nep-gth New Economics Papers
on Game Theory
Issue of 2013‒09‒26
eighteen papers chosen by
Laszlo A. Koczy
Hungarian Academy of Sciences and Obuda University

  1. Bayes Correlated Equilibrium and the Comparison of Information Structures By Dirk Bergemann; Stephen Morris
  2. A Numerical Algorithm to find All Scalar Feedback Nash Equilibria By Engwerda, J.C.
  3. Bribery and Threat By Estrada , Fernando
  4. Efficient networks for a class of games with global spillovers By Sudipta Sarangi; Pascal Billand; Christophe Bravard; Jacques Durieu
  5. The Comparison of Information Structures in Games: Bayes Correlated Equilibrium and Individual Sufficiency By Dirk Bergemann; Stephen Morris
  6. Existence of the limit value of two person zero-sum discounted repeated games via comparison theorems. By Vigeral, Guillaume; Sorin, Sylvain
  7. Limited farsightedness in network formation By KIRCHSTEIGER, Georg; MANTOVANI, Marco; MAULEON, Ana; VANNETELBOSCH, Vincent
  8. Relative concerns and delays in bargaining with private information By MAULEON, Ana; VANNETELBOSCH, Vincent
  9. On Discontinuous Games with Asymmetric Information By Zhiwei Liu; Nicholas C. Yannelis
  10. The generosity effect: Fairness in sharing gains and losses By Guillermo Baquero; Willem Smit; Luc Wathieu
  11. Grand canonical minority game as a sign predictor By Karol Wawrzyniak; Wojciech Wi\'slicki
  12. More than thirty years of ultimatum bargaining experiments: Motives, variations, and a survey of the recent literature By Werner Güth; Martin G. Kocher
  13. The Economics of Coercion and Conflict: an Introduction By Harrison, Mark
  14. Mechanism Design and Non-Cooperative Renegotiation By Robert Evans; Sonje Reiche
  15. Technology Adoption and Energy Efficiency in Irrigation: First Results from a Coordination Game in Andhra Pradesh, India By Müller, Malte; Rommel, Jens
  16. Using Field Experiments in Environmental and Resource Economics By John A. List; Michael K. Price
  17. Computability Theory in Economics - Frontiers and a Restrospective By K. Vela Velupillai
  18. Focused power: Experiments, the Shapley-Shubik power index, and focal points By Geller, Chris R.; Mustard, Jamie; Shahwan, Ranya

  1. By: Dirk Bergemann (Cowles Foundation, Yale University); Stephen Morris (Dept. of Economics, Princeton University)
    Abstract: The set of outcomes that can arise in Bayes Nash equilibria of an incomplete information game where players may or may not have access to more private information is characterized and shown to be equivalent to the set of an incomplete information version of correlated equilibrium, which we call Bayes correlated equilibrium. We describe a partial order on many player information structures -- which we call individual sufficiency -- under which more information shrinks the set of Bayes correlated equilibria. We discuss the relation of the solution concept to alternative definitions of correlated equilibrium in incomplete information games and of the partial order on information structures to others, including Blackwell's for the single player case.
    Keywords: Correlated equilibrium, Incomplete information, Robust predictions, Information structure
    JEL: C72 D82 D83
    Date: 2013–02
  2. By: Engwerda, J.C. (Tilburg University, Center for Economic Research)
    Abstract: Abstract: In this note we generalize a numerical algorithm presented in [9] to calculate all solutions of the scalar algebraic Riccati equations that play an important role in finding feedback Nash equilibria of the scalar N-player linear affine-quadratic differential game. The algorithm is based on calculating the positive roots of a polynomial matrix.
    Keywords: linear-quadratic differential games;linear feedback Nash equilibrium;affine systems;numerical solution;Riccati equations.
