nep-gth New Economics Papers
on Game Theory
Issue of 2011‒12‒13
34 papers chosen by
Laszlo A. Koczy
Hungarian Academy of Sciences and Obuda University

  1. Refinements of Nash equilibrium in potential games By Oriol Carbonell-Nicolau; Richard McLean
  2. Approximation Results for Discontinuous Games with an Application to Equilibrium Refinement By Oriol Carbonell-Nicolau; Richard McLean
  3. On Large Games with a Bio-Social Typology By M. Ali Khan; Kali P. Rath; Yeneng Sun; Haomiao Yu
  4. Agame-theoretical approach to network capacity planning under competition By Waldman, Helio; Bortoletto, Rodrigo C.; Pavani, Gustavo S.
  5. Quotient Spaces of Boundedly Rational Types By Davide Cianciaruso; Fabrizio Germano
  6. Elasticity of Games By Gilad Bavly
  7. Group outcomes and reciprocity By Ioannou, Christos; Qi, Shi; Rustichini, Aldo
  8. Admissibility and event-rationality By Barelli, Paulo; Galanis, Spyros
  9. A Limit Theorem for Equilibria under Ambiguous Beliefs Correspondences By Giuseppe De Marco; Maria Romaniello
  10. A Note on a Weighted Voting Experiment: Human Mistakes in Cooperative Games By Eric Guerci; Nobuyuki Hanaki; Naoki Watanabe; Gabriele Esposito; Xiaoyan Lu
  11. Strategic behavior in Schelling dynamics: A new result and experimental evidence By Juan Miguel Benito; Pablo Branas-Garz; Penelope Hernandez; Juan A. Sanchis
  12. Mesoscopic approach to minority games in herd regime By Karol Wawrzyniak; Wojciech Wislicki
  13. Coordination under threshold uncertainty in a public goods game By Astrid Dannenberg; Andreas Löschel; Gabriele Paolacci; Christiane Reif; Alessandro Tavoni
  14. Ideology and endogenous constitutions. By Riboni, Alessandro
  15. Multiple Equilibria in Asymmetric First-Price Auctions By Todd R. Kaplan; Shmuel Zamir
  16. Do People Keep Socially Unverifiable Promises? By Cary Deck; Maroš Servátka; Steven Tucker
  17. Complexity of Networking - An Experimental Study of the Network Hawk Dove Game By Siegfried Berninghaus; Stephan Schosser; Bodo Vogt
  18. Conflicted Minds: Recalibrational Emotions Following Trust-based Interaction. By Eric Schniter; Roman M. Sheremeta; Timothy Shields
  19. Multiple equilibria in asymmetric first-price auctions By Kaplan, Todd R; Zamir, Shmuel
  20. Imperfect public monitoring with costly punishment - An experimental study By Attila Ambrus; Ben Greiner
  21. A way to play bankruptcy problems. By Jiménez Gómez, José Manuel
  22. On the core and Walrasian expectations equilibrium in infinite dimensional commodity spaces By Bhowmik, Anuj; Cao, Jiling
  23. An axiomatic justification of mediation in bankruptcy problems. By Jiménez Gómez, José Manuel
  24. Risk-Aversion and Prudence in Rent-Seeking Games. By Treich, Nicolas
  25. Price Discrimination in Many-to-Many Matching Markets By Renato Gomes; Alessandro Pavan
  26. Game-theoretic analysis of IPv4-IPv6 migration process By Trinh, Tuan Anh; Sallai, Gyula
  27. Decomposing R2 with the Owen value By Hüttner, Frank; Sunder, Marco
  28. Estimating Noncooperative and Cooperative Models of Bargaining: An Empirical Comparison By Masanori Mitsutsune; Takanori Adachi
  29. Competition for Procurement Shares By Alcalde, José; Dahm, Matthias
  30. Population Monotonic and Strategy-Proof Mechanisms Respecting Welfare Lower Bounds By Duygu Yengin
  31. The Effect of Religion on Cooperation and Altruistic Punishment: Experimental Evidence from Public Goods Experiments By Akay, Alpaslan; Karabulut, Gökhan; Martinsson, Peter
  32. Prizes versus Wages with Envy and Pride By Pradeep Dubey; John Geanakoplos; Ori Haimanko
  33. Seller Reputation and Trust in Pre-Trade Communication By Bruno Jullien; In-Uck Park
  34. Efficient Renegotiation in Search Markets: Theory and Field Experimental Evidence By Bengtsson, Niklas

  1. By: Oriol Carbonell-Nicolau (Rutgers University); Richard McLean (Rutgers University)
    Abstract: We prove the existence of strategically stable sets of pure-strategy Nash equilibria (and hence the existence of pure-strategy trembling-hand perfect equilibria) in potential games that admit an upper semicontinuous potential, and we show that generic potential games possess pure-strategy strictly perfect and essential equilibria. In addition, we provide a link between upper semicontinuity of a potential and conditions defined directly on the payoff functions of a potential game. Finally, we show that stable sets and (strictly) perfect equilibria are related to the set of maximizers of a potential, which refines the set of Nash equilibria. Specifically, the set of maximizers of a potential contains a strategically stable set of pure-strategy Nash equilibria (and hence a pure-strategy trembling-hand perfect equilibrium) and, for generic games, any maximizer of a potential is a pure-strategy strictly perfect and essential equilibrium.
