nep-gth New Economics Papers
on Game Theory
Issue of 2014‒02‒21
ten papers chosen by
Laszlo A. Koczy
Hungarian Academy of Sciences and Obuda University

  1. Learning a Population Distribution By Seung Han Yoo
  2. The Formation and Long-run Stability of Cooperative Groups in a Social Dilemma Situation By Maruta, Toshimasa; Okada, Akira
  3. Linear Transforms, Values and Least Square Approximation for Cooperation Systems. By Ulrich Faigle; Michel Grabisch
  4. Strategy-Proof Fair School Placement By Alcalde, Jose; Romero-Medina, Antonio
  5. A classification of bargaining solutions by evolutionary origin By Hwang, Sung-Ha; Newton, Jonathan
  6. Matching Markets with N-Dimensional Preferences By Flanders, Sam
  7. Competing Mechanisms Communication under Exclusivity Clauses By Andrea Attar; Eloisa Campioni; Gwenaël Piaser
  8. Imitation and Efficient Contagion By Tristan Boyer; Nicolas Jonard
  9. Serial Dictatorship with Infinitely Many Agents By Shino Takayama; Akira Yokotani
  10. Efficiency versus Equity in the Allocation of Medical Specialty Training Positions in Spain: A Health Policy Simulation Based on a Discrete Choice Model By Jeffrey E. Harris; Beatriz G. López-Valcárcel; Patricia Barber; Vicente Ortún

