nep-gth New Economics Papers
on Game Theory
Issue of 2011‒10‒09
eleven papers chosen by
Laszlo A. Koczy
Hungarian Academy of Sciences and Obuda University

  1. Robust Predictions in Games with Incomplete Information By Dirk Bergemann; Stephen Morris
  2. The proportional distribution in a cooperative model with external opportunities By Camilla Di Luca (Universita degli Studi "G. D'Annunzio" di Chieti-Pescara); Josep M Izquierdo (Universitat de Barcelona); Carles Rafels (Universitat de Barcelona)
  3. Fast Convergence in Population Games By Itai Arieli; H. Peyton Young
  4. Truth-telling and Trust in Sender-receiver Games with Intervention By Ismail Saglam; Mehmet Y. Gurdal; Ayca Ozdogan
  5. Does Bargaining Matter in the Small Firm’s Matching Model? By Olivier LHARIDON, University of Rennes 1 - CREM-CNRS; Franck MALHERBET, Ecole Polytechnique; Sébastien PEREZ-DUARTE, BCE.
  6. Punish and Perish? By Angelo Antoci; Luca Zarri
  7. A Welfare-Tradeoff-Ratio-Model of Social Preferences By Bjoern Hartig
  8. Fast Convergence in Evolutionary Equilibrium Selection By Gabriel E. Kreindler; H. Peyton Young
  9. Social Approval, Competition and Cooperation By Xiaofei (Sophia) Pan; Daniel Houser
  10. Testing the Framework of Other-Regarding Preferences By M. Vittoria Levati; Aaron Nicholas; Birendra Rai
  11. (Bad) Luck or (Lack of) Effort?: Comparing Social Sharing Norms between US and Europe. By Pedro Rey-Biel; Roman M. Sheremeta; Neslihan Uler

  1. By: Dirk Bergemann (Cowles Foundation, Yale University); Stephen Morris (Dept. of Economics, Princeton University)
    Abstract: We analyze games of incomplete information and offer equilibrium predictions which are valid for all possible private information structures that the agents may have. Our characterization of these robust predictions relies on an epistemic result which establishes a relationship between the set of Bayes Nash equilibria and the set of Bayes correlated equilibria. We completely characterize the set of Bayes correlated equilibria in a class of games with quadratic payoffs and normally distributed uncertainty in terms of restrictions on the first and second moments of the equilibrium action-state distribution. We derive exact bounds on how prior information of the analyst refines the set of equilibrium distribution. As an application, we obtain new results regarding the optimal information sharing policy of firms under demand uncertainty. Finally, we reverse the perspective and investigate the identification problem under concerns for robustness to private information. We show how the presence of private information leads to partial rather than complete identification of the structural parameters of the game. As a prominent example we analyze the canonical problem of demand and supply identification.
    Keywords: Incomplete information, Correlated equilibrium, Robustness to private information, Moments restrictions, Identification, Information bounds
    JEL: C72 C73 D43 D83
    Date: 2011–09
  2. By: Camilla Di Luca (Universita degli Studi "G. D'Annunzio" di Chieti-Pescara); Josep M Izquierdo (Universitat de Barcelona); Carles Rafels (Universitat de Barcelona) (Universitat de Barcelona)
    Abstract: We study a cooperative problem where agents contribute a certain amount of money or capital in order to obtain a surplus. The proportional distribution with respect to the contributions of players is a core element of the cooperative game associated. Within this basic model, an external agent is introduced in order to evaluate the potential profit of every subcoalition of agents in the case this new agent enters. This analysis can produce that the relative bargaining power of agents may be modified. In particular, we evaluate whether the proportional distribution is still a robust proposal from the point of view of the bargaining set of a cooperative game with coalition structure (Davis and Maschler, 1963). Since, in general, the proportional distribution fails to be a bargaining set element of this game, a sufficient condition for the proportional allocation to belong to the bargaining is stated. A necessary condition is also analysed. Finally, we state a sufficient condition that guarantees the proportional distribution to be the unique element of the bargaining set of the associated game with coalition structure.