    Keywords: discontinuous game, potential game, trembling-hand perfect equilibrium, stable set, essential equilibrium
    JEL: C72
    Date: 2011–06–06
  2. By: Oriol Carbonell-Nicolau (Rutgers University); Richard McLean (Rutgers University)
    Abstract: We provide approximation results for Nash equilibria in possibly discontinuous games when payoffs and strategy sets are perturbed, and compare these conditions to those considered in the related literature. We then prove existence results for a new "finitistic" infinite-game generalization of Selten's [17] notion of perfection, and study some of its properties. The existence results, which rely on the approximation theorems, relate existing notions of perfection to the new specification.
    Keywords: discontinuous game, Nash equilibrium correspondence, payoff security, trembling-hand perfect equilibrium, limit-of-finite perfect equilibrium
    JEL: C72
    Date: 2011–08–16
  3. By: M. Ali Khan; Kali P. Rath; Yeneng Sun; Haomiao Yu
    Abstract: We present a comprehensive theory of large non-anonymous games in which agents have a name and a determinate social-type and/or biological trait to resolve the dissonance of a (matching-pennies type) game with an exact pure-strategy Nash equilibrium with finite agents, but without one when modeled on the Lebesgue unit interval. We (i) establish saturated player spaces as both necessary and sufficient for an existence result for Nash equilibrium in pure strategies, (ii) clarify the relationship between pure, mixed and behavioral strategies via the exact law of large numbers in a framework of Fubini extension, (iii) illustrate corresponding asymptotic results.
    Date: 2011–12
  4. By: Waldman, Helio; Bortoletto, Rodrigo C.; Pavani, Gustavo S.
    Abstract: The paper discusses the dimensioning strategies of two network providers (operators) that supply channels to the same population of users in a competitive environment. Usersare assumed to compete for best service (lowest blocking probability of new request), while operators wishto maximize their profits. This setting gives rise to two interconnected, noncooperative games: a) a users game, in which the partition of primary traffic between operators is determined by the operators' channel capacities and by the users' blocking-avoidance strategy; and b) a network dimensioning game between operators in which the players alternate dimensioning decisions thatmaximize their profit rate under the current channel capacity of his/her opponent. At least for two plausible users' blocking avoidance strategies discussed in the paper, the users game will always reach some algorithmic equilibrium. In the operators' game, the player strategies are given by their numbers of deployed chanels, limited by their available infrastructure resources. If the infrastrucutre is under-dimensioned with respect to the traffic rate, the operators game willreach a Nash equilibrium when both players reach full use of their available infrastructures. Otherweise, a Nash equilibrium may also arise if both operators incur the same deployment costs. If costs are asymmetric, though, the alternating game may enter a loop. If the asymmetry is modest, both players may then try to achieve a competitive monopoly in which the opponent is forced to leave the game or operate with a loss (negative profit). However, if the asymmetry is high enough, only the player with the lower costs can force his opponent to leave the game while still holding a profitable operation. --
    Keywords: network dimensioning,game theory,duopoly,Nash equilibrium,circuit switching,blocking probability
    JEL: C72
    Date: 2011
  5. By: Davide Cianciaruso; Fabrizio Germano
    Abstract: I analyze common agency games in which the principals, and possibly the agent,have private information. I distinguish between games in which the principals delegate the fi…nal decisions to the agent, and games in which they retain some decision power after offering their mechanisms. I show that,in contrast with mechanism design models with one informed Myerrson's Inscrutability Principle fails when there are many informed principals. I also …find that, in contrast with common agency models with uninformed principals, the Delegation Principle (Menu Theorem) fails when principals are informed. I then focus on Perfect Bayesian Equilibria in which principals offer their mechanisms without randomizing. I characterize the outcomes of arbitrary games with delegation as outcomes of a new game in which principals offer menus and send cheap-talk signals. Next, I characterize the outcomes of arbitrary games without delegation as outcomes of a new game in which principals offer menus of direct revelation mechanisms, to which they truthfully report their types. JEL Code: C72, D03, D83
    Keywords: Incomplete-information games, high-order reasoning, type space, quotient space, hierarchies of beliefs, bounded rationality Principle, menus, signals, direct revelation mechanisms.
