nep-gth New Economics Papers
on Game Theory
Issue of 2011‒09‒16
eleven papers chosen by
Laszlo A. Koczy
Hungarian Academy of Sciences and Obuda University

  1. Inner Core, Asymmetric Nash Bargaining Solutions and Competitive Payoffs By Sonja Brangewitz; Jan-Philip Gamp
  2. Sharing the surplus in games with externalities within and across issues By Effrosyni Diamantoudi; Inés Macho-Stadler; David Pérez-Castrillo; Licun Xue
  3. A note on the Shapley value for characteristic functions on bipartitions By Sander Muns
  4. Cooperative games with incomplete information: Some open problems By Françoise Forges; Roberto Serrano
  5. The Value of social networks in rural Paraguay By Ligon, Ethan A.; Schechter, Laura
  6. Re-Thinking Reputation By Andrew Mell
  7. Dynamic coordination via organizational routines By Andreas Blume; April M. Franco; Paul Heidhues
  8. Trust, Reciprocity and Rules By Thomas A. Rietz; Eric Schniter; Roman M. Sheremeta; Timothy W. Shields
  9. Heterogeneous sunspots solutions under learning and replicator dynamics By Michele Berardi
  10. Implications of inequality aversion for international climate policy By Vogt, Carsten; Sturm, Bodo
  11. Information Manipulation, Coordination, and Regime Change By Chris Edmond

