nep-gth New Economics Papers
on Game Theory
Issue of 2010‒10‒23
fifteen papers chosen by
Laszlo A. Koczy
Obuda University

  1. Von Neumann-Morgenstern solution and convex descompositions of TU games By Francesc Llerena; Carles Rafels
  2. Finitely repeated games with semi-standard monitoring By Pauline Contou-Carrère; Tristan Tomala
  3. Communication, correlation and cheap-talk in games with public information By Heller, Yuval; Solan, Eilon; Tomala, Tristan
  4. Network Extension By Hans Haller
  5. Feature-based Choice and Similarity in Normal-form Games: An Experimental Study By Giovanna Devetag; Sibilla Di Guida
  6. The Framing of Games and the Psychology of Play By Martin Dufwenberg; Simon Gaechter; Heike Hennig-Schmidt
  7. A Technical Note on Lorenz Dominance in Cooperative Games By Sanchez-Soriano, J.; Brânzei, R.; Llorca, N.; Tijs, S.H.
  8. Non-cooperative incentives to share knowledge in competitive environments By Andrzej Kwiatkowski
  9. Nash Implementation in Production Economies with Unequal Skills: A Complete Characterization By Yoshihara, Naoki; Yamada, Akira
  10. Obligation Rules By Gustavo Bergantiños; Anirban Kar
  11. Sending information to interactive receivers playing a generalized prisoners' dilemma By Kfir Eliaz; Roberto Serrano
  12. Does bargaining matter in the small firm's matching Mmodel? By L'Haridon, Olivier; Malherbet, Franck; Pérez-Duarte, Sébastien
  13. Prospects after the Voting Reform of the Lisbon Treaty By Laszlo A. Koczy
  15. Affirmative Action Policy and Effort Levels. Sequential-Move Contest Game Argument By Andrzej Kwiatkowski

  1. By: Francesc Llerena; Carles Rafels (Universitat de Barcelona)
    Abstract: We study under which conditions the core of a game involved in a convex decomposition of another game turns out to be a stable set of the decomposed game. Some applications and numerical examples, including the remarkable Lucas five player game with a unique stable set different from the core, are reckoning and analyzed.
    Keywords: convex games, cooperative games, stable sets
    JEL: C71
    Date: 2010
  2. By: Pauline Contou-Carrère (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I); Tristan Tomala (HEC Paris - Department of Economics and Decision Sciences)
    Abstract: This paper studies finitely repeated games with semi-standard monitoring played in pure strategies. In these games, each player's action set is endowed with a partition, and the equivalence classes of the actions played are publicly observed. We characterize the limit set of equilibrium payoffs as the duration of the game increases.
    Keywords: Finitely repeated games, semi-standard monitoring, folk theorem.
    Date: 2010–09
  3. By: Heller, Yuval; Solan, Eilon; Tomala, Tristan
    Abstract: This paper studies extensive form games with perfect information and simultaneous moves, henceforth called games with public information. On this class, we prove that all communication equilibrium payoffs can be obtained without mediator by cheap-talk procedures. The result encompasses repeated games and stochastic games.
    Keywords: correlated equilbirium; distributed computation
    JEL: C72
    Date: 2010–06–01
  4. By: Hans Haller
    Abstract: In a model of strategic network formation, the endogenously formed network is built around a pre-existing network. We envisage that the pre-existing or core network is publicly provided. Strategic network formation is decentralized: Players act in their private interest and bear the costs when adding links to the pre-existing network. We study how the pre-existing network affects existence of Nash equilibria and efficiency of Nash equilibrium outcomes.
    Keywords: Network formation; Network extension; Network infrastructure; Strategic games; Efficiency; Stability
    Date: 2010
  5. By: Giovanna Devetag; Sibilla Di Guida
    Abstract: In this paper we test the effect of descriptive "features" on initial strategic behavior in normal form games, where "descriptive" are all those features that can be modified without altering the (Nash) equilibrium structure of a game. We observe that our experimental subjects behave according to some simple heuristics based on descriptive features, and that these heuristics are stable even across strategically different games. This suggests that a categorization of games based on features may be more accurate in predicting agents' initial behavior than the standard categorization based on Nash equilibria, as shown by the analysis of individual behavior. Anaysis of choice patterns and individual response times suggests that non-equilibrium choices may be due to the use of incorrect and simplified mental representations of the game structure, rather than to beliefs in other players' irrationality. Of the four stationary concepts analyzed (Nash equilibrium, QRE, action sampling, and payoff sampling), QRE results the best in fitting the observed data.
