nep-gth New Economics Papers
on Game Theory
Issue of 2013‒04‒27
fifteen papers chosen by
Laszlo A. Koczy
Hungarian Academy of Sciences and Obuda University

  1. Compressed Equilibrium in Large Repeated Games of Incomplete Information By Ehud Kalai; Eran Shmaya
  2. Implementation of Communication Equilibria by Correlated Cheap Talk : the Two-Player Case. By Forges, Françoise; Vida, Péter
  3. Robust Predictions in Games with Incomplete Information By Dirk Bergemann; Stephen Morris
  4. A Pareto Efficient Solution for General Exchange Markets with Indivisible Goods By Subiza, Begoña; Peris, Josep
  5. Stagnation proofness and individually monotonic bargaining solutions By Jaume García-Segarra; Miguel Ginés-Vilar
  6. Learning, teaching and sophistication in a strategic game By Emmanuel Malsch
  7. Linking the Kar and Folk Solutions Through a Problem Separation Property By Christian Trudeau
  8. Incentives for Experimenting Agents By Johannes Horner; Larry Samuelson
  9. Fiscal Federalism and Competitive Bidding for Foreign Investment as a Multistage Game By Hari K. Nagarajan; Kolumum R. Nagarajan; Raghbendra Jha
  10. The Shapley value as a guide to FRAND licensing agreements. By Pierre Dehez; Sophie Poukens
  11. Finite ß-Playable Effectivity Functions By Stefano vannucci
  12. Commitment Problems in Conflict Resolution. By Erik O. Kimbrough; Jared Rubin; Roman M. Sheremeta; Timothy Shields
  13. Centralized allocation in multiple markets By Monte, Daniel; Tumennasan, Norovsambuu
  14. Leadership and incentives. By Cappelen, Alexander W.; Reme, Bjørn-Atle; Sørensen, Erik Ø.; Tungodden, Bertil
  15. The Demise of Walk Zones in Boston: Priorities vs. Precedence in School Choice By Umut M. Dur; Scott Duke Kominers; Parag A. Pathak; Tayfun Sönmez

  1. By: Ehud Kalai; Eran Shmaya
    Abstract: Due to their many applications, large Bayesian games have been a subject of growing interest in game theory and related fields. But to a large extent, models (1) have been restricted to one-shot interaction, (2) are based on an assumption that player types are independent and (3) assume that the number of players is known. The current paper develops a general theory of Bayesian repeated large games that avoids some of these difficulties. To make the analysis more robust, it develops a concept of compressed equilibrium which is applicable to a general class of Bayesian repeated large anonymous games. JEL Classification Numbers: C72, C72
    Keywords: Nash Anonymous games, Nash equilibrium, Repeated games, Large games, Bayesian equilibrium, Price taking, Rational expectations
    Date: 2013–04–01
  2. By: Forges, Françoise; Vida, Péter
    Abstract: We show that essentially every communication equilibrium of any finite Bayesian game with two players can be implemented as a strategic form correlated equilibrium of an extended game, in which before choosing actions as in the Bayesian game, the players engage in a possibly fin nitely long (but in equilibrium almost surely fi nite), direct, cheap talk.
    Keywords: Bayesian game; pre-play communication; cheap talk; communication equilibrium; correlated equilibrium; Two Player;
    JEL: C72 D70 C73
    Date: 2013–01
  3. By: Dirk Bergemann; Stephen Morris
    Date: 2013–04–11
  4. By: Subiza, Begoña (Universidad de Alicante, Departamento de Métodos Cuantitativos y Teoría Económica); Peris, Josep (Universidad de Alicante, Departamento de Métodos Cuantitativos y Teoría Económica)
    Abstract: It is well known that the core of an exchange market with indivisible goods (always non empty) may contain Pareto ineficient allocations and is not, in general, a stable set. The strict core solves this shortcoming, but in some situations it may be empty. We de fine a new solution that solves the emptiness problem of the strict core when indifferences are allowed in the individuals'preferences. This solution always selects Pareto eficient allocations and satisfi es a suitable stability property. Moreover, it is included in the strict core,whenever this one is non-empty. Finally, we provide a min-max interpretation for this new solution.