    JEL: C02 C61 C63 C72
    Date: 2013
  3. By: Estrada , Fernando
    Abstract: In their recent work Thomas S. Schelling (2007, 2010), reiterating original arguments about game theory and its applications to social sciences. In particular, game theory helps to explore situations in which agents make decisions interdependent (strategic communication). Schelling's originality is to extend economic theory to social sciences. When a player can anticipate the options and influence the decisions of others. The strategy, indirect communication plays a crucial role. To illustrate, we investigate how to perform the payoff matrix in cases of bribery and threat
    Keywords: Social Science, Schelling, game theory, strategic communications, bribes, threats.
    JEL: C7 C72 C78 C9 D7 D8 D82 D84
    Date: 2013
  4. By: Sudipta Sarangi; Pascal Billand; Christophe Bravard; Jacques Durieu
    Abstract: In this paper we characterize efficient networks for network formation games with global spillovers, that satisfy convexity and sub-modularity properties. This allows us to complete the work of Goyal and Joshi (2006) and Westbrock on collaborative oligopoly networks. In particular, we establish that efficient networks are nested split graphs in this class of games.
  5. By: Dirk Bergemann; Stephen Morris
    Date: 2013–09–19
  6. By: Vigeral, Guillaume; Sorin, Sylvain
    Abstract: We give new proofs of existence of the limit of the discounted values for two person zero-sum games in the following frameworks: incomplete information, absorbing, recursive. The idea of these new proofs is to use some comparison criteria.
    Keywords: variational inequalities; comparison principle; asymptotic value; incomplete information; repeated games; stochastic games;
    JEL: C73
    Date: 2013
  7. By: KIRCHSTEIGER, Georg (Université Libre de Bruxelles, ECARES, B-1050 Brussels, Belgium); MANTOVANI, Marco (Università degli studi di Milano, I-20122 Milano, Italy); MAULEON, Ana (CEREC, Saint-Louis University, Brussels, Belgium; Université catholique de Louvain, CORE, Belgium); VANNETELBOSCH, Vincent (CEREC, Saint-Louis University, Brussels, Belgium; Université catholique de Louvain, CORE, Belgium)
    Abstract: Pairwise stability Jackson and Wolinsky [1996] is the standard stability concept in network formation. It assumes myopic behavior of the agents in the sense that they do not forecast how others might react to their actions. Assuming that agents are perfectly farsighted, related stability concepts have been proposed. We design a simple network formation experiment to test these extreme theories, but find evidence against both of them: the subjects are consistent with an intermediate rule of behavior, which we interpret as a form of limited farsightedness. On aggregate, the selection among multiple pairwise stable networks (and the performance of farsighted stability) crucially depends on the level of farsightedness needed to sustain them, and not on efficiency or cooperative considerations. Individual behavior analysis corroborates this interpretation, and suggests, in general, a low level of farsightedness (around two steps) on the part of the agents.
    Keywords: network formation, experiment, myopic and farsighted stability
    JEL: D85 C91 C92
    Date: 2013–07–09
  8. By: MAULEON, Ana (CEREC, Saint-Louis University, Brussels, Belgium; Université catholique de Louvain, CORE, Belgium); VANNETELBOSCH, Vincent (CEREC, Saint-Louis University, Brussels, Belgium; Université catholique de Louvain, CORE, Belgium)
    Abstract: We consider Rubinstein's two-person alternating-offer bargaining model with two-sided incomplete information. We investigate the effects of one party having relative concerns on the bargaining outcome and the delay in reaching an agreement. We find that facing an opponent having stronger relative concerns only hurts the bargainer when she is stronger than her opponent. In addition, we show that an increase of one party's relative concerns will decrease the maximum delay in reaching an agreement.
