nep-gth New Economics Papers
on Game Theory
Issue of 2013‒10‒02
ten papers chosen by
Laszlo A. Koczy
Hungarian Academy of Sciences and Obuda University

  1. Foundations for Cooperation in the Prisoners’ Dilemma By Brendan Daley; Philipp Sadowski
  2. Choosing one's preferences By Guilhem Lecouteux
  3. Entitlement in a Real Effort Ultimatum Game By Michael D. Carr; Phil Mellizo
  4. The Rejective Core of an Economy with Profit-Making Firms By Takekuma, Shin-Ichi
  5. Random Housing with Existing Tenants By Alcalde, Jose
  6. On the Origin of the Family By Francesconi, Marco; Ghiglino, Christian; Perry, Motty
  8. The closed primaries versus the top-two primary By P. Amorós; Ricardo Martínez; M. Socorro Puy
  9. A game theoretical analysis of the design options of the real-time electricity market By Haikel Khalfallah; Vincent Rious
  10. How individual preferences get aggregated in groups - An experimental study By Attila Ambrus; Ben Greiner; Parag Pathak

  1. By: Brendan Daley; Philipp Sadowski
    Abstract: We provide axiomatic foundations for a simple model of play in the prisoners’ dilemma. The model accommodates cooperation and suggests that players behave as if their expectations about their opponents’ behavior vary with their own choice. We refer to this nonstandard updating as magical thinking. The degree to which players exhibit magical thinking may be heterogeneous in the population and is captured by a uniquely identified parameter for each player. Further, it is as if all players perceive these parameters to be i.i.d. draws from a common distribution. The model’s identification allows for tractable comparative statics.
    Keywords: Prisoners’ dilemma, magical thinking, cooperation
    JEL: C7 D8
    Date: 2013
  2. By: Guilhem Lecouteux (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X)
    Abstract: A central assumption in economics is that individuals are rational in the sense that they seek to satisfy their preferences, by choosing the action that maximizes a utility function that represents those preferences. However, it appears that in strategic interaction with other rational agents, the individuals can bene t from strategic commitments. We determine the set of games for which strategic commitments can be bene cial to the players, by building an analytical framework in which players can choose their own preferences before playing a game. We show that players make strategic commitments as soon as there exists a Stackelberg equilibrium that is not a Nash equilibrium, but also that there always exists at least one set of preference relations at the equilibrium such that a Nash equilibrium is implemented. We then show that the possibility of making strategic commitments generates cooperative behaviours in the case of supermodular games.
    Keywords: strategic commitment, choice of preferences, Stackelberg, supermodularity
    Date: 2013–09–23
  3. By: Michael D. Carr; Phil Mellizo
    Abstract: Data from lab experiments support the claim that individuals have social preferences. Most models of social preferences, however, consider only the distribution of outcomes, not the source of the endowment used in the game. Once the source is considered, outcomes in the ultimatum game are more difficult to interpret. We extend the ultimatum game to allow for responder-produced endowments. We find that offers increase when the responder produces the endowment, but rejection rates are lower. Further, offers remain below 100% of the endowment, suggesting that unproductive proposers feel entitled to a part of the endowment, and responders respect this right.
    JEL: C91 D30 D63
    Date: 2013–09
  4. By: Takekuma, Shin-Ichi
    Abstract: In this paper, we consider an economy with producers and introduce a kind of "money" into the economy in order to incorporate producers' behaviors of profit maximization. We define a modified concept of "rejective core" which depends on both consumers' and producers' criterions, and prove the identity of the rejective core and the competitive equilibrium. Namely, the purpose of this paper is to characterize the competitive equilibrium in Arrow-Debreu type economies by applying the concept of "rejective core".
    Keywords: rejective core, competitive equilibrium
    JEL: C71 D21 D41 D51
    Date: 2013–09
  5. By: Alcalde, Jose (Universidad de Alicante, Departamento de Métodos Cuantitativos y Teoría Económica)
    Abstract: We explore the problem of distributing a group of indivisible objects, some of which incorporate a primitive assignment of use, or tenancy right. Within this framework we analyze the existence of rules always selecting an ex-ante efficient allocation, conditioned to a preservation of the tenancy rights. We realize that a probabilistic version of the Deferred Acceptance procedure (Gale and Shapley, 1962), is efficient and, from an ordinal point of view, superior to the randomized approaches of the Top Trading Cycles (Abdulkadiroglu and Sönmez, 1999) and the New House 4 mechanism employed in the MIT.
    Keywords: Correlated Priorities; Random Assignment; Serial Rule; Matching Markets; Ordinal Efficiency
    JEL: C78 D63 D70
    Date: 2013–09–25
  6. By: Francesconi, Marco (University of Essex); Ghiglino, Christian (University of Essex); Perry, Motty (Department of Economics, University of Warwick)
