nep-gth New Economics Papers
on Game Theory
Issue of 2010‒10‒30
seventeen papers chosen by
Laszlo A. Koczy
Obuda University

  1. Finitely repeated games with semi-standard monitoring. By Pauline Contou-Carrère; Tristan Tomala
  2. The Minority of Three-Game: An Experimental and Theoretical Analysis By Thorsten Chmura; Werner Güth; Thomas Pitz; Anthony Ziegelmeyer
  3. Strategic choice of preferences: the persona model By David H. Wolpert; Julian Jamison; David Newth; Michael Harre
  4. On the game-theoretic foundations of competitive search equilibrium. By Kircher, Philipp; Galenianos, Manolis
  5. Perfect and Imperfect Real-Time Monitoring in a Minimum-Effort Game By Cary Deck; Nikos Nikiforakis
  6. Fight or Flight? Defending Against Sequential Attacks in the Game of Siege By Cary Deck; Roman Sheremeta
  7. Budget-Balance, Fairness and Minimal Manipulability By ANDERSSON, Tommy; EHLERS, Lars; SVENSSON, Lars-Gunnar
  8. Almost Common Priors By Ziv Hellman
  9. Other-regarding behaviour: Testing guilt- and reciprocity-based models By Tobias Regner; Nicole S. Harth
  10. Aggregating sets of von Neumann-Morgenstern. By Eric Danan; Thibault Gajdos; Jean-Marc Tallon
  11. Insuring against loss of evidence in game-theoretic probability By A. Philip Dawid; Steven de Rooij; Glenn Shafer; Alexander Shen; Nikolai Vereshchagin; Vladimir Vovk
  12. An Axiomatization of the Serial Cost-Sharing Method By SPRUMONT, Yves
  13. Combinatorial Voting By David S. Ahn; Santiago Oliveros
  14. Managerial Incentives and Stackelberg Equilibria in Oligopoly By Marcella Scrimitore
  15. Interdependent Preferences and Strategic Distinguishability By Dirk Bergemann; Stephen Morris; Satoru Takahashi
  16. Una propuesta metodológica para estimar los cambios sobre el valor de la propiedad: estudio de caso para Bogotá aplicando propensity score matching y By Jorge Andrés Perdomo C.
  17. Partial collusion with asymmetric cross-price effects By L. Savorelli

  1. By: Pauline Contou-Carrère (Centre d'Economie de la Sorbonne); 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.
    JEL: C72 C73
    Date: 2010–09
  2. By: Thorsten Chmura (Department of Economics, University of Munich); Werner Güth (Max Planck Institute of Economics, Strategic Interaction Group); Thomas Pitz (Nottingham University Business School China); Anthony Ziegelmeyer (Max Planck Institute of Economics, Strategic Interaction Group)
    Abstract: We report experimental and theoretical results on the minority of three-game where three players have to choose one of two alternatives independently and the most rewarding alternative is the one chosen by a single player. This coordination game has many asymmetric equilibria in pure strategies that are non strict and payoff-asymmetric, and a unique symmetric mixed strategy equilibrium in which each player's behavior is based on the toss of a fair coin. We show that such a straightforward behavior is predicted by Harsanyi and Selten's (1988) equilibrium selection theory as well as alternative solution concepts like impulse balance equilibrium and sampling equilibrium. Our results indicate that participants rely on various decision rules, and that only a quarter of them decide according to the toss of a fair coin. Reinforcement learning is the most successful decision rule as it describes best the behavior of about a third of our participants.
    Keywords: Coordination, Minority game, Mixed strategy, Learning models, Experiments
    JEL: C72 C91 D83
    Date: 2010–10–19
  3. By: David H. Wolpert; Julian Jamison; David Newth; Michael Harre
    Abstract: We introduce a modification to the two-timescale games studied in the evolution of preferences (EOP) literature. In this modification, the strategic process occurring on the long timescale is learning by an individual across his or her lifetime, not natural selection operating on genomes over multiple generations. This change to the longer timescale removes many of the formal difficulties of EOP models and allows us to show how two-timescale games can provide endogenous explanations for why humans sometimes adopt interdependent preferences and sometimes exhibit logit quantal response functions. In particular, we show that our modification to EOP explains experimental data in the Traveler’s Dilemma. We also use our modification to show how cooperation can arise in nonrepeated versions of the Prisoner’s Dilemma (PD). We then show that our modification to EOP predicts a “crowding out” phenomenon in the PD, in which introducing incentives to cooperate causes players to stop cooperating instead. We also use our modification to predict a tradeoff between the robustness and the benefit of cooperation in the PD.
