nep-gth New Economics Papers
on Game Theory
Issue of 2013‒11‒02
eighteen papers chosen by
Laszlo A. Koczy
Hungarian Academy of Sciences and Obuda University

  1. Weakly Continuous Security in Discontinuous and Nonquasiconcave Games: Existence and Characterization By Rabia Nessah
  2. On the Existence of Mixed Strategy Nash equilibria By Pavlo Prokopovych; Nicholas C.Yannelis
  3. Commitments, Intentions, Truth and Nash Equilibria By Schlag, Karl H.; Vida, Péter
  4. A sharing mechanism for superadditive and non-superadditive logistics cooperation By Xiaozhou Xu; Shenle Pan; Eric Ballot
  5. Alternating or compensating? An experimentrepeated sequential best shot game By Lisa Bruttel; Werner Güth
  6. Social Centipedes: the Impact of Group Identity on Preferences and Reasoning By Le Coq, Chloe; Tremewan, James; Wagner, Alexander K.
  7. A Characterization of Exact Non-atomic Market Games By Massimiliano AMARANTE
  8. Cheap Talk with Correlated Signals By A.K.S. Chand; Sergio Currarini; Giovanni Ursino
  9. Partnership and trust in gift-exchange games. By Benoît Chalvignac
  10. Tit for Others' Tat Repeated Prisoner's Dilemma Experiments with Third-Party Monitoring and Indirect Punishment By Lisa Bruttel; Werner Güth
  11. A Competitive Approach to Leadership in Public Good Games By Centorrino, Samuele; Concina, Laura
  12. Promoting coordination in summary-statistic games By Dominik Erharter
  13. You Are Who Your Friends Are: An Experiment on Trust and Homophily in Friendship Networks By Fabian Winter; Mitesh Kataria
  14. Platform Competition as Network Contestability By Robert P. Gilles; Dimitrios Diamantaras
  15. Fair Division in Unanimity Bargaining with Subjective Claims By Anita Gantner; Kristian Horn; Rudolf Kerschbamer
  16. Trust and manipulation in social networks By FORSTER, Manuel; MAULEON, Ana; VANNETELBOSCH, Vincent
  17. Kantian Optimization: An Approach to Cooperative Behavior By John E. Roemer
  18. Breaking Up a Research Consortium By Niedermayer, Andras; Wu, Jianjun

  1. By: Rabia Nessah (IESEG School of Management (LEM-CNRS))
    Keywords: Discontinuous games, nonquasiconcave games, pure strategy Nash equilibrium, weakly continuous security, pseudo upper semicontinuity, generalized payoff security, weakly reciprocal upper semicontinuity
    JEL: C72
    Date: 2013–06
  2. By: Pavlo Prokopovych (Kyiv School of Economics and Kyiv Economics Institute); Nicholas C.Yannelis (Department of Economics, Tippie College of Business, University of Iowa)
    Abstract: The focus of this paper is on developing geometric sufficient conditions for the existence of a mixed strategy Nash equilibrium for both diagonally transfer continuous and better-reply secure games. First, we show that employing the concept of diagonal transfer continuity in place of better-reply security might be advantageous when the existence of a mixed strategy Nash equilibrium is concerned. Then, we study equilibrium existence in better-reply secure games possessing a payoff secure mixed extension. With the aid of an example we show that such games need not have mixed strategy Nash equilibria. We provide some easily verifiable conditions for the mixed extension of a two-person game that is reciprocally upper semicontinuous and uniformly payoff secure to be better-reply secure.
    Keywords: Discontinuous game; Diagonally transfer continuous game; Better-reply secure game; Mixed strategy equilibrium; Transfer lower semicontinuity
    JEL: C65 C72
    Date: 2013–10
  3. By: Schlag, Karl H.; Vida, Péter
    Abstract: Games with multiple Nash equilibria are believed to be easier to play if players can communicate. We present a simple model of communication in games and investigate the importance of when communication takes place. Sending a message before play captures talk about intentions, after play captures talk about past commitments. We focus on equilibria where messages are believed whenever possible. Applying our results to Aumann’s Stag Hunt game we find that communication is useless if talk is about commitments, while the efficient outcome is selected if talk is about intentions. This confirms intuition and empirical findings in the literature.
    Keywords: Pre-play communication; cheap talk; coordination.
