nep-gth New Economics Papers
on Game Theory
Issue of 2012‒05‒22
fifteen papers chosen by
Laszlo A. Koczy
Hungarian Academy of Sciences and Obuda University

  1. The Average Covering Tree Value for Directed Graph Games By Khmelnitskaya, A.; Selcuk, O.; Talman, A.J.J.
  2. Strategic Sharing of a Costly Network By Hernández, Penélope; Peris, Josep E.; Silva-Reus, José A.
  3. Cognitive load in the multi-player prisoner's dilemma game: Are there brains in games? By Duffy, Sean; Smith, John
  4. Trustworthy by Convention By M. Bigoni; S. Bortolotti; M. Casari; D. Gambetta
  5. International Environmental Agreements with Mixed Strategies and Investment By Hong, Fuhsai; Karp, Larry
  6. Salience, Coordination and Cooperation in Contributing to Threshold Public Goods By Luca Corazzini, Christopher Cotton, Paola Valbonesi
  7. Matching with Quorums By Daniel Monte; Norovsambuu Tumennasan
  8. Centralized Allocation in Multiple Markets By Daniel Monte; Norovsambuu Tumennasan
  9. Reciprocity in the Principal Multiple Agent Model By Giuseppe De Marco; Giovanni Immordino
  10. Participation Games and international environmental agreements: a nonparametric model By Karp, Larry; Simon, Leo
  11. Sequential Disappearance of Reputations in Two-Sided Incomplete-Information Games By Ayca Ozdogan
  12. Sharing a polluted river network By Dong, Baomin; Ni, Debing; Wang, Yuntong
  13. Bargaining over an Endogenous Agenda By Vincent Anesi; Daniel J. Seidmann
  14. Asymmetric R&D Alliances and Coopetitive Games By Daniela Baglieri; David Carf\`i; Giovanni Battista Dagnino
  15. Ingratiation and Favoritism: Experimental Evidence By Robin, Stéphane; Rusinowska, Agnieszka; Villeval, Marie Claire

  1. By: Khmelnitskaya, A.; Selcuk, O.; Talman, A.J.J. (Tilburg University, Center for Economic Research)
    Abstract: Abstract: We introduce a single-valued solution concept, the so-called average covering tree value, for the class of transferable utility games with limited communication structure represented by a directed graph. The solution is the average of the marginal contribution vectors corresponding to all covering trees of the directed graph. The covering trees of a directed graph are those (rooted) trees on the set of players that preserve the dominance relations between the players prescribed by the directed graph. The average covering tree value is component efficient and under a particular convexity-type condition is stable. For transferable utility games with complete communication structure the average covering tree value equals to the Shapley value of the game. If the graph is the directed analog of an undirected graph the average covering tree value coincides with the gravity center solution.
    Keywords: TU game;directed communication structure;marginal contribution vector;Myerson value;average tree solution;stability.
    JEL: C71
    Date: 2012
  2. By: Hernández, Penélope (Departamento de Análisis Económico and ERI-CES. University of Valencia .); Peris, Josep E. (Universitat d'Alacant. Departament de Mètodes Quantitatius i Teoría Econòmica); Silva-Reus, José A. (Universitat d'Alacant. Departament de Mètodes Quantitatius i Teoría Econòmica and Instituto Universitario Desarrollo Social y Paz (IUDESP))
    Abstract: We s tudy minimum cost spanning tree problems for a given set of users connected to a source. We propose a rule of sharing such that each user may pay her cost for such a tree plus an additional amount to the others users . A reduction of her cost appears as a compensation from the other users. Our first result states the existence of a sharing such that no agent is willing to choose a different tree from the minimum cost tree (mcst) offered by Prim’s algorithm. Therefore, the mcst emerges as both a social and individual optimal solu tion. Given a sharing system, we implement the above solution as a subgame perfect equilibrium of a sequential game where players decide sequentially with whom to connect. Moreover , the proposed solution is at the core of the monotone cooperative game associated with a minimal cost spanning tree problem.
    Keywords: Minimum cost spanning tree; cost allocation; subgame perfect equilibrium
    JEL: C71 D63 D70
    Date: 2012–05–09
  3. By: Duffy, Sean; Smith, John
    Abstract: We find that differences in the ability to devote cognitive resources to a strategic interaction imply differences in strategic behavior. In our experiment, we manipulate the availability of cognitive resources by applying a differential cognitive load. In cognitive load experiments, subjects are directed to perform a task which occupies cognitive resources, in addition to making a choice in another domain. The greater the cognitive resources required for the task implies that fewer such resources will be available for deliberation on the choice. Although much is known about how subjects make decisions under a cognitive load, little is known about how this affects behavior in strategic games. We run an experiment in which subjects play a repeated multi-player prisoner's dilemma game under two cognitive load treatments. In one treatment, subjects are placed under a high cognitive load (given a 7 digit number to recall) and subjects in the other are placed under a low cognitive load (given a 2 digit number). According to two different measures, we find evidence that the low load subjects behave more strategically. First, the behavior of the low load subjects converged to the Subgame Perfect Nash Equilibrium prediction at a faster rate than the high load subjects. Second, we find evidence that low load subjects were better able to condition their behavior on the outcomes of previous periods.
