nep-gth New Economics Papers
on Game Theory
Issue of 2011‒07‒13
fourteen papers chosen by
Laszlo A. Koczy
Hungarian Academy of Sciences and Obuda University

  1. Information transmission in coalitional voting games. By Serrano, Roberto; Vohra, Rajiv
  2. On the impact of independence of irrelevant alternatives By Peleg, Bezalel; Sudhölter, Peter; Zarzuelo, José M.
  3. Generalized externality games: economic applications. By Corcho Sánchez, Paula I.
  4. On the superiority of approval vs plurality: a counterexample By Francesco De Sinopoli; Giovanna Iannantuoni
  5. Proportional Nash solutions - A new and procedural analysis of nonconvex bargaining problems By Xu, Yongsheng; Yoshihara, Naoki
  6. A Many-to-Many 'Rural Hospital Theorem' By Flip Klijn
  7. Largest Consistent Set in International Environmental Agreements By Giovanni Villani; Marta Biancardi
  8. The Minority Game Unpacked: Coordination and Competition in a Team-based Experiment By T. Brenner; G. Devetag; F. Pancotto
  9. Coopetitive games and sustainability in project financing By Carfì, David; Patané, Giusy; Pellegrino, Samantha
  10. Efficiency and Equilibria in Games of Optimal Derivative Design By Ulrich Horst; Santiago Moreno-Bromberg
  11. Noisy Stochastic Games By John Duggan
  12. A non-linear coopetitive game for global green economy By Carfì, David; Trunfio, Alessandra
  13. The Persistence of "Bad" Precedents and the Need for Communication: A Coordination Experiment By Dietmar Fehr
  14. A fixed point theorem without convexity. By Ben-El-Mechaiekh, H.; Chebbi, S.; Florenzano, M.; Llinares, J.V.

  1. By: Serrano, Roberto; Vohra, Rajiv
    Abstract: A core allocation of a complete information economy can be characterized as one that would not be unanimously rejected in favor of another feasible alternative by any coalition. We use this test of coalitional voting in an incomplete information environment to formalize a notion of resilience. Since information transmission is implicit in the Bayesian equilibria of such voting games, this approach makes it possible to derive core concepts in which the transmission of information among members of a coalition is endogenous. Our results lend support to the credible core of Dutta and Vohra [4] and the core proposed by Myerson [11] as two that can be justified in terms of coalitional voting
  2. By: Peleg, Bezalel (Institute of Mathematics and Center for the Study of Rationality); Sudhölter, Peter (Department of Business and Economics); Zarzuelo, José M. (Faculty of Economics and Business Administration)
    Abstract: On several classes of n-person NTU games that have at least one Shapley NTU value, Aumann characterized this solution by six axioms: Non-emptiness, efficiency, unanimity, scale covariance, conditional additivity, and independence of irrelevant alternatives (IIA). Each of the first five axioms is logically independent of the remaining axioms, and the logical independence of IIA is an open problem. We show that for n = 2 the first five axioms already characterize the Shapley NTU value, provided that the class of games is not further restricted. Moreover, we present an example of a solution that satisfies the first 5 axioms and violates IIA for 2-person NTU games (N,V) with uniformly p-smooth V(N).
    Keywords: NTU game; Shapley NTU value; positive smoothness
    JEL: C71
    Date: 2010–10–05
  3. By: Corcho Sánchez, Paula I.
    Abstract: This paper analyzes two specific economic problems: The division of profits between associated firms and the distribution of cost of a public good. We tackle these problems using game theoretic techniques. To do so, a new c1ass of games in characteristic function form, called Generalizad Externality Games is defined in this paper. Sorne attractive features of this c1ass of games are that the core is non-empty and that these new games there seems to be a connection with relational goods.
    Keywords: Cooperative Games; Balanced Games; Core; Coob-Douglas Production; Public Goods; Relations Goods;
  4. By: Francesco De Sinopoli; Giovanna Iannantuoni
    Abstract: We present a simple voting environment where the Condorcet winner exists. Under plurality rule, the derived game has a stable set where such a candidate is elected with probability one. However, no stable set of the approval game elects the Condorcet winner with positive probability.