    JEL: C72 D83
    Date: 2013–10–29
  4. By: Xiaozhou Xu (CGS - Centre de Gestion Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris); Shenle Pan (CGS - Centre de Gestion Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris); Eric Ballot (CGS - Centre de Gestion Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris)
    Abstract: The lack of a stable, fair and generally applicable sharing mechanism is one of the most noticeable impediments to the implementation of logistics cooperation. Most of the current literature on the sharing mechanism in logistics cooperation focuses on superadditive logistics cooperation games, neglecting the probable occurrence of other types of games resulting from coordination cost and unequal partners. In this work, we propose a sharing model based on game theoretic solutions, taking account of the bargaining power of players to identify a fair in-Core allocation. Under full cooperation assumption, we generalize this model for non-superadditive logistics cooperation games with coordination costs at different levels. The games with empty Core are also studied within the model.
    Keywords: Logistics cooperation, game-theoretical approach, bargaining power, non-superadditive game in logistics
    Date: 2013–10–28
  5. By: Lisa Bruttel (University of Konstanz, Department of Economics); Werner Güth (Max Planck Institute of Economics, Strategic Interaction Group)
    Abstract: In the two-person sequential best shot game, first player 1 contributes to a public good and then player 2 is informed about this choice before contributing. The payoff from the public good is the same for both players and depends only on the maximal contribution. Efficient voluntary cooperation in the repeated best shot game therefore requires that only one player should contribute in a given round. To provide better chances for such cooperation, we enrich the sequential best shot base game by a third stage allowing the party with the lower contribution to transfer some of its periodic gain to the other party. Participants easily establish cooperation in the finitely repeated game. When cooperation evolves, it mostly takes the form of "labor division," with one participant constantly contributing and the other constantly compensating. However, in a treatment in which compensation is not possible, (more or less symmetric) alternating occurs frequently and turns out to be almost as efficient as labor division.
    Keywords: best shot game, coordination, transfer, experiment
    JEL: C71 C73 C91
    Date: 2013–10–25
  6. By: Le Coq, Chloe (Stockholm Institute of Transition Economics); Tremewan, James (Department of Economics, University of Vienna (Austria)); Wagner, Alexander K. (Department of Economics, University of Cologne (Germany))
    Abstract: Using a group identity manipulation we examine the role of social preferences in an experimental one-shot centipede game. Contrary to what social preference theory would predict, we find that players continue longer when playing with outgroup members. Our explanation rests on two observations: (i) players should only stop if they are sufficiently confident that their partner will stop at the next node, given the exponentially-increasing payoffs in the game, and (ii) players are more likely to have this degree of certainty if they are matched with someone from the same group, whom they view as similar to themselves and thus predictable. We find strong statistical support for this argument. We conclude that group identity not only impacts a player’s utility function, as identified in earlier research, but also affects her reasoning about the partner’s behavior.
    Keywords: Group identity; centipede game; prospective reference theory
    JEL: C72 C91 C92 D83
    Date: 2013–09–30
  7. By: Massimiliano AMARANTE
    Abstract: Continuous exact non-atomic games are naturally associated to certain operators between Banach spaces. It thus makes sense to study games by means of the corresponding operators. We characterize non-atomic exact market games in terms of the properties of the associated operators. We also prove a separation theorem for weak compact sets of countably additive measures, which is of independent interest.
    Keywords: lower/upper envelopes, separation theorem, exact games, nonatomic market games
    JEL: C71
    Date: 2013
  8. By: A.K.S. Chand (University of Venice, Italy); Sergio Currarini (University of Leicester, University of Venice and CMCC, Italy); Giovanni Ursino (Catholic University of Milan, Italy)
    Abstract: We consider a game of information transmission, with one informed decision maker gathering information from one or more informed senders. Private information is (conditionally) correlated across players, and communication is cheap talk. For the one sender case, we show that correlation unambiguously tightens the existence conditions for a truth-telling equilibrium. We then generalize the model to an arbitrary number of senders, and we find that, in this case, the effect of correlation on the incentives to report information truthfully is non monotone, and correlation may discipline senders' equilibrium behavior, making it easier to sustain truth-telling.
