|
on Game Theory |
|
Issue of 2011‒04‒09
fifteen papers chosen by Laszlo A. Koczy Hungarian Academy of Sciences and Obuda University |
| By: | FURUSAWA Taiji; KONISHI Hideo |
| Abstract: | We consider a (pure) public goods provision problem with voluntary participation in a quasi-linear economy. We propose a new hybrid solution concept, the free-riding-proof core (FRP-Core), which endogenously determines a contribution group, public goods provision level, and how to share the provision costs. The FRP-Core is always nonempty in public goods economies but does not usually achieve global efficiency. The FRP-Core has support from both cooperative and noncooperative games. In particular, it is equivalent to the set of perfectly coalition-proof Nash equilibria (Bernheim, Peleg, and Whinston, 1987) of a dynamic game with players' participation decisions followed by a common agency game of public goods provision. |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:11028&r=gth |
| By: | Lohmann, E.R.M.A.; Borm, P.E.M.; Herings, P.J.J. (Tilburg University, Center for Economic Research) |
| Abstract: | To verify whether a transferable utility game is exact, one has to check a linear inequality for each exact balanced collection of coalitions. This paper studies the structure and properties of the class of exact balanced collections. Comparing the definition of exact balanced collections with the definition of balanced collections, the weight vector of a balanced collection must be positive whereas the weight vector for an exact balanced collection may contain one negative weight. We investigate minimal exact balanced collections, and show that only these collections are needed to obtain exactness. The relation between minimality of an exact balanced collection and uniqueness of the corresponding weight vector is analyzed. We show how the class of minimal exact balanced collections can be partitioned into three basic types each of which can be systematically generated. |
| Keywords: | Cooperative games;exact games;exact balanced collections. |
| JEL: | C71 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:2011012&r=gth |
| By: | Hamers, H.J.M.; Miquel, S.; Norde, H.W. (Tilburg University, Center for Economic Research) |
| Abstract: | For the class of minimum coloring games (introduced by Deng et al. (1999)) we investigate the existence of population monotonic allocation schemes (introduced by Sprumont (1990)). We show that a minimum coloring game on a graph G has a population monotonic allocation scheme if and only if G is (P4, 2K2)-free (or, equivalently, if its complement graph G is quasi-threshold). Moreover, we provide a procedure that for these graphs always selects an integer population monotonic allocation scheme. |
| Keywords: | Minimum coloring game;population monotonic allocation scheme;(P4;2K2)-free graph;quasi-threshold graph. |
| JEL: | C71 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:2011016&r=gth |
| By: | Grundel, S.; Borm, P.E.M.; Hamers, H.J.M. (Tilburg University, Center for Economic Research) |
| Abstract: | This paper considers situations characterized by a common-pool resource, which needs to be divided among agents. Each of the agents has some claim on this pool and an individual reward function for assigned resources. This paper analyzes not only the problem of max- imizing the total joint reward, but also the allocation of these rewards among the agents. Analyzing these situations a new class of transferable utility games is introduced, called multipurpose resource games. These games are based on the bankruptcy model, as intro- duced by O'Neill (1982). It is shown that every multipurpose resource game is compromise stable. Moreover, an explicit expression for the nucleolus of these games is provided. |
| Keywords: | bankruptcy games;compromise stability;nucleolus. |
| JEL: | C71 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:2011029&r=gth |
| By: | Koshevoy, G.A.; Talman, A.J.J. (Tilburg University, Center for Economic Research) |
| Abstract: | For an arbitrary set system we show that there exists a unique minimal building set containing the set system. As solutions we take the solutions for this building covering by extending in a natural way the characteristic function to it. |
| Keywords: | Core;building set;nested set;Myerson value;average tree solution. |
| JEL: | C71 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:2011025&r=gth |
| By: | Niko Noeske (Institute of Mathematical Economics, Bielefeld University) |
| Abstract: | We analyze indirect evolutionary two-player games to identify the dynamic emergence of (strong) reciprocity in a large number of economic settings. The underlying evolutionary environment allows for an arbitrary initial population state provided that every degree of the compact space of reciprocity is adherent to at least one individual of the corresponding continuum population. The basic results, which essentially maintain the evolutionary viability of reciprocity, are, in several directions, context dependent, and minimum valid for the wide class of evolutionary dynamics which hold for regularity and payoff-monotonicity. The evolutionary solution concept which is applied to elevate the explanatory power of emerging Nash equilibria is dominance solvability, in this case, for continuous strategy spaces. An asymmetric aspect comes into play since the actions of the evolutionary players are not only determined by the current state of reciprocity but also by their inherent, context-free preferences towards others which differ among one another devoid of being endogenized in the time span of the dynamic process at hand. |
