nep-gth New Economics Papers
on Game Theory
Issue of 2013‒02‒08
six papers chosen by
Laszlo A. Koczy
Hungarian Academy of Sciences and Obuda University

  1. Graphs Inducing Totally Balanced and Submodular Chinese Postman Games By Hamers, H.J.M.; Josune Albizuri, M.
  2. An Eye-Tracking Study of Feature-Based Choice in One-Shot Games By Giovanna Devetag; Sibilla Di Guida; Luca Polonio
  3. On Games Arising From Multi-Depot Chinese Postman Problems By Platz, T.T.; Hamers, H.J.M.
  4. Friends and Enemies: A Model of Signed Network Formation By Timo Hiller
  5. I’ll do it by myself as I knew it all along’: On the failure of hindsight-biased principals to delegate optimally By David Danz; Frank Hüber; Dorothea Kübler; Lydia Mechtenberg; Julia Schmid
  6. Risk-sharing and contagion in networks By Antonio Cabrales; Piero Gottardi; Fernando Vega-Redondo

  1. By: Hamers, H.J.M.; Josune Albizuri, M. (Tilburg University, Center for Economic Research)
    Abstract: Abstract A Chinese postman (CP) game is induced by a a weighted undirected, connected graph in which the edges are identified as players and a vertex is chosen as post-office location. Granot and Granot (2012) characterized graphs that give rise to CP games that are balanced. This note completes this line of research by characterizing graphs that give rise to CP games that are submodular (totally balanced, respectively).
    Keywords: Chinese Postman games;submodularity;totally balancedness
    JEL: C71
    Date: 2013
  2. By: Giovanna Devetag; Sibilla Di Guida; Luca Polonio
    Abstract: We analyze subjects’ eye movements while they make decisions in a series of one-shot games. The majority of them perform a partial and selective analysis of the payoff matrix, often ignoring the payoffs of the opponent and/or paying attention only to specific cells. Our results suggest that subjects apply boundedly rational decision heuristics that involve best responding to a simplification of the decision problem, obtained either by ignoring the other players’ motivations or by considering them only for a subset of outcomes. Finally, we find a correlation between types of eye movements observed and choices in the games.
    Keywords: one-shot games; eye-tracking; similarity; categorization; focal points; experimental economics; individual behavior; behavioral economics
    JEL: C72 C91 D01 D83
    Date: 2013–01
  3. By: Platz, T.T.; Hamers, H.J.M. (Tilburg University, Center for Economic Research)
    Abstract: This paper introduces cooperative games arising from multi-depot Chinese postman problems and explores the properties of these games. A multi-depot Chinese postman problem (MDCP) is represented by a connected (di)graph G, a set of k depots that is a subset of the vertices of G, and a non-negative weight function on the edges of G. A solution to the MDCP is a minimum weight tour of the (di)graph that visits all edges (arcs) of the graph and that consists of a collection of subtours such that the subtours originate from dierent depots, and each subtour starts and ends at the same depot. A cooperative Chinese postman (CP) game is induced by a MDCP by associating every edge of the graph with a dierent player. This paper characterizes globally and locally k-CP balanced and submodular (di)graphs. A (di)graph G is called globally (locally) k-CP balanced (respectively submodular), if the induced CP game of the corresponding MDCP problem on G is balanced (respectively submodular) for any (some) choice of the locations of the k depots and every non-negative weight function
    Keywords: Chinese postman problem;cooperative game;submodularity;bal- ancedness.
    JEL: C71
    Date: 2013
  4. By: Timo Hiller
    Abstract: I propose a game of signed network formation, where agents make friends to coerce payoffs from enemies with fewer friends. The model accounts for the interplay between friendship and enmity. Nash equilibrium configurations are such that, either everyone is friends with everyone, or agents can be partitioned into sets of different size, where agents within the same set are friends and agents in different sets are enemies. These results mirror findings of a large body of work on signed networks in sociology, social psychology, international relations and applied physics.
    Keywords: Network Formation, Structural Balance, Alliances, Contest Success Function
    JEL: D74 D85
    Date: 2012–10
  5. By: David Danz; Frank Hüber; Dorothea Kübler; Lydia Mechtenberg; Julia Schmid
    Abstract: With the help of a simple model, we show that the hindsight bias can lead to ineffcient delegation decisions. This prediction is tested experimentally. In an online experiment that was conducted during the FIFA World Cup 2010 participants were asked to predict a number of outcomes of the ongoing World Cup and had to recall their assessments after the outcomes had been realized. This served as a measure of the hindsight bias for each participant. The participants also had to make choices in a delegation game. Our data confirm that hindsight-biased subjects more frequently fail to delegate optimally than subjects whom we have classified as not hindsight biased.
    Keywords: hindsight bias, delegation, experiments
    JEL: C72 C91 D84
    Date: 2013–01
  6. By: Antonio Cabrales; Piero Gottardi; Fernando Vega-Redondo
    Abstract: The aim of this paper is to investigate how the capacity of an economic system to absorb shocks depends on the specific pattern of interconnections established among financial firms. The key trade-off at work is between the risk-sharing gains enjoyed by firms when they become more interconnected and the large-scale costs resulting from an increased risk exposure. We focus on two dimensions of the network structure: the size of the (disjoint) components into which the network is divided, and the “relative density" of connections within each component. We find that when the distribution of the shocks displays "fat" tails extreme segmentation is optimal, while minimal segmentation and high density are optimal when the distribution exhibits "thin" tails. For other, less regular distributions intermediate degrees of segmentation and sparser connections are also optimal. We also find that there is typically a conflict between efficiency and pairwise stability, due to a “size externality" that is not internalized by firms who belong to components that have reached an individually optimal size. Finally, optimality requires perfect assortativity for firms in a component.
    Keywords: Firm networks, Contagion, Risk Sharing
    JEL: D85 C72 G21
    Date: 2013–01

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