|
on Game Theory |
|
Issue of 2013‒03‒23
thirteen papers chosen by Laszlo A. Koczy Hungarian Academy of Sciences and Obuda University |
| By: | Brink J.R. van den; Talman A.J.J.; Herings P.J.J.; Laan G. van der (GSBE) |
| Abstract: | In the literature various models of games with restricted cooperation can be found. In those models, instead of allowing for all subsets of the set of players to form, it is assumed that the set of feasible coalitions is a proper subset of the power set of the set of players. In this paper we consider such sets of feasible coalitions that follow from a permission structure on the set of players, in which players need permission to cooperate with other players. We assume the permission structure to be an oriented tree. This means that there is one player at the top of the permission structure and for every other player there is a unique directed path from the top player to this player. We introduce a new solution for these games based on the idea of the Average Tree value for cycle-free communication graph games. We provide two axiomatizations for this new value and compare it with the conjunctive permission value. |
| Keywords: | Game Theory and Bargaining Theory: General; |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umagsb:2013001&r=gth |
| By: | Gaurab Aryal; Ronald Stauber |
| Abstract: | We introduce and analyze three definitions of equilibrium for finite extensive games with imperfect information and ambiguity averse players. In a setting where players' preferences are represented by maxmin expected utility as characterized in Gilboa and Schmeidler (1989), our definitions capture the intuition that players may consider the possibility of slight mistakes, analogous to the intuition leading to trembling-hand perfect equilibrium as introduced in Selten (1975). We prove existence for two of our equilibrium notions, and relate our definitions to standard equilibrium concepts with expected utility maximizing players. Our analysis shows that ambiguity aversion can lead to distinct behavioral implications, even if ambiguous beliefs only arise from the possibility of slight mistakes in the implementation of unambiguous strategies. |
| Keywords: | Extensive games; Ambiguity; Maxmin |
| JEL: | C72 D81 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:acb:cbeeco:2013-606&r=gth |
| By: | Khan A. (GSBE) |
| Abstract: | We study stochastically stable behaviour in 2 x 2 coordination games where the risk-dominant equilibrium differs from the Pareto-efficient equilibrium. Individuals are randomly matched to another individual in the population (with full support) and they choose strategies by imitating the most successful individual they observe. So, while individuals interact globally, their observation, as determined by their social network, may be local. In the benchmark model, all individuals observe each other, and hence, an individual imitates the strategy of the most successful individual in the entire population; here, the stochastically stable outcome corresponds to the situation where everyone coordinates on the Pareto-efficient equilibrium. While this outcome is always stochastically stable even when observability is incomplete, the state where everyone plays the action of the risk-dominant equilibrium may be stochastically stable as well. Reasonably tight sufficient conditions for unique stochastic stability of the state where all individuals play the Pareto-efficient equilibrium strategy include each individual observing at least four other individuals or when each individual observes the same number of other individuals. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umagsb:2013004&r=gth |
| By: | Ronen Gradwohl |
| Abstract: | In most implementation frameworks, agents care only about the outcome and not at all about the way in which it was obtained. Additionally, typical mechanisms for full implementation involve the complete revelation of all private information to the planner. In this paper I consider the problem of full implementation with agents who may prefer to protect their privacy. I analyze the extent to which privacy-protecting mechanisms can be constructed under various assumptions about agents' predilection for privacy and the permissible game forms. JEL Classification Numbers: D82, C72 |
| Keywords: | Nash implementation, subgame perfect implementation, privacy |
| Date: | 2013–03–04 |
| URL: | http://d.repec.org/n?u=RePEc:nwu:cmsems:1561&r=gth |
| By: | Hitoshi Matsushima (The University of Tokyo); Tomomi Tanaka (Economic Development & Global Education, LLC); Tomohisa Toyama (Kogakuin University) |
| Abstract: | We examine repeated prisoners’ dilemma with imperfect private monitoring and random termination where the termination probability is low. We run laboratory experiments and show subjects retaliate more severely when monitoring is more accurate. This experimental result contradicts the prediction of standard game theory. Instead of assuming full rationality and pure self-interest, we introduce naivete and social preferences, i.e., reciprocal concerns, and develop a model that is consistent with, and uniquely predicts, the observed behavior in the experiments. Our behavioral model suggests there is a trade-off between naivete and reciprocity. When people are concerned about reciprocity, they tend to make fewer random choices. |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:cfi:fseres:cf309&r=gth |
| By: | Adam Zylbersztejn (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris) |
| Abstract: | Several experimental studies show that ex post communication promotes generosity in situations where individual incentives contradict with common interest, like the provision of public goods. The root underlying the effect of this institution, especially in a repeated interaction, is nonetheless still obscure. This study provides a novel empirical testbed for two mechanisms by which ex post communication may affect behavior in repeated interactions : one is related to strategic signaling, the other involves emotions induces by others' opinions. The main findings are as follows. First, the presence of ex post communication (conducted through the attribution of costless disapproval points) fosters pro-social behavior and reduces free-riding. Second, I find systematic evidence that subjects tend to use ex post communication as a signaling device, whilst no evidence in favor of the emotion-based hypothesis. A possible interpretation of this phenomenon is that ex post messages are used to announce future sanctions for free-riding. |
| Keywords: | Public goods game; voluntary contribution mechanism; ex post communication |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00800587&r=gth |
| By: | Francesco De Sinopoli; Giovanna Iannantuoni; Elena Manzoni |
| Abstract: | In this paper we propose a model with uncertainty in which strategic voters vote, under poportional rule, for a Parliament and parties bargain to form a government. We prove that only consensus government form and only extreme parties take votes. |
