nep-gth New Economics Papers
on Game Theory
Issue of 2014‒03‒08
eleven papers chosen by
Laszlo A. Koczy
Hungarian Academy of Sciences and Obuda University

  1. Efficiency in repeated games with local interaction and uncertain local monitoring By Francesco Nava; Michele Piccione
  2. On the restricted cores and the bounded core of games on distributive lattices By Michel Grabisch; Peter Sudhölter
  3. Truthful Equilibria in Dynamic Bayesian Games By Johannes Horner; Satoru Takahashi; Nicolas Vieille
  4. Evolutionary Stability of Indirect Reciprocity by Image Scoring By Berger Ulrich; Ansgar Grüne
  5. A property rights based consolidation approach By Casajus, André; Labrenz, Helfried
  6. Comparing Generalized Median Voter Schemes According to their Manipulability By R. Pablo Arribillaga; Jordi Massó
  7. Fairness Through the Lens of Cooperative Game Theory: An Experimental Approach By Geoffroy De Clippel; Kareen Rozen
  8. Brothers in Alms? Coordination Betwen Nonprofits on Markets for Donations By Gani Aldashev; Marco Marini; Thierry Verdier
  9. Negotiating to Avoid "Gradual" versus "Dangerous" Climate Change: An Experimental Test of Two Prisoners' Dilemma By Scott Barrett; Astrid Dannenberg
  10. Incomplete Contracting, Renegotiation, and Expectation-Based Loss Aversion By Herweg, Fabian; Karle, Heiko; Müller, Daniel
  11. Discriminatory versus uniform-price auctions By Zoltán Monostori

