nep-gth New Economics Papers
on Game Theory
Issue of 2014‒05‒24
fourteen papers chosen by
Laszlo A. Koczy
Hungarian Academy of Sciences and Obuda University

  1. Equilibrium Delay and Non-existence of Equilibrium in Unanimity Bargaining Games By Volker Britz; P. Jean-Jacques Herings; Arkadi Predtetchinski
  2. A Hybrid Game with Conditional and Unconditional Veto Power By Güth, Werner; Levati, Vittoria; Montinari, Natalia; Nardi, Chiara
  3. Organizational coordination and costly communication with boundedly rational agents By Dietrichson, Jens; Jochem, Torsten
  4. On Stable Equilibria in Discrete-Space Social Interaction Models By Akamatsu, Takashi; Fujishima, Shota; Takayama, Yuki
  5. Analysis of Strategies to Promote Cooperation in Distributed Service Discovery By Guillem Martínez-Canovas; Elena Del Val; Vicente Botti; Penélope Hernández; Miguel Rebollo
  6. On the Single-Valuedness of the Pre-Kernel By Meinhardt, Holger Ingmar
  7. An elimination contest with non-sunk bids By Chiappinelli, Olga
  8. Dynamic farsighted networks with endogenous opportunities of link formation By James Lake
  9. Multiplicity of Equilibria and Information Structures in Empirical Games: Challenges and Prospects By Ron N. Borkovsky; Paul B. Ellickson; Brett R. Gordon; Victor Aguirregabiria; Gardete Pedro
  10. Farsighted Fuzzy Coalitions in an Economy with Multilateral Negative Externalities By Zahur, Nahim Bin
  11. Preferences and beliefs in a sequential social dilemma: A within-subjects analysis By Blanco, Mariana; Engelmann, Dirk; Koch, Alexander K.; Normann, Hans-Theo
  12. Experience in Public Goods Experiments By Conte, Anna; Levati, Vittoria; Montinari, Natalia
  13. The Social Value of Public Information with Convex Costs of Information Acquisition By Ui, Takashi
  14. Loss and Other-Regarding Preferences: Evidence From Dictator Game By Armenak Antinyan

  1. By: Volker Britz (ETH Zurich, Switzerland); P. Jean-Jacques Herings (Maastricht University, Netherlands); Arkadi Predtetchinski (Maastricht University, Netherlands)
    Abstract: We consider a class of perfect information bargaining games with unanimity acceptance rule. The proposer and the order of responding players are determined by the state that evolves stochastically over time. The probability distribution of the state in the next period is determined jointly by the current state and the identity of the player who rejected the current proposal. This protocol encompasses a vast number of special cases studied in the literature. We show that subgame perfect equilibria in pure stationary strategies need not exist. When such equilibria do exist, they may exhibit delay. Limit equilibria (as the players become infinitely patient) need not be unique.
    Keywords: Strategic Bargaining; Subgame Perfect Equilibrium; Stationary Strategies; Nash Bargaining Solution.
    JEL: C72 C78
    Date: 2014–05
  2. By: Güth, Werner (Max Planck Institute of Economics); Levati, Vittoria (University of Verona); Montinari, Natalia (Department of Economics, Lund University); Nardi, Chiara (University of Verona)
    Abstract: In the hybrid game, one proposer confronts two responders with veto power: one responder can condition his decisions on his own offer but the other cannot. We vary what the informed responder knows about the offers as well as the uninformed responder's conflict payoff. Neither variation affects behavior: proposers always favor informed responders, who frequently accept minimal offers.
    Keywords: Ultimatum; Yes/No game
    JEL: C72 C92
    Date: 2014–05–19
  3. By: Dietrichson, Jens (Department of Economics, Lund School of Economics and Management, 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: 2014–04–09
  4. By: Akamatsu, Takashi; Fujishima, Shota; Takayama, Yuki
    Abstract: We investigate the differences and connections between discrete-space and continuous-space social interaction models. Although our class of continuous-space model has a unique equilibrium, we find that discretized models can have multiple equilibria for any degree of discretization, which necessitates a stability analysis of equilibria. We present a general framework for characterizations of equilibria and their stability under a broad class of evolutionary dynamics by using the properties of a potential game. Although the equilibrium population distribution in the continuous space is uniquely given by a symmetric unimodal distribution, we find that such a distribution is not always stable in a discrete space. On the other hand, we also show that any sequence of a discrete-space model's equilibria converges with the continuous-space model's unique equilibrium as the discretization is refined.
