nep-gth New Economics Papers
on Game Theory
Issue of 2013‒12‒06
ten papers chosen by
Laszlo A. Koczy
Hungarian Academy of Sciences and Obuda University

  1. Meritocracy, Egalitarianism and the Stability of Majoritarian Organizations By Salvador Barberà; Carmen Beviá; Clara Ponsatí
  2. A Comment on "Cycles and Instability in a Rock-Paper-Scissors Population Game: A Continuous Time Experiment" By Wang, Zhijian; Zhu, Siqian; Xu, Bin
  3. Strategic Experimentation with Heterogeneous Agents and Payoff Externalities By Kaustav Das
  4. Coalition Formation in a Legislative Voting Game By Christiansen, N.; Georganas, S.; Kagel, J. H.
  5. Does trust mean giving and not risking? Experimental evidence from the trust game By Garapin, A.; Muller, L.; Rahali, B.
  6. Manipulated voters in competitive election campaigns By Kemal K?vanc Akoz; Cemal Eren Arbatli
  7. Network Procurement Auctions By Thomas Greve; Michael G. Pollitt
  8. Spillovers in networks of user generated content: Evidence from 23 natural experiments on Wikipedia By Kummer, Michael E.
  9. Dynamic Moral Hazard and Stopping By Robin Mason; Juuso Välimäki
  10. Strategic Location Choice under Dynamic Oligopolistic Competition and Spillovers By Luca Colombo; Herbert Dawid

