nep-gth New Economics Papers
on Game Theory
Issue of 2013‒07‒20
eight papers chosen by
Laszlo A. Koczy
Hungarian Academy of Sciences and Obuda University

  1. Cooperative Games with Incomplete Information : Some Open Problems. By Forges, Françoise; Serrano, Roberto
  2. Individual Learning and Cooperation in Noisy Repeated Games By Yuichi Yamamoto
  4. Allocating via Priorities By Alcalde, Jose; Silva-Reus, José Ángel
  5. Natural implementation with partially honest agents in economic environments By Lombardi, Michele; Yoshihara, Naoki
  6. Cooperative Transfer Price Negotiations under Incomplete Information By Sonja Brangewitz; Claus-Jochen Haake
  7. Purification and Independence By Michael Greinecker; Konrad Podczeck
  8. An Experimental Analysis of Single vs. Multiple Bids in Auctions of Divisible Goods By Rosen, Christiane; Madlener, Reinhard

  1. By: Forges, Françoise; Serrano, Roberto
    Abstract: This is a brief survey describing some of the recent progress and open problems in the area of cooperative games with incomplete information. We discuss exchange economies, cooperative Bayesian games with orthogonal coalitions, and issues of cooperation in non-cooperative Bayesian games.
    Keywords: Strategic Externalities; Non-Cooperative Bayesian Games; Cooperative Games with Orthogonal Coalitions; Exchange Economies; Informational Externalities;
    JEL: D82 D51 C72 C71
    Date: 2013–06
  2. By: Yuichi Yamamoto (Department of Economics, University of Pennsylvania)
    Abstract: We investigate whether two players in a long-run relationship can maintain cooperation when the details of the underlying game are unknown. Specifically, we consider a new class of repeated games with private monitoring, where an unobservable state of the world influences the payoff functions and/or the monitoring structure. Each player privately learns the state over time but cannot observe what the opponent learned. We show that there are robust equilibria in which players eventually obtain payoffs as if the true state were common knowledge and players played a “belief-free” equilibrium. We also provide explicit equilibrium constructions in various economic examples
    Keywords: repeated game, private monitoring, incomplete information, belief-free equilibrium, ex-post equilibrium, individual learning
    JEL: C72 C73
    Date: 2013–07–06
  3. By: Marilda Sotomayor
    Abstract: Aiming to obtain new characterizations for the concepts of core, cooperative equilibrium and competitive equilibrium, and new correlations among these concepts, we introduce labor time into the assignment game. Two many-to-many matching models are obtained, distinguished by the nature of the agreements - rigid and flexible. An example illustrates that the characteristic function form does not always fully represent the cooperative structure of the two markets. Two different notions of demand correspondence generate distinct sets of competitive equilibrium allocations. The connection between the cooperative structures of both markets and the cooperative and competitive structures of each market is established through five cooperative solution sets proved to be non-empty, distinct and correlated by the set inclusion - one set is a superset of the next: the maximal set is the core; the second one characterizes the cooperative equilibria for the rigid market; the third set characterizes the cooperative equilibria for the flexible market; the other two sets characterize the competitive equilibrium allocations for the two competitive markets.
    Keywords: stable allocations, core, competitive equilibrium allocations, feasible
    JEL: C78 D78
    Date: 2013–02–19
  4. By: Alcalde, Jose (Universidad de Alicante, Departamento de Métodos Cuantitativos y Teoría Económica); Silva-Reus, José Ángel (Universidad de Alicante, Departamento de Métodos Cuantitativos y Teoría Económica)
    Abstract: We design a mechanism to allocate indivisible objects that combines procedural and distributive fairness. It associates each allocation problem a family of priorities to be used when determining how agents and objects should be matched. The selection of specific priorities, correlated with agents' preferences, guarantees the (ex-ante) equity of the outcome. The analysis of our mechanism, both from the efficiency and the strategic perspectives, enables us to connect the recent literature on random assignment (Bogomolnaia and Moulin, 2001) and the traditional analysis of matching mechanisms (Gale and Shapley, 1962).
    Keywords: Correlated Priorities; Random Assignment; Serial Rule; Matching Markets
    JEL: C78 D61 D63
    Date: 2013–07–11
  5. By: Lombardi, Michele; Yoshihara, Naoki