    Keywords: bounded rationality; experimental economics; experimental game theory; public goods game; strategic sophistication; rational inattention
    JEL: C72 C91
    Date: 2012–05–15
  4. By: M. Bigoni; S. Bortolotti; M. Casari; D. Gambetta
    Abstract: Social life offers innumerable instances in which trust relations involve multiple agents. In an experiment, we study a new setting called Collective Trust Game where there are multiple trustees, who may have an incentive to coordinate their actions. Trustworthiness has also a strategic motivation, and the trusters' decision depends upon their beliefs about the predominant convention with regard to trustworthiness. In this respect, the Collective Trust Games offers a richer pattern of behavior than dyadic games. We report that the levels of trustworthiness are almost thirty percentage points higher when strategic motivations are present rather than not. Higher levels of trustworthiness also led to higher levels of trust. Moreover, strategic motives appear as a major drive for trustees, comparable in size to positive reciprocity, and more important than concerns for equality.
    JEL: C92 C72 D03
    Date: 2012–05
  5. By: Hong, Fuhsai; Karp, Larry
    Abstract: We modify a canonical participation game used to study International Environmental Agreements (IEA), considering both mixed and pure strategies at the participation stage, and including a prior cost-reducing investment stage. The use of mixed strategies at the participation stage reverses a familiar result and alsoreverses the policy implication of that result: with mixed strategies, equilibriumparticipation and welfare is higher in equilibria that involve higher investment.
    Keywords: Natural Resources and Conservation, Social Sciences, International Environmental Agreement, climate agreement, participation games, investment, mixed strategy
    Date: 2012–05–08
  6. By: Luca Corazzini, Christopher Cotton, Paola Valbonesi
    Abstract: We present results from a multiple public goods experiment, where each public good produces benefits only if total contributions to it reach a minimum threshold. The experiment allows us to compare subjects' behavior in a benchmark treatment with a single public good and in treatments with more public goods than can be funded. We show how the availability of additional, more-efficient public goods may not make subjects better off. This is because additional options decrease the probability of coordination and discourage contributions. Introducing additional, less-efficient options does not alter coordination and contributions relative to the benchmark.
    Keywords: threshold public goods, multiple public goods, salience, efficiency, laboratory experiment
    JEL: C91 C92 H40 H41
    Date: 2012–05
  7. By: Daniel Monte (Department of Economics and Business, Aarhus University, Denmark); Norovsambuu Tumennasan (Department of Economics and Business, Aarhus University, Denmark)
    Abstract: We study the problem of allocating workers to different projects in which each project requires having a minimum number of workers assigned to it or else it does not open. We show that the well-known serial dictatorship mechanism is neither strategy-proof nor Pareto ecient. Thus, we propose an algorithm, denoted as the serial dictatorship with project closures, which is strategy-proof and also Pareto efficient over the set of all feasible allocations.
    Keywords: matching, stability, efficiency, serial dictatorship
    JEL: C78 D61 D78 I20
    Date: 2012–05–10
  8. By: Daniel Monte (Department of Economics and Business, Aarhus University, Denmark); Norovsambuu Tumennasan (Department of Economics and Business, Aarhus University, Denmark)
    Abstract: The problem of allocating indivisible objects to different agents, where each individual is assigned at most one object, has been widely studied. Pápai (2000) shows that the set of strategy-proof, nonbossy, Pareto optimal and reallocation-proof rules are hierarchical exchange rules | generalizations of Gale's Top Trading Cycles mechanism. We study the centralized allocation that takes place in multiple markets. For example, the assignment of multiple types of indivisible objects; or the assignment of objects in successive periods. We show that the set of strategy-proof, Pareto efficient and nonbossy rules are sequential dictatorships, a special case of Pápai's hierarchical exchange rules.
    Keywords: Matching, Strategy-Proofness, Nonbossiness, Pareto efficiency
    JEL: C78 D61 D78 I20
    Date: 2012–05–10
  9. By: Giuseppe De Marco (Università di Napoli Parthenope and CSEF); Giovanni Immordino (Università di Salerno and CSEF)
    Abstract: This paper studies how incentives are affected by intention-based reciprocity preferences when the principal hires many agents. Our results describe the agents' psychological attitudes required to sustain a given strategy profile. We also show that hiring reciprocal agents to implement a first or a second-best contract will always benefit the principal if the strategy profile is symmetric. When instead the profile (first or second-best) is asymmetric the principal's best interest might be better served by self-interested agents. We conclude the paper by clarifying when symmetric profiles are most likely to arise.
