nep-gth New Economics Papers
on Game Theory
Issue of 2013‒06‒24
eight papers chosen by
Laszlo A. Koczy
Hungarian Academy of Sciences and Obuda University

  1. From bargaining solutions to claims rules: a proportional approach By Giménez Gómez, José Manuel; Osório Costa, Antonio Miguel; Peris, Josep E.
  2. Level-k reasoning and time pressure in the 11-20 money request game By Florian Lindner; Matthias Sutter
  3. Egalitarianism. An evolutionary perspective By L. Bagnoli; G. Negroni
  4. When Parity Promotes Peace: Resolving Conflict Between Asymmetric Agents. By Erik O. Kimbrough; Roman M. Sheremeta; Timothy W. Shields
  5. The equity core and the Lorenz-maximal allocations in the equal division core By Llerena Garrés, Francesc; Vilella Bach, Misericòrdia
  6. Two-Person Fair Division of Indivisible Items: An Efficient, Envy-Free Algorithm By Brams, Steven J.; Kilgour, D. Marc; Klamler, Christian
  7. An experimental study on the incentives of the probabilistic serial mechanism By Hugh-Jones, David; Kurino, Morimitsu; Vanberg, Christoph
  8. Short- and Long-run Goals in Ultimatum Bargaining. By Antonio M. Espín; Filippos Exadaktylos; Benedikt Herrmann; Pablo Brañas-Garza