    Date: 2011–09–20
  6. By: Gilad Bavly
    Abstract: We develop an elasticity index of a strategic game. The index measures the robustness of the set of rational outcomes of a game. The elasticity index of a game is the maximal ratio between the change of the rational outcomes and the size of an infinitesimal perturbation. The perturbation is on the players’ knowledge of the game. The elasticity of a strategic game is a nonnegative number. A small elasticity is indicative of the robustness of the rational outcomes (for example, if there is only one player the elasticity is 0), and a large elasticity is indicative of non-robustness. For example, the elasticity of the (normalized) n-stage finitely repeated prisoner’s dilemma is at least exponential in n, as is the elasticity of the n-stage centipede game and the n-ranged traveler’s dilemma. The concept of elasticity enables us to look from a different perspective at Neyman’s (1999) repeated games when the number of repetitions is not commonly known, and Aumann’s (1992) demonstration of the effect of irrationality perturbations.
    Date: 2011–12
  7. By: Ioannou, Christos; Qi, Shi; Rustichini, Aldo
    Abstract: Group membership affects an agent's individual behavior. We determine how, by testing two competing hypotheses. One is that group membership operates through social identity, and the other is that group membership implements a correlation among the actions of in-group members in response to an implicit signal. We introduce two novel features in the experimental design. The first feature is the display of group outcomes. This allows us to assess directly the importance of relative group performance on subjects' decisions. The second is a careful manipulation of the Dictator game and the Trust game. More specifically, we choose parameters strategically so as to ensure no change in the pecuniary incentives across the two games. For a precise quantitative test of the two hypotheses we develop a structural model to describe an agent's behavior across treatments. Our findings suggest that the role of social identity on motivating agents' decisions has been exaggerated. The display of group outcomes induces a group effect, but a careful analysis of this effect reveals that participants use group outcomes as a signal to coordinate in-group members on favorable outcomes. Furthermore, we find evidence in support of recent experimental studies which demonstrate that an agent's allocation choice is sensitive to the behavior of the agent that generated the choice set. <br><br> Keywords; groups, trust game, dictator game, reciprocity
    Date: 2011–04–08
  8. By: Barelli, Paulo; Galanis, Spyros
    Abstract: Brandenburger et al. (2008) establish epistemic foundations for rationality and common assumption of rationality (RCAR), where rationality includes admissibility, using lexicographic type structures. Their negative result that RCAR is empty whenever the type structure is complete and continuous suggests that iterated admissibility (IA) requires players to have prior knowledge about each other, and therefore is a strong solution concept, not at the same level as iterated elimination of strongly dominated strategies (IEDS). We follow an alternative approach using standard type structures and show that IA can be generated in a complete and continuous type structure. A strategy is event-rational if it is a best response to a conjecture, as usual, and in addition it passes a “tie-breaking†test based on a set E of strategies of the other player. Event-rationality and common belief in event-rationality (RCBER) is characterized by a solution concept we call hypo-admissible sets and, in a complete structure, generates the strategies that are admissible and survive the iterated elimination of strongly dominated strategies (Dekel and Fudenberg (1990)). Extending event-rationality by adding what a player is certain about the other’s strategies as a tie-breaking set to each round of mutual belief we get common belief of extended event-rationality (RCBeER), which generates a more restrictive solution concept than the SAS (Brandenburger et al. (2008)) and in a complete structure produces the IA strategies. Contrary to the negative result in Brandenburger et al. (2008), we show that RCBER and RCBeER are nonempty in complete, continuous and compact type structures, therefore providing an epistemic criterion for IA <br><br> Keywords; epistemic game theory, admissibility, iterated weak dominance, common knowledge, rationality, completeness
    Date: 2011–05–01
  9. By: Giuseppe De Marco (Università di Napoli Parthenope); Maria Romaniello (Università di Napoli Federico II)
    Abstract: Previous literature shows that, in many different models, limits of equilibria of perturbed games are equilibria of the unperturbed game when the sequence of perturbed games converges to the unperturbed one in an appropriate sense. The question whether such limit property extends to the equilibrium notions in ambiguous games is not yet clear as it seems; in fact, previous literature shows that the extension fails in simple examples. The contribution in this paper is to show that the limit property holds for equilibria under ambiguous beliefs correspondences (presented by the authors in a previous paper). Key for our result is the sequential convergence assumption imposed on the sequence of beliefs correspondences. Counterexamples show why this assumption cannot be removed.