  1. By: Seung Han Yoo (Department of Economics, Korea University, Seoul, Republic of Korea)
    Abstract: This paper introduces a dynamic Bayesian game with an unknown population distribution. Players do not know the true population distribution and assess it based on their private observations using Bayes' rule. First, we show the existence and characterization of an equilibrium in which each player's strategy is a function not only of the player's type but also of experience. Second, we show that each player's initial belief about the population distribution converges almost surely to a "correct" belief.
    Keywords: Bayesian games, Dynamic games, Bayesian learning
    JEL: C72 C73 D83
    Date: 2014
  2. By: Maruta, Toshimasa; Okada, Akira
    Abstract: Abstract: We consider the formation and long-run stability of cooperative groups in a social dilemma situation where the pursuit of individual interests conflicts with the maximization of social welfare. The adaptive play model of Young (1993) is applied to a game of group formation where voluntary participants negotiate for an institution to enforce them to cooperate. For a class of group formation games with two types, the stochastically stable equilibrium can be characterized in terms of the Nash products of the associated hawk-dove games, which summarize the strategic interaction among the individuals in the game.
    Keywords: Adaptive play, cooperation, evolution, group formation, hawk-dove game, social dilemma, stochastic stability, voluntary participation
    JEL: C70 C72
    Date: 2014–02
  3. By: Ulrich Faigle (Universität zu Köln - Mathematisches Institut); Michel Grabisch (Centre d'Economie de la Sorbonne - Paris School of Economics)
    Abstract: We study linear properties of TU-games, revisiting well-known issues like interaction transforms, the inverse Shapley value problem and the concept of semivalues and least square values. We embed TU-games into the model of cooperation systems and influence patterns, which allows us to introduce linear operators on games in a natural way. We focus on transforms, which are linear invertible maps, relate them to bases and investigate many examples (Möbius transform, interaction transform, walsh transform, etc.). In particular, we present a simple solution to the inverse problem in its general form: Given a linear value ? and a game v, find all games v? such that ?(v) = ?(v?). Generalizing Hart and Mas-Colell's concept of a potential, we introduce general potentials and show that every linear value is induced by an appropriate potential. We furthermore develop a general theory of allocations with a quadratic optimality criterion under linear constraints, obtaining results of Charnes et al., and Ruiz et al., and others as special cases. We prove that this class of allocations coincides exactly with the class of all linear values.
    Keywords: Cooperation system, cooperative game, basis, transform, inverse problem, potential, linear value, semivalue.
    JEL: C71
    Date: 2014–01
  4. By: Alcalde, Jose (Instituto Interuniversitario de Desarrollo Social y Paz); Romero-Medina, Antonio (Departamento de Economía)
    Abstract: This paper provides an ‘escape route’ from the efficiency-equity trade-off in the School Choice problem. We achieve our objective by presenting a weak notion of fairness, called τ-fairness, which is always non-empty. Then, we propose the adoption of the Student Optimal Compensating Exchange Place rule, a procedure that assigns a τ-fair allocation to each problem. When students’ preferences are restricted to satisfy the Top Dominance condition (Alcalde and Barberà, 1994), the mechanism is strategy-proof.
    Keywords: School Choice Problem; Fair Matching; Top Dominance Condition; Strategy-Proofness
    JEL: C78 D63 I28
    Date: 2014–02–13
  5. By: Hwang, Sung-Ha; Newton, Jonathan
    Abstract: For games of contracting under perturbed best response dynamics, varying the perturbations along two dimensions (uniform vs. logit, directed vs. undirected) gives four possibilities. Three of these select differing major bargaining solutions as stochastically stable. The fourth possibility yields a new bargaining solution which exhibits significant nonmonotonicities and demonstrates the interplay of two key drivers of evolutionary selection: (i) the ease of making errors; (ii) the ease of responding to errors.
    Keywords: bargaining; adaptive learning; Evolution
    Date: 2014–01
  6. By: Flanders, Sam
    Abstract: Abstract. This paper analyzes matching markets where agent types are n-vectors of characteristics--i.e. points in R^n --and agents prefer matches that are closer to them according to a distance metric on this set (horizontal preferences). First, given a few assumptions, I show that in the Gale-Shapley stable matching in this environment, agents match to a linear function of their own type. I show that restrictions on preferences are not as onerous as they may seem, as a rich variety of preference structures can be mapped into the horizontal framework. With these results in hand, I develop a highly stylized model of an online dating platform that helps consumers find and contact potential matches, where consumers have preferences over many characteristics (e.g. height, income, age, etc.) and have the option to pay to join the platform or look for a match off the platform. I characterize the firm's optimal pricing strategy and the concomitant market outcomes for consumers. Finally, I address an unanswered question in the matching literature--can multidimensional preferences be aggregated (e.g. into a univariate measure of quality) without changing the salient features of the model? I find that, in the dating platform model I introduced, consumer preferences can be aggregated without any change to firm strategy or market outcomes, providing some justification for the univariate-type matching models prevalent in the theoretical matching literature.
    Keywords: Matching, Online Dating, Marriage, Family Economics, Mathematical Economics
    JEL: C78 D01 D10 L86
    Date: 2014–02
  7. By: Andrea Attar; Eloisa Campioni; Gwenaël Piaser
    Abstract: In the present note, we show that a weak restriction on out of equilibrium beliefs allows to extend the Revelation Principle to exclusive agency games, even if we consider mixed strategy equilibria. Next, we argue that this result does not extend to games with several agents, even if we restrict the analysis to pure strategy equilibria.
    Keywords: Competing Mechanisms, Exclusive Contracts, Incomplete Information,Participation decision
    JEL: D82
    Date: 2014–01–06
  8. By: Tristan Boyer; Nicolas Jonard
    Abstract: This paper is about the diffusion of cooperation in an infinite population of networked individuals repeatedly playing a Prisoner’s Dilemma. We formulate conditions on payoffs and network structure such that, starting from an initial seed group, imitative learning results in the overall adoption of cooperation — efficient contagion. Key to this result is the pattern of interaction among players who are at the same distance from the initial seed group. We find that the more these agents interact among themselves rather than with players who are closer to or further away from the initial seed group, the easier it is for efficient contagion to take place. We highlight the importance of cycles for efficient contagion, and show that the presence of critical edges prevents it. We also find that networks organized as dense clusters sparsely connected to one another tend to resist efficient contagion. Finally, we find that the likelihood of efficient contagion in a network increases when information neighborhoods extend beyond interaction neighborhoods.
    Keywords: networks, imitation, contagion
    JEL: C7 D8
    Date: 2014–01–06
  9. By: Shino Takayama (School of Economics, The University of Queensland); Akira Yokotani (School of Economics, The University of Queensland)
    Abstract: This paper studies social choice correspondences assigning a set of choices to each pair consisting of a nonempty subset of the set of alternatives and a weak preference profile, which is called an extended social choice correspondence (ESCC). The ESCC satisfies unanimity if, when there is a weakly Pareto dominant alternative, the ESCC selects this alternative. Stability requires that the ESCC is immune to manipulation through withdrawal of some alternatives. Independence implies that the ESCC selects the same outcome from a subset of the set of alternatives for two preference profiles that are the same on this set. We characterize the ESCC satisfying the three axioms, when the set of alternatives is finite but includes more than three alternatives, and the set of voters can have any cardinality. Our main theorem establishes that the ESCC satisfying the three axioms is a serial dictatorship ala Eraslan and McLennan (2004). Our second theorem shows that a serial dictatorship includes ‘invisible serial dictators’ ala Kirman and Sondermann (1972).
    Date: 2014–02–17
  10. By: Jeffrey E. Harris; Beatriz G. López-Valcárcel; Patricia Barber; Vicente Ortún
    Abstract: Background. In Spain’s “MIR” system of allocating residency training positions, medical school graduates are ranked according to their performance on a national exam and then sequentially choose from the remaining available training slots. We studied how changes in the MIR system might address the inadequate supply of practitioners of family and community medicine in that country. Data. Our data included: a registry of the actual residency positions chosen by medical school graduates in the 2012 MIR cycle; a 2012 post-MIR survey in which graduates made counterfactual choices as to what they would have chosen but for their position in the national rankings; and a 2011 survey of the relative importance of specialty attributes among final-year medical students in the same cohort. Methods. We modeled the MIR system as a one-sided matching mechanism based priority rankings, also called “serial dictatorship.” Within this model, we developed a framework for evaluating the tradeoff between the efficiency gains from increasing the supply of practitioners of family and community medicine and the equity-related benefits of permitting the most talented medical students to make their specialty choices first. We then applied our framework to real data on medical school graduates’ specialty choices during 2012 MIR cycle. Our empirical analysis, based on the multinomial logit model with random coefficients, took account of the endogeneity of choice sets induced by the MIR scheme. We then used the parameter estimates to simulate various alternative public policies, including random ranking of candidates, restrictions on the supply of training positions, and policies designed to upgrade medical school graduates’ valuations of a career in family and community medicine. Results: Both random ranking and restrictions in supply resulted in a relatively small efficiency gains from training more productive medical school graduates in family and community medicine, but at the same time a substantial equity losses. Improvements in two key attributes of family and community medicine – professional prestige and the proportion of income from private practice – resulted in substantial gains in both equity and efficiency. Conclusions: Policies designed to increase the prestige and remuneration of practitioners of family and community medicine have the potential to be more efficient and equitable than other alternatives.
    JEL: C25 C78 D82 I11 I18
    Date: 2014–02

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