| Keywords: | Proportional Election, Strategic Voting, Legislative Bargaining |
| JEL: | C72 D72 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:mib:wpaper:240&r=gth |
| By: | Surajeet Chakravarty (Department of Economics, University of Exeter); Miguel A. Fonseca (Department of Economics, University of Exeter) |
| Abstract: | We study using laboratory experiments the impact on cooperation of allowing individuals to invest in group-specific, excludable public goods. We find that allowing different social groups to voluntarily contribute to such goods increases total contributions. However, a significant proportion of that contribution goes towards the group-specific club good, rather than the public good, even when the latter has higher financial returns to cooperation. We find significant evidence of in-group biases, which are manifested by positive in-group reciprocity. That is, club goods allow subjects to display their preferences for interaction with their in-group members, as well as in positive in-group reciprocity. |
| Keywords: | club goods, social identity, experiment |
| JEL: | C92 D02 D03 H41 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:exe:wpaper:1302&r=gth |
| By: | Liang, Pinghan |
| Abstract: | This paper studies the optimal design of delegation rule in a three-tier principal-intermediary-agent hierarchy. In this hierarchy, monetary transfer is not feasible, delegation is made sequentially, and all players are strategic. We characterize the optimal delegation mechanism. It is shown that the single-interval delegation a la Holmstrom is optimal only when the intermediary is moderately biased. Otherwise, as responses to the distortion caused by a biased intermediary, the optimal delegation set may involve a hole. Thus, multi-interval delegation set would arise when subordinates have opposing biases. This result sheds some light on policy threshold effects: "slight" changes in the underlying state cause a jump in the policy responses. |
| Keywords: | Delegation, Intermediary, Hierarchies |
| JEL: | D73 D78 D86 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:45271&r=gth |
| By: | Cremer, Helmuth (TSE, IDEI); Maldonado, Dario (University Bogota) |
| Abstract: | This paper studies oligopolistic competition in education markets when schools can be private and public and when the quality of education depends on "peer group"effects. In the first stage of our game schools set their quality and in the second stage they fix their tuition fees. We examine how the (subgame perfect Nash) equilibrium allocation (qualities, tuition fees and welfare) is affected by the presence of public schools and by their relative position in the quality range. When there are no peer group effects, efficiency is achieved when (at least) all but one school are public. In particular in the two school case, the impact of a public school is spectacular as we go from a setting of extreme differentiation to an efficient allocation. However, in the three school case, a single public school will lower welfare compared to the private equilibrium. We then introduce a peer group effect which, for any given school is determined by its student with the highest ability. These PGE do have a significant impact on the results. The mixed equilibrium is now never efficient. However, welfare continues to be improved if all but one school are public. Overall, the presence of PGE reduces the effectiveness of public schools as regulatory tool in an otherwise private education sector. |
| Keywords: | Education, peer-group effects, mixed duopoly |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:ide:wpaper:26909&r=gth |
| By: | Janne Tukiainen |
| Abstract: | I study the role of minimum bid increments (MBI) in internet auctions using field experiment data. I sell identical gift cards while varying the MBI. Internet auctions have typically been viewed as second-price, implying truthful bidding. However, due to the presence of the MBI, equilibrium bidding behavior involves bid-shading. I test between truthful bidding and equilibrium bidding. Truthful bidding is rejected. Bidders conduct bid-shading in a pattern consistent with equilibrium bidding. I also report that the revenue maximizing level for the MBI is higher than zero and the eBay level is close to optimal. Moreover, a high MBI inefficiently limits entry. |
| Keywords: | Field experiment, internet auctions, minimum bid increment, revenue, strategic bidding |
| JEL: | D44 C93 C72 C52 L81 |
| Date: | 2013–02–15 |
| URL: | http://d.repec.org/n?u=RePEc:fer:wpaper:44&r=gth |
| By: | Liang, Pinghan |
| Abstract: | We develop a multi-agent communication model with participation decisions to address the customer complaining behavior and the corresponding management policy. Privately informed customers choose among costly complain, keep silence, and exit, and a firm decides complaining barriers and whether to undertake a corrective action. It is shown that customers truthfully complain only under a moderate complaining barrier. The observed low complaint/dissatisfaction ratio and costly complaint arise as one equilibrium outcome. Customers' expectations, the precision of signals, and the temptation of outside options are identified as the determinants of complaint management policy. Firms are likely to set socially excessive complaining barriers. |
| Keywords: | Customer complaint management, Communication, Exit |
| JEL: | D82 L15 L51 M31 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:45268&r=gth |
| By: | Audrey Boilley (CRESE, Université de Franche-comté) |
| Abstract: | We compare duopoly competition with a regulated public monopoly in the health care insurance sector using the two-sided market approach. Health plans allow policyholders and physicians to interact. Policyholders have a preference for one of two health plans and value the diversity of physicians. Physicians value the number of policyholders because they are paid on a fee-for-service basis. This is a positive network externality. We find that the resulting Nash equilibria are explained by the two standard effects of product differentiation: the price competition effect and the market share effect, and by two opposing effects related to the network externality. We call these the positive earning effect and the negative spending effect. Overall the comparison between the two types of organizations shows that regulation is preferred when the physicians' market is not covered and competition is preferred when it is covered. But each time the choice is made at the expense of one type of agent. |
| Keywords: | Two-Sided Markets, Managed Care Competition, Network Effects, Product Differentiation, Hotelling, Public Policy |
| JEL: | C72 D21 D43 L11 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:crb:wpaper:2013-02&r=gth |