    Keywords: Approval voting, Plurality voting, Sophisticated voting,Mertens Stability.
    JEL: C72 D72
    Date: 2011–06
  5. By: Xu, Yongsheng; Yoshihara, Naoki
    Abstract: This paper studies the Nash solution to nonconvex bargaining problems. The Nash solution in such a context is typically multi-valued. We introduce a procedure to exclude some options recommended by the Nash solution. The procedure is based on the idea of the Kalai-Smorodinsky solution which has the same informational requirement on individual utilities as the Nash solution does and has an equity consideration as well. We then use this procedure to introduce two new solutions to nonconvex bargaining problems and study them axiomatically.
    JEL: C71 C78 D6 D7
    Date: 2011–06
  6. By: Flip Klijn
    Abstract: We show that the full version of the so-called 'rural hospital theorem' (Roth, 1986) generalizes to many-to-many matching where agents on both sides of the market have separable and substitutable preferences.
    Keywords: matching, many-to-many, stability, rural hospital theorem.
    JEL: C78 D60
    Date: 2011–06–27
  7. By: Giovanni Villani; Marta Biancardi
    Abstract: In this paper we study the formation and the stability of International Environmental Agreements (IEAs) in a pollution abatement model with a quadratic cost function. Countries play a two-stage game: in the first stage each country decides to join or not the coalition while, in the -second stage, the quantity of pollution abatement is chosen. To analyze the stability of coalition structures in a multiple coalition game, we use the notion of the Largest Consistent Set (LCS) which allows players to be farsighted.In an abstract context, Chwe (1994) developed the concept of farsighted stability: an outcome is stable and it is in the LCS if and only if deviations from it or potential further deviations are not unanimously preferred to the original outcome by the coalition considering the deviations. Applying this notion of stability in the IEA context we assume that, when a country or a sub-coalition contemplate exiting or joining an agreement, it takes into account the reactions of other countries ignited by its own actions. We identify what would be the resulting stable structures and the LCS, examining the indicator of countries’ environmental awareness proposed by the model. A particular analysis is proposed about the Grand Coalition. Moreover, we present a handy Maple algorithm to compare the cost functions and to determine direct dominance.
    Keywords: IEA; Farsightedness; Implementation.
    JEL: F50 C60
    Date: 2011–04
  8. By: T. Brenner; G. Devetag; F. Pancotto
    Abstract: While in the literature participants' behavior in minority games has been extensively studied, nobody so far has made the eort to open the black box of strategic arguments and considerations laying behind this behavior. To this aim we use an experimental setting in which decisions behind behaviors are analyzed tracking down decisional processes and participants reasoning as the result of transcribed video recorded sessions of teams that constitute decisional units. Such discussions are then analyzed with Content Analysis. Results show the relevance of others' behavior as well as the own history of choices and payoffs, while theoretical solutions based on game understanding as well as randomization as hypothesized by game theoretical solutions, are rare. Secondly, co-evolution between arguments is present: teams that tend to be more strategic, induce the opposite attitude in opponent teams.
    JEL: C72 C91 C92
    Date: 2011–07
  9. By: Carfì, David; Patané, Giusy; Pellegrino, Samantha
    Abstract: The paper provides a Game Theory model of coopetition which addresses the Project Financing problem of supporting the production of energy via sustainable renewable sources. In our analysis we consider two banks that may decide to invest in renewable and non-renewable energy sources. Several solutions of our coopetitive game are considered and determined explicitly.