    Keywords: Cheap Talk, Multiple Senders, Correlation
    JEL: C72 D82 D83
    Date: 2013–09
  9. By: Benoît Chalvignac
    Abstract: In this paper we extend the gift-exchange game setting to include a new experimental treatment where subjects are paired with the same partner for the whole game. We observe that the matching mode is more critical to cooperation levels than the contractual arrangement, and that trust-based contracts outperform incentive-based contracts when interaction is repeated within the same pair. In the partner setting, individual preferences seem only to be second-order determinants of cooperation levels and most subjects are highly responsive to others' cooperative choices. Our findings help explain the cooperation dynamics required for organizations to leverage their incentive structure and to endure.
    Keywords: Gift-exchange game; Trust; Cooperation; Informal organization.
    JEL: D2 D7 M2
    Date: 2013
  10. By: Lisa Bruttel (University of Konstanz, Department of Economics); Werner Güth (Max Planck Institute of Economics, Strategic Interaction Group)
    Abstract: Two pairs of two participants each interact repeatedly in two structurally independent but informationally linked Prisoner's Dilemma games. Neither pair receives feedback about past choices by their own partner but is fully informed about the choices by the other pair. Considering this as a four-person infinite horizon game allows for Folk-Theorem-like voluntary cooperation. We ask whether monitoring and indirect punishment with the help of others are comparable to direct monitoring and punishment in establishing and maintaining voluntary cooperation. The treatment effects we find are rather weak. Others' monitoring of own activities is only an insufficient substitute for direct observability.
    Keywords: prisoner's dilemma, monitoring, experiment
    JEL: C73 C91 D82 D84
    Date: 2013–10–18
  11. By: Centorrino, Samuele; Concina, Laura
    Date: 2013–02
  12. By: Dominik Erharter
    Abstract: This paper studies how external incentives can help agents to coordinate in summary-statistic games. Agents follow a myopic best-reply rule and face a trade-off between efficiency and strategic uncertainty. A principal can help agents to coordinate on the Pareto optimal equilibrium by monitoring an appropriate number of agents. The optimal monitoring policy is 'minimally-invasive' - for every strategy profile of the agents, the principal either monitors just enough agents to make high effort a best-reply or does not monitor at all. Furthermore, given the principal's payoffs are supermodular and increasing at an increasing rate, the optimal monitoring policy is monotone in the number of agents who choose high effort.
    Keywords: adaptive learning, Markov decision process, coordination failure, order-statistic game
    JEL: C73 C62 D86
    Date: 2013–10
  13. By: Fabian Winter (Max-Planck Institute of Economics, Jena); Mitesh Kataria (Max-Planck Institute of Economics, Jena)
    Abstract: We study the existence of homophily (i.e. the tendency for people to make friends with people who are similar to themselves) with respect to trustworthiness. We ask whether two friends show similarly trustworthy behavior towards strangers, and whether this is anticipated by outsiders. We develop a simple model of bayesian learning in trust games and test the derived hypotheses in a controlled laboratory environment. In the experiment, two trustees sequentially play a trust game with the same trustor, where the trustees depending on treatmen are either friends or strangers to each other. We affirm the existence of homophily with re- spect to trustworthiness. Trustors' beliefs about the trustees' trustfulness are not affected by the knowledge about the (non-)existent friendship between the trustees. Behaviorally, however, they indirectly reciprocate the (un-)trustworthy behavior of one trustee towards his/her friends in later interactions.
    Keywords: social networks, homophily, trust, friendship, indirect tit-for-tat
    JEL: C92 D83 J24 J40
    Date: 2013–10–23
  14. By: Robert P. Gilles (Queen's University Management School, Belfast, UK); Dimitrios Diamantaras (Department of Economics, Temple University)
    Abstract: Recent research in industrial organisation has investigated the essential place that middlemen have in the networks that make up our global economy. In this paper we attempt to understand how such middlemen compete with each other through a game theoretic analysis using novel techniques from decision-making under ambiguity. We model a purposely abstract and reduced model of one middleman who provides a two-sided platform, mediating surplus-creating interactions between two users. The middleman evaluates uncertain outcomes under positional ambiguity, taking into account the possibility of the emergence of an alternative middleman offering intermediary services to the two users. Surprisingly, we find many situations in which the middleman will purposely extract maximal gains from her position. Only if there is relatively low probability of devastating loss of business under competition, the middleman will adopt a more competitive attitude and extract less from her position.