    Keywords: Social interaction; Agglomeration; Discrete space; Potential game; Stability; Evolutionary game theory
    JEL: C62 C72 C73 D62 R12
    Date: 2014–05–08
  5. By: Guillem Martínez-Canovas (ERI-CES); Elena Del Val (DSIC, Polytechnic University of Valencia;; Vicente Botti (DSIC, Polytechnic University of Valencia); Penélope Hernández (ERI-CES); Miguel Rebollo (DSIC, Polytechnic University of Valencia)
    Abstract: New systems can be designed, developed, and managed as societies of agents that interact with each other by offering and providing services. These systems can be viewed as complex networks where nodes are bounded rational agents. In order to deal with complex goals, they require the cooperation of the other agents to be able to locate the required services. In this paper, we present a theoretical model that formalizes the interactions among agents in a search process. We present a repeated game model where the actions that are involved in the search process have an associated cost. Also, if the task arrives to an agent that can perform it, there is a reward for agents that collaborated by forwarding queries. We propose a strategy that is based on random-walks, and we study under what conditions the strategy is a Nash Equilibrium. We performed several experiments in order to validate the model and the strategy and to analyze which network structures are more appropriate to promote cooperation.
    Keywords: Repeated games, Networks, Nash Equilibrium, Random-walk, Service Discovery
    Date: 2014–03
  6. By: Meinhardt, Holger Ingmar
    Abstract: Based on results given in the recent book by Meinhardt (2013), which presents a dual characterization of the pre-kernel by a finite union of solution sets of a family of quadratic and convex objective functions, we could derive some results related to the uniqueness of the pre-kernel. Rather than extending the knowledge of game classes for which the pre-kernel consists of a single point, we apply a different approach. We select a game from an arbitrary game class with an unique pre-kernel satisfying the non-empty interior condition of a payoff equivalence class, and then establish that the set of related and linear independent games which are derived from this pre-kernel of the default game replicate this point also as its sole pre-kernel element. In the proof we apply results and techniques employed in the above work. Namely, we prove in a first step that the linear mapping of a pre-kernel element into a specific vector subspace of balanced excesses is unique. Secondly, that there cannot exist a different and non-transversal vector subspace of balanced excesses in which a linear transformation of a pre-kernel element can be mapped. Furthermore, we establish that on the restricted subset on the game space that is constituted by the convex hull of the default and the set of related games, the pre-kernel correspondence is single-valued, and therefore continuous. Finally, we provide sufficient conditions that preserves the pre-nucleolus property for related games even when the default game has not an unique pre-kernel.
    Keywords: Transferable Utility Game; Pre-Kernel; Uniqueness; Convex Analysis; Fenchel-Moreau Conjugation; Indirect Function
    JEL: C71 D63 D74
    Date: 2014–05–19
  7. By: Chiappinelli, Olga
    Abstract: In this paper we study a multi-stage elimination contest with non-sunk bids: differently from existing literature, we realize that when players are budget-constrained, they do not regard past bids as strategically irrelevant in their decision of how much to bid in following stages. This happens because they face a basic trade-off when allocating scarce resources over stages. We believe that although non-sunk bids make the analysis more complex, they allow to improve the quality of the modelization for many real scenarios, like R&D contests and sport tournaments. In our simple two-stage framework with complete information and asymmetric players, we find that: (i) there is a unique SPNE where in the first stage only the strongest player bids positive, while forcing the others to bid zero; in the second stage shortlisted bidders play mixed strategies, and the strongest player wins the game on average; (ii) relative ex-ante strengths of players are relatively more important, in determining the outcome of the game, than their relative abilities of allocating limited resources over the stages; (iii) the two-stage contest yields a lower expected revenue than the one-stage one, due to the fact that the first stage yields basically no revenue and that shortlisting to the second stage is inefficient. On the basis of these results, our elimination contest does not seem to be a very advantageous allocation mechanism for the contest sponsor.
    Keywords: All-pay auctions, Elimination contests, Non-sunk bids.
    JEL: C72 C73 D44 D72
    Date: 2014–03
  8. By: James Lake (Southern Methodist University)
    Abstract: I present a three player dynamic network theoretic model where players are farsighted and asymmetric. Unlike the previous literature that imposes an exogenous protocol governing the order of negotiations, I allow the identity of the players who form a link in a given period to depend endogenously on player characteristics. Importantly, I show how this can give different predictions regarding attainment of the complete network relative to models with an exogenous protocol. Regardless of whether the complete network is efficient, a key dynamic trade off drives whether the complete network is attained in my model. A pair of players (insiders) may form a link with each other but, even though link formation is always myopically beneficial, each insider then refuses subsequent link formation with the third player (outsider) because the eventual attainment of the complete network makes each insider worse off relative to the insider-outsider network.