    Keywords: Game theory
    Date: 2010
  4. By: Kircher, Philipp; Galenianos, Manolis
    Abstract: We provide a unified directed search framework with general production and matching specifications that encompasses most of the existing literature. We prove the existence of subgame perfect Nash equilibria in pure firm strategies in a finite version of the model. We use this result to derive a more complete characterization of the equilibrium set for the finite economy and to extend convergence results as the economy becomes large to general production and matching specifications. The latter extends the micro-foundations for the standard market-utility assumption used in competitive search models with a continuum of agents to new environments.
    Date: 2010
  5. By: Cary Deck (University of Arkansas and Economic Science Institute); Nikos Nikiforakis (Department of Economics, University of Melbourne)
    Abstract: This paper presents the results from a minimum-effort game in which individuals can observe the choices of others in real time. We find that under perfect monitoring almost all groups coordinate at the payoff-dominant equilibrium. However, when individuals can only observe the actions of their immediate neighbors in a circle network, monitoring improves neither coordination nor efficiency relative to a baseline treatment without real-time monitoring. We argue that the inefficiency of imperfect monitoring is due to information uncertainty, that is, uncertainty about the interpretation of the information available regarding the actions of others.
    Keywords: minimum effort game, information uncertainty, real time monitoring, circle network, cheap talk
    JEL: C72 C92 D82
    Date: 2010
  6. By: Cary Deck (University of Arkansas and Economic Science Institute); Roman Sheremeta (Argyros School of Business and Economics, Chapman University)
    Abstract: This paper examines theory and behavior in a two-player game of siege, sequential attack and defense. The attacker’s objective is to successfully win at least one battle while the defender’s objective is to win every battle. Theoretically, the defender either folds immediately or, if his valuation is sufficiently high and the number of battles is sufficiently small, then he has a constant incentive to fight in each battle. Attackers respond to defense with diminishing assaults over time. Consistent with theoretical predictions, our experimental results indicate that the probability of successful defense increases in the defenders valuation and it decreases in the overall number of battles in the contest. However, the defender engages in the contest significantly more often than predicted and the aggregate expenditures by both parties exceed predicted levels. Moreover, both defenders and attackers actually increase the intensity of the fight as they approach the end of the contest.
    Keywords: Colonel Blotto, conflict resolution, weakest-link, game of siege, multi-period resource allocation, experiments.
    JEL: C72 C91 D72 D74
    Date: 2010
  7. By: ANDERSSON, Tommy; EHLERS, Lars; SVENSSON, Lars-Gunnar
    Abstract: A common real-life problem is to fairly allocate a number of indivisible objects and a fixed amount of money among a group of agents. Fairness requires that each agent weakly prefers his consumption bundle to any other agent’s bundle. Under fairness, efficiency is equivalent to budget-balance (all the available money is allocated among the agents). Budget-balance and fairness in general are incompatible with non-manipulability (Green and Laffont, 1979). We propose a new notion of the degree of manipulability which can be used to compare the ease of manipulation in allocation mechanisms. Our measure counts for each problem the number of agents who can manipulate the rule. Given this notion, the main result demonstrates that maximally linked fair allocation rules are the minimally manipulable rules among all budget-balanced and fair allocation mechanisms. Such rules link any agent to the bundle of a pre-selected agent through indifferences (which can be viewed as indirect egalitarian equivalence).
    Keywords: minimal manipulability, fairness, budget-balance, allocation rules
    JEL: C71 C78 D63 D71 D78
    Date: 2010
  8. By: Ziv Hellman
    Abstract: What happens when priors are not common? We show that for each type profile τ over a knowledge space (Ω, Π), where the state space Ω is connected with respect to the partition profile Π, we can associate a value 0 ≤ ε ≤ 1 that we term the prior distance of τ , where ε = 0 if and only if the profile has a common prior. If τ has ε prior distance, then for any bet f amongst the players, it cannot be common knowledge that each player expects a positive gain of ε‖f‖<Sub>∞</Sub>, thus extending no betting results under common priors. Furthermore, as more information is obtained and partitions are refined, the prior distance, and thus the extent of common knowledge disagreement, decreases.
    Date: 2010–09
  9. By: Tobias Regner (Max Planck Institute of Economics, Strategic Interaction Group, Jena); Nicole S. Harth (International Graduate College, Friedrich Schiller University, Jena)
    Abstract: Intentions-based models of social preferences use the framework of psychological games and incorporate higher order beliefs and actions into the utility function. We test the robustness of two types of intentions-based models (guilt aversion and reciprocity). In addition to incentivised elicitation of first- and second-order action beliefs, we assess participants' sensitivity to feel guilt, and their attitude towards acting reciprocal. The data confirm the predictions of intentions-based models. Both second-order beliefs and the weighting factor that depends on a participant's sensitivity to guilt/reciprocity are relevant for the decisions taken. Second-order beliefs appear to have an inverse U-shaped effect on the amount returned.
