nep-gth New Economics Papers
on Game Theory
Issue of 2013‒07‒28
seven papers chosen by
Laszlo A. Koczy
Hungarian Academy of Sciences and Obuda University

  1. Efficiency in strategic form games: A little trust can go a long way By Jianpei Li; Paul Schweinzer
  2. Bargaining and Power By Dominik Karos
  3. On the Existence of Approximated Equilibria and Sharing-Rule Equilibria in Discontinuous Games By Philippe Bich; Rida Laraki
  4. TULLOCK CONTESTS WITH ASYMMETRIC INFORMATION By Ezra Einy; Ori Haimanko; Diego Moreno; Aner Sela; Benyamin Shitovitz
  5. The Degree and Cost Adjusted Folk Solution for Minimum Cost Spanning Tree Games By Norde, H.W.
  6. Conditional Beliefs and Higher-Order Preferences By Lee, Byung Soo
  7. Partially Honest Nash Implementation:A Full Characterization By Lombardi, Michele; Yoshihara, Naoki

  1. By: Jianpei Li; Paul Schweinzer
    Abstract: We study the incentives of noncooperative players to play a cooperative game. That is, we look for individually rational, redistributive, pre-game agreements enacted in order to coordinate towards efficient equilibrium play. Contrasting with standard Nash equilibrium analysis, we assume that players can commit to the agreements they negotiate and that utility is verify and transferable. We show that agreeing on a proportional-exponential redistribution rule is individually rational and implements the socially efficient outcome as Nash equilibrium. Moreover, we show that this class of redistributional contracts may be naturally obtained as the outcome of Nash bargaining.
    Keywords: Redistribution, Efficiency, Social contract
    JEL: C72 D62 D71
    Date: 2013–07
  2. By: Dominik Karos (Department of Economics and Statistics, Saarland University)
    Abstract: Given a simple game, a power configuration specifies the power of each player in each winning coalition. We introduce a new power configuration which takes into account bargaining among players in coalitions. We show that under very weak conditions on a bargaining solution there is a power configuration which is stable with respect to renegotiations. We further show that given this power configuration there is a coalition which is both internally and Nash stable. We consider two different bargaining solutions on apex games and show under which conditions there are core stable coalitions. Finally, we investigate how infeasible coalition might affect the outcome and apply our model to the German parliament.
    Keywords: Coalition Formation, Power, Bargaining
    JEL: C71 D71
    Date: 2013–06
  3. By: Philippe Bich (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); Rida Laraki (Ecole Polytechnique - Ecole Polytechnique, IMJ - Institut de Mathématiques de Jussieu - CNRS : UMR7586 - Université Pierre et Marie Curie (UPMC) - Paris VI - Université Paris VII - Paris Diderot)
    Abstract: New relaxations of the Nash equilibrium concept are shown to exist in any strategic game with discontinuous payoff functions. The new concepts are used (1) to show the equivalence between Reny's better-reply security condition [28] and Simon-Zame's endogenous tie-breaking rule equilibrium concept [32], (2) to obtain conditions for the existence of approximated equilibria in a class of discontinuous games that naturally extends Reny's better-reply secure games, and (3) to show the existence of approximated equilibria in a large family of two-player games that contains all standard models of auctions.
    Keywords: Discontinuous games, better-reply security, sharing-rule equilibrium, approximated equilibrium, strategic approximation, auctions, diagonal games.
    Date: 2013–07–18
  4. By: Ezra Einy (Department of Economics, Ben-Gurion University of the Negev, Israel); Ori Haimanko (Department of Economics, Ben-Gurion University of the Negev, Israel); Diego Moreno (Departamento de Economia, Universidad Carlos III de Madrid.); Aner Sela (Department of Economics, Ben-Gurion University of the Negev. Israel); Benyamin Shitovitz (Department of Economics, University of Haifa)
    Abstract: Under standard assumptions about players'cost functions, we show that a Tullock contest with asymmetric information has a pure strategy equilibrium. Next we study Tullock contests in which players have a common value and a common state-independent linear cost function. A two-player contest in which one player has an information advantage has a unique equilibrium. In equilib- rium both players exert the same expected effort, and although the player with an information advantage wins the prize with probability less than one-half, his payoff is greater or equal to that of his opponent. When there are more than two players in the contest, having information advantage leads to higher payoffs, but the other properties of equilibrium no longer hold.
    JEL: C72 D44 D82
    Date: 2013
  5. By: Norde, H.W. (Tilburg University, Center for Economic Research)
    Abstract: Abstract: In this paper two cost sharing solutions for minimum cost spanning tree problems are introduced, the degree adjusted folk solution and the cost adjusted folk solution. These solutions overcome the problem of the classical reductionist folk solution as they have considerable strict ranking power, without breaking established axioms. As such they provide affirmative answers to open questions, put forward in Bogomolnaia and Moulin (2010) and Bogomolnaia et al. (2010).
    Keywords: cost sharing;minimum cost spanning tree games;networks.
    JEL: C71
    Date: 2013
  6. By: Lee, Byung Soo
    Abstract: In this paper, we establish the Bayesian foundations of type structures in which beliefs are lexicographic probability systems (LPS’s)—such as those used in Brandenburger et al. (2008)—rather than standard probability measures as in Mertens and Zamir (1985). This is a setting which the distinction between preferences hierarchies (Epstein and Wang, 1996) and beliefs hierarchies is meaningful and the former has conceptual advantages. Type structures in which beliefs are conditional probability systems (CPS’s) are found to describe fewer hierarchies than LPS type structures can if a nonredundancy requirement is imposed. The two families of type structures are found to be capable of describing the same set of hierarchies in the absence of such a requirement. The existence of “largest”—a notion closely related to universality—LPS/CPS type structures is also shown. Finally, we find that some coherent hierarchies cannot be types but those hierarchies may be needed to express epistemic conditions for iterated elimination of weakly dominated strategies.
    Keywords: Preferences hierarchies, type structure, weakly dominated strategies, epistemic game theory, lexicographic probability system, conditional probability system
    JEL: C72 D8 D80
    Date: 2013–07–17
  7. By: Lombardi, Michele; Yoshihara, Naoki
    Abstract: Given the framework introduced by Dutta and Sen (2012), this paper offers a comprehensive analysis of (Nash) implementation with artially honest agents when there are three or more participants. First, it establishes a condition which is necessary and sufficient for implementation. Second, it provides simple tests for checking whether or not a social choice correspondence can be implemented. Their usefulness is shown by examining implementation in a wide variety of environments.
    Keywords: Implementation, Nash equilibrium, social choice correspondences, partial honesty, Condition μ
    JEL: C72 D71
    Date: 2013–07

This nep-gth issue is ©2013 by Laszlo A. Koczy. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.