  1. By: Francesco Nava; Michele Piccione
    Abstract: The paper discusses community enforcement in infinitely repeated, two-action games with local interaction and uncertain monitoring. Each player interacts with and observes only a fixed set of opponents, of whom he is privately informed. the main result shows that when beliefs about the monitoring structure have full support, efficiency can be sustained with sequential equilibria that are independent of the players' beliefs. Stronger results are obtained when only acyclic monitoring structures are allowed or players have unit discount rates. These equilibria satisfy numerous robustness properties.
    JEL: J1
    Date: 2012–11
  2. By: Michel Grabisch (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris 1 - Panthéon-Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Peter Sudhölter (University of Southern Denmark - Department of Business and Economics and COHERE)
    Abstract: A game with precedence constraints is a TU game with restricted cooperation, where the set of feasible coalitions is a distributive lattice, hence generated by a partial order on the set of players. Its core may be unbounded, and the bounded core, which is the union of all bounded faces of the core, proves to be a useful solution concept in the framework of games with precedence constraints. Replacing the inequalities that define the core by equations for a collection of coalitions results in a face of the core. A collection of coalitions is called normal if its resulting face is bounded. The bounded core is the union of all faces corresponding to minimal normal collections. We show that two faces corresponding to distinct normal collections may be distinct. Moreover, we prove that for superadditive games and convex games only intersecting and nested minimal collection, respectively, are necessary. Finally, it is shown that the faces corresponding to pairwise distinct nested normal collections may be pairwise distinct, and we provide a means to generate all such collections.
    Keywords: game theory; restricted cooperation; distributive lattice; core; extremal rays; faces of the core
    Date: 2014
  3. By: Johannes Horner; Satoru Takahashi; Nicolas Vieille
    Date: 2014–02–24
  4. By: Berger Ulrich (Department of Economics, Vienna University of Economics and Business); Ansgar Grüne
    Abstract: Indirect reciprocity describes a class of reputation-based mechanisms which may explain the prevalence of cooperation in groups where partners meet only once. The first model for which this has analytically been shown was the binary image scoring mechanism, where one's reputation is only based on one's last action. But this mechanism is known to fail if errors in implementation occur. It has thus been claimed that for indirect reciprocity to stabilize cooperation, reputation assessments must be of higher order, i.e. contingent not only on past actions, but also on the reputations of the targets of these actions. We show here that this need not be the case. A simple image scoring mechanism where more than just one past action is observed provides ample possibilities for stable cooperation to emerge even under substantial rates of implementation errors.
    Keywords: cooperation, prisoner's dilemma, donation game, indirect reciprocity, image scoring, first-order assessment, evolutionary stability, altruism
    JEL: C72 D83
    Date: 2014–02
  5. By: Casajus, André; Labrenz, Helfried
    Abstract: We suggest a full consolidation approach that takes into account the property rights structure whithin the subsidiaries, in particular, the majority requirements on restructurings. Our approach employs a property rights index based on cooperative game theory. --
    Keywords: consolidation,majority requirements,property rights,cooperative game theory,Shapley value
    JEL: C71 G32 G34 M41
    Date: 2014
  6. By: R. Pablo Arribillaga; Jordi Massó
    Abstract: We propose a simple criterion to compare generalized median voter schemes according to their manipulability. We identify three necessary and sufficient conditions for the comparability of two generalized median voter schemes in terms of their vulnerability to manipulation. The three conditions are stated using the two associated families of monotonic fixed ballots and depend very much on the power each agent has to unilaterally change the outcomes of the two generalized median voter schemes. We perform a specific analysis of all median voter schemes, the anonymous subfamily of generalized median voter schemes.
    Keywords: generalized median voting schemes, strategy-proofness, anonymity
    JEL: C78 D78
    Date: 2014–02
  7. By: Geoffroy De Clippel; Kareen Rozen
    Date: 2014–02–24
  8. By: Gani Aldashev (Department of Economics and CRED, University of Namur); Marco Marini (University of Rome "La Sapienza" and CREI); Thierry Verdier (Paris School of Economics and CEPR)
    Abstract: Mission-driven nonprofit organizations compete for donations through fundraising activities. Such competition can lead to inefficient outcomes, if nonprofits impose externalities on each others' output. This paper studies the sustainability of fundraising coordination agreements, using a game-theoretic model of coalition formation. Three key characteristics determine the stability of cooperation: (i) the alliance formation rule, (ii) the extent to which fundraising efforts are strategic complements/substitutes, and (iii) whether deviation from the agreements is by an individual or by a group of nonprots. We also characterize necessary and su¢ cient conditions for the stability of Pareto-optimal full coordination in fundraising.
    Keywords: nonprofits, charitable giving, coordination, endogenous coalition formation, non-distribution constraint
    JEL: L31 D74 L44 C72
    Date: 2014–01
  9. By: Scott Barrett; Astrid Dannenberg
    Abstract: According to the Framework Convention on Climate Change, global collective action is needed to stabilize “greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous [our emphasis] anthropogenic interference with the climate system.” The Framework Convention thus implies that, on the far side of some critical concentration level, climate change will be “dangerous,” while on the near side of the threshold, climate change will be “safe” (though perhaps still undesirable). Rather than be linear and smooth, the Framework Convention warns that climate change may be “abrupt and catastrophic.”
    Keywords: climate change, prisoners’ dilemma, catastrophe, negotiations, cooperation, uncertainty, experimental economics
    JEL: C72 F51 H41 H87 Q54
    Date: 2014
  10. By: Herweg, Fabian; Karle, Heiko; Müller, Daniel
    Abstract: We consider a simple trading relationship between an expectation-based loss-averse buyer and profit-maximizing sellers. When writing a long-term contract the parties have to rely on renegotiations in order to ensure materially efficient trade ex post. The type of the concluded long-term contract affects the buyer’s expectations regarding the outcome of renegotiation. If the buyer expects renegotiation always to take place, the parties are always able to implement the materially efficient good ex post. It can be optimal for the buyer, however, to expect that renegotiation does not take place. In this case, a good of too high quality or too low quality is traded ex post. Based on the buyer’s expectation management, our theory provides a rationale for “employment contracts†in the absence of non-contractible investments. Moreover, in an extension with non-contractible investments, we show that loss aversion can reduce the hold-up problem.
    Keywords: Behavioral Contract Theory; Expectation-Based Loss Aversion; Incomplete Contracts; Renegotiation
    JEL: C78 D03 D86
    Date: 2014–02–13
  11. By: Zoltán Monostori (Magyar Nemzeti Bank (the central bank of Hungary))
    Abstract: The purpose of this paper is to compare the two auction techniques (discriminatory and uniform-price auctions) most commonly used for the sale of securities. Literature tends to analyze methods from the aspect of the expected revenue from the auction. Theoretical models arrive at different rankings for expected revenue; however, they do reveal the relationship between the bids submitted and the auction technique. These results are confirmed both by ‘laboratory’ experiments and the empirical evidence of real-world auctions. The latter may also provide a robust answer to the question of expected revenue; the uniform-price format coming out as the more beneficial for the Treasury. Still, at present the global majority of issuers of government bonds use the discriminatory-price format and central bank instruments also tend to be sold in this format. This is because issuers may have considerations other than expected revenue.
    Keywords: auction, central bank auctions, treasury auctions, discriminatory auctions, uniform-price auctions
    JEL: C78 D44 D53 D82 H63
    Date: 2014

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