    Abstract: We present a game theoretic model to explain why people form life long monogamous families. Three components are essential in our framework, paternal investment, fatherhood uncertainty, and, perhaps the most distinctive feature of all, the overlap of children of different ages. When all three conditions are present, monogamy is the most efficient form of sexual organization in the sense that it yields greater survivorship than serial monogamy, group marriage, and polygyny. Monogamy is also the only conguration that fosters altruistic ties among siblings. Finally, our result sheds light to the understanding of why most religions center around the monogamous delity family. JEL classification: Overlapping generations ; Free riding ; Kinship systems ; Religion JEL codes: C72 ; D01 ; D10 ; J12 ; Z13
    Date: 2013
  7. By: Aytek Erdil
    Abstract: I study strategy-proof assignment mechanisms where the agents reveal their preference rankings over the available objects. A stochastic mechanism returns lotteries over deterministic assignments, and mechanisms are compared according to first-order stochastic dominance. I show that non-wasteful strategy-proof mechanisms are not dominated by strategy-proof mechanisms, however nonwastefulness is highly restrictive when the mechanism involves randomization. In fact, the Random Priority mechanism (i.e., the Random Serial Dictatorship), and a recently adopted school choice mechanism, Deferred Acceptance with Random Tie-breaking, are wasteful. I find that both these mechanisms are dominated by strategy-proof mechanisms. In general, strategy-proof improvement cannot be due to merely reshuffling objects, and therefore must involve assigning more objects. Forthcoming in
    Date: 2013–09–26
  8. By: P. Amorós; Ricardo Martínez; M. Socorro Puy
    Abstract: The top-two primary recently approved in states like Washington, California, and Alaska eliminates the closed party primaries and creates instead a single ballot in which the first and second place winners pass to the general election. We compare the electoral consequences of the top-two primary with those of the closed primaries. We present a model where each primary procedure induce a sequential game with three stages: candidate-entry stage, primary election, and general election. We analyze the equilibria of these games and show that the top-two primary contributes to political moderation and may increase the number of swing states.
    Keywords: Voting system, Closed primaries, Open primaries, Top-two primary, Political moderation, Sequential voting
    JEL: C72 D72
    Date: 2013–09
  9. By: Haikel Khalfallah (PACTE - Politiques publiques, ACtion politique, TErritoires - Institut d'Études Politiques [IEP] - Grenoble - CNRS : UMR5194 - Université Pierre-Mendès-France - Grenoble II - Université Joseph Fourier - Grenoble I); Vincent Rious (Microeconomix - Microeconomix)
    Abstract: In this paper we study the economic consequences of two real-time electricity market designs (with or without penalties) taking into account the opportunistic behaviors of market players. We implement a two-stage dynamic model to consider the interaction between the forward market and the real-time market where market players compete in a Nash manner and rely on supply/demand function oligopoly competition. Dynamic programming is used to deal with the stochastic environment of the market and the mixed complementarity problem is employed to find a solution to the game. Numerical examples are presented to illustrate how the optimal competitor's strategies could change according to the adoption or no adoption of a balancing mechanism and to the level of the penalty imposed on imbalances, regarding a variety of producers' cost structures. The main finding of this study is that implementing balancing mechanisms would increase forward contracts while raising electricity prices. Moreover, possible use of market power would not be reduced when imbalances are penalized.
    Keywords: Electricity markets ; balancing mechanisms ; supply function equilibrium ; mixed complementarity problem
    Date: 2013
  10. By: Attila Ambrus (Department of Economics, Duke University); Ben Greiner (School of Economics, Australian School of Business, the University of New South Wales); Parag Pathak (Department of Economics, Massachusetts Institute of Technology)
    Abstract: This paper experimentally investigates how individual preferences, through unrestricted deliberation, get aggregated into a group decision in two contexts: reciprocating gifts, and choosing between lotteries. In both contexts we find that median group members have a significant impact on the group decision, but particular other members also have some influence. Non-median members closer to the median tend to have more influence than other members. By investigating the same individual’s influence in different groups, we find evidence for relative position in the group having a direct effect on influence. We do not find evidence that group choice exhibits a shift in a particular direction that is independent of member preferences and caused by the group decision context itself. We also find that group deliberation not only involves bargaining and compromise, but it also involves persuasion: preferences tend to shift towards the choice of the individual’s previous group, especially for those with extreme individual preferences.
    Keywords: group decision-making, role of deliberation, social influence
    JEL: C72 C92 H41
    Date: 2013–09

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