    Abstract: In this paper, we introduce the weak and the strong notions of partially honest agents (Dutta and Sen, 2012), and then study implementation by natural price-quantity mechanisms (Saijo et al., 1996, 1999) in pure exchange economies with three or more agents in which pure-consequentialistically rational agents and partially honest agents coexist. Firstly, assuming that there exists at least one partially honest agent in either the weak notion or the strong notion, the class of efficient social choice correspondences which are Nash-implementable by such mechanisms is characterized. Secondly, the (unconstrained) Walrasian correspondence is shown to be implementable by such a mechanism when there is at least one partially honest agent of the strong type, which may provide a behavioral foundation for decentralized implementation of the Walrasian equilibrium. Finally, in this set-up, the effects of honesty on the implementation of more equitable Pareto optimal allocations can be viewed as negligible.
    Keywords: Natural implementation, Nash equilibrium, exchange economies, intrinsic preferences for honesty.
    JEL: C0 C02 C72 D03 D04 D71
    Date: 2013–07
  6. By: Sonja Brangewitz (University of Paderborn); Claus-Jochen Haake (University of Paderborn)
    Abstract: In this paper, we analyze a model in which two divisions negotiate over an intrafirm transfer price for an intermediate product. Formally, we consider bargaining problems under incomplete information, since the upstream division’s (seller's) costs and downstream division's (buyer's) revenues are supposed to be private information. Assuming two possible types for buyer and seller each, we first establish that the bargaining problem is regular, regardless whether incentive and/or efficiency constraints are imposed. This allows us to apply the generalized Nash bargaining solution to determine transfer payments and transfer probabilities. Furthermore, we derive general properties of this solution for the transfer pricing problem and compare the model developed here with the existing literature for negotiated transfer pricing under incomplete information. In particular, we focus on the models presented in Wagenhofer (1994).
    Keywords: Transfer Pricing, Negotiation, Generalized Nash Bargaining Solution, Incomplete Information
    JEL: C78 D82 M41
    Date: 2013–07
  7. By: Michael Greinecker; Konrad Podczeck
    Abstract: We show that concepts introduced by Aumann more than thirty years ago throw a new light on purification in games with extremely dispersed private information. We show that one can embed payoff-irrelevant randomization devices in the private information of players and use these randomization devices to implement mixed strategies as deterministic functions of the private information. This approach gives rise to very short, elementary, and intuitive proofs for a number of purification results that previously required sophisticated methods from functional analysis or nonstandard analysis. We use our methods to prove a general purification theorem for games with private information in which a player's payoffs can depend in arbitrary ways on events in the private information of other players and in which we allow for shared information in a general way.
    Date: 2013–07
  8. By: Rosen, Christiane (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))
    Abstract: In this paper we report on an experiment we conducted that has been inspired by energy trading. Bidders with a portfolio consisting of three cost-quantity pairs bid into a market with a single buyer. Depending on the treatment, they are allowed to submit either one or two bids constructed from their endowments. The novelty of our study is the experimental examination of a procurement auction in the context of divisible goods and the evaluation of the effect of multiple bids in comparison to single bids in such an auction. We created both a low and a high competition scenario to evaluate the effects of competitive forces on each auction format. We find that multiple bids have a calming effect on the market, reducing volatility substantially. However, this comes at the cost of lower profits for bidders, whereas auctioneer’s revenue is maximized. At the same time, supply reduction, which is equivalent to demand reduction in demand auctions, is more pronounced in the multiple-bid setting. A reason for this might be that expensive units are driven out of the market more easily in the multi-bid setting, as they can no longer be offered without causing loss of market efficiency during dispatch.
    Keywords: Divisible good auction; laboratory experiment; discriminatory pricing; multiple bids
    JEL: C72 C91 D44
    Date: 2013–04

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