| Keywords: | reciprocity, evolutionary game theory, dominance solvability, asymmetric game setting, payoff-monotonic dynamics |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:bie:wpaper:446&r=gth |
| By: | David M. McEvoy (Department of Economics, Appalachian State University); Todd L. Cherry (Department of Economics, Appalachian State University); John K. Stranlund (Department of Resource Economics, University of Massachusetts Amherst) |
| Abstract: | This paper examines the endogenous formation of coalitions that provide public goods in which players implement a minimum participation requirement before deciding whether to join. We demonstrate theoretically that payoff-maximizing players will vote to implement efficient participation requirements and these coalitions will form. However, we also demonstrate that if some players are averse to inequality they can cause inefficient outcomes. Inequality-averse players can limit free riding by implementing larger than efficient coalitions or by blocking efficient coalitions from forming. We test the theory with experimental methods and observe individual behavior and coalition formation consistent with a model of inequality-averse players. |
| Keywords: | public goods, coalition formation, inequality aversion, participation requirement, experiments |
| JEL: | C92 H41 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:dre:wpaper:2011-2&r=gth |
| By: | Jay Pil Choi (Department of Economics, Michigan State University); Subhasish M. Chowdhury (School of Economics, University of East Anglia); Jaesoo Kim (Department of Economics, IUPUI, Indianapolis) |
| Abstract: | This article studies the interaction between simultaneous inter-group and intra-group conflicts. We introduce power inequality between group members and consider a constant elasticity of substitution group impact function. We explain how each group's internal conflict influences its chance of winning in the external conflict and show that a less conflictive group may expend more effort in collective action if the group impact function shows enough degrees of complementrarity. In addition, we demonstrate a possible non-monotonic change in the equilibrium payoff and rent dissipation with respect to the power inequality. |
| Keywords: | Contest, Collective decision, Group contest, Asymmetry, Internal conflict |
| JEL: | C72 D72 D74 H41 |
| Date: | 2011–03–28 |
| URL: | http://d.repec.org/n?u=RePEc:uea:aepppr:2011_25&r=gth |
| By: | Godal, Odd (Göteborg University and University of Bergen); Meland, Frode (University of Bergen, Department of Economics) |
| Abstract: | This paper discusses coalition formation with side payments in markets for transferable property rights where strategic agents prevail on both sides of the market. Our concern is emissions permit trading under the Kyoto Protocol. While a seller cartel is not profitable, our analysis indicates that coalitions between sellers and buyers pay off. Three stable cartels are found. None involve all agents, yet they all induce overall e¢ ciency. To support a stable coalition, the EU, Japan and Canada may pay together between 0 and 13 billion US dollars per year to Russia. The permit price and society-wide emission reductions are nil. |
| Keywords: | Emissions trading; Kyoto Protocol; cartel formation; merger profitability. |
| JEL: | C71 C72 Q58 |
| Date: | 2011–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bergec:2006_004&r=gth |
| By: | Flåm, Sjur Didrik (University of Bergen, Department of Economics) |
| Abstract: | Abstract. Exchange of risks is considered here as a transferableutility, cooperative game, featuring risk averse players. Like in competitive equilibrium, a core solution is determined by shadow prices on state-dependent claims. And like in finance, no risk can properly be priced only in terms of its marginal distribution. Pricing rather depends on the pooled risk and on the convolution of individual preferences. The paper elaborates on these features, placing emphasis on the role of prices and incompleteness. Some novelties come by bringing questions about existence, computation and uniqueness of solutions to revolve around standard Lagrangian duality. Especially outlined is how repeated bilateral trade may bring about a price-supported core allocation. |
| Keywords: | Keywords: cooperative game; transferable utility; core; risks; mutual insurance; contingent prices; bilateral exchange; supergradients; stochastic approximation. |
| JEL: | C71 D52 G12 |
| Date: | 2011–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bergec:2006_009&r=gth |
| By: | Simon Halliday |
| Abstract: | In attempting to understand cooperation, economists have used the methods of experimental economics to focus on spheres of human behavior in which humans display altruism, reciprocity, or other social preferences through giving and through punishment. Recent work has begun to examine whether allowing allocations in the negative domain, that is, allowing subjects to take (or steal) other subjects' endowments, might affect participants' behavior. If participants' behavior is affected, then our understanding of experimental results generally, and social preferences speci cally, should be affected too (List 2007, Bardsley 2008). In this paper we propose an experimental variation on the Dictator Game with third-party punishment (Fehr and Fischbacher 2004b). We examine, first, a basic Dictator Game with third-party punishment, after which we introduce a treatment allowing the dictator to take from the receiver, in the knowledge that the third party could punish them. The results conflict. Many dictators choose the most self-interested option, while, when taking is introduced as an option for the dictator, third parties punish the most self-interested option more than in the baseline. |