    Keywords: proportional distribution, coalition structure, bargaining set, cooperative game
    JEL: C71
    Date: 2011
  3. By: Itai Arieli; H. Peyton Young
    Abstract: A stochastic learning dynamic exchibits fast convergence in a population game if the expected waiting time until the process comes near a Nash equilibrium is bounded above for all sufficiently large populations. We propose a novel family of learning dynamics that exhibits fast convergence for a large class of population games that includes coordination games, potential games, and supermodular games as special cases. These games have the property that, from any initial state, there exists a continous better-reply path to a Nash equilibrium that is locally stable.
    Keywords: Populaton game, Better-reply dynamic, Stochastic approximation, Convergence time
    JEL: C72 C73
    Date: 2011
  4. By: Ismail Saglam (TOBB University of Economics and Technology, Department of Economics); Mehmet Y. Gurdal (TOBB University of Economics and Technology, Department of Economics); Ayca Ozdogan (TOBB University of Economics and Technology, Department of Economics)
    Abstract: Recent experimental studies find excessive truth-telling in strategic information transmission games with conflictive preferences. In this paper, we show that this phenomenon is more pronounced in sender-receiver games where a truthful regulator randomly intervenes. We also establish that intervention significantly increases the excessive trust of receivers.
    Keywords: Strategic information transmission, truth-telling, trust, sender-receiver game.
    JEL: C72 C90 D83
    Date: 2011–09
  5. By: Olivier LHARIDON, University of Rennes 1 - CREM-CNRS; Franck MALHERBET, Ecole Polytechnique; Sébastien PEREZ-DUARTE, BCE.
    Abstract: In this article, we use a stylized model of the labor market to investigate the effects of three alternative and well-known bargaining solutions. We apply the Nash, the Egalitarian and the Kalai-Smorodinsky bargaining solutions in the small firm’s matching model of unemployment. We first show that the Egalitarian and the Kalai-Smorodinsky solutions are easily implementable within search-matching economies. Second, we show that the differences between the three solution are weaker than expected. This contrasts with some of the main results obtained by the recent literature.
    Keywords: appariement, négociations, jeux coopératifs.
    JEL: C71 C78 J20 J60
    Date: 2011–09
  6. By: Angelo Antoci (DEIR, University of Sassari); Luca Zarri (Economics Department, University of Verona)
    Abstract: The evolution of large-scale cooperation among genetic strangers is a fundamental unanswered question in the social sciences. Behavioral economics has persuasively shown that so called ‘strong reciprocity’ plays a key role in accounting for the endogenous enforcement of cooperation. Insofar as strongly reciprocal players are willing to costly sanction defectors, cooperation flourishes. However, experimental evidence unambiguously indicates that not only defection and strong reciprocity, but also unconditional cooperation is a quantitatively important behavioral attitude. By referring to a prisoner’s dilemma framework where punishment (‘stick’) and rewarding (‘carrot’) options are available, here we show analytically that the presence of cooperators who don’t punish in the population makes altruistic punishment evolutionarily weak. We show that cooperation breaks down and strong reciprocity is maladaptive if costly punishment means ‘punishing defectors’ and, even more so, if it is coupled with costly rewarding of cooperators. In contrast, punishers don’t perish if cooperators, far from being rewarded, are sanctioned. These results, based on an extended notion of strong reciprocity, challenge evolutionary explanations of cooperation that overlook the ‘dark side’ of altruistic behavior.
    Keywords: Cooperation, Strong Reciprocity, Altruistic Punishment, Altruistic Rewarding, Heterogeneous Types
    JEL: C7 D7 Z1
    Date: 2011–08
  7. By: Bjoern Hartig (CGS, University of Cologne)
    Abstract: This paper introduces a model of social preferences featuring a single parameter representing an individual's disposition to share resources with others. The parameter reacts to observed behavior of others in a clearly defined manner. Therefore, the model allows the numerical analysis of reciprocal interaction. Based on evolutionary concepts, the model is characterized by a very basic utility maximization condition and it is consistent with and often predictive of the results of a multitude of different behavioral games and phenomenon.