    Keywords: Indivisible goods; Exchange market; Strict core; Indifferences; MS-set; m-stability
    JEL: C71 C78 D71 D78
    Date: 2013–04–23
  5. By: Jaume García-Segarra (LEE & Department of Economics, Universitat Jaume I, Castellón, Spain); Miguel Ginés-Vilar (LEE & Department of Economics, Universitat Jaume I, Castellón, Spain)
    Abstract: The aim of this paper is to generalize the results of Peter and Tijs [10] and [9]. We propose a characterization that holds both for n-agent problems and for a larger class of problems. The axioms used in our characterization are weaker because they are implied by the characterization in the aforementioned references. We analyze a phenomenon known as stagnation effect, which takes place when a bargaining solution remains unchanged facing all possible expansions of the bargaining set not affecting the utopia point. Our main result relies on a very weak axiom, stagnation proofness. Whenever a bargaining solution satisfies this axiom, such solution does not suffer from the stagnation effect.
    Keywords: Bargaining, axiomatization, n-agent problem, monotone paths
    JEL: C78 D74
    Date: 2013
  6. By: Emmanuel Malsch (UP1 UFR02 - Université Paris 1, Panthéon-Sorbonne - UFR d'Économie - Université Paris I - Panthéon-Sorbonne - PRES HESAM)
    Abstract: The present study would like to show - among other things - in the spirit of Hyndman, Terracol and Vaksmann (2009), that learning and teaching are still observed in an environment where there is no pure strategy Nash equilibrium (but still, as in any finite game, a mixed strategy Nash equilibrium), which is the case in the majority of real-life situations. The main objective in this paper is to test experimentally the following hypotheses: - First, we want to know if players believe that their opponents can be learners and that their actions might influence their opponent's beliefs. - Second, we would like to investigate the idea that players do use this awareness of their opponent's ability to learn to manipulate their opponents' beliefs. - Third, we want to know if there are other explanations we can provide for the way players behave in our game: "cyclic behaviour", "learning of correlated strategies"? - Last, we think that Inequity and Risk aversion might play a role but that doesn't undermine our teaching strategy hypothesis mentioned above. The paper is organized as follows. Section II introduces our game and experimental procedure. Section III gives some preliminary results and descriptive statistics. Section IV-V and VI shows that subjects might be more sophisticated than the standard theories predict. Section VII-VIII-IX explore the possibility of "cyclic playing behaviours", the existence of a learning of "correlated strategy" and examines the effect of "inequity and risk aversion". Section X concludes the paper.
    Keywords: théorie des jeux, apprentissage
    Date: 2012–06–12
  7. By: Christian Trudeau (Department of Economics, University of Windsor)
    Abstract: Minimum cost spanning tree problems connect agents efficiently to a source with the cost of using an edge fixed. We revisit the dispute between the Kar and folk solutions, two solution concepts to divide the common cost of connection based on the Shapley value. We introduce a property called Weak Problem Separation that allows, under conditions, to divide the problem in two: connecting an agent to the source and connecting agents to each other. It allows us to characterize the set of all affine combinations of the Kar and folk solutions.
    Keywords: Minimum cost spanning tree problems; folk solution; Kar solution; problem separability.
    JEL: C71 D63
    Date: 2012–10
  8. By: Johannes Horner; Larry Samuelson
    Date: 2013–04–11
  9. By: Hari K. Nagarajan; Kolumum R. Nagarajan; Raghbendra Jha
    Abstract: This paper models the behavior of states in a federal country wising to attract foreign firms to locate within their own individual jurisdictions. The essential intertemporal character of this decision is modeled as a multi-stage game to attract such foreign investment in these states. It is found that, when states with unequal political or economic infrastructure compete, the resulting Nash equilibrium profiles are inefficient. Under certain conditions, states that have won once, can “allow†a rival to win in a subsequent stage. The resulting Nash Equilibrium is more efficient. If the option of “allowing†a rival to win is not available, then states may resort to “suicide†strategies defined as outcomes created by history of losses.
    Keywords: Fiscal Federalism, Multi stage games, suicide strategies
    JEL: C70 H73 H77
    Date: 2013
  10. By: Pierre Dehez; Sophie Poukens
    Abstract: We consider the problem of specifying Fair, Reasonable And Non-Discriminatory agreements faced by standard-setting organizations. Along with Layne-Farrar, Padilla and Schmalensee (2007), we model the problem as a cooperative game with transferable utility, allowing for patents to be weak in the sense that they have substitutes. Assuming that a value has been assigned to weak patents, we obtain a formula for the Shapley value that gives an insight into what FRAND agreements should look like.
    Keywords: patent licensing, Shapley value, core.