| JEL: | C91 D63 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:rza:wpaper:211&r=gth |
| By: | James C. Cox; Elinor Ostrom; James M. Walker |
| Abstract: | Social dilemmas characterize decision environments in which individuals' exclusive pursuit of their own material self-interest can produce inefficient allocations. Two such environments are those characterized by public goods and common-pool resources in which the social dilemmas can be manifested in free riding and tragedy of the commons outcomes. Much field and laboratory research has focused on the effectiveness of alternative political-economic institutions in counteracting individuals' tendencies to underprovide public goods and over-extract commonpool resources. Previous laboratory research has not focused on the implications of power asymmetries in paired public good and common pool game settings. In our baseline treatments, we experiment with simultaneous move one-period games in which paired comparisons can be made across settings with public good and common pool games. In our central treatments, we experiment with pairs of sequential move one-period games in which second movers with asymmetric power -- "bosses and kings" -- can have large effects on efficiency and equity. The central questions are whether the bosses and kings do have significant effects on outcomes and whether those effects differ across the paired public good and common pool games in ways that can be rationalized by some theories but not others. |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:exc:wpaper:2011-06&r=gth |
| By: | Raffaele Fiocco; Mario Gilli |
| Abstract: | We consider the regulation of a monopolistic market when the prin- cipal delegates to a regulatory agency two tasks: the supervision of the firm's unknown costs and the arrangement of a pricing mechanism. As usual, the agency may have an incentive to hide information from the principal to share the informative rent with the firm. The novelty of this paper is that both the regulatory mechanism and the side con- tracting between the agency and the firm are modelled as a bargaining process. This negotiation between the regulator and the monopoly induces a radical change in the extraprofit from private information, which is now equal to the standard informational rent weighted by the agency’ bargaining power. This in turn a¤ects the collusive stage, in particular the firm has the greatest incentive to collude when fac- ing an agency with the same bargaining power. Then, we focus on the optimal organizational responses to the possibility of collusion. In our setting, where incompleteness of contracts prevents the design of a screening mechanism between the agency’ types and thus Tirole’ equivalence principle does not apply, we prove that the stronger the agency in the negotiation process, the greater the incentives for the principal to tolerate collusion in equilibrium. |
| Keywords: | regulation, bargaining, collusion. |
| JEL: | D73 D82 L51 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:mib:wpaper:207&r=gth |
| By: | Duygu Yengin (School of Economics, University of Adelaide) |
| Abstract: | In the problem of assigning indivisible goods and monetary transfers, we characterize welfare-egalitarian mechanisms (that are decision-efficient and incentive compatible) with an axiom of solidarity under preference changes and a fair ranking axiom of order preservation. This result is in line with characterizations of egalitarian rules with solidarity in other economic models. We also show that we can replace order-preservation with egalitarian-equivalence or no-envy (on the subadditive domain) and still characterize the welfare-egalitarian class. We show that, in the model we consider, the welfare-egalitarian mechanisms appear to be the best candidates to satisfy several different fairness and solidarity requirements as well as generating bounded deficits. |
| Keywords: | egalitarianism, solidarity, order preservation, egalitarian-equivalence, no-envy, distributive justice, NIMBY problems, imposition of tasks, allocation of indivisible (public) goods and money, the Groves mechanisms, strategy-proofness |
| JEL: | C79 D61 D63 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:adl:wpaper:2011-20&r=gth |
| By: | Duygu Yengin (School of Economics, University of Adelaide) |
| Abstract: | We characterize welfare-egalitarian mechanisms (that are decision-efficient and incentive compatible) with the two fundamental axioms of fairness: no-envy and egalitarian-equivalence. We consider cases where agents have equal rights over external world resources but are individually responsible for their preferences/costs. Our characterization answers the political philosophy question of what kind of welfare differentials allowed if we respect private ownership rights over self and public ownership over external world. We also relate no-envy and egalitarian-equivalence to "equality of what" debate and build a link between resource and opportunity egalitarianism, and welfare-egalitarianism. |
| Keywords: | egalitarianism, egalitarian-equivalence, no-envy, distributive justice, equality of opportunity, resource egalitarianism, private ownership of the self and public ownership of external world, NIMBY problems, allocation of indivisible goods and money, discrete public goods, strategy-proofness. |
| JEL: | C79 D61 D63 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:adl:wpaper:2011-19&r=gth |