, based only on standard fixed point arguments and finite dimensional real analysis.
    Keywords: Generalized games, Non-convexities, Pure-strategy Nash equilibrium.
    JEL: C72 C62
    Date: 2010–06
  2. By: Lombardi, Michele; Yoshihara, Naoki
    Abstract: Noting that a full characterization of Nash-implementation is given using a canonical-mechanism and Maskin's theorem (Maskin, 1999) is shown using a mechanism with Saijo's type of strategy space reduction (Saijo, 1988), this paper fully characterizes the class of Nashimplementable social choice correspondences (SCCs) by mechanisms with the strategy space reduction, which is further shown to be equivalent to the class of Nash-implementable SCCs.
    Keywords: Nash implementation, strategy space reduction, s-mechanisms, Condition μs
    JEL: C72 D71 D82
    Date: 2010–04
  3. By: Carlos Oyarzun (Universidad de Alicante); Paan Jindapon (University of Alabama)
    Abstract: We study strategic communication in a sender-receiver gamein which the sender sends a message about the observed quality ofthe good to the receiver who may accept or reject the good without knowing the true quality or the sender's type. The game has infinitely many perfect Bayesian Nash equilibria. An equilibrium refinement identifies a unique class of equilibria that are outcome equivalent to the equilibrium in which the neutral sender always tells the truth and the biased sender adopts a feigning strategy to disguise himself by not fully exaggerating about the quality of the good.
    Keywords: Cheap Talk, Feigning Strategy, Strategic Information Transmission.
    JEL: C72 C78
    Date: 2009–09
  4. By: Florian Artinger (Max Planck Institute for Human Development, Berlin); Fillipos Exadaktylos (University of Granada); Lauri Sääksvuori (Max Planck Institute of Economics, Jena); Hannes Koppel (Max Planck Institute of Economics, Jena)
    Abstract: Economists have been theorizing that other-regarding preferences influence decision making. Yet, what are the corresponding psychological mechanisms that inform these preferences in laboratory games? Empathy and Theory of Mind (ToM) are dispositions considered to be essential in social interaction. We investigate the connection between an individual's preference type and her disposition to engage in empathy and ToM in neutrally framed Dictator and Ultimatum Game. For that purpose, cognitive and emotional psychometric scales are applied to infer the dispositions of each subject. We find that a disposition for empathy does not influence the behavior in the games. ToM positively correlates with offers in the Dictator Game. Integral to ToM are beliefs about others. Both, other-regarding and selfish types, show a strong correlation between what they belief others do and their own action. These results indicate that expectations about the prevalent social norm might be central in informing behavior in one-shot games.
    Keywords: Altruism, Inequality, Empathy, Theory of Mind, Behavioral Economics
    JEL: C91 C72 D01 D64
    Date: 2010–06–23
  5. By: José M. Jiménez Gómez (Universidad Politécnica de Cartagena)
    Abstract: In this paper we use two different sets of Commonly Accepted Equity Principles to provide new characterizations of well known bankruptcy rules from an strategic viewpoint. In this sense, we extend the results obtained by Chun, 1989, and Herrero, 2003, who followed the van Damme's approach, 1986, for solving Nash type bargaining problems, but in bankruptcy problems. Specifially, by using, on the one hand, the Unanimous Concessions mechanism we justify Piniles' and the Constrained Egalitarian rules, and, on the other hand, with the Diminishing Claims procedure we retrieve the Dual of Pinile's and the Dual of Constrained Egalitarian rules.
    Keywords: Bankruptcy problems, strategic approach, noncooperative justifications, Piniles¿ rule, Constrained Egalitarian rule.
    JEL: C71 D63 D71
    Date: 2010–03
  6. By: José M. Jiménez Gómez (Universidad Politécnica de Cartagena); María del Carmen Marco Gil (Universidad Politécnica de Cartagena); Pedro Gadea Blanco (Universidad Politécnica de Cartagena)
    Abstract: It is well known that, in distributions problems, "Fairness" rarely leads to a single viewpoint (see Young (1994) and Moulin (1988) among many others). This paper provides, in this context, interesting basis in defense of intermediate agreements when two prominent proposals, representing different sets of "Equity Principles", highlight a discrepancy in sharing resources. Specifically, we formalize such a conflicting situation by associating it with a "natural" cooperative game, called the Bifocal Distribution game, to show that both the Nucleolus, introduced by Schmeidler (1969), and the Shapley value, proposed by Shapley (1953), agree on recommending the "average of the two focal solutions". Finally, applying our analysis to bankruptcy problems, which have been analyzed extensively by Thomson (2003) and Moulin (2002), provides new "reasonable" solutions.
    Keywords: distribution problems, bankruptcy, cooperative games, nucleolus, Shapley value, Lorenz criterion.
    JEL: C71 D63 D71
    Date: 2010–03
  7. By: Xu, Yongsheng; Yoshihara, Naoki
    Abstract: Conditions α and β are two well-known rationality conditions in the theory of rational choice. This paper examines the implication of weaker versions of these two rationality conditions in the context of solutions to non-convex bargaining problems. It is shown that, together with the standard axioms of efficiency, anonymity and scale invariance, they characterize the Nash solution. This result makes a further connection between solutions to non-convex bargaining problems and rationalizability of choice functions in the theory of rational choice.
