nep-gth New Economics Papers
on Game Theory
Issue of 2011‒01‒23
seven papers chosen by
Laszlo A. Koczy
Hungarian Academy of Sciences and Obuda University

  1. Signaling Concerns about Fairness: Cooperation under Uncertain Social Preferences By John Duffy; Felix Munoz-Garcia
  2. Note on a Two-Player All-pay Auction with Asymmetrical Bidders and Incomplete Information By M. Magnani
  3. Keeping Negotiations in the Dark: Environmental Agreements under Incomplete Information By Ana Espinola-Arredondo; Felix Munoz-Garcia
  4. A theory of deception. By Ettinger, David; Jehiel, Philippe
  5. Inducing Good Behavior: Bonuses versus Fines in Inspection Games By Daniele Nosenzo; Theo Offerman; Martin Sefton; Ailko van der Veen
  6. On the existence and social optimality of equilibria in a Hotelling game with uncertain demand and linearquadratic costs By Michal Król
  7. Networks and collective action By Ramón Jesús Flores Díaz; Maurice Koster; Ines Lindner; Elisenda Molina

  1. By: John Duffy; Felix Munoz-Garcia (School of Economic Sciences, Washington State University)
    Abstract: This paper investigates incomplete information and signaling about players?inequity aversion in the simultaneous and sequential-move prisoner?s dilemma game. We ?first evaluate the role of incomplete information according to: (1) whether uncertainty helps select the effcient equilibrium outcome, and (2) whether more cooperation can be sustained under incomplete than under complete information. We then examine the possibility of information transmission among individuals in a signaling game. A separating equilibrium can be supported in which players with high concerns about fairness bear the cost of cooperating in order to reveal their type to opponents, thus promoting cooperation in subsequent periods. We also fi?nd a pooling equilibrium in which a player unconcerned about inequity aversion initially cooperates in order to mislead the uninformed player. This misleading strategy induces cooperation from the uninformed player in the subsequent stage of the game, moment at which the unconcerned player takes the opportunity to defect. This "?backstabbing?" equilibrium helps explain frequently observed behavior in ?finitely-repeated experiments.
    Keywords: Prisoner?s Dilemma; Inequity aversion; Incomplete Information; Signaling
    JEL: C72 C73 D82
    Date: 2010–12
  2. By: M. Magnani
    Abstract: The present paper analyzes a general class of first-price all-pay auctions where two players have different "bidding technologies" and one bidder has a head start advantage over his/her opponent. Equilibria are characterized for the complete information setting and for the case where there is incomplete asymmetrical information. In particular, the handicapped player is uncertain about the size of the opponent’s advantage.
    Keywords: All-pay auctions and Auction theory and Games with asymmetrical players and Incomplete information games
    JEL: C72 D44 D81
    Date: 2010
  3. By: Ana Espinola-Arredondo; Felix Munoz-Garcia (School of Economic Sciences, Washington State University)
    Abstract: This paper investigates the role of uncertainty as a tool to support cooperation in international environmental agreements. We consider two layers of uncertainty. Under unilateral uncertainty treaties become successful with positive probability in the signaling game, even under parameter conditions for which no agreement is reached under complete information. Under bilateral uncertainty, a separating equilibrium emerges where the leader participates in the treaty only when its environmental concerns are high. We show that the agreement is signed for larger sets of parameter values under unilateral uncertainty. We then show that further layers of uncertainty might enhance social welfare.
    Keywords: Signaling games; Unilaterial uncertainty; Bilateral uncertainty; Non-binding negotiations
    JEL: C72 D62 Q28
    Date: 2010–12
  4. By: Ettinger, David; Jehiel, Philippe
    Abstract: This paper proposes an equilibrium approach to belief manipulation and deception in which agents only have coarse knowledge of their opponent's strategy. Equilibrium requires the coarse knowledge available to agents to be correct, and the inferences and optimizations to be made on the basis of the simplest theories compatible with the available knowledge. The approach can be viewed as formalizing into a game theoretic setting a well documented bias in social psychology, the fundamental attribution error. It is applied to a bargaining problem, thereby revealing a deceptive tactic that is hard to explain in the full rationality paradigm.
    Keywords: Bargaining Theory; deception; belief manipulation;
    JEL: D84 D83 C78
    Date: 2010
  5. By: Daniele Nosenzo (School of Economics, University of Nottingham); Theo Offerman (CREED, Department of Economics, University of Amsterdam); Martin Sefton (School of Economics, University of Nottingham); Ailko van der Veen (CREED, Department of Economics, University of Amsterdam)
    Abstract: We examine the effectiveness of bonuses and fines in an ‘inspection game’ where an employer can learn the effort of a worker through costly inspection. Standard game theoretic analysis predicts that fines discourage shirking, whereas bonuses encourage shirking. In contrast, ownpayoff effects suggest that both fines and bonuses discourage shirking. In an experiment we find that fines are more effective than bonuses in reducing shirking. However, we do not find that bonuses encourage shirking. Behavioral theories based on Impulse Balance Equilibrium or Quantal Response Equilibrium provide a good account of deviations from Nash equilibrium predictions.
    Keywords: Inspection Games; Costly Monitoring; Rewards and Punishments; Bonuses and Fines; Quantal Response Equilibrium; Impulse Balance Equilibrium; Experiment
    JEL: C70 C72 C92
    Date: 2010–12
  6. By: Michal Król
    Date: 2011
  7. By: Ramón Jesús Flores Díaz; Maurice Koster; Ines Lindner; Elisenda Molina
    Abstract: Given a social network, we are interested in the problem of measuring the influence of a group of agents to lead the society to adopt their behavior. Motivated by the description of terrorist movements, we provide a markovian dynamical model for non-symmetric societies, which takes into account two special features: the hard core terrorist group cannot be influenced, and the remaining agents may change from active to non-active and vice versa during the process. In this setting, we interpret the absorption time of the model, which measures how quickly the terrorist movement achieve the support of all society, as a group measure of power. In some sense, our model generalizes the classical approach of DeGroot to consensus formation
    Keywords: Collective action, Social networks, Influence and Diffusion models
    Date: 2010–12

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