  1. By: Salvador Barberà; Carmen Beviá; Clara Ponsatí
    Abstract: Egalitarianism and meritocracy are competing principles to distribute the joint benefits of cooperation. We examine the consequences of letting members of society vote between those two principles, in a context where groups of a certain size must be formed in order for individuals to become productive. Our setup induces a hedonic game of coalition formation. We study the existence of core stable partitions (organizational structures) of this game. We show that the inability of voters to commit to one distributional rule or another is a potential source of instability. But we also prove that, when stable organizational structures exist, they may be rich in form, and different than those predicted by alternative models of group formation. Non- segregated groups may arise within core stable structures. Stability is also compatible with the coexistence of meritocratic and egalitarian groups. These phenomena are robust, and persist under alternative variants of our initial model.
    Keywords: egalitarianism, meritocracy, coalition formation, hedonic games, core stability, assortative mating
    JEL: C62 C71 D02 D71
    Date: 2013–11
  2. By: Wang, Zhijian; Zhu, Siqian; Xu, Bin
    Abstract: The authors (Cason, Friedman and Hopkins, Review of Economic Studies, 2014) claimed that control treatments (using simultaneous matching in discrete time) replicate previous results that exhibit weak or no cycles. After correcting two mathematical mistakes in their cycles tripwire algorithm, we study the cycles by scanning the tripwire in the full strategy space of the games and we find significant cycles that were omitted by the authors. So we suggest that all of the treatments exhibit significant cycles.
    Keywords: experiments; learning; cycles; mixed equilibrium; discrete time
    JEL: C72 C73 C92 D83
    Date: 2013–11–26
  3. By: Kaustav Das (Department of Economics, University of Exeter)
    Abstract: This paper analyses a two-player game of strategic experimentation with two-armed bandits.At least one of the arms is risky in the sense that it may not yield a lumpsum payoff. There is payoff externality between the players and they differ in their ability to learn across the risky arm. Either player has to decide in a continous time regarding which arm to use. Two alternative settings are analysed. The first setting has two risky arms which are perfectly negatively correlated. The other one has one safe arm and one risky arm. I show that in equilibrium (Markovian) there is always too much of duplication which implies that with respect to a social planner's solution, risky arms are explored excessively.
    Keywords: R&D competition, Two-armed Bandit, Duplication, Learning.
    JEL: C73 D83 O31
    Date: 2013
  4. By: Christiansen, N.; Georganas, S.; Kagel, J. H.
    Abstract: We experimentally investigate the Jackson-Moselle (2002) model where legislators bargain over policy proposals and the allocation of private goods. Key comparative static predictions of the model hold as policy proposals shift in the predicted direction with private goods, with the variance in policy outcomes increasing as well. Private goods increase total welfare even after accounting for their cost and help secure legislative compromise. Coalition formations are better characterized by an efficient equal split between coalition partners than the stationary subgame perfect equilibrium prediction.
    Keywords: legislative bargaining; policy decisions; private goods; experiment
    Date: 2013
  5. By: Garapin, A.; Muller, L.; Rahali, B.
    Abstract: In a within-subjects framework, we compare levels of transfer in the trust game and in the (triple) dictator game. We control preferences towards risk through the Holt and Laury test (2002) and social preferences with the ring test (Liebrand, 1984). We then provide evidence that social preferences correlate with levels of transfer, while risk attitudes do not. Finally, we also cast doubts on the predictive power of the two tests.
    JEL: C72 C90
    Date: 2013
  6. By: Kemal K?vanc Akoz (Department of Economics, New York University, 19 W. 4th Street, 6FL, New York, NY 10012); Cemal Eren Arbatli (Department of Economics, National Research University-Higher School of Economics, 26 Shabolovka Street, Building 3, 3116A, Moscow, Russia)
    Abstract: We provide a game-theoretical model of manipulative election campaigns with two political candidates and a continuum of Bayesian voters. Voters are uncertain about candidate positions, which are exogenously given and lie on a unidimensional policy space. Candidates take unobservable, costly actions to manipulate a campaign signal that would otherwise be fully informative about a candidate’s distance from voters relative to the other candidate. We show that if the candidates differ in campaigning efficiency, and voters receive the manipulated signal with an individual, random noise, then the cost-efficient candidate wins the election even if she is more distant from the electorate than her opponent is. In contrast to the existing election campaign models that do not support information manipulation in equilibrium, our paper rationalizes misleading political advertising and suggests that limits on campaign spending may potentially improve the quality of information available to the electorate
    Keywords: Hidden actions, election campaigns, manipulation, propaganda, bias.
    JEL: C72 D72 D82 D84
    Date: 2013
  7. By: Thomas Greve; Michael G. Pollitt
    Abstract: In most network asset procurement exercises, network configurations are predefined by the auctioneers. Bidders can neither propose different network configurations nor can they submit bids on a group of network links. We believe the market itself can be designed better. We present a lot structure and an auction design where bidders might propose and build different network configurations and where bidding for packages is a possibility. We demonstrate why the auction design in this paper should be considered for future network procurement exercises through an example, inspired by UK offshore electricity transmission assets, to illustrate our idea.
    Keywords: Auctions, Networks, Investments
    JEL: D44 D85
    Date: 2013–11–27
  8. By: Kummer, Michael E.
    Abstract: Endogeneity in network formation hinders the identification of the role social networks play in generating spillovers, peer effects and other externalities. This paper tackles this problem and investigates how the link network between articles on the German Wikipedia influences the attention and content generation individual articles receive. Identification exploits local exogenous shocks on a small number of nodes in the network. It can thus avoid the usually required, but strong, assumptions of exogenous observed characteristics and link structure in networks. This approach also applies if, due to a lack of network information, identification through partial overlaps in the network structure fails (e.g. in classrooms). Exogenous variation is generated by natural and technical disasters or by articles being featured on the German Wikipedia's start page. The effects on neighboring pages are substantial; I observe an increase of almost 100 percent in terms of both views and content generation. The aggregate effect over all neighbors is also large: I find that a view on a treated article converts one for one into a view on a neighboring article. However, the resulting content generation is small in absolute terms. --
    Keywords: Social Media,Information,Knowledge,Spillovers,Large-scale Networks,Natural Experiment
    JEL: L17 D62 D85 D29
    Date: 2013
  9. By: Robin Mason (Department of Economics, University of Exeter and CEPR.); Juuso Välimäki (Aalto University School of Economics and HECER.)
    Abstract: We analyse a simple model of dynamic moral hazard in which there is a clear and tractable trade-off between static and dynamic incentives. In our model, a principal wants an agent to complete a project. The agent undertakes unobservable effort, which affects in each period the probability that the project is completed. We characterise the contracts that the principal sets, with and without commitment. We show that with full commitment, the contract involves the agent’s value and wage declining over time, in order to give the agent incentives to exert effort. The long-run levels of the value and wage depend on the relative discount rates of the principal and agent. We also characterise the set of sequentially rational equilibria, where the principal has no commitment power.
    Keywords: Principal-agent model, continuous time, moral hazard, project completion.
    JEL: C73 D82 J31
    Date: 2013
  10. By: Luca Colombo (Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore); Herbert Dawid (Universität Bielefeld)
    Abstract: This paper investigates firms' optimal location choices explicitly accounting for the role of inwards and outwards knowledge spillovers in a dynamic Cournot oligopoly with firms that are heterogeneous in their ability to carry out cost-reducing R\&D. Firms can either locate in an industrial cluster or in isolation. Technological spillovers are exchanged between the firms in the cluster. It is shown that a technological leader has an incentive to locate in isolation only if her advantage exceeds a certain threshold, which is increasing in firms' discount rate, in industry dispersion, and in the intensity of knowledge spillovers. Scenarios are identified where although it is optimal for the technological leader to locate in isolation, from a welfare perspective it would be desirable that she locates in the cluster.
    Keywords: Location Choice, Knowledge Spillovers, Technological Leadership, Markov-perfect Equilibrium
    JEL: L13 C73 O31 R12
    Date: 2013–11

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