    JEL: C71 C78 D63 D71
    Date: 2010–04
  8. By: Herzing, Mathias (Dept. of Economics, Stockholm University)
    Abstract: This paper focuses on the impact of hidden information on strategic interaction in the context of trade agreements. In the presence of informational asymmetry it is possible that a tradeoff between liberalization and sustainability of cooperation emerges. It is shown that it may be optimal to agree on a degree of liberalization associated with a strictly positive ex ante probability of deviation occurring. In that case, cooperation will break down in …finite time, and the optimal degree of liberalization cannot be applied indefinitely.
    Keywords: Trade agreements; repeated games; asymmetric information; trade policy
    JEL: C72 C73 D82 F13
    Date: 2010–06–24
  9. By: Marco van der Leij (Universidad de Alicante); Sanjeev Goyal (Department of Economics, Queen Mary)
    Abstract: This paper examines the celebrated "Strength of weak ties" theory of Granovetter(1973). We formalize the theory in terms of two hypotheses: one, for any threeplayers with two links present, the probability of a third link being present isincreasing in the strength of the two ties, and two, the removal of a weak tieincreases average distance in the network more than the removal of a strong tie. We test these hypotheses using data on the network of coauthorship amongeconomists. We find support for the hypothesis of transitivity of strong ties, but we reject thehypothesis that weak ties reduce distance more than strong ties do. We then identify two general features of networks which explain these findings:significant inequality in the distribution of connections across individuals andstronger ties among individuals who have more connections.
    Keywords: network; strength of weak ties; core-periphery; co-authorship network
    JEL: A14 D85 Z13
    Date: 2010–01
  10. By: Jean-Paul Carvalho
    Abstract: Culture constrains individual choice by making certain behaviour taboo. We propose an evolutionary model in which members of different groups attempt to coordinate over time. We show that cultural constraints can lead to a permanent break down in coordination between groups, even when coordination is attainable and Pareto-efficient. Hence restrictive cultures make coordination with out-group members more difficult. By limiting a person’s options, however, highly restrictive cultures act as a strategic commitment, forcing out-group members to conform to in-group norms if they want to coordinate. In this way, cultural constraints on behaviour may lead to higher expected welfare. When people rationally choose their culture, we demonstrate that restrictive and permissive cultures can co-exist in the long run.
    Keywords: Coordination games, Culture, Taboos, Commitments, Cultural Evolution
    JEL: C72 C73 Z1
    Date: 2010
  11. By: Abitbol, Pablo
    Abstract: This report presents the results of a replication, with 199 culturally-diverse subjects, of Thomas Schelling’s (1957) experiments on tacit coordination. Section 1 introduces the concept of focal point equilibrium selection in tacit one-shot symmetric pure coordination games, as presented by Schelling in his classic article; it then traces its subsequent exploration through experimental research, shows how it has been explained, particularly in terms of culture, and relates that kind of explanation to the experimental and null hypotheses of the present study and its associated predictions. Section 2 describes the design of the intercultural tacit coordination experiment, and section 3 the results. Finally, section 4 presents a very preliminary discussion of the implications of the experiment’s results in terms of the cultural explanation of focal point equilibrium selection.
    Keywords: Culture; cultural diversity; coordination; game theory; Thomas Schelling
    JEL: C72
    Date: 2009–10
  12. By: Ben Greiner (University of New South Wales, School of Economics, Sydney, Australia); Werner Güth (Max Planck Institute of Economics, Strategic Interaction Group); Ro'i Zultan (Max Planck Institute of Economics, Strategic Interaction Group)
    Abstract: We report on an experiment using video technology to manipulate pre-play communication protocols in the lab and to study purely social effects of communication on donations and discrimination between potential receivers. The experimental design eliminates strategic factors by allowing two receivers to unilaterally communicate with an anonymous dictator before the latter decides on her gifts. Through the use of three communication setups (none, audio, and audio-visual) we show and analyze the existence of purely social effects of communication. We find that a silent channel leads to discrimination between potential receivers based on impression formation, but does not affect average levels of donations. When the auditory channel is added, average donations increase. The social processes invoked are heterogeneous and communicator- specific but not unsystematic.
    Keywords: bargaining, communication, discrimination, n-person dictator game, video experiment
    JEL: C72 C91 D64
    Date: 2010–06–23
  13. By: Alfonso Rosa García (Universidad de Murcia); Hubert Janos Kiss (Universidad Autónoma de Madrid); Ismael Rodríguez Lara (Universidad de Alicante)
    Abstract: We develop, both theoretically and experimentally, a stereotypical environment that allows for coordination breakdown, leading to a bank run. Three depositors are located at the nodes of a network and have to decide whether to keep their funds deposited or to withdraw. One of the depositors has immediate liquidity needs, whereas the other two depositors do not. Depositors act sequentially and observe others actions only if connected by the network. Theoretically, a link connecting the first two depositors to decide is sufficient to avoid a bank run. However, our experimental evidence shows that subjects¿ choice is not affected by the existence of the link per se. Instead, being observed and the particular action that is observed determine subjects¿ choice. Our results highlight the importance of initial decisions in the emergence of a bank run. In particular, Bayesian analysis reveals that subjects clearly depart from predicted behavior when observing a withdrawal.
    Keywords: bank runs, coordination failures, experimental evidence, networks
    JEL: C70 C90 D85 G21
    Date: 2009–10

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.
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