    Keywords: competition, middlemen, ambiguity, platform, two-sided market, market intermediation
    JEL: C72 D81 D85
    Date: 2013–10
  15. By: Anita Gantner; Kristian Horn; Rudolf Kerschbamer
    Abstract: In an experiment on a subjective claims problem we compare three unanimity bargaining procedures - the Demand, the Offer and the Exit variant - in terms of fairness and efficiency. To assess the fairness of the allocations obtained by these procedures, we evaluate them from a partial point of view using stakeholders' subjective evaluations of claims as elicited in a hypothetical fairness question, and we evaluate them from an impartial point of view using spectators' responses in a vignette. We find that after correcting for the self-serving bias in the partial view, both views point towards the same allocation. The Offer variant, which requires stakeholders to supply complete division proposals, yields outcomes that come closest to this fair allocation.
    Keywords: Fair Division, Subjective Claims, Bargaining, Experiment
    JEL: D63 C91 D61
    Date: 2013–10
  16. By: FORSTER, Manuel (Université catholique de Louvain, CORE, Belgium; CES, Université Paris 1 Panthéon-Sorbonne, France); MAULEON, Ana (Université catholique de Louvain, CORE, Belgium; CEREC, Université Saint-Louis, Bruxelles, Belgium); VANNETELBOSCH, Vincent (Université catholique de Louvain, CORE, Belgium; CEREC, Université Saint-Louis, Bruxelles, Belgium)
    Abstract: We investigate the role of manipulation in a model of opinion formation where agents have opinions about some common question of interest. Agents repeatedly communicate with their neighbors in the social network, can exert some effort to manipulate the trust of others, and update their opinions taking weighted averages of neighbors’ opinions. The incentives to manipulate are given by the agents’ preferences. We show that manipulation can modify the trust structure and lead to a connected society, and thus, make the society reaching a consensus. Manipulation fosters opinion leadership, but the manipulated agent may even gain influence on the long-run opinions. In sufficiently homophilic societies, manipulation accelerates (slows down) convergence if it decreases (increases) homophily. Finally, we investigate the tension between information aggregation and spread of misinformation. We find that if the ability of the manipulating agent is weak and the agents underselling (overselling) their information gain (lose) overall influence, then manipulation reduces misinformation and agents converge jointly to more accurate opinions about some underlying true state.
    Keywords: social networks, trust, manipulation, opinion leadership, consensus, wisdom of crowds
    JEL: D83 D85 Z13
    Date: 2013–09–23
  17. By: John E. Roemer (Dept. of Political Science, Yale University)
    Abstract: Although evidence accrues in biology, anthropology and experimental economics that homo sapiens is a cooperative species, the reigning assumption in economic theory is that individuals optimize in an autarkic manner (as in Nash and Walrasian equilibrium). I here postulate a cooperative kind of optimizing behavior, called Kantian. It is shown that in simple economic models, when there are negative externalities (such as congestion effects from use of a commonly owned resource) or positive externalities (such as a social ethos reflected in individuals’ preferences), Kantian equilibria dominate Nash-Walras equilibria in terms of efficiency. While economists schooled in Nash equilibrium may view the Kantian behavior as utopian, there is some -- perhaps much -- evidence that it exists. If cultures evolve through group selection, the hypothesis that Kantian behavior is more prevalent than we may think is supported by the efficiency results here demonstrated.
    Keywords: Kantian equilibrium, Social ethos, Implementation
    JEL: D60 D62 D64 C70 H30
    Date: 2012–03
  18. By: Niedermayer, Andras; Wu, Jianjun
    Abstract: Inter-firm R&D collaborations through contractual arrangements have become increasingly popular, but in many cases they are broken up without any joint discovery. We provide a rationale for the breakup date in R&D collaboration agreements. More specifically, we consider a research consortium initiated by a firm A with a firm B. B has private information about whether it is committed to the project or a free-rider. We show that under fairly general conditions, a breakup date in the contract is a (secondbest) optimal screening device for firm A to screen out free-riders. With the additional constraint of renegotiation proofness, A can only partially screen out free-riders: entry by some free-riders makes sure that A does not have an incentive to renegotiate the contract ex post. We also propose empirical strategies for identifying the three likely causes of a breakup date: adverse selection, moral hazard, and project non-viability.
    Keywords: Optimal R&D contracts; adverse selection; breakup date; R&D collaboration
    JEL: C72 D82 L20
    Date: 2013–05–14

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.
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