    Keywords: relative concerns, alternating-offer bargaining, private information, maximal delays
    JEL: C70 D60 J50
    Date: 2013–07–09
  9. By: Zhiwei Liu; Nicholas C. Yannelis
    Date: 2013
  10. By: Guillermo Baquero (ESMT European School of Management and Technology); Willem Smit (SMU, IMD); Luc Wathieu (Georgetown University, McDonough School of Business)
    Abstract: We explore the interaction between fairness attitudes and reference dependence both theoretically and experimentally. Our theory of fairness behavior under reference-dependent preferences in the context of ultimatum games, defines fairness in the utility domain and not in the domain of dollar payments. We test our model predictions using a within-subject design with ultimatum and dictator games involving gains and losses of varying amounts. Proposers indicated their offer in gain- and (neatly comparable) loss- games; responders indicated minimum acceptable gain and maximum acceptable loss. We find a significant “generosity effect” in the loss domain: on average, proposers bear the largest share of losses as if anticipating responders’ call for a smaller share. In contrast, reference dependence hardly affects the outcome of dictator games -where responders have no veto right- though we detect a small but significant “compassion effect”, whereby dictators are on average somewhat more generous sharing losses than sharing gains.
    Keywords: Fairness, loss domain, ultimatum game, dictator game, referencedependent preferences, social preferences
    JEL: D03 D81
    Date: 2013–08–29
  11. By: Karol Wawrzyniak; Wojciech Wi\'slicki
    Abstract: In this paper the extended model of Minority game (MG), incorporating variable number of agents and therefore called Grand Canonical, is used for prediction. We proved that the best MG-based predictor is constituted by a tremendously degenerated system, when only one agent is involved. The prediction is the most efficient if the agent is equipped with all strategies from the Full Strategy Space. Each of these filters is evaluated and, in each step, the best one is chosen. Despite the casual simplicity of the method its usefulness is invaluable in many cases including real problems. The significant power of the method lies in its ability to fast adaptation if \lambda-GCMG modification is used. The success rate of prediction is sensitive to the properly set memory length. We considered the feasibility of prediction for the Minority and Majority games. These two games are driven by different dynamics when self-generated time series are considered. Both dynamics tend to be the same when a feedback effect is removed and an exogenous signal is applied.
    Date: 2013–09
  12. By: Werner Güth (Max Planck Institute of Economics, Strategic Interaction Group); Martin G. Kocher (University of Munich, University of Gothenburg and CESifo Munich)
    Abstract: Take-it or leave-it offers are probably as old as mankind. Our objective here is, first, to provide a, probably subjectively-colored, recollection of the initial ultimatum game experiment, its motivation and the immediate responses. Second, we discuss important extensions of the standard ultimatum bargaining game in a unified framework, and, third, we offer a survey of the experimental ultimatum bargaining literature containing papers published since the turn of the century. The paper argues that the ultimatum game is an extremely versatile tool for research in bargaining and on social preferences. Finally, we provide examples for open research questions and directions for future studies.
    Keywords: ultimatum bargaining, experiment, social preferences
    JEL: C91
    Date: 2013–09–16
  13. By: Harrison, Mark (University of Warwick)
    Abstract: This chapter introduces the author’s selected papers on the economics of coercion and conflict. It defines coercion and conflict and relates them. In conflict, adversaries make costly investments in the means of coercion. The application of coercion does not remove choice but limits it to options that leave the victim worse off than before. Coercion and conflict are always political, but a number of key concepts from economics can help us understand them. These include rational choice, strategic interaction, increasing and diminishing returns, scale and state capacity, surplus extraction, and Type I errors. The chapter concludes that the economist’s toolkit, although not complete, is useful.
    Keywords: Coercion, Conflict, Games, Errors, Increasing Returns, Rational Choice, Scale, Surplus, Violence.
    Date: 2013
  14. By: Robert Evans; Sonje Reiche
    Abstract: We characterize decision rules which are implementable in mechanism design settings when, after the play of a mechanism, the uninformed party can propose a new mechanism to the informed party. The necessary and sufficient conditions are, essentially, that the rule be implementable with commitment, that for each type the decision is at least as high as if there were no mechanism, and that the slope of the decision function is not too high. The direct mechanism which implements such a rule with commitment will also implement it in any equilibrium without commitment, so the standard mechanism is robust to renegotiation.
