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on Game Theory |
| By: | Karagözoglu, Emin (Maastricht University); Riedl, Arno (Maastricht University) |
| Abstract: | More often than not production processes are the joint endeavor of people having different abilities and productivities. Such production processes and the associated surplus production are often not fully transparent in the sense that the relative contributions of involved agents are blurred; either by lack of information about the actual performance of collaborators or because of random noise in the production process or both. These variables likely influence the surplus sharing negotiations following the production. By means of a laboratory experiment, we systematically investigate their role for the whole bargaining process from opening offers to (dis)agreements and find that uncertainties in surplus production and (even) a very coarse performance information lead to bargaining asymmetries. In addition, we find that bargainers' subjective entitlements are also influenced by performance information and the randomness inherent in the production process. These differences in subjective entitlements together with the differences in entitlements between better and worse performers influence the whole bargaining process and significantly contribute to the differences in bargaining outcomes. |
| Keywords: | bargaining, performance information, randomness in production process, entitlements, experiments |
| JEL: | C79 C92 D01 D29 D63 D89 M59 |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5079&r=gth |
| By: | Nicolas Jacquemet (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); Adam Zylbersztejn (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: | This paper reports experimental results from a one-shot game with two Nash equilibria: the first one is efficient, the second one relies on weakly dominated strategies. The experimental treatments consider three information-enhancing mechanisms in the game: simple repetition, cheap-talk messages and observation of past actions from the current interaction partner. Our experimental results show the use of dominated strategies is quite widespread. Any kind of information (through learning, words or actions) increases efficiency. As regards coordination, we find that good history performs better than good messages; but bad history performs worse than bad messages. |
| Keywords: | Coordination game, communication, cheap-talk, observation. |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00505164_v1&r=gth |
| By: | Fernando Louge (Institute of Mathematical Economics, Bielefeld University) |
| Abstract: | This paper considers a two-player game with a one-dimensional continuous strategy. We study the asymptotic stability of equilibria under the replicator dynamic when the support of the initial population is an interval. We find that, under strategic complementarities, Continuously Stable Strategy (CSS) have the desired convergence properties using an iterated dominance argument. For general games, however, CSS can be unstable even for populations that have a continuous support. We present a sufficient condition for convergence based on elimination of iteratively dominated strategies. This condition is more restrictive than CSS in general but equivalent in the case of strategic complementarities. Finally, we offer several economic applications of our results. |
| JEL: | C73 |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:bie:wpaper:436&r=gth |
| By: | L. Bagnoli; G. Negroni |
| Abstract: | Two parties bargaining over a pie whose size is determined by the investment decisions of both. The bargaining rule is sensitive to the investment behavior. If a symmetric investments profile is observed, bargaining proceeds according to the Nash Demand Game; otherwise bargaining proceeds according to the Ultimatum Game. We are interested in the evolutionary emergence of both an efficient investment norm and a bargaining norm. Under some conditions we prove that these norms co-evolve; when this happens they support the efficient investment and the egalitarian distribution of the surplus. In addition, when surplus requires that at least one agent invests, then either both norms co-evolve or no norm evolves. |
| JEL: | C78 L41 |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:710&r=gth |
| By: | Fernando Louge (Institute of Mathematical Economics, Bielefeld University); Frank Riedel (Institute of Mathematical Economics, Bielefeld University) |
| Abstract: | This paper studies the evolutionary stability of the unique Nash equilibrium of a first price sealed bid auction. It is shown that the Nash equilibrium is not asymptotically stable under payoff monotonic dynamics for arbitrary initial popu- lations. In contrast, when the initial population includes a continuum of strategies around the equilibrium, the replicator dynamic does converge to the Nash equilibrium. Simulations are presented for the replicator and Brown-von Neumann-Nash dynamics. They suggest that the convergence for the replicator dynamic is slow compared to the Brown-von Neumann-Nash dynamics. |
| JEL: | C73 D44 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:bie:wpaper:435&r=gth |
| By: | Fafchamps, Marcel; Goyal, Sanjeev; Leij, Marco J. van der |
| Abstract: | The matching of individuals in teams is a key element in the functioning of an economy. The network of social ties can potentially transmit important information on abilities and reputations and also help mitigate matching frictions by facilitating interactions among “screened” individuals. We conjecture that the probability of two individuals forming a team falls in the distance between the two individuals in the network of existing social ties. The objective of this paper is to empirically test this conjecture. We examine the formation of coauthor relations among economists over a twenty-year period. Our principal finding is that a new collaboration emerges faster among two researchers if they are “closer” in the existing coauthor network among economists. This proximity effect on collaboration is strong: Being at a network distance of 2 instead of 3, for instance, raises the probability of initiating a collaboration by 27%. |
| JEL: | D83 D85 C78 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ner:oxford:http://economics.ouls.ox.ac.uk/14800/&r=gth |