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on Game Theory |
| By: | Eső, Péter; Schummer, James |
| Abstract: | In games with costly signaling, some equilibria are vulnerable to deviations which could be "unambiguously" interpreted as coming from a unique set of Sender-types. This occurs when these types are precisely the ones who gain from deviating for any beliefs the Receiver could form over that set. We show that this idea characterizes a unique equilibrium outcome in two classes of games. First, in monotonic signaling games, only the Riley outcome is immune to this sort of deviation. Our result therefore provides a plausible story behind the selection made by Cho and Kreps' (1987) D1 criterion on this class of games. Second, we examine a version of Crawford and Sobel's (1982) model with costly signaling, where standard refinements have no effect. We show that only a Riley-like separating equilibrium is immune to these deviations. |
| JEL: | C72 C70 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:ner:oxford:http://economics.ouls.ox.ac.uk/14788/&r=gth |
| By: | Pavlo Prokopovych (Kyiv School of Economics, Kyiv Economics Institute) |
| Abstract: | We introduce domain L-majorized correspondences and study a number of their properties. A new equilibrium existence theorem for qualitative games is established. It is used to show a new equilibrium existence theorem for quasiconcave games with two players. Then we propose another form of the better-reply security condition that covers games whose set of Nash equilibria is not necessarily closed. |
| Keywords: | majorized correspondence, qualitative game, discontinuous game, better-reply security, single deviation property |
| JEL: | C65 C72 |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:kse:dpaper:31&r=gth |
| By: | Joseph Abdou (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris) |
| Abstract: | We study the stability and the stability index of the meet game form defined on a meet-semilattice. Given any active coalition structure, we show that the stability index relative to the equilibrium, to the beta core and to the exact core is a function of the Nakamura number, the depth of the semilattice and its gap function. |
| Keywords: | Effectivity function, lattice, stability index, equilibrium, Nakamura number. |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00497447_v1&r=gth |
| By: | Stefano Vannucci |
| Abstract: | A clutter on a set X is a simple hypergraph with pairwise not-comparable hyperedges, hence in particular any set of Von Neumann-Morgenstern (VNM) -stable sets of an irreflexive simple digraph is a clutter. A clutter (X,E) is representable by VNM-stable sets or VNM if there exists an irreflexive simple digraph (X, ?) such that E is a set of VNM-stable sets of (X, ?). The class of VNM clutters on a set X is characterized |
| Keywords: | VNM-stable sets, kernels, clutters, Sperner systems |
| JEL: | C70 C71 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:usi:wpaper:592&r=gth |
| By: | Sunanda Roy (Department of Economics, Iowa State University); Tarun Sabarwal (Department of Economics, University of Kansas) |
| Abstract: | Games with strategic substitutes (GSS) have extremal serially undominated strategy pro- files, analogous to games with strategic complements (GSC). These extremal strategy profiles need not necessarily be Nash equilibria, (indeed, a GSS may have no Nash equilibrium,) but they are simply rationalizable. Dominance solvability in GSS is not equivalent to uniqueness of Nash equilibrium, but is equivalent to uniqueness of simply rationalizable strategies. Con- vergence of best response dynamics is equivalent to global convergence of adaptive dynamics, is equivalent to dominance solvability, and implies uniqueness of equilibrium, all in contrast to GSC. In particular, Cournot stability is equivalent to dominance solvability in GSS. In parameterized GSS, under natural conditions, dynamically stable equilibrium selections can be viewed in terms of monotone selections of equilibria, analogous to GSC. The results shed light on predicted behavior, learning, global stability, uniqueness of equilibrium, and dynamic stability of monotone comparative statics in GSS. Several examples are provided. |
| Keywords: | Rationalizability, Adaptive Dynamics, Correspondence Principle, Strategic Sub- stitutes, Learning, Dominance Solvability, Global Stability, Monotone comparative statics |
| JEL: | C70 C62 C72 |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:kan:wpaper:201003&r=gth |
| By: | Dannenberg, Astrid; Lange, Andreas; Sturm, Bodo |
| Abstract: | The provision of public goods often relies on voluntary contributions and cooperation. While most of the experimental literature focuses on individual contributions, many real-world problems involve the formation of institutions among subgroups (coalitions) of players. International agreements serve as one example. This paper experimentally tests theory on the formation of coalitions in different institutions and compares those to a voluntary contribution mechanism. The experiment confirms the rather pessimistic conclusions from the theory: only few players form a coalition when the institution prescribes the full internalization of mutual benefits of members. Contrary to theory, coalitions that try to reduce the freeriding incentives by requiring less provision from their members, do not attract additional members. Substantial efficiency gains occur, however, both along the extensive and intensive margin when coalition members can each suggest a minimum contribution level with the smallest common denominator being binding. The experiment thereby shows that the acceptance of institutions depends on how terms of coalitions are reached. -- |
| Keywords: | public goods,institutions,coalition formation,cooperation |