    Keywords: Renegotiation, Mechanism Design
    Date: 2013–09–19
  15. By: Müller, Malte; Rommel, Jens
    Abstract: Farmers’ technology adoption in electric irrigation has recently been analyzed as a coordination problem. To study how the Pareto-inferior equilibrium, farmers are trapped in, can be overcome we have developed a framed field experiment. Leadership and group size are varied in a full factorial experimental design. Initial results show only minor treatment effects. Further analysis is necessary to account for socio-demographic heterogeneity.
    Keywords: Coordination Game, Energy Efficiency, India, Irrigation, Technology Adoption, Community/Rural/Urban Development, Institutional and Behavioral Economics, Research Methods/ Statistical Methods,
    Date: 2013
  16. By: John A. List; Michael K. Price
    Abstract: This study showcases the usefulness of field experiments to the study of environmental and resource economics. Our focus pertains to work related to field experiments in the area of ‘behavioral’ environmental and resource economics. Within this rubric, we discuss research in two areas: those that inform i) benefit cost analysis and ii) conservation of resources. Within each realm, we show how field experiments have been able to test the relevant theories, provide important parameters to construct new theories, and guide policymakers. We conclude with thoughts on how field experiments can be used to deepen our understanding of important areas within environmental and resource economics.
    JEL: C9 C93 Q5
    Date: 2013–08
  17. By: K. Vela Velupillai
    Abstract: This is an outline of the origins and development of the way computability theory was incorporated into formal economic theory. I try to place in the context of the development of computable economics, some of the classics of the subject as well as those that have, from time to time, been credited with having contributed to the advancement of the field. Speculative methodological thoughts and reflections suggest directions in which fruitful research could proceed to reduce the current deficit in the epistemology of computation in economics. Finally, thoughts on where the frontiers of computable economics are, and how to move towards them, conclude the paper. In a precise sense -- both historically and analytically -- it would not be an exaggeration to claim that both the origins of computable economics and its frontiers are defined by two classics, both by Banach and Mazur: that one page masterpiece by Banach and Mazur and the unpublished Mazur conjecture of 1928, and its unpublished proof by Banach. For the undisputed original classic of computable economics is Rabin's effectivization of the Gale-Stewart game; the frontiers, as I see them, are defined by recursive analysis and constructive mathematics, underpinning computability over the computable and constructive reals and providing computable foundations for the economist's Marshallian penchant for curve-sketching and, in general, the contents of Theoretical Computer Science, Vol. 219, Issue 1-2). The former work has its roots in the Banach-Mazur game, at least in one reading of it; the latter in Banach and Mazur (1937), as well as other, earlier, contributions, not least by Brouwer.
    Keywords: Computability, Effectivization, Constructivity, Uncomputability, Computable Economics
    Date: 2013
  18. By: Geller, Chris R.; Mustard, Jamie; Shahwan, Ranya
    Abstract: Experiments evaluate the fit of human behaviour to the Shapley-Shubik power index (SSPI), a formula of voter power. Groups of six subjects with differing votes divide a fixed purse by majority rule in online chat rooms. Earnings proxy for measured power. Chat rooms and processes for selecting subjects reduce or eliminate extraneous forces. Logrolling remains as the primary political force. Subjects' initial proposals for division of the purse allow measurement of effects from focal points and transaction costs. Divisions of purses, net of those effects, closely fit the SSPI, averaging 1.033 of their SSPI values. The SSPI can serve as a control for power imbedded in voting blocs, permitting fuller analysis of other factors that affect political outcomes. --
    Keywords: social choice,public choice,elections,bargaining,coalitions,politico economic,voting power,conflict,election,collective action,majority rule
    JEL: D71 D72 D74
    Date: 2013

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