    Keywords: Ambiguous games, beliefs correspondences, limit equilibria
    Date: 2011–11–28
  10. By: Eric Guerci (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579); Nobuyuki Hanaki (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579, Economics Department - Université de Tsukuba); Naoki Watanabe (Economics Department - Université de Tsukuba); Gabriele Esposito (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579); Xiaoyan Lu (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579)
    Abstract: We conducted a sensitivity analysis of results in weighted voting experiments by varying the following two features of the protocol by Montero et al. (2008): (a) the way subjects' roles are reassigned in each round (random versus semi-fixed roles) and (b) the number of proposals that subjects can approve simultaneously (multiple versus single approval). We found that the possibility of simultaneously approving many proposals (multiple approvals) may result in more confusion and mistakes by subjects than the case without such a possibility (single approval). We also found that frequencies of minimal winning coalitions (MWCs) observed under the protocol with semi-fixed roles and single approval are consistent with our hypothesis: each subject prefers a MWC in which his or her relative weight is larger, and the probability of each MWC occurring depends on a score in the social ordering determined by the Borda count, when there is no veto player.
    Keywords: weighted voting; experiment; cooperative game; mistakes; winning coalition
    Date: 2011–11–28
  11. By: Juan Miguel Benito (Departamento de Economia, Universidad Publica de Navarra, Spain); Pablo Branas-Garz (Departamento de Teoria e Historia Economica, Universidad de Granada, Spain and Economic Science Institute Affliate, Chapman University); Penelope Hernandez (Departamento de Analisis Economico y ERI-CES, Spain); Juan A. Sanchis (Departamento de Estructura Econ´omica y ERI-CES, Spain)
    Abstract: In this paper we experimentally test Schelling’s (1971) segregation model and confirm the striking result of segregation. In addition, we extend Schelling’s model theoretically by adding strategic behavior and moving costs. We obtain a unique subgame perfect equilibrium in which rational agents facing moving costs may find it optimal not to move (anticipating other participants’ movements). This equilibrium is far for full segregation. We run experiments for this extended Schelling model. We find that the percentage of strategic players dramatically increases with the cost of moving and that the degree of segregation depends on the distribution of rational subjects.
    Keywords: Subgame perfect equilibrium, segregation, experimental games
    Date: 2011
  12. By: Karol Wawrzyniak; Wojciech Wislicki
    Abstract: We study minority games in efficient regime. By incorporating the utility function and aggregating agents with similar strategies we develop an effective mesoscale notion of state of the game. Using this approach, the game can be represented as a Markov process with substantially reduced number of states with explicitly computable probabilities. For any payoff, the finiteness of the number of states is proved. Interesting features of an extensive random variable, called aggregated demand, viz. its strong inhomogeneity and presence of patterns in time, can be easily interpreted. Using Markov theory and quenched disorder approach, we can explain important macroscopic characteristics of the game: behavior of variance per capita and predictability of the aggregated demand. We prove that in case of linear payoff many attractors in the state space are possible.
