
on Game Theory 
Issue of 2012‒09‒16
seventeen papers chosen by Laszlo A. Koczy Hungarian Academy of Sciences and Obuda University 
By:  Herings P. JeanJacques; Britz Volker; Predtetchinski Arkadi (METEOR) 
Abstract:  We consider noncooperative multilateral bargaining games with endogenous bargaining protocols.Under an endogenous protocol, the probability with which a player becomes the proposer in a roundof bargaining depends on the identity of the player who previously rejected. An important exampleis the frequently studied rejectorbecomesproposer protocol. We focus on subgame perfectequilibria in stationary strategies which are shown to exist and to be efficient. Equilibriumproposals do not depend on the probability to proposeconditional on the rejection by another player, though equilibrium acceptance sets do depend onthese probabilities. Next we consider the limit, as the bargaining friction vanishes. In case noplayer has a positive probability to propose conditional on his rejection, each player receiveshis utopia payoff conditional on being recognized and equilibrium payoffs are in general Paretoinefficient. Otherwise, equilibrium proposals of all players converge to a weighted NashBargaining Solution, where the weights are determined by the probability to propose conditional ona rejection. 
Keywords:  microeconomics ; 
Date:  2012 
URL:  http://d.repec.org/n?u=RePEc:dgr:umamet:2012030&r=gth 
By:  Abraham Neyman 
Abstract:  Every continuoustime stochastic game with finitely many states and actions has a uniform and limitingaverage equilibrium payoff. 
Date:  2012–08 
URL:  http://d.repec.org/n?u=RePEc:huj:dispap:dp616&r=gth 
By:  Mikel AlvarezMozos; Ziv Hellman; Eyal Winter 
Abstract:  Assuming a `spectrum' or ordering on the players of a coalitional game, as in a political spectrum in a parliamentary situation, we consider a variation of the Shapley value in which coalitions may only be formed if they are connected with respect to the spectrum. This results in a naturally asymmetric power index in which positioning along the spectrum is critical. We present both a characterisation of this value by means of properties and combinatoric formulae for calculating it. In simple majority games, the greatest power accrues to `moderate' players who are located neither at the extremes of the spectrum nor in its centre. In supermajority games, power increasingly accrues towards the extremes, and in unaninimity games all power is held by the players at the extreme of the spectrum. 
Date:  2012–08 
URL:  http://d.repec.org/n?u=RePEc:huj:dispap:dp618&r=gth 
By:  YiChun Chen (Dept. of Economics, National University of Singapore); Alfredo Di Tillio (IGIR and Dept. of Economics, Universita Luigi Bocconi); Eduardo Faingold (Cowles Foundation, Yale University); Siyang Xiong (Dept. of Economics, Rice University) 
Abstract:  Previous research has established that the predictions made by game theory about strategic behavior in incomplete information games are quite sensitive to the assumptions made about the players' infinite hierarchies of beliefs. We evaluate the severity of this robustness problem by characterizing conditions on the primitives of the model  the players’ hierarchies of beliefs  for the strategic behavior of a given Harsanyi type to be approximated by the strategic behavior of (a sequence of) perturbed types. This amounts to providing characterizations of the strategic topologies of Dekel, Fudenberg, and Morris (2006) in terms of beliefs. We apply our characterizations to a variety of questions concerning robustness to perturbations of higherorder beliefs, including genericity of common priors, and the connections between robustness of strategic behavior and the notion of common pbelief of Monderer and Samet (1989). 
Keywords:  Games with incomplete information, Rationalizability, Higherorder beliefs, Robustness 
JEL:  C70 C72 
Date:  2012–09 
URL:  http://d.repec.org/n?u=RePEc:cwl:cwldpp:1875&r=gth 
By:  Alex Robson 
Keywords:  Coase Theory, externalities, transaction costs, cooperatives games 
JEL:  D23 K00 C71 C78 D62 
Date:  2012–08 
URL:  http://d.repec.org/n?u=RePEc:gri:epaper:economics:201208&r=gth 
By:  Noussair, C.N.; Stoop, J.T.R. (Tilburg University, Center for Economic Research) 
Abstract:  Abstract: We report results from three wellknown experimental paradigms, where we use time, rather than money, as the salient component of subjectsâ€™ incentives. The three experiments, commonly employed to study social preferences, are the dictator game, the ultimatum game and the trust game. All subjects in a session earn the same participation fee, but their choices affect the time at which they are permitted to leave the laboratory, with decisions typically associated with greater own payoff translating into an earlier departure. The modal proposal in both the dictator and ultimatum games is an equal split of the waiting time. In the trust game, there is substantial trust and reciprocity. Overall, social preferences are evident in time allocation decisions. Received laboratory results from dictator, ultimatum, and trust games are robust to the change in reward medium, though there is some suggestive evidence that decisions are even more prosocial with respect to time than money. 