    Date: 2013
  11. By: Stefano vannucci
    Abstract: The ß-effectivity function of a strategic game form G describes the decision power of coalitions under G as contingent on the ability of each coalition to predict the behaviour of the complementary coalition. An e¤ectivity function E is ß-playable if there exists a strategic game form G such that E is the ß-effectivity function of G. It is shown that whenever the player set and the outcome set are fi?nite an effectivity function E is ß-playable if and only if E is both outcome-monotonic and polar-superadditive. Moreover, the underlying strategic game form only needs ?small?strategy spaces, whose size is linear in the size of the monotonic co-basis of E. As a by-product of that result, a few new characterizations of tight finite e¤ectivity functions are also obtained.
    JEL: C62 C70 D72
    Date: 2012–12
  12. By: Erik O. Kimbrough (Simon Fraser University); Jared Rubin (Chapman University); Roman M. Sheremeta (Chapman University); Timothy Shields (Chapman University)
    Abstract: Commitment problems are inherent to non-binding conflict resolution mechanisms, since an unsatisfied party can ignore the resolution and initiate conflict. We provide experimental evidence suggesting that even in the absence of binding contractual agreements individuals often avoid conflict by committing to the outcome of a conflict resolution mechanism. Commitment problems are mitigated to a greater extent for groups who opt-in to the conflict resolution mechanism, but only when opting-in is costly. Although conflict rates are higher when opting-in is costly than when it is free or exogenously imposed, commitment problems are greatly reduced amongst those groups who choose to opt-in.
    Keywords: conflict resolution, commitment problem, opting-in, contests, experiments
    JEL: C72 C91 D72
    Date: 2013
  13. By: Monte, Daniel; Tumennasan, Norovsambuu
    Abstract: We study the problem of centralized allocation of indivisible objects in multiple markets. We show that the set of allocation rules that are group strategy-proof andPareto-efficient are sequential dictatorships. Therefore, the solution of the joint al-location in multiple markets is significantly narrower than in the single-market case.Our result also applies to dynamic allocation problems. Finally, we provide conditionsunder which the solution of the single-market allocation coincides with the multiple-market case, and we apply this result to the study of the school choice problem withsibling priorities
    Date: 2013–04–16
  14. By: Cappelen, Alexander W. (Dept. of Economics, Norwegian School of Economics and Business Administration); Reme, Bjørn-Atle (Dept. of Economics, Norwegian School of Economics and Business Administration); Sørensen, Erik Ø. (Dept. of Economics, Norwegian School of Economics and Business Administration); Tungodden, Bertil (Dept. of Economics, Norwegian School of Economics and Business Administration)
    Abstract: We study whether compensating people who volunteer to be leaders in a public goods game creates a social crowding-out effect of moral motivation among the others in the group. We report from an experiment with four treatments, where the base treatment is a standard public goods game with simultaneous contribution decisions, while the three other treatments allowed participants to volunteer to be an “early contributor” in their group. In the three leader treatments, we manipulate the level of compensation given to the leader. Our main finding is that a moderate compensation to the leader is highly beneficial, it increases the average contribution by almost 80%. A high compensation, however, is detrimental to public good provision. We show that paying a moderate compensation to the leaders strikes the right balance between the need for recruiting leaders and avoiding a large social crowding-out effect. We argue that the main findings of the paper are important in many real life settings where we would like to use economic incentives to encourage people to lead by example.
    Keywords: Voluntariness; Group behavior; Public goods; Laoratory.
    JEL: C72 C92 H41
    Date: 2013–04–12
  15. By: Umut M. Dur; Scott Duke Kominers; Parag A. Pathak; Tayfun Sönmez
    Abstract: School choice plans in many cities grant students higher priority for some (but not all) seats at their neighborhood schools. This paper demonstrates how the precedence order, i.e. the order in which different types of seats are filled by applicants, has quantitative effects on distributional objectives comparable to priorities in the deferred acceptance algorithm. While Boston's school choice plan gives priority to neighborhood applicants for half of each school's seats, the intended effect of this policy is lost because of the precedence order. Despite widely held impressions about the importance of neighborhood priority, the outcome of Boston's implementation of a 50-50 school split is nearly identical to a system without neighborhood priority. We formally establish that either increasing the number of neighborhood priority seats or lowering the precedence order positions of neighborhood seats at a school have the same effect: an increase in the number of neighborhood students assigned to the school. We then show that in Boston a reversal of precedence with no change in priorities covers almost three-quarters of the range between 0% and 100% neighborhood priority. Therefore, decisions about precedence are inseparable from decisions about priorities. Transparency about these issues—in particular, how precedence unintentionally undermined neighborhood priority—led to the abandonment of neighborhood priority in Boston in 2013.
    JEL: C78 D50 D61 I21
    Date: 2013–04

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