    Keywords: networks, dynamic, farsighted, efficiency
    JEL: C70 C71 C73
    Date: 2014–05
  9. By: Ron N. Borkovsky; Paul B. Ellickson; Brett R. Gordon; Victor Aguirregabiria; Gardete Pedro
    Abstract: Empirical models of strategic games are central to much analysis in marketing and economics. However, two challenges in applying these models to real world data are that such models often admit multiple equilibria and that they require strong informational assumptions. The first implies that the model does not make unique predictions about the data, and the second implies that results may be driven by strong a priori assumptions about the informational setup. This article summarizes recent work that seeks to address both issues and suggests some avenues for future research.
    Keywords: Empirical games; Structural estimation; Multiple Equilibria; Biased Beliefs; Information structures; Learning in games; Identification
    JEL: C51 C72 C73
    Date: 2014–05–06
  10. By: Zahur, Nahim Bin
    Abstract: How do coalitions form in games with externalities? This is important for understanding whether full cooperation be sustained in tackling problems such as climate change. In traditional coalition formation games, each player makes a binary decision on whether or not to cooperate. But what if players within coalitions choose not to cooperate fully with each other? This study looks at the coalition formation process
    Keywords: Resource /Energy Economics and Policy,
    Date: 2014
  11. By: Blanco, Mariana; Engelmann, Dirk; Koch, Alexander K.; Normann, Hans-Theo
    Abstract: In empirical analyses of games, preferences and beliefs are typically treated as independent. However, if beliefs and preferences interact, this may have implications for the interpretation of observed behavior. Our sequential social dilemma experiment allows us to separate different interaction channels. When subjects play both roles in such experiments, a positive correlation between first- and second-mover behavior is frequently reported. We find that the observed correlation primarily originates via an indirect channel, where second-mover decisions influence beliefs through a consensus effect, and the first-mover decision is a best response to these beliefs. Specifically, beliefs about second-mover cooperation are biased toward own second-mover behavior, and most subjects best respond to stated beliefs. However, we also find evidence for a direct, preference-based channel. When first movers know the true probability of second-mover cooperation, subjects' own second moves still have predictive power regarding their first moves. --
    Keywords: Beliefs,consensus effect,social dilemma,experimental economics
    JEL: C72 C90
    Date: 2014
  12. By: Conte, Anna (Max Planck Institute of Economics); Levati, Vittoria (University of Verona, Department of Economics); Montinari, Natalia (Department of Economics, Lund University)
    Abstract: We use information on students' past participation in economic experiments, as stored in our database, to analyze whether behavior in public goods games is affected by experience (i.e., previous participation in social dilemma-type experiments) and history (i.e., participation in experiments of a different class than the social dilemma). We have three main results. First, at the aggregate level, the amount subjects contribute and expect others to contribute decrease with experience. Second, a mixture model reveals that the proportion of unconditional cooperators decreases with experience, while that of selfish individuals increases. Finally, history also influences behavior, although to a lesser extent than experience. Our findings have important methodological implications for researchers, who are urged to control for subjects' experience and history in their experiments if they want to improve the external validity and replicability of their results.
    Keywords: Public goods experiments; Social preferences; Mixture models; Experience; History
    JEL: C35 C51 C72 H41
    Date: 2014–05–18
  13. By: Ui, Takashi
    Abstract: In a beauty contest framework, welfare can decrease with public information if the precision of private information is exogenous, whereas welfare necessarily increases with public information if the precision is endogenous with linear costs of information acquisition. The purpose of this paper is to reconcile these results by considering nonlinear costs of information acquisition. The main result of this paper is a necessary and sufficient condition for welfare to increase with public information. Using it, we show that costs of information acquisition are linear if and only if welfare necessarily increases with public information. Thus, welfare can decrease with public information for any strictly convex costs. This is because convex costs mitigate the so-called crowding-out effect of public information on private information, thereby making the social value of public information with endogenous precision closer to that with exogenous precision.
    Keywords: public information, private information, crowding-out effect, linear quadratic Gaussian game
    JEL: C72 D82 E10
    Date: 2014–05
  14. By: Armenak Antinyan (