    Keywords: reciprocity, many agents, psychological games
    JEL: C72 D03 D86
    Date: 2012–05–10
  10. By: Karp, Larry; Simon, Leo
    Abstract: We examine the size of stable coalitions in a participation game that has been used to model international environmental agreements, cartel formation, R&D spillovers, and monetary policy. The literature to date has relied on parametric examples; based onthese examples, a consensus has emerged that in this kind of game, the equilibrium coalition size is small, except possibly when the potential benefits of cooperation are also small. In this paper, we develop a non-parametric approach to the problem, and demonstrate that the conventional wisdom is not robust. In a general setting, we identify conditions under which the equilibrium coalition size can be large even when potential gains are large. Contrary to previously examined leading special cases, we show that reductions in marginal abatementcosts in an international environmental game can increase equilibrium membership, and we provide a measure of the smallest reduction in costs needed to support a coalition of arbitrary size.
    Keywords: Natural Resources and Conservation, Social Sciences, stable coalitions, participation games, International Environmental Agreement, climate agreement, trans-boundary pollution, investment spillovers
    Date: 2012–02–13
  11. By: Ayca Ozdogan
    Date: 2012–05
  12. By: Dong, Baomin; Ni, Debing; Wang, Yuntong
    Abstract: A polluted river network is populated with agents (e.g., firms, villages, municipalities, or countries) located upstream and downstream. This river network must be cleaned, the costs of which must be shared among the agents. We model this problem as a cost sharing problem on a tree network. Based on the two theories in international disputes, namely the Absolute Territorial Sovereignty (ATS) and the Unlimitted Territorial Integrity (UTI), we propose three different cost sharing methods for the problem. They are the Local Responsibility Sharing (LRS), the Upstream Equal Sharing (UES), and the Downstream Equal Sharing (DES), respectively. The LRS and the UES generalize Ni and Wang ("Sharing a polluted river", Games Econ. Behav., 60 (2007), 176-186) but the DES is new. The DES is based on a new interpretation of the UTI. We provide axiomatic characterizations for the three methods. We also show that they coincide with the Shapley values of the three different games that can be defined for the problem. Moreover, we show that they are in the cores of the three games, respectively. Our methods can shed light on pollution abatement of a river network with multiple sovereignties.
    Keywords: River network; Water pollution; Cost sharing; the Shapley value
    JEL: D62 C71 D61
    Date: 2012–04–01
  13. By: Vincent Anesi (University of Nottingham); Daniel J. Seidmann (University of Nottingham)
    Abstract: We present a model of bargaining in which a committee searches over the policy space, successively amending the default by voting over proposals. Bargaining ends when proposers are unable or unwilling to amend the existing default, which is then implemented. We characterize the policies which can be implemented from any initial default in a pure strategy stationary Markov perfect equilibrium for an interesting class of environments including multi-dimensional and infinite policy spaces. Minimumwinning coalitions may not form, and the set of equilibrium policies may be unaffected by a change in the set of proposers. The set of stable policies (which are implemented, once reached as default) forms a weakly stable set; and conversely, any weakly stable set is supported by some equilibrium. If the policy space is well ordered then the committee implements the ideal policy of the last proposer in a subset of a weakly stable set. However, this result does not generalize to other cases, allowing us to explore the effects of protocol manipulation. Variations in the quota and in the number of proposers may have surprising effects on the set of stable decisions. We also show that equilibria of our model are contemporaneous perfect ?-equilibria of a related model of repeated implementation with an evolving default; and that stable decisions in semi-Markovian equilibria form the largest consistent set.
    Keywords: bargaining, evolving default, stable set
    JEL: C78 D71 D72
    Date: 2011–09
  14. By: Daniela Baglieri; David Carf\`i; Giovanni Battista Dagnino
    Abstract: In this paper we show how the study of asymmetric R&D alliances, that are those between young and small firms and large and MNEs firms for knowledge exploration and/or exploitation, requires the adoption of a coopetitive framework which consider both collaboration and competition. We draw upon the literature on asymmetric R&D collaboration and coopetition to propose a mathematical model for the coopetitive games which is particularly suitable for exploring asymmetric R&D alliances.
    Date: 2012–05
  15. By: Robin, Stéphane (CNRS, GATE); Rusinowska, Agnieszka (Paris School of Economics); Villeval, Marie Claire (CNRS, GATE)
    Abstract: We provide experimental evidence of workers' ingratiation by opinion conformity and of managers' discrimination in favor of workers with whom they share similar opinions. In our Baseline, managers can observe both workers' performance at a task and opinions before assigning unequal payoffs. In the Ingratiation treatment, workers can change their opinion after learning that held by the manager. In the Random treatment, workers can also change opinion but payoffs are assigned randomly, which gives a measure of non-strategic opinion conformism. We find evidence of high ingratiation indices, as overall, ingratiation is effective. Indeed, managers reward opinion conformity, and even more so when opinions cannot be manipulated. Additional treatments reveal that ingratiation is cost sensitive and that the introduction of performance pay for managers as well as a less noisy measure of performance increase the role of relative performance in the assignment of payoffs, without eliminating the reward of opinion conformity.
    Keywords: ingratiation, opinion conformity, favoritism, discrimination, social distance, experiment
    JEL: C7 C92 D03 D86 M51
    Date: 2012–04

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