    Keywords: social preferences, other-regarding behaviour, experiments, trust game, guilt aversion, beliefs, psychological game theory, emotions
    JEL: C91 D84
    Date: 2010–10–20
  10. By: Eric Danan (THEMA); Thibault Gajdos (Centre d'Economie de la Sorbonne, Ecole Polytechnique, CERSES); Jean-Marc Tallon (Centre d'Economie de la Sorbonne - Paris School of Economics)
    Abstract: We analyze the aggregation problem without the assumption that individuals and society have fully determined and observable preferences. More precisely, we endow individuals ans society with sets of possible von Neumann-Morgenstern utility functions over lotteries. We generalize the classical neutrality assumption to this setting and characterize the class of neutral social welfare function. This class turns out to be considerably broader for indeterminate than for determinate utilities, where it basically reduces to utilitarianism. In particular, aggregation rules may differ by the relationship between individual and social indeterminacy. We characterize several subclasses of neutral aggregation rules and show that utilitarian rules are those that yield the least indeterminate social utilities, although they still fail to systematically yield a determinate social utility.
    Keywords: Aggregation, vNM utility, indeterminacy, neutrality, utilitarianism.
    JEL: D71 D81
    Date: 2010–07
  11. By: A. Philip Dawid; Steven de Rooij; Glenn Shafer; Alexander Shen; Nikolai Vereshchagin; Vladimir Vovk
    Abstract: We consider the game-theoretic scenario of testing the performance of Forecaster by Sceptic who gambles against the forecasts. Sceptic's current capital is interpreted as the amount of evidence he has found against Forecaster. Reporting the maximum of Sceptic's capital so far exaggerates the evidence. We characterize the set of all increasing functions that remove the exaggeration. This result can be used for insuring against loss of evidence.
    Date: 2010–05
  12. By: SPRUMONT, Yves
    Abstract: We offer an axiomatization of the serial cost-sharing method of Friedman and Moulin (1999). The key property in our axiom system is Group Demand Monotonicity, asking that when a group of agents raise their demands, not all of them should pay less.
    Keywords: Cost sharing, serial method, Group Demand Monotonicity, Shapley value
    JEL: C71 D63
    Date: 2010
  13. By: David S. Ahn; Santiago Oliveros
    Date: 2010–10–18
  14. By: Marcella Scrimitore
    Abstract: The paper investigates both quantity and price oligopoly games in markets with a variable number of managerial and entrepreneurial firms which defines market structure. Following Vickers (Economic Journal, 1985) which establishes an equivalence between the equilibrium under unilateral delegation and the Stackelberg quantity equilibrium, the outcomes of these games are compared with the ones in sequential multi-leaders and multi-followers games. The profitability of a managerial/entrepreneurial attitude vs leadership/followership is shown to critically depend upon the kind of strategy, price or quantity, and upon the assumed market structure. Indeed, the latter turns out to be crucial in determining the equivalence result that is shown to be contingent on the assumption that just one leader or one managerial firm operate in the market. A welfare analysis finally highlights the differences between the delegation and the sequential games, focusing on the impact of market structure and imperfect substitutability on the equilibria of the two games.
    Keywords: Strategic delegation, sequential games, quantity and price competition, welfare analysis.
    JEL: C72 L13 L22
    Date: 2010–10–19
  15. By: Dirk Bergemann; Stephen Morris; Satoru Takahashi
    Date: 2010–10–22
  16. By: Jorge Andrés Perdomo C.
    Abstract: Este estudio comparó los resultados obtenidos mediantes Propensity Score Matching (PSM, nombre y sigla en inglés) y un modelo de precios hedónico espaciales (PHE) para estimar el cambio en el valor de la propiedad en Bogotá, cuando un predio se encuentra ubicado cerca a una estación de TransMilenio (TM). Así, en 2008, las viviendas colindantes a una estación de TM en promedio obtienen un precio mayor entre $117.500 (PHE) y $115.403 (PSM) por metro cuadrado, cuando es contrastado con el valor por metro cuadrado de los predios alejados del área de influencia del sistema TM y que potencialmente hubiesen podido estar afectados directamente por el proyecto.
    Date: 2010–09–05
  17. By: L. Savorelli
    Abstract: Asymmetries in cross-price elasticities have been demonstrated by several empirical studies. In this paper we study from a theoretical stance how introducing asymmetry in the substitution effects influences the sustainability of collusion. We characterize the equilibrium of a linear Cournot duopoly with substitute goods, and consider substitution e¤ects which are asymmetric in magnitude. Within this framework, we study partial collusion using Friedman (1971) solution concept. Our main result shows that the interval of quantities supporting collusion in the asymmetric setting is always smaller than the interval in the symmetric benchmark. Thus, the asymmetry in the substitution effects makes collusion more difficult to sustain. This implies that previous Antitrust decisions could be reversed by considering the role of this kind of asymmetry.
    JEL: C72 D43 L13
    Date: 2010–10

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