  1. By: Giménez Gómez, José Manuel; Osório Costa, Antonio Miguel; Peris, Josep E.
    Abstract: Is it important to negotiate on proportions rather than on numbers? To answer this question, we analyze the behavior of well-known bargaining solutions and the claims rules they induce when they are applied to a "proportionally transformed" bargaining set SP -so-called bargaining-in-proportions set. The idea of applying bargaining solutions to claims problems was already developed in Dagan and Volij (1993). They apply the bargaining solutions over a bargaining set that is the one de ned by the claims and the endowment. A comparison among our results and theirs is provided. Keywords: Bargaining problem, Claims problem, Proportional, Constrained Equal Awards, Constrained Equal Losses, Nash bargaining solution. JEL classi fication: C71, D63, D71.
    Keywords: Jocs cooperatius, Igualtat, Decisió, Presa de, 33 - Economia,
    Date: 2013
  2. By: Florian Lindner; Matthias Sutter
    Abstract: Arad and Rubinstein (2012a) have designed a novel game to study level-k reasoning experimentally. Just like them, we find that the depth of reasoning is very limited and clearly different from equilibrium play. We show that such behavior is even robust to repetitions, hence there is, at best, little learning. However, under time pressure, behavior is, perhaps coincidentally, closer to equilibrium play. We argue that time pressure evokes intuitive reasoning and reduces the focal attraction of choosing higher (and per se more profitable) numbers in the game.
    Keywords: Level-k reasoning, Time pressure, Repetition, Experiment
    JEL: C91 C72
    Date: 2013–06
  3. By: L. Bagnoli; G. Negroni
    Abstract: Two parties bargaining over a pie, the size of which is determined by their previous investment decisions. Investment costs are heterogeneous. The bargaining rule is sensitive to investment behavior. Two games are studied which differ for the considered sociopolitical structure: communal property in one case and private property in the other. We hereby show that in both games when a unique stochastically stable outcome exists a norm of investment and a norm of surplus division must coevolve. While the investment norm always supports the efficient investment profile, the surplus division norm may differ among these games depending on the size of investment cost gap. Under private property only the egalitarian surplus division evolves. Under communal property instead two different surplus division norms may evolve: the egalitarian one and an inegalitarian norm. We show that no cap to payoffs inequality emerges under private property while an inequality payoff cap endogenously evolves under communal property. The games have been proposed to explain the social norms used in modern hunter-gatherer societies.
    JEL: C78 D83 L14 Z13
    Date: 2013–06
  4. By: Erik O. Kimbrough (Department of Economics, Simon Fraser University); Roman M. Sheremeta (Argyros School of Business & Economics, Chapman University); Timothy W. Shields (Argyros School of Business & Economics, Chapman University)
    Abstract: Due to the high costs of conflict both in theory and practice, we examine and experimentally test the conditions under which conflict between asymmetric agents can be resolved. We model conflict as a two-agent rent-seeking contest for an indivisible prize. Before conflict arises, both agents may agree to allocate the prize by fair coin flip to avoid the costs of conflict. In equilibrium, risk-neutral agents with relatively symmetric conflict capabilities agree to resolve the conflict by randomization. However, with sufficiently asymmetric capabilities, conflicts are unavoidable because the stronger agent prefers to fight. The results of the experiment confirm that the availability of the random device partially eliminates conflicts when agents are relatively symmetric; however, the device also reduces conflict between substantially asymmetric agents.
    Keywords: contest, asymmetries, conflict resolution, experiments
    JEL: C72 C91 D72 D74
    Date: 2013
  5. By: Llerena Garrés, Francesc; Vilella Bach, Misericòrdia
    Abstract: In this paper, we characterize the non-emptiness of the equity core (Selten, 1978) and provide a method, easy to implement, for computing the Lorenz-maximal allocations in the equal division core (Dutta-Ray, 1991). Both results are based on a geometrical decomposition of the equity core as a finite union of polyhedrons. Keywords: Cooperative game, equity core, equal division core, Lorenz domination. JEL classification: C71
    Keywords: Jocs cooperatius, 33 - Economia,
    Date: 2013
  6. By: Brams, Steven J.; Kilgour, D. Marc; Klamler, Christian
    Abstract: Many procedures have been suggested for the venerable problem of dividing a set of indivisible items between two players. We propose a new algorithm (AL), related to one proposed by Brams and Taylor (BT), which requires only that the players strictly rank items from best to worst. Unlike BT, in which any item named by both players in the same round goes into a “contested pile,” AL may reduce, or even eliminate, the contested pile, allocating additional or more preferred items to the players. The allocation(s) that AL yields are Pareto-optimal, envy-free, and maximal; as the number of items (assumed even) increases, the probability that AL allocates all the items appears to approach infinity if all possible rankings are equiprobable. Although AL is potentially manipulable, strategizing under it would be difficult in practice.
    Keywords: Two-person fair division, indivisible items, envy-freeness, efficiency, algorithm
    JEL: C7 C78 D6 D61 D63 D7 D74
    Date: 2013–06
  7. By: Hugh-Jones, David; Kurino, Morimitsu; Vanberg, Christoph
    Abstract: We report an experiment on the Probabilistic Serial (PS) mechanism for allocating indivisible goods. The PS mechanism, a recently discovered alternative to the widely used Random Serial Dictatorship mechanism, has attractive fairness and efficiency properties if people report their preferences truthfully. However, the mechanism is not strategy-proof, so participants may not truthfully report their preferences. We investigate misreporting in a set of simple applications of the PS mechanism. We confront subjects with situations in which theory suggests that there is an incentive or no incentive to misreport. We find little misreporting in situations where misreporting is a Nash equilibrium. However, we also find a significant degree of misreporting in situations where there is actually no benefit in doing so. These findings suggest that the PS mechanism may have problems in terms of truthful elicitation. --
    Keywords: probabilistic serial mechanism,incentives
    JEL: C78 C91 C92
    Date: 2013
  8. By: Antonio M. Espín (GLOBE, Departamento de Teoría e Historia Económica, Universidad de Granada); Filippos Exadaktylos (BELIS, Murat Sertel Center for Advanced Economic Studies, Istanbul Bilgi University); Benedikt Herrmann (Institute for Health and Consumer Protection, Joint Research Centre, European Commission); Pablo Brañas-Garza (Economic Science Institute, and Department of Economics and International Development, Middlesex University Business School)
    Abstract: The ultimatum game (UG) is widely used to study human bargaining behavior and fairness norms. In this game, two players have to agree on how to split a sum of money. The proposer makes an offer, which the responder can accept or reject. If the responder rejects, neither player gets anything. The prevailing view is that, beyond self-interest, the desire to equalize both players’ payoffs (i.e., fairness) is the crucial motivation in the UG. Based on this view, previous research suggests that responders follow short-run psychological incentives when imposing fairness through the rejection of low offers. However, competitive spite, which reflects the desire to reduce others’ payoffs, can also account for the behavior observed in the UG, and has been linked to short-run, present-oriented aspirations as well. In this paper, we explore the relationship between individuals’ inter-temporal preferences and their behavior in a large-scale dual-role UG experiment. We find that impatience (present orientation) predicts the rejection of low, “unfair” offers as responders and the proposal of low, “unfair” offers as proposers, which is consistent with spite but inconsistent with fairness motivations. This behavior systematically reduces the payoffs of those who interact with impatient individuals. Thus, impatient individuals appear to be keen on reducing their partners’ share of the pie, even at the risk of destroying it. These findings indicate that competitive spite, rather than fairness, is the short-run motivation in ultimatum bargaining.
    Keywords: ultimatum game, costly punishment, delay discounting, impatience, fairness, spite, cooperation, competition
    Date: 2013

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