    Date: 2011–11
  13. By: Astrid Dannenberg (Centre for European Economic Research (ZEW)); Andreas Löschel (Centre for European Economic Research (ZEW)); Gabriele Paolacci (Ca’ Foscari University of Venice); Christiane Reif (Centre for European Economic Research (ZEW)); Alessandro Tavoni (London School of Economics and Political Science (LSE))
    Abstract: We explored experimentally how threshold uncertainty affects coordination success in a threshold public goods game. Whereas all groups succeeded in providing the public good when the exact value of the threshold was known, uncertainty was generally detrimental for the public good provision. The negative effect of threshold uncertainty was particularly severe when it took the form of ambiguity, i.e. when players were not only unaware of the value of the threshold but also of its probability distribution. Early signaling of willingness to contribute and share the burden equitably helped groups in coping with threshold uncertainty.
    Keywords: public good, threshold uncertainty, ambiguity, experiment
    JEL: C72 C92 H41 Q54
    Date: 2011
  14. By: Riboni, Alessandro
    Abstract: We study a legislature where decisions are made by playing an agenda-setting game. Legislators are concerned about their electoral prospects but they are also genuinely concerned for the legislature to make the correct decision. We show that when ideological polarization is positive but not too large (and the status quo is extremely inefficient), institutions in which the executive has either no constraints (autocracy) or many constraints (unanimity) are preferable to democracies that operate under an intermediate number of constraints (simple majority rule). When instead ideological polarization is large (and the status quo is only moderately inefficient), simple majority turns out to be preferable.
    Keywords: Majority rule; Position-taking preferences; Ideological polarization; Strategic interactions; Agenda-setting game;
    JEL: D7 D02
    Date: 2011–09
  15. By: Todd R. Kaplan; Shmuel Zamir
    Abstract: Maskin and Riley (2003) and Lebrun (2006) prove that the Bayes-Nash equilibrium of first-price auctions is unique. This uniqueness requires the assumption that a buyer never bids above his value. We demonstrate that, in asymmetric first-price auctions (with or without a minimum bid), the relaxation of this assumption results in additional equilibria that are "substantial." Although in each of these additional equilibria no buyer wins with a bids above his value, the allocation of the object and the selling price may vary among the equilibria. Furthermore, we show that such phenomena can only occur under asymmetry in the distributions of values.
    Keywords: asymmetric auctions, first-price auctions, multiple equilibria
    JEL: C72 D44
    Date: 2011–11
  16. By: Cary Deck; Maroš Servátka (University of Canterbury); Steven Tucker (University of Canterbury)
    Abstract: Previous research has suggested that communication and especially promises increase cooperation in laboratory experiments. This has been taken as evidence for internal motivations such as guilt aversion or preference for promise keeping. The original goal of this paper was to examine promises under a double blind payoff procedure to test the alternative explanation that promise keeping was due to external influence and reputational concerns. We find no evidence that communication increases the overall level of cooperation in our double blind experiment. However, our results are due in part to the high level of cooperation that we observe, leading us to conduct additional single blind conditions. Ultimately, we find no evidence that communication or payoff procedures impact aggregate cooperation.
    Keywords: Anonymity; experiment; promises; partnership; guilt aversion; psychological game theory; trust; lies; social distance; behavioral economics; hidden action
    JEL: C70 C91
    Date: 2011–12–01
  17. By: Siegfried Berninghaus (Karlsruhe Institute of Technology); Stephan Schosser (Karlsruhe Institute of Technology); Bodo Vogt (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg)
    Abstract: Complexity of strategies is central for human decision making and attracted interest of different game theorists in the recent years. Nevertheless, behavioral economists have neglected the importance of complexity in their analyses. In this paper, we analyze network formation and action selection in a Hawk Dove Game with focus on complexity aspects. We conduct experiments with three variants of the game which are equivalent from a game theoretic perspective, but differ from a complexity theoretic perspective. Our results show, that complexity of decision making has an impact on the strategies played and that efficiency is higher the less complex the decision problem is.
    Date: 2011–11
  18. By: Eric Schniter (Economic Science Institute, Chapman University); Roman M. Sheremeta (Argyros School of Business and Economics, Chapman University); Timothy Shields (Argyros School of Business and Economics, Chapman University)
    Abstract: Consistent with a modular view of the mind, both short-sighted and long-sighted programs may be simultaneously active in the mind and in conflict with one another when individuals face choice dilemmas in trust-based economic interactions. Recalibrational theory helps us identify the adaptive design features shared among subsets of superordinate emotion programs. According to this design logic and the computation of adaptive problem features produced by Trust games, we predict the activation of emotions after Trust games. While this study successfully predicts reports of twenty distinct emotional states, further studies are needed to demonstrate ultimate recalibrational functions of emotions.