    Keywords: normal form games, one-shot games, response times, similarity, categorization, focal points
    JEL: C72 C91 C92
    Date: 2010–10–09
  6. By: Martin Dufwenberg (University of Arizona); Simon Gaechter (University of Nottingham); Heike Hennig-Schmidt (University of Bonn)
    Abstract: Psychological game theory can provide rational-choice-based framing effects; frames influence beliefs, beliefs influence motivations. We explain this theoretically and explore empirical relevance experimentally. In a 2?2 design of one-shot public good games we show that frames affect subject’s first- and second-order beliefs, and contributions. From a psychological gametheoretic framework we derive two mutually compatible hypotheses about guilt aversion and reciprocity under which contributions are related to second- and first-order beliefs, respectively. Our results are consistent with either.
    Keywords: framing; psychological game theory; guilt aversion; reciprocity; public good games; voluntary cooperation
    JEL: C91 C72 D64 Z13
    Date: 2010–09
  7. By: Sanchez-Soriano, J.; Brânzei, R.; Llorca, N.; Tijs, S.H. (Tilburg University, Center for Economic Research)
    Abstract: AMS classification: 91A12
    Keywords: Cooperative games;Lorenz dominance;egalitarianism;con- strained egalitarian solution;equal split-off set.
    JEL: C71
    Date: 2010
  8. By: Andrzej Kwiatkowski
    Abstract: In this paper we study a model where non-cooperative agents may exchange knowledge in a competitive environment. As a potential factor that could induce the knowledge disclosure between humans we consider the timing of the moves of players. We develop a simple model of a multistage game in which there are only three players and competition takes place only within two stages. Players can share their private knowledge with their opponents and the knowledge is modelled as influencing their marginal cost of effort. We identify two main mechanisms that work towards knowledge disclosure. One of them is that before the actual competition starts, the stronger player of the first stage of a game may have desire to share his knowledge with the "observer", because this reduces the valuation of the prize of the weaker player of that stage and as a result his effort level and probability of winning in a fight. Another mechanism is that the "observer" may have sometimes desire to share knowledge with the weaker player of the first stage, because in this way, by increasing his probability of winning in that stage, he decreases the probability of winning of the stronger player. As a result, in the second stage the "observer" may have greater chances to meet the weaker player rather than the stronger one.
    Keywords: knowledge sharing, strategic knowledge disclosure, multistage contest game, non-cooperative games
    JEL: C72 D83
    Date: 2010–10
  9. By: Yoshihara, Naoki; Yamada, Akira
    Abstract: In production economies with unequal labor skills, where the planner is ignorant to the set of feasible allocations in advance of production, the paper firstly introduces a new axiom, Nonmanipulability of Irrelevant Skills (NIS), which together with Maskin Monotonicity constitute the necessary and sufficient conditions for Nash implementation. Secondly, the paper defines natural mechanisms, and then fully characterizes Nash implementation by natural mechanisms, using a slightly stronger variation of NIS and Supporting Price Independence. Following these characterizations, it is shown that there is a Maskin monotonic allocation rule which is not implementable when information about individual skills is absent. In contrast, many fair allocation rules, which are known to be non-implementable in the present literature, are implementable by the natural mechanisms.
    Keywords: Unequal labor skills, Nash implementation, Nonmanipulability of Irrelevant Skills
    JEL: C72 D51 D78 D82
    Date: 2010–10
  10. By: Gustavo Bergantiños; Anirban Kar
    Abstract: They provide a characterization of the obligation rules in the context of minimum cost spanning tree games. They also explore the relation between obligation rules and random order values of their reducible cost game - it is shown that the later is a subset of the obligation rules. Moreover we provide a necessary and sufficient condition on obligation function such that the corresponding obligation rule coincides with a random order value.
    Keywords: characterization, obligation, cost spanning, sufficient, coincides
    Date: 2010
  11. By: Kfir Eliaz (Brown University); Roberto Serrano (Brown University and IMDEA Social Sciences Institute)
    Abstract: Consider the problem of information disclosure for a planner who faces two agents interacting in a state-dependent multi-action prisoners' dilemma. We find conditions under which the planner can make use of his superior information by disclosing some of it to the agents, and conditions under which such information leakage is not possible. Although the problem is entirely symmetric, the planner's only way to reveal part of the information is based on creating asymmetries between the two agents by giving them different pieces of information. We also find conditions under which such partially informative equilibria are the planner's best equilibria.
