nep-gth New Economics Papers
on Game Theory
Issue of 2014‒05‒17
five papers chosen by
Laszlo A. Koczy
Hungarian Academy of Sciences and Obuda University

  1. Strategically Equivalent Contests By Roman M. Sheremeta; Subhasish M. Chowdhury
  2. Overbidding and overspreading in rent-seeking experiments: Cost structure and prize allocation rules By Chowdhury, Subhasish; Sheremeta, Roman; Turocy, Theodore
  3. Reciprocal beliefs and out-group cooperation: evidence from a public good game By Brañas-Garza, Pablo; Kernohan, David; Oyediran, Olusegun; Rivas, M. Fernanda
  4. Social preferences in the online laboratory: a randomized experiment By Jérôme Hergueux; Nicolas Jacquemet
  5. The Illusion of School Choice: Empirical Evidence from Barcelona By Calsamiglia, Caterina; Guell, Maia

  1. By: Roman M. Sheremeta (Weatherhead School of Management, Case Western Reserve University and Economic Science Institute, Chapman University); Subhasish M. Chowdhury (School of Economics, Centre for Behavioural and Experimental Social Science, and the ESRC Centre for Competition Policy, University of East Anglia)
    Abstract: Using a two-player Tullock-type contest we show that intuitively and structurally different contests can be strategically equivalent. Strategically equivalent contests generate the same best response functions and, as a result, the same equilibrium efforts. However, strategically equivalent contests may yield different equilibrium payoffs. We propose a simple two-step procedure to identify strategically equivalent contests. Using this procedure, we identify contests that are strategically equivalent to the original Tullock contest, and provide new examples of strategically equivalent contests. Finally, we discuss possible contest design applications and avenues for future theoretical and empirical research.
    Keywords: rent-seeking, contest, equivalence, contest design
    JEL: C72 D72 D74
    Date: 2014
  2. By: Chowdhury, Subhasish; Sheremeta, Roman; Turocy, Theodore
    Abstract: We study experimentally the effects of cost structure and prize allocation rules on the performance of rent-seeking contests. Most previous studies use a lottery prize rule and linear cost, and find both overbidding relative to the Nash equilibrium prediction and significant variation of efforts, which we term ‘overspreading.’ We investigate the effects of allocating the prize by a lottery versus sharing it proportionally, and of convex versus linear costs of effort, while holding fixed the Nash equilibrium prediction for effort. We find the share rule results in average effort closer to the Nash prediction, and lower variation of effort. Combining the share rule with a convex cost function further enhances these results. We can explain a significant amount of non-equilibrium behavior by features of the experimental design. These results contribute towards design guidelines for contests based on behavioral principles that take into account implementation features of a contest.
    Keywords: rent-seeking, contest, contest design, experiments, quantal response, overbidding
    JEL: C72 C91 D72
    Date: 2014
  3. By: Brañas-Garza, Pablo; Kernohan, David; Oyediran, Olusegun; Rivas, M. Fernanda
    Abstract: This experimental study examines latent racial prejudice toward out-groups among 152 Spanish college students when they make guesses about the contributions of others in a public good game. Prejudice is examined firstly from the perspective of a two-sided, implicitly-held belief toward any of the specified out-groups: Africans, Asians, Latin Americans and Western. Secondly, from an ordinal perspective of highest negative (positive) prejudice. Lastly models of racial beliefs are fitted for the four out-groups. Results suggest subjects expect Africans and Latin Americans to be less cooperative, but Asians and Western to be more cooperative, than they actually are. We also find that racial prejudices do not have unique determinants across the out-groups under study, nor do the determining factors work in similar directions.
    Keywords: Beliefs, Implicit Cognition, Multiculturalism, Prejudice, Public Good Game, Stereotypes
    JEL: C91 H41 J15
    Date: 2014–05–13
  4. By: Jérôme Hergueux (IEP Paris - Sciences Po Paris - Institut d'études politiques de Paris - Institut d'Études Politiques [IEP] - Paris - PRES Sorbonne Paris Cité - Fondation Nationale des Sciences Politiques [FNSP]); Nicolas Jacquemet (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, BETA - Bureau d'économie théorique et appliquée - CNRS : UMR7522 - Université de Strasbourg - Université Nancy II)
    Abstract: Internet is a very attractive technology for the implementation of experiments, both in order to obtain larger and more diverse samples and as a field of economic research in its own right. This paper reports on an experiment performed both online and in the laboratory, designed to strengthen the internal validity of decisions elicited over the Internet. We use the same subject pool, the same monetary stakes and the same decision interface, and control the assignment of subjects between the Internet and a traditional university laboratory. We apply the comparison to the elicitation of social preferences in a Public Good game, a dictator game, an ultimatum bargaining game and a trust game, coupled with an elicitation of risk aversion. This comparison concludes in favor of the reliability of behaviors elicited through the Internet. We moreover find a strong overall parallelism in the preferences elicited in the two settings. The paper also reports some quantitative differences in the point estimates, which always go in the direction of more other-regarding decisions from online subjects. This observation challenges either the predictions of social distance theory or the generally assumed increased social distance in internet interactions.
    Keywords: Social experiment ; Field experiment ; Internet Methodology ; Randomized assignment
    Date: 2014
  5. By: Calsamiglia, Caterina (Universitat Autònoma de Barcelona); Guell, Maia (Federal Reserve Bank of Minneapolis)
    Abstract: School choice aims to improve (1) the matching between children and schools and (2) students’ educa-tional outcomes. Yet, the concern is that disadvantaged families are less able to exercise choice, which raises (3) equity concerns. The Boston mechanism (BM) is a procedure that is widely used around the world to resolve overdemands for particular schools by defining a set of priority points based on neigh-borhood and socioeconomic characteristics. The mechanism design literature has shown that under the BM, parents may not have incentives to provide their true preferences, thereby establishing a trade-off between preferences and perceived safety. However, the set of possible Nash equilibria arising from the BM is large and has varying properties, and what will actually happen is an empirical question. We exploit an unexpected change in the definition of neighborhood in Barcelona, which provides an exogenous change in the set of schools perceived as safe and allows us to separate housing and schooling decisions to assess the importance of this trade-off in the data. We find that safety carries a large weight in family choice. The huge majority of parents opt for schools for which they have the highest priority—the neighborhood schools—excluding other preferred schools. Similar to the previous literature, we also find that some parents seem naive, but using school registry data, we find that a significant fraction of them have the outside option of private schools, which allows them to take higher risks to access the best public schools. At the other extreme, some of the naive are not matched to any of the schools they applied for. Our results suggest that when allowing school choice under the BM with priorities: (1) the gains in terms of matching seem limited, because the equilibrium allocation is not very different from a neighborhood-based assignment, (2) estimating the effect of choice on outcomes by implementing such a mechanism may lead to a lower bound on the potential effects of having choice, and (3) important inequalities emerge beyond parents’ naivete found in the literature.
    Keywords: School choice; Boston mechanism; Priorities
    JEL: C78 D63 I24
    Date: 2014–05–08

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