Keywords:  dictator game;ultimatum game;trust game;time. 
JEL:  C70 C91 D63 D64 
Date:  2012 
URL:  http://d.repec.org/n?u=RePEc:dgr:kubcen:2012068&r=gth 
By:  Omer Edhan 
Abstract:  We prove that every continuous value on a space of vector measure market games $Q$, containing the space of nonatomic measures $NA$, has the \textit{conic property}, i.e., if a game $v\in Q$ coincides with a nonatomic measure $\nu$ on a conical diagonal neighborhood then $\varphi(v)=\nu$. We deduce that every continuous value on the linear space $\mathcal M$, spanned by all vector measure market games, is determined by its values on $\mathcal{LM}$  the space of vector measure market games which are Lipschitz functions of the measures. 
Date:  2012–08 
URL:  http://d.repec.org/n?u=RePEc:huj:dispap:dp623&r=gth 
By:  Daniel Cracau (Faculty of Economics and Management, OttovonGuericke University Magdeburg); Benjamin Franz (Mathematical Institute, University of Oxford) 
Abstract:  We study oligopoly games with firms competing in prices and quantities at the same time. We systematically compare our experimental results to the theoretical predictions using the mixed strategy equilibria for linear demand functions. For the duopoly game, we observe that the mixed strategy equilibrium predicts average outcomes better than Cournot and Bertrand do. Subjects' price choices are mainly between marginal cost and monopoly level but do not follow the equilibrium distribution. Although average prices and profits are above theoretical values, we do not observe a high level of collusion as expected in the literature. By comparing simulations based on the mixed strategy equilibrium to our experimental outcomes, we conclude that in this game price setting can be explained by strategic reaction to preceding round results. In contrast to the equilibrium prediction, we observe a decrease in prices and negative average profits for the triopoly game. 
Keywords:  PriceQuantity Competition; Mixed Strategy Equilibria; Experimental Economics; Learning Direction Theory 
JEL:  D43 L11 
Date:  2012–08 
URL:  http://d.repec.org/n?u=RePEc:mag:wpaper:120017&r=gth 
By:  Yehuda (John) Levy 
Abstract:  We study nonzerosum continuoustime stochastic games, also known as continuoustime Markov games, of fixed duration. We concentrate on Markovian strategies. We show by way of example that equilibria need not exist in Markovian strategies, but they always exist in Markovian publicsignal correlated strategies. To do so, we develop criteria for a strategy profile to be an equilibrium via differential inclusions, both directly and also by modeling continuoustime stochastic as differential games and using the HamiltonJacobiBellman equations. We also give an interpretation of equilibria in mixed strategies in continuoustime, and show that approximate equilibria always exist. 
Date:  2012–08 
URL:  http://d.repec.org/n?u=RePEc:huj:dispap:dp617&r=gth 
By:  Omer Edhan 
Abstract:  Among the singlevalued solution concepts studied in cooperative game theory and economics, those which are also positive projections play an important role. The value, semivalues, and quasivalues of a cooperative game are several examples of solution concepts which are positive projections. These solution concepts are known to have many important applications in economics. In many applications the specific positive projection discussed is represented as an expectation of marginal contributions of agents to ``random" coalitions. Usually these representations are used to characterize positive projections obeying certain additional axioms. It is thus of interest to study the representation theory of positive projections and its relation with some common axioms. We study positive projections defined over certain spaces of nonatomic Lipschitz vector measure games. To this end, we develop a general notion of ``calculus" for such games, which in a manner extends the notion of the RadonNykodim derivative for measures. We prove several representation results for positive projections, which essentially state that the image of a game under the action of a positive projection can be represented as an averaging of its derivative w.r.t. some vector measure. We then introduce a specific calculus for the space $\mathcal{CON}$ generated by concave, monotonically nondecreasing, and Lipschitz continuous functions of finitely many nonatomic probability measures. We study in detail the properties of the resulting representations of positive projections on $\mathcal{CON}$ and especially those of values on $\mathcal{CON}$. The latter results are of great importance in various applications in economics. 
Date:  2012–08 
URL:  http://d.repec.org/n?u=RePEc:huj:dispap:dp624&r=gth 
By:  Omer Edhan 
Abstract:  We prove that a singlevalued solution of perfectly competitive TU economies underling nonatomic exact market games is uniquely determined as the Mertens value by four plausible valuerelated axioms. Since the Mertens value is always a core element, this result provides an axiomatization of the Mertens value as a coreselection. Previous works in this direction assumed the economies to be either di erentiable (e.g., Dubey and Neyman [9]) or of uniform nitetype (e.g., Haimanko [14]). Our work does not assume that, thus it contributes to the axiomatic study of payo s in perfectly competitive economies (or values of their derived market games) in general. In fact, this is the rst contribution in this direction. 