    Keywords: Sustainability; coopetition; Differentiable Pareto Analysis; Project Financing
    JEL: G2 C71 C7 C72 G21
    Date: 2011
  10. By: Ulrich Horst; Santiago Moreno-Bromberg
    Abstract: In this paper the problem of optimal derivative design, profit maximization and risk minimization under adverse selection when multiple agencies compete for the business of a continuum of heterogenous agents is studied. The presence of ties in the agents' best-response correspondences yields discontinuous payoff functions for the agencies. These discontinuities are dealt with via efficient tie--breaking rules. In a first step, the model presented by Carlier, Ekeland & Touzi (2007) of optimal derivative design by profit-maximizing agencies is extended to a multiple--firm setting, and results of Page & Monteiro (2003, 2007, 2008) are used to prove the existence of (mixed-strategies) Nash equilibria. On a second step we consider the more complex case of risk minimizing firms. Here the concept of socially efficient allocations is introduced, and existence of the latter is proved. It is also shown that in the particular case of the entropic risk measure, there exists an efficient "fix--mix" tie-breaking rule, in which case firms share the whole market over given proportions.
    Date: 2011–07
  11. By: John Duggan (W. Allen Wallis Institute of Political Economy, 107 Harkness Hall, University of Rochester, Rochester, NY 14627-0158)
    Abstract: This paper establishes existence of a stationary Markov perfect equilibrium in general stochastic games with noise — a component of the state that is nonatomically distributed and not directly affected by the previous period’s state and actions. Noise may be simply a payoff irrelevant public randomization device, delivering known results on existence of correlated equilibrium as a special case. More generally, noise can take the form of shocks that enter into players’ stage payoffs and the transition probability on states. The existence result is applied to a model of industry dynamics and to a model of dynamic partisan electoral competition.
    Date: 2011–06
  12. By: Carfì, David; Trunfio, Alessandra
    Abstract: The paper aims at providing a non-linear Game Theory model of coopetition which addresses the problem of the global Green Economy. We apply the notion of coopetition at country level, instead of microeconomic firm level. The country has to decide whether it wants to collaborate with the rest of the world in getting an efficient Green Economy, even if the country is competing in the global scenario. Our non-linear model will provide different win-win solutions which are going to show the convenience for each country to participate actively to a program of sustainability and efficient resource allocation within a non-linear coopetitive framework. Our coopetitive model is non-linear with respect to each strategy of the game.
    Keywords: B21; C7; C71; C72; C78; F19; Q50
    JEL: F4 C71 B22 C7 C72
    Date: 2011
  13. By: Dietmar Fehr
    Abstract: Precedents can facilitate successful coordination within groups by reducing strategic uncertainty, but they may lead to coordination failure when two groups with diverging precedents have to interact. This paper describes an experiment to explore how such coordination failure can be mitigated and whether subjects are aware of it. In an initial phase, groups were able to establish a precedent in a repeated weakest-link game, and in a second phase two groups with dierent precedents are merged into a larger group. As expected, this leads to coordination failures. Unlike most of the previous literature, subjects could endogenously choose to communicate in the merged group for a small fee. The results suggest that communication can mitigate the coordination failure in the merged group and, in most cases, leads to efficient coordination. However, subjects in particular from groups with an efficient precedent in the initial phase are inattentive to the potential coordination failure and choose not to communicate. This can have profound consequences since groups who fail to implement communication are unable to achieve efficient coordination in the second phase. The results may be useful for the understanding of how groups learn to solve coordination problems from past coordination success or failure.
    Keywords: coordination, precedent, costly communication, cheap talk
    JEL: C72 C92 D23 L23
    Date: 2011–06
  14. By: Ben-El-Mechaiekh, H.; Chebbi, S.; Florenzano, M.; Llinares, J.V.
    Abstract: The purpose of this paper is to extend Himmelberg's fixed point theorem replacing the usual convexity in topological vector spaces by an abstract topological notion of convexity which generalizes classical convexity as well as several metric convexity structures found in the literature. We prove the existence, under weak hypotheses, of a fixed point for a compact approachable map and we provide sufficient conditions under which this result applies to maps whose values are convex in the abstract sense mentionned above.
    Keywords: Fixed point theorems; Generalized convexity; Compact correspondences; Approachable correspondences;

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