    Keywords: Information disclosure; generalized prisoners' dilemma; uninformative equilibria; partially or fully informative equilibria
    JEL: C72 D82 D83
    Date: 2010–10–12
  12. By: L'Haridon, Olivier; Malherbet, Franck; Pérez-Duarte, Sébastien
    Abstract: In this article, the authors use a stylized model of the labor market to investigate the effects of three alternative and well-known bargaining solutions. They apply the Nash, the Egalitarian and the Kalai-Smorodinsky bargaining solutions in the small firm’s matching model of unemployment. To the best of their knowledge, this is the first attempt that has been made to implement and systematically compare these solutions in search matching economies. Their results are twofold. First from the theoretical/methodological viewpoint, they extend a somewhat flexible search matching economy to alternative bargaining solutions. In particular, they prove that the Egalitarian and the Kalai -Smorodinsky solutions are easily implementable and mathematically tractable within search-matching economies. Second, their results show that even though the traditional results of bargaining theory apply in this context, they are generally qualitatively different and quantitatively weaker than expected. This is of particular relevance in comparison with the results established in the earlier literature.
    Keywords: Search and matching models; Bargaining theory; Nash; Egalitarian; Kalai-Smorodinsky
    JEL: C71 C78 J20 J60
    Date: 2010–09–07
  13. By: Laszlo A. Koczy (Institute of Economics - Hungarian Academy of Sciences)
    Abstract: The European Union used to make decisions by unanimity or near unanimity. After a series of extensions, with 27 member states the present decision making mechanisms have become very slow and assigned power to the members in an arbitrary way. The new decision rules accepted as part of the Lisbon Treaty did not only make decision making far easier, but streamlined the process by removing the most controversial element: the voting weights. The new system relies entirely on population data. We look at the immediate impact of the reform as well as the long term effects of the dfferent demographic trends in the 27 member states. We find that the Lisbon rules benefit the largest member states, while medium sized countries, especially Central Eastern European countries suffer the biggest losses.
    Keywords: European Union, Council of Ministers, qualified majority voting, Banzhaf index, Shapley-Shubik index, a priori voting power, demographics
    JEL: C71 D72
    Date: 2010–09
  14. By: Daniele Nosenzo (University of Nottingham); Martin Sefton (University of Nottingham)
    Abstract: In this paper we examine voluntary contributions to a public good, embedding Varian (1994)’s voluntary contribution game in extended games that allow players to choose the timing of their contributions. We show that predicted outcomes are sensitive to the structure of the extended game, and also to the extent to which players care about payoff inequalities. We then report a laboratory experiment based on these extended games. We find that behavior is similar in the two extended games: subjects avoid the detrimental move order of Varian’s model, where a person with a high value of the public good commits to a low contribution, and instead players tend to delay contributions. These results suggest that commitment opportunities may be less damaging to public good provision than previously thought.
    Keywords: Public Goods, Voluntary Contributions, Sequential Contributions, Endogenous Timing, Action Commitment, Observable Delay, Experiment
    JEL: H41 C72 C92
    Date: 2010–08
  15. By: Andrzej Kwiatkowski
    Abstract: In this paper we analyse a simple two-person sequential-move contest game with heterogeneous players. Assuming that the heterogeneity could be the consequence of past discrimination, we study the e¤ects of implementation of affirmative action policy, which tackles this heterogeneity by compensating discriminated players, and compare them with the situation in which the heterogeneity is ignored and the contestants are treated equally. In our analysis we consider different orders of moves. We show that the order of moves of contestants is a very important factor in determination of the effects of the implementation of the affirmative action policy. We also prove that in such cases a significant role is played by the level of the heterogeneity of individuals. In particular, in contrast to the present-in-the-literature predictions, we demonstrate that as a consequence of the interplay of these two factors, the response to the implementation of the affirmative action policy option may be the decrease in the total equilibrium effort level of the contestants in comparison to the unbiased contest game.
    Keywords: Asymmetric contest; sequential-move contest; affirmative action; discrimination
    JEL: C72 D63 I38 J78
    Date: 2010–10

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