Date:  2012–09 
URL:  http://d.repec.org/n?u=RePEc:huj:dispap:dp627&r=gth 
By:  Athanasiou Efthymios; Dey Santanu; Valletta Giacomo (METEOR) 
Abstract:  We put forward a model of private goods with externalities. Agents derive benefit fromcommunicating with each other. In order to communicate they need to have a language in common.Learning languages is costly. In this setting no individually rational and feasible Grovesmechanism exists. We characterize the bestinclass feasible Groves mechanism and thebestinclass individually rational Groves mechanism. 
Keywords:  public economics ; 
Date:  2012 
URL:  http://d.repec.org/n?u=RePEc:dgr:umamet:2012016&r=gth 
By:  Tsakas Elias (METEOR) 
Abstract:  We provide epistemic conditions for correlated rationalizability, which are considerably weakerthan the ones by Zambrano (2008). More specifically, we simultaneously replace mutual knowledge ofrationality and mutual knowledge of the event that every player deems possible only strategyprofiles that belong to the support of her actual conjecture, with strictly weaker epistemicconditions of pairwise mutual knowledge of these events.Moreover, we show that our epistemic foundation for correlated rationalizability does not implymutual knowledge of rationality. 
Keywords:  microeconomics ; 
Date:  2012 
URL:  http://d.repec.org/n?u=RePEc:dgr:umamet:2012031&r=gth 
By:  Björn Frank (University of Kassel); Stefan Krabel (University of Kassel) 
Abstract:  This paper presents evidence on biased voting by jurors from the Warsaw Pact countries who ranked highlevel chess games. The roots of this bias are probably ideological, as there were no formal benefits for biased voting. Furthermore, this bias is observed only for jurors from Eastern countries, not for those from the West (NATO), and most interestingly, it disappears after the collapse of the Warsaw pact in 1989. 
Date:  2012 
URL:  http://d.repec.org/n?u=RePEc:mar:magkse:201237&r=gth 
By:  René van den Brink (VU University Amsterdam); Frank Steffen (The University of Liverpool Management School) 
Abstract:  The main purpose of the present paper is to disentangle the mixup of the notions of success and satisfaction which is prevailing in the voting power literature. We demonstrate that both notions are conceptually distinct, and discuss their relationship and measurement. We show that satisfaction contains success as one component, and that both coincide under the canonical setup of a simultaneous decisionmaking mechanism as it is predominant in the voting power literature. However, we provide two examples of sequential decisionmaking mechanisms in order to illustrate the difference between success and satisfaction. In the context of the discussion of both notions we also address their relationship to different types of luck. 
Keywords:  success; satisfaction; luck; power 
JEL:  C79 D02 D71 
Date:  2012–03–27 
URL:  http://d.repec.org/n?u=RePEc:dgr:uvatin:20120030&r=gth 
By:  Changxia Ke; Kai A. Konrad; Florian Morath 
Abstract:  Victorious alliances often fight about the spoils of war. We consider experimentally when members of victorious alliances accept a peaceful division of the spoils, and when they fight against each other, and how the inability to commit to a peaceful division affects their effort contributions in their fight against a common enemy. First, we find that an asymmetric split of the prize induces a higher likelihood of internal fight and, in turn, reduces the effort contributions in the fight against a joint enemy. Second, nonbinding declarations on how to divide the spoils in case of victory do not help to mitigate the holdup problem. 
Keywords:  Conflict, contest, alliance, holdup problem, experiment 
JEL:  D72 D74 
Date:  2012–03 
URL:  http://d.repec.org/n?u=RePEc:mpi:wpaper:alliances_in_the_shadow_of_conflict&r=gth 
By:  Max Blouin 
Abstract:  This paper presents a theoretical model of conflict between two players, with intervention by a peacekeeping force. Peacekeepers are treated as a military contingent, capable of taking sides, acting as a third (independent) side in the war, or remaining inactive, depending on circumstances. This departs from previous models, in which peacekeeping was no more than a parameter affecting players' fighting costs. The main result is an optimal deployment strategy by peacekeepers, detailing the nature and level of intervention required under different circumstances; a strategy which results in the lowest possible level of warfare between the two antagonists. The credible threat of force (rather than mere intervention) is the strategy's key component. 
Keywords:  Peacekeeping, conflict, responsibility to protect (R2P) 
JEL:  D74 F53 H56 
Date:  2012 
URL:  http://d.repec.org/n?u=RePEc:lvl:lacicr:1235&r=gth 