nep-gth New Economics Papers
on Game Theory
Issue of 2014‒02‒08
thirteen papers chosen by
Laszlo A. Koczy
Hungarian Academy of Sciences and Obuda University

  1. Contractually stable networks By CAULIER, Jean-François; MAULEON, Ana; VANNETELBOSCH, Vincent
  2. Fair allocation of indivisible goods: the two-agent case By RAMAEKERS, Eve
  3. On Gale and Shapley "college admissions and the stability of marriage" By GABSZEWICZ, Jean. J.; GARCIA, Filomena; PAIS, Joana; RESENDE, Joana
  4. Organizational Coordination and Costly Communication with Boundedly Rational Agents By Dietrichson, Jens; Jochem, Torsten
  5. Relative concerns and delays in bargaining with private information By MAULEON, Ana; VANNETELBOSCH, Vincent
  6. An experimental study of sorting in group contests By Philip Brookins; John Lightle; Dmitry Ryvkin
  7. Improving Fairness and Efficiency in Matching with Distributional Constraints: An Alternative Solution for the Japanese Medical Residency Match By Goto, Masahiro; Iwasaki, Atsushi; Kawasaki, Yujiro; Yasuda, Yosuke; Yokoo, Makoto
  8. Why can’t we be friends? Entitlements and the costs of conflict By Erik O Kimbrough; Roman M Sheremeta
  9. Accuracy of proposers' beliefs in an allocation-type game By Federica Alberti; Anna Conte; Kei Tsutsui
  10. You always meet twice: An experiment on intrinsic versus instrumental reciprocity By Johnsen, Åshild A; Kvaløy, Ola
  11. Some Unpleasant Bargaining Arithmetic? By Hülya Eraslan; Antonio Merlo
  12. International Environmental Agreements: An Emission Choice Model with Abatement Technology By Eftichios Sartzetakis; Stefania Strantza
  13. Data games: sharing public goods with exclusion By DEHEZ, Pierre; TELLONE, Daniela