| JEL: | C72 C92 D71 H41 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:10037&r=gth |
| By: | Stefano Vannucci |
| Abstract: | Characterizations of the choice functions that select the cores or the externally stable cores induced by an underlying revealed dominance digraph are provided. Relying on such characterizations, the basic order-theoretic structure of the corresponding sets of revealed cores is also analyzed |
| Keywords: | Core, choice functions, dominance digraphs, revealed preference |
| JEL: | C70 C71 D01 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:usi:wpaper:591&r=gth |
| By: | Ulrich Horst; Santiago Moreno-Bromberg |
| Abstract: | In this paper the problem of optimal derivative design, profit maximization and risk minimization under adverse selection when multiple agencies compete for the business of a continuum of heterogenous agents is studied. In contrast with the principal-agent models that are extended within, here the presence of ties in the agents' best-response correspondences yields discontinuous payoff functions for the agencies. These discontinuities are dealt with via efficient tie-breaking rules. The main results of this paper are a proof of existence of (mixed-strategies) Nash equilibria in the case of profit-maximizing agencies, and of socially efficient allocations when the firms are risk minimizers. It is also shown that in the particular case of the entropic risk measure, there exists an efficient "fix-mix" tie-breaking rule, in which case firms share the whole market over given proportions. |
| Keywords: | Adverse selection, Nash equilibria, Pareto optimality, risk transfer, socially efficient allocations, tie-breaking rules |
| JEL: | C62 C72 D43 D82 G14 |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2010-035&r=gth |
| By: | Simon Czermak; Francesco Feri; Daniela Rützler; Matthias Sutter |
| Abstract: | We examine the strategic sophistication of adolescents, aged 10 to 17 years, in experimental normal-form games. Besides making choices, subjects have to state their first- and second-order beliefs. We find that choices are more often a best reply to beliefs if any player has a dominant strategy and equilibrium payoffs are not too unequal. Using a mixture model we can estimate for each subject the probability to be any of eight different strategic and non-strategic types. The econometric estimation reveals that older subjects are more likely to eliminate dominated strategies, and that subjects with good math grades are more strategic. |
| Keywords: | Strategic thinking, beliefs, experiment, age, adolescents |
| JEL: | C72 C91 |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2010-15&r=gth |
| By: | Vittoria M. Levati (Max Planck Institute of Economics, Strategic Interaction Group, Jena, Germany); Matthias Uhl (Max Planck Institute of Economics, Strategic Interaction Group, Jena, Germany); Ro'i Zultan (Max Planck Institute of Economics, Strategic Interaction Group, Jena, Germany) |
| Abstract: | Absentmindedness is a special case of imperfect recall which according to Piccione and Rubinstein (1997a) leads to time inconsistencies. Aumann, Hart and Perry (1997a) question their argument and show how dynamic inconsistencies can be resolved. The present paper explores this issue from a descriptive point of view by examining the behavior of absentminded individuals in a laboratory environment. Absentmindedness is manipulated in two ways. In one treatment, it is induced by cognitively overloading participants. In the other, it is imposed by randomly matching decisions with decision nodes in the information set. The results provide evidence for time inconsistencies in all treatments. We introduce a behavioral principal, which best explains the data. |
| Keywords: | imperfect recall, absentmindedness, dynamic inconsistency, experiment |
| JEL: | C72 C91 D81 D83 |
| Date: | 2010–06–16 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2010-035&r=gth |
| By: | Roland Hodler; Simon Loertscher; Dominic Rohner |
| Abstract: | Decision makers lacking crucial specialist know-how often consult with better informed but biased experts. In our model the decision maker’s choice problem is binary and her preferred option depends on the state of the world unknown to her. The expert observes the state and sends a report to the decision maker. His bias is such that he prefers the same decision for all states. Lying about the state leads to a cost that increases in the size of the lie. As a function of the size of the expert’s bias and the decision maker’s prior about the underlying state, three kinds of equilibrium behavior occur. In each case equilibrium consists of separating and pooling segments, and the decision maker takes the expert’s preferred decision for some states for which she would not take this decision had she observed the state herself. The model has a variety of applications and extends to situations in which the decision maker may be naive and take the report by its face value, and to situations with multiple experts and uncertainty about the size of the expert’s bias. |
| Keywords: | Experts, policy advice, information distortion, costly signalling |
| JEL: | C72 D72 D82 |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:zur:iewwpx:496&r=gth |
| By: | Frankel, David M. |
| Abstract: | Many recent models of crises involve games with small, anonymous players and finite action sets, such as whether or not to attack a currency or withdraw funds from a bank. We show that such models, when repeated, do not yield recurring crises in the presence of a flexible class of payoff shocks. As an illustration, we apply this result to Diamond and Dybvig's model of bank runs. |
| JEL: | C73 E32 |
| Date: | 2010–07–10 |
| URL: | http://d.repec.org/n?u=RePEc:isu:genres:31687&r=gth |