    Keywords: other-regarding preferences, altruism, cooperation, evolution, reciprocity, welfare-tradeoff-ratio
    JEL: C71 C73 C90 C91 D63 D64
    Date: 2011–09–28
  8. By: Gabriel E. Kreindler; H. Peyton Young
    Abstract: Stochastic learning models provide sharp predictions about equilibrium selection when the noise level of the learning process is taken to zero. The difficulty is that, when the noise is extremely small, it can take an extremely long time for a large population to reach the stochastically stable equilibrium. An important exception arises when players interact locally in small close-knit groups; in this case convergence can be rapid for small noise and an arbitrarily large population. We show that a similar result holds when the population is fully mixed and there is no local interaction. Selection is sharp and convergence is fast when the noise level is ‘fairly’ small but not extremely small.
    Keywords: Stochastic stability, Logit learning, Markov chain, Convergence time
    JEL: C72 C73
    Date: 2011
  9. By: Xiaofei (Sophia) Pan (Interdisciplinary Center for Economic Science and Department of Economics, George Mason University); Daniel Houser (Interdisciplinary Center for Economic Science and Department of Economics, George Mason University)
    Abstract: HollŠnder (1990) argued that when non-monetary social approval from peers is sufficiently valuable, it works to promote cooperation. HollŠnder, however, did not define the characteristics of environments in which high valued approval is likely to occur. This paper provides evidence from a laboratory experiment indicating that people under competition value approval highly, but only when winners earn visible rewards through approval. The evidence implies that approvalÕs value is tied to signaling motives. Our findings point to new institutions that rely on reward, rather than punishment, to efficiently promote generosity in groups.
    Keywords: social approval, cooperation, signaling, competition
    JEL: D02 D64 H4
    Date: 2011–09
  10. By: M. Vittoria Levati (Max Planck Institute of Economics, Jena, and Department of Economics, University of Verona); Aaron Nicholas (Graduate School of Business, Deakin University); Birendra Rai (Department of Economics, Monash University)
    Abstract: We assess the empirical validity of the overall theoretical framework of other-regarding preferences by focusing on those preference axioms that are common to all the prominent theories of outcome-based other-regarding preferences. This common set of preference axioms leads to a testable implication: the strict preference ranking of self over a finite number of alternatives lying on any straight line in the space of material payoffs to self and other will be single-peaked. The extent of single-peakedness varies from a high of 79% to a low of 54% across our treatments that are based on dictator and trust games. Positively and/or negatively other-regarding subjects are significantly less likely to report single-peaked rankings relative to self-regarding subjects. We delineate the potential reasons for violations of single-peakedness and discuss the implications of our findings for theoretical modeling of other-regarding preferences.
    Keywords: Other-regarding preferences, social preferences, decision making under risk, single-peaked preferences, experiments
    JEL: C70 C91 D63 D81
    Date: 2011–09–30
  11. By: Pedro Rey-Biel (Universitat Autònoma de Barcelona, Departmento de Economía e Historia Económica); Roman M. Sheremeta (Argyros School of Business and Economics, Chapman University, USA); Neslihan Uler (Research Center for Group Dynamics, Institute for Social Research, University of Michigan)
    Abstract: We compare the determinants of individual giving between two countries, Spain and the US, which differ in their redistribution policies and their beliefs over the causes of poverty. By varying the information about the determinants of income, we find that, although overall giving is similar in both countries when subjects know the actual role of luck and effort, Spanish subjects give more when they are uninformed compared to American subjects. Using elicited beliefs, we find that this is due to Spanish subjects associating poverty with bad luck and Americans believing that low performers did not work hard enough.
    Keywords: individual giving, cross-cultural, beliefs, laboratory experiment
    JEL: C72 C91 D63 D81 H50
    Date: 2011

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