  1. By: Sonja Brangewitz (Institute of Mathematical Economics, Bielefeld University); Jan-Philip Gamp (Institute of Mathematical Economics, Bielefeld University)
    Abstract: We investigate the relationship between the inner core and asymmetric Nash bargaining solutions for n-person bargaining games with complete information. We show that the set of asymmetric Nash bargaining solutions for different strictly positive vectors of weights coincides with the inner core if all points in the underlying bargaining set are strictly positive. Furthermore, we prove that every bargaining game is a market game. By using the results of Qin (1993) we conclude that for every possible vector of weights of the asymmetric Nash bargaining solution there exists an economy that has this asymmetric Nash bargaining solution as its unique competitive payoff vector. We relate the literature of Trockel (1996, 2005) with the ideas of Qin (1993). Our result can be seen as a market foundation for every asymmetric Nash bargaining solution in analogy to the results on non-cooperative foundations of cooperative games.
    Keywords: Inner Core, Asymmetric Nash Bargaining Solution, Competitive Payoffs, Market Games
    JEL: C71 C78 D51
    Date: 2011–08
  2. By: Effrosyni Diamantoudi; Inés Macho-Stadler; David Pérez-Castrillo; Licun Xue
    Abstract: We consider environments in which agents can cooperate on multiple issues and externalities are present both within and across issues. We propose a way to extend (Shapley) values that have been put forward to deal with externalities within issues to games where there are externalities within and across issues. We characterize our proposal through axioms that extend the Shapley axioms to our more general environment.
    Keywords: externalities, cooperative game theory, Shapley value, linked issues.
    JEL: C71 D62
    Date: 2011–08–01
  3. By: Sander Muns
    Abstract: <p>The Shapley value is a well-known allocation concept in cooperative game theory. It assigns to each player a part of the worth generated by the coalition of all players. The Shapley value is fair in the sense that it satisfies several desirable properties and axioms.</p><p>We consider a cooperative game with a bipartition that indicates which players are participating. The paper provides a simple analytical solution for the Shapley value when the worth of a coalition only depends on the number of participating coalition players. The computational complexity is only linear in the number of players, which contrasts with the usual exponential increase. This efficient result remains true when we introduce (i) randomization of the bipartition, and (ii) randomly draw an appropriate characteristic/worth function. We illustrate our result with an example that is related to the problem of allocating systemic risk among banks.</p>
    JEL: C71
    Date: 2011–08
  4. By: Françoise Forges (l'Université Paris-Dauphine); Roberto Serrano (Brown University and IMDEA Social Sciences Institute)
    Abstract: This is a brief survey describing some of the recent progress and open problems in the area of cooperative games with incomplete information. We discuss exchange economies, cooperative Bayesian games with orthogonal coalitions, and issues of cooperation in non-cooperative Bayesian games.
    Keywords: strategic externalities; informational externalities; exchange economies; cooperative games with orthogonal coalitions; non-cooperative bayesian games
    JEL: C71 C72 D51 D82
    Date: 2011–09–01
  5. By: Ligon, Ethan A.; Schechter, Laura
    Abstract: We conduct field experiments in rural Paraguay to measure the value of reciprocity within social networks in a set of fifteen villages. These experiments involve conducting dictator- type games; different treatments involve manipulating the information and choice that individuals have in the game. These different treatments allow us to measure and distinguish between different motives for giving in these games. The different motives we're able to measure include a general benevolence, directed altruism, fear of sanctions, and reciprocity within the social network. We're further able to draw inferences from play in the games regarding the sorts of impediments to trade which must restrict villagers' ability to share in states of the world when no researchers are present running experiments and measuring outcomes.
    Keywords: Agricultural and Resource Economics
    Date: 2011–02–01
  6. By: Andrew Mell
    Abstract: Economic models of reputation make strong assumptions about the information available to players. In particular, it is assumed that they know the entire history of the game to date. Such models can seldom reproduce the cycling of reputations we observe in the real world. We build a model of reputation with more realistic assumptions about the partial knowledge of the history that would be available and how it might be used. This new approach can explain cycles in reputations.
    Keywords: Reputation, monitoring, expectations formation
    JEL: D82 D84
    Date: 2011
  7. By: Andreas Blume (University of Pittsburgh); April M. Franco (Rotman School of Management, University of Toronto); Paul Heidhues (ESMT European School of Management and Technology)
    Abstract: We investigate dynamic coordination among members of a problem-solving team who receive private signals about which of their actions are required for a (static) coordinated solution and who have repeated opportunities to explore different action combinations. In this environment ordinal equilibria, in which agents condition only on how their signals rank their actions and not on signal strength, lead to simple patterns of behavior that have a natural interpretation as routines. These routines partially solve the team's coordination problem by synchronizing the team's search efforts and prove to be resilient to changes in the environment by being ex post equilibria, to agents having only a coarse understanding of other agents' strategies by being fully cursed, and to natural forms of agents' overconfidence. The price of this resilience is that optimal routines are frequently suboptimal equilibria.
    Keywords: coordination games, organizational routines, decentralized information, ex-post equilibria, cursed equilibria, multi-agent learning, rational learning
    JEL: C73 D23
    Date: 2011–09–06
  8. By: Thomas A. Rietz (Henry B. Tippie College of Business, University of Iowa); Eric Schniter (Economic Science Institute, Chapman University); Roman M. Sheremeta (Argyros School of Business and Economics, Chapman University); Timothy W. Shields (Argyros School of Business and Economics, Chapman University)
    Abstract: In the absence of enforceable contracts, many economic and personal interactions rely on trust and reciprocity. Research shows that although this reliance often works well, sometimes it breaks down. Simple rules mandating minimum standards on reciprocation prevent the most egregious trust violations, but may also undermine behavior that would have otherwise produced higher overall economic welfare. We test the efficacy of exogenously imposed minimum return rules using experimental trust games. We find that rules fail to increase trust and trustworthiness. Thus low minimum standards significantly decrease economic welfare. Although sufficiently restrictive rules restore welfare, trust and trustworthy behavior never returns.
    Keywords: trust games, experiments, reputation, information, reciprocity
    JEL: C72 C91 D72
    Date: 2011
  9. By: Michele Berardi
    Abstract: In a linear stochastic forward-looking univariate model with predetermined variables, we consider the possibility of heterogeneous equilibria with sunspots emerging endogenously through adaptive learning and replicator dynamics. In particular, we investigate equilibria where only a fraction of agents in the economy condition their forecasts on a sunspot, and equilibria where di¤erent groups of agents use di¤erent sunspots. We comclude that, although such heterogeneous equilibria exist and can be stable under adaptive learning, they do no survive under endogenous replicator dynamics. Moreover, we show that even homogeneous sunspot equilibria require some degree of coordinations among agents for them to emerge in an economy. We conclude that heterogeneous equilibria with sunspots are fragile under endogenous selection of predictors by agents, and that even the relevance of homogeneous sunspot equilibria is questioned once agents are allowed to doubt about the importance of sunspots in their forecasts.
    Date: 2011
  10. By: Vogt, Carsten; Sturm, Bodo
    Abstract: In this paper, we extend the Fehr and Schmidt model of inequality aversion to a situation where the players differ with respect to their benefits and costs from contributions to a non-linear public good. A necessary condition for contributing to the public good is that the players' benefit exceeds some critical value. Using data from the impact assessment model RICE and estimates for inequality aversion from the experimental literature, we show that this condition fails to hold for major countries involved in international climate policy. --
    Keywords: Climate policy,public good game,inequality aversion,voluntary cooperation
    JEL: C72 D63 H41 Q54
    Date: 2011
  11. By: Chris Edmond
    Abstract: This paper presents a model of information and political regime change. If enough citizens act against a regime, it is overthrown. Citizens are imperfectly informed about how hard this will be and the regime can, at a cost, engage in propaganda so that at face-value it seems hard. This coordination game with endogenous information manipulation has a unique equilibrium and the paper gives a complete analytic characterization of its comparative statics. If the quantity of information available to citizens is sufficiently high, then the regime has a better chance of surviving. However, an increase in the reliability of information can reduce the regime's chances. These two effects are always in tension: a regime benefits from an increase in information quantity if and only if an increase in information reliability reduces its chances. The model allows for two kinds of information revolutions. In the first, associated with radio and mass newspapers under the totalitarian regimes of the early twentieth century, an increase in information quantity coincides with a shift towards media institutions more accommodative of the regime and, in this sense, a decrease in information reliability. In this case, both effects help the regime. In the second kind, associated with diffuse technologies like modern social media, an increase in information quantity coincides with a shift towards sources of information less accommodative of the regime and an increase in information reliability. This makes the quantity and reliability effects work against each other. The model predicts that a given percentage increase in information reliability has exactly twice as large an effect on the regime's chances as the same percentage increase in information quantity, so, overall, an information revolution that leads to roughly equal-sized percentage increases in both these characteristics will reduce a regime's chances of surviving.
    JEL: C7 D7 D8
    Date: 2011–09

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