    Keywords: emotions, recalibrational theory, modularity, Trust game, experiments
    Date: 2011
  19. By: Kaplan, Todd R; Zamir, Shmuel
    Abstract: Maskin and Riley (2003) and Lebrun (2006) prove that the Bayes-Nash equilibrium of …rst-price auctions is unique. This uniqueness requires the assumption that a buyer never bids above his value. We demonstrate that, in asymmetric …rst-price auctions (with or without a minimum bid), the relaxation of this assumption results in additional equilibria that are "substantial." Although in each of these additional equilibria no buyer wins with a bids above his value, the allocation of the object and the selling price may vary among the equilibria. Furthermore, we show that such phenomena can only occur under asymmetry in the distributions of values.
    Keywords: Asymmetric auctions; …first-price auctions; multiple equilibria
    JEL: D44 C72
    Date: 2011–11–21
  20. By: Attila Ambrus (Department of Economics, Harvard University); Ben Greiner (School of Economics, The University of New South Wales)
    Abstract: This paper experimentally investigates the effects of a costly punishment option on cooperation and social welfare in long finitely repeated public good contribution games. In a perfect monitoring environment increasing the severity of the potential punishment monotonically increases both contributions and the average net payoffs of subjects. In a more realistic imperfect monitoring environment, we find a U-shaped relationship between the severity of punishment and average net payoffs. Access to a standard punishment technology in this setting significantly decreases net payoffs, even in the long run. Access to a very severe punishment technology leads to roughly the same payoffs as with no punishment option, as the benefits of increased cooperation offset the social costs of punishing.
    Keywords: public good contribution experiments; imperfect monitoring; welfare implications of costly punishment
    JEL: C72 C92 H41
    Date: 2011–08
  21. By: Jiménez Gómez, José Manuel
    Abstract: The commitment among agents has always been a difficult task, especially when they have to decide how to distribute the available amount of a scarce resource among all. On the one hand, there are a multiplicity of possible ways for assigning the available amount; and, on the other hand, each agent is going to propose that distribution which provides her the highest possible award. In this paper, with the purpose of making this agreement easier, firstly we use two different sets of basic properties, called Commonly Accepted Equity Principles, to delimit what agents can propose as reasonable allocations. Secondly, we extend the results obtained by Chun (1989) and Herrero (2003), obtaining new characterizations of old and well known bankruptcy rules. Finally, using the fact that bankruptcy problems can be analyzed from awards and losses, we define a mechanism which provides a new justification of the convex combinations of bankruptcy rules. Keywords: Bankruptcy problems, Unanimous Concessions procedure, Diminishing Claims mechanism, Piniles’ rule, Constrained Egalitarian rule. JEL classification: C71, D63, D71.
    Keywords: Fallida, Jocs cooperatius, Economia del benestar, Elecció social, 33 - Economia,
    Date: 2011
  22. By: Bhowmik, Anuj; Cao, Jiling
    Abstract: In this paper, we establish two different characterizations of Walrasian expectations allocations by the veto power of the grand coalition in an asymmetric information economy having finitely many agents and states of nature and whose commodity space is a Banach lattice. The first one deals with Aubin non-dominated allocations, and the other claims that an allocation is a Walrasian expectations allocation if and only if it is not privately dominated by the grand coalition, by considering perturbations of the original initial endowments in precise directions.
    Keywords: Asymmetric information economy; Aubin non-dominated allocation; Private core; Privately non-dominated allocation; Properness; Walrasian expectations allocation
    JEL: D11 D82 D51
    Date: 2011–06–23
  23. By: Jiménez Gómez, José Manuel
    Abstract: This paper provides a natural way of reaching an agreement between two prominent proposals in a bankruptcy problem. Particularly, using the fact that such problems can be faced from two different points of views, awards and losses, we justify the average of any pair of dual bankruptcy rules through the definition a double recursive process. Finally, by considering three posible sets of equity principles that a particular society may agree on, we retrieve the average of old and well known bankruptcy rules, the Constrained Equal Awards and the Constrained Equal Losses rules, Piniles’ rule and its dual rule, and the Constrained Egalitarian rule and its dual rule. Keywords: Bankruptcy problems, Midpoint, Bounds, Duality, Recursivity. JEL classification: C71, D63, D71.