  1. By: CAULIER, Jean-François; MAULEON, Ana; VANNETELBOSCH, Vincent
  2. By: RAMAEKERS, Eve
  3. By: GABSZEWICZ, Jean. J.; GARCIA, Filomena; PAIS, Joana; RESENDE, Joana
  4. By: Dietrichson, Jens (Department of Economics, Lund University); Jochem, Torsten (Faculty of Economics and Business, University of Amsterdam)
    Abstract: How does costly communication affect organizational coordination? This paper develops a model of costly communication based on the weakest-link game and boundedly rational agents. Solving for the stochastically stable states, we find that communication increases the possibilities for efficient coordination compared to a setting where agents cannot communicate. But as agents face a trade-off between lowering the strategic uncertainty for the group and the costs of communication, the least efficient state is still the unique stochastically stable one for many parameter values. Simulations show that this is not just a long run phenomena, the stochastically stable state is the most frequent outcome also in the short run. Making communication mandatory induces efficient coordination, whereas letting a team leader handle communication increases efficiency when the leader expects others to follow and has enough credibility. The results are broadly consistent with recent experimental evidence of communication in weakest-link games.
    Keywords: Organizational coordination; Commmunication; Stochastic stability; Bounded rationality; Simulation
    JEL: C73 D23 L22 L23
    Date: 2014–02–03
  6. By: Philip Brookins (Department of Economics, Florida State University); John Lightle (Department of Economics, Florida State University); Dmitry Ryvkin (Department of Economics, Florida State University)
    Abstract: We study experimentally the effects of sorting in contests between groups of heterogeneous players whose within-group efforts are perfect substitutes. The theory predicts that higher aggregate effort will be reached when variation in ability between groups is lower, i.e., by a more balanced sorting. In the experiment, we assign subjects to four types -- A, B, C, and D -- ranked by their cost of effort, with A having the lowest and D having the highest cost, and conduct contests between two groups of two players each. In the Balanced treatment, (A,D) groups (i.e., groups comprised of a type A and a type D player) compete with (B,C) groups, whereas in the Unbalanced treatment, (A,B) groups compete with (C,D) groups. We find substantial heterogeneity and overinvestment of efforts by all types in both treatments, including the "underdog" (C,D) group which surprisingly is not demoralized by the unbalanced matching. Despite strong overbidding, relative aggregate efforts are remarkably close to equilibrium predictions both between treatments and between groups within each treatment. The results confirm the prediction that balanced sorting leads to higher aggregate effort.
    Keywords: contest, group, sorting, heterogeneous players, experiment
    JEL: C72 C91 M54 D72
    Date: 2014–01
  7. By: Goto, Masahiro; Iwasaki, Atsushi; Kawasaki, Yujiro; Yasuda, Yosuke; Yokoo, Makoto
    Abstract: Regional imbalance of doctors is a serious issue in many countries. In an attempt to average the geographical distribution of doctors, the Japanese government introduced ``regional caps'' recently, restricting the total number of medical residents matched within each region. Motivated by this policy change, Kamada and Kojima (2013) proposed a mechanism called the flexible deferred acceptance mechanism (FDA) that makes every doctor weakly better off than the current system. In this paper, we further study this problem and develop an alternative mechanism that we call the priority-list based deferred acceptance mechanism (PLDA). Both mechanisms enable hospitals in the same region to fill their capacities flexibly until the regional cap is filled. FDA lets hospitals take turns to (tentatively) choose the best remaining doctor, while PLDA lets each region directly decide which doctor is (tentatively) matched with which hospital based on its priority list. We show that PLDA performs better than FDA in terms of efficiency and fairness through theoretical and computational analyses.
    Keywords: distributional constraints, medical residency matching, school admission, stability, fairness, nonwastefulness, efficiency, strategy-proofness, matching with contracts
    JEL: C71 C78 D61
    Date: 2014–02
  8. By: Erik O Kimbrough (Department of Economics, Simon Fraser University); Roman M Sheremeta (Weatherhead School of Management, Case Western Reserve University & Economic Science Institute, Chapman University)
    Abstract: We design an experiment to explore the impact of earned entitlements on the frequency and intensity of conflicts in a two-stage conflict game where players may attempt to use non-binding side-payments to avoid conflict. In this game, Proposers make offers and Responders decide simultaneously whether to accept the offers and whether to engage in a conflict. A simple theoretical analysis suggests that Proposers should never offer side-payments because Responders should always accept them and then still choose to enter conflict; however, our experiment reveals that some individuals use this non-binding mechanism to avoid conflict. Moreover, when subjects earn their roles (Proposer or Responder), conflicts are 44% more likely to be avoided than when roles are assigned randomly. Earned entitlements impact behavior in three important ways: (1) Proposers who have earned their position persistently make larger offers; (2) larger offers lead to a lower probability of conflict, but (3) Proposers whose offers do not lead to conflict resolution respond spitefully with greater conflict expenditure. Hence, with earned rights, the positive welfare effects of reduced conflict frequency are offset by higher conflict intensity. This result differs from previous experimental evidence from ultimatum games in which earned entitlements tend to encourage agreement and increase welfare; thus, our findings highlight the important consequences of endogenizing the costs of conflict. Our analysis suggests that earned entitlements alter behavior by influencing the beliefs of Proposers about the willingness of Responders to accept a peaceful resolution. As a result, these Proposers make persistent high offers, and when their beliefs are disappointed by a Responder’s decision to accept a side-payment and still enter conflict, they retaliate.
    Keywords: contests, conflict resolution, side-payments, entitlements, experiments
    JEL: C72 C91 D72
    Date: 2014
  9. By: Federica Alberti (Strategic Interaction Group, Max Planck Institute of Economics, Jena); Anna Conte (Strategic Interaction Group, Max Planck Institute of Economics, Jena, and Department of Economics and Quantitative Methods , WBS, University of Westminster London); Kei Tsutsui (Frankfurt School of Finance and Management)
    Abstract: In the context of an allocation game, this paper analyses the proposer's reported beliefs about the responder's willingness to accept (or reject) the proposed split of the pie. The proposer's beliefs are elicited via a quadratic scoring rule. An econometric model of the proposer's beliefs is estimated. The estimated proposer's beliefs are then compared with the actual responder's choices. As a result of this comparison, we observe that the proposer tends to underestimate the empirical acceptance probability, especially when the slice of the pie allocated to the proposer is large.
    Keywords: Model construction and estimation, Allocation game, Beliefs elicitation and evaluation
    JEL: C51 C52 C72 D84
    Date: 2014–01–29
  10. By: Johnsen, Åshild A (UiS); Kvaløy, Ola (UiS)
    Abstract: In repeated games, it is hard to distinguish true prosocial behavior from strategic instrumental behavior. In particular, a player does not know whether a reciprocal action is intrinsically or instrumentally motivated. In this paper, we experimentally investigate the relationship between intrinsic and instrumental reciprocity by running a two-period repeated trust game. In the `strategic treatment' the subjects know that they will meet twice, while in the `non-strategic treatment' they do not know and hence the second period comes as a surprise. We find that subjects anticipate instrumental reciprocity, and that intrinsic reciprocity is rewarded. In fact, the total level of cooperation, in which trust is reciprocated, is higher in the non-strategic treatment. Instrumental reciprocity thus seems to crowd out intrinsic reciprocity: If one takes the repeated game incentives out of the repeated game
    Keywords: Trust; Reciprocity; Repeated Games; Experiment
    JEL: C72 C91 D03
    Date: 2014–01–28
  11. By: Hülya Eraslan (Department of Economics, John Hopkins University); Antonio Merlo (Department of Economics, University of Pennsylvania)
    Abstract: It is commonly believed that, since unanimity rule safeguards the rights of each individual, it protects minorities from the possibility of expropriation, thus yielding more equitable outcomes than majority rule. We show that this is not necessarily the case in bargaining environments. We study a multilateral bargaining model à la Baron and Ferejohn (1989), where players are heterogeneous with respect to the potential surplus they bring to the bargaining table. We show that unanimity rule may generate equilibrium outcomes that are more unequal (or less equitable) than under majority rule. In fact, as players become perfectly patient, we show that the more inclusive the voting rule, the less equitable the equilibrium allocations.
    Keywords: Multilateral bargaining, voting rules, inequality
    JEL: C78 D70
    Date: 2014–01–03
  12. By: Eftichios Sartzetakis (Department of Economics, University of Macedonia); Stefania Strantza (Department of Economics, Concordia University)
    Abstract: The present paper examines the size of stable IEAs concerning transboundary environmental problems. A coalition is considered stable when no signatories wish to withdraw while no more countries wish to participate. We assume that the coalition behaves as a leader maximizing its members' aggregate welfare while the countries outside the coalition maximize their own welfare independently, taking the choice of the coalition as given. We further assume a benefit function that is concave in the country's own emissions, an environmental damage function that is convex in aggregate net emissions and an abatement cost function that is convex in the country's abatement effort. Each country chooses both its emission and abatement levels. Within this framework we find that the size of the stable coalition depends on the model's parameters but it is always larger than in the case in which countries are allowed to choose either emission or abatement level. Our results complement Barrett's (1994) suggestion that the size of the stable coalition depends on the model's parameters, even though we are imposing the constraint that the net emission flow is positive.
    Keywords: Environmental Agreements.
    JEL: D6 Q5 C7
    Date: 2013–12
  13. By: DEHEZ, Pierre; TELLONE, Daniela

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