    Keywords: Fallida, Jocs cooperatius, Economia del benestar, Elecció social, 33 - Economia,
    Date: 2011
  24. By: Treich, Nicolas
    Date: 2010–12
  25. By: Renato Gomes; Alessandro Pavan
    Abstract: We study second-degree price discrimination in markets where the product traded by the monopolist is access to other agents. We derive necessary and sufficient conditions for the welfareand the profit-maximizing mechanisms to employ a single network or a menu of non-exclusive networks. We characterize the optimal matching schedules under a wide range of preferences, derive implications for prices, and deliver testable predictions relating the structure of the optimal pricing strategies to conditions on the distribution of match qualities. Our analysis sheds light on the distortions associated with the private provision of broadcasting, health insurance and job matching services. JEL Code: D82
    Keywords: matching, two-sided markets, networks, adverse selection, incentives, mechanism design
    Date: 2011–09
  26. By: Trinh, Tuan Anh; Sallai, Gyula
    Abstract: The rate of deployment and adoption issues of new network technologies, IPv6 in particular, have recently been hotly debated in the research community. However, the question of how protocols migrate, especially the dynamics of migration, to new paradigms is still largely open. In this paper, we address the issue from a game theoretic point of view. We model and analyze the profit maximizing strategies of Autonomous Systems (ASes); both the properties of ASes and the topology of the Internet is considered. The contribution our work is threefold. First, we propose an economic model of the ASes and their relations from the IPv4-IPv6 migration viewpoint. Second, we show - after analysing the strategies of ASes using gametheoretic tools - that under the proposed economic model, the all IPv6 AS topology is a Nash equilibrium on any network topology. Third, we apply the findings of evolutionary dynamics on the problem of migration by incorporating Internet-specific properties to the evolutionary model, namely the size of the ASes and the cost of migration. The analyses show that even if IPv6 has higher payoff than IPv4, the whole migration does not happen always fast. Finally, extensive simulations are carried out based on the proposed models to illustrate the impacts of different parameters on the IPv6 migration dynamics in realistic scenarios. --
    Keywords: IPv6 transition,game theory
    JEL: C72 C73
    Date: 2011
  27. By: Hüttner, Frank; Sunder, Marco
    Abstract: We provide an axiomatization-based justification for applying the Owen value to decompose R2 in OLS models if prior knowledge can be used to form groups of regressor variables. The assumptions made by the axioms are not only plausible with respect to the variables but also clarify the meaning of the exogenous grouping of variables. --
    Keywords: Shapley value,Owen value,OLS,variance decomposition,German Socio-Economic Panel
    JEL: C20
    Date: 2011
  28. By: Masanori Mitsutsune (Tokyo Metropolitan Government); Takanori Adachi (School of Economics, Nagoya University)
    Abstract: This paper examines the issue of model selection in studies of strategic situations. In particular, we compare estimation results from Adachi and Watanabe's (2008) noncooperative formulation of government formulation with those from two alternative cooperative formulations. Although the estimates of the ministerial ranking are similar, statistical testing suggests that Adachi and Watanabe's(2008) noncooperative formulation is best fitted to the observed data among the alternative models. This result implies that modeling the time structure in bargaining situations is crucially important at the risk of possibly misspecifying the details of the game.
    Keywords: Model selection, Bargaining, Government formation, Structural estimation
    JEL: C52 C71 C72 C78 H19
    Date: 2011–12
  29. By: Alcalde, José; Dahm, Matthias
    Abstract: We propose a new procurement procedure which allocates shares of the total amount to be procured depending on the bids of suppliers. Among the properties of the mechanism are: (i) Bidders have an incentive to par- ticipate in the procurement procedure, as equilibrium payoff s are strictly positive. (ii) The mechanism allows to vary the extent to which affirma- tive action objectives, like promoting local industries, are pursued. (iii) Surprisingly, even accomplishing affirmative action goals, procurement ex- penditures might be lower than under a classical auction format. Keywords: Procurement Auction, Affirmative Action. JEL: C72, D44, H57
    Keywords: Jocs no-cooperatius (Matemàtica), 33 - Economia,
    Date: 2011
  30. By: Duygu Yengin (School of Economics, University of Adelaide)
    Abstract: The significance of population monotonicity and welfare bounds is well-recognized in the fair division literature. We characterize population monotonic and incentive compatible mechanisms which allocate the goods efficiently and respect a welfare lower bound chosen in the fair allocation problem of allocating collectively owned indivisible goods or bads when monetary transfers are possible and preferences are private information. We consider the welfare bounds that are central to the fair allocation literature, namely, the identical-preferences lower-bound, individual rationality, the stand-alone lower-bound, and k-fairness. We also compare the strength and associated budget deficits of and the logical relations between the aforementioned lower bounds. JEL Classifications: C79, D61, D63.
    Keywords: welfare bounds, the identical-preferences lower-bound, individual rationality, the stand-alone lower-bound, k-fairness, population monotonicity, collective ownership, allocation of indivisible goods and money, NIMBY problems, imposition of tasks, the Groves mechanisms, strategy-proofness
    JEL: C79 D61 D63
    Date: 2011–12
  31. By: Akay, Alpaslan (IZA); Karabulut, Gökhan (Istanbul University); Martinsson, Peter (University of Gothenburg)
    Abstract: This paper experimentally examines how religious festivals and the degree of religiosity affect cooperation and altruistic punishment by using public goods experiments. We conducted the experiments in Turkey at different points in time; one on the most religious day during Ramadan (the Night of Power – Laylat al-Qadr) and the other at a time without any religious festivals other than the normal daily prayers. The overall results show no differences in cooperation or altruistic punishment among individuals during Ramadan, even when the degree of their religiosity varied. However, less religious people did change their cooperative behaviour in response to religious festivals. Most of the differences can, however, be explained by differences in beliefs about others contributions. By and large, this indicates the importance of conditional cooperation.
    Keywords: cooperation, experiment, public goods, punishment, religion
    JEL: C72 C91 H41
    Date: 2011–11
  32. By: Pradeep Dubey (Center for Game Theory, Dept. of Economics, SUNY at Stony Brook); John Geanakoplos (Cowles Foundation, Yale University); Ori Haimanko (Dept. of Economics, Ben-Gurion University of the Negev)
    Abstract: We show that if agents are risk neutral, prizes outperform wages if and only if there is sufficient pride and envy relative to the noisiness of performance. If agents are risk averse, prizes are a necessary supplement to wages (as bonuses).
    Keywords: Envy, Pride, Wages, Prizes, Bonus
    JEL: C72 D01 D23 L14
    Date: 2011–11
  33. By: Bruno Jullien; In-Uck Park
    Abstract: We characterize the unique equilibrium in which high ability sellers always announce the quality of their items truthfully, in a repeated game model of experienced good markets with adverse selection on a seller's propensity to supply good quality items. In this equilibrium a seller's value function strictly increases in reputation and a seller's type is revealed within finite time. The analysis highlights a new reputation mechanism based on an endogenous complementarity the market places between a seller's honesty in pre-trade communication (trust) and his/her ability to deliver good quality (reputation). As maintaining honesty is less costly for high ability sellers who anticipate less “bad news” to disclose, they can signal their ability by communicating in a more trustworthy manner. Applying this model, we examine the extent to which consumer feedback systems foster trust in online markets, including the possibility that sellers may change identities or exit.
    Keywords: cheap talk, consumer rating system, reputation, trust.
    JEL: C73 D82 D83 L14
    Date: 2011–03
  34. By: Bengtsson, Niklas (Uppsala Center for Labor Studies)
    Abstract: In this paper, I study the conditions that enable search efficiency in a search market in which the firms advertise incomplete terms of trade. The posted terms give rise to cost incentives so perverse that they could result in no trade at all if they are not renegotiated. I show that the private equilibrium is socially efficient if the customers retain the right to trade at the posted terms. The customers will never execute this right in practice, but the threat of doing so will frame the renegotiation in a socially efficient manner. I confirm the mechanisms in a controlled, randomized eld experiment in the market for metered taxis in Cape Town. Renegotiation is always privately efficient and does not lead to holdup. However, despite the absence of holdup and the availability of Pareto gains, renegotiations occur too seldom, which suggests that the trading parts do not understand the bene ts from renegotiation, or that there are some hidden costs associated with renegotiation.
    Keywords: Matching; Diamond Paradox; Taxi Experiment; Incomplete Contracts; Transaction Costs; Institutions; Natural Field Experiment; Search frictions; Price advertisements; Price Posting
    JEL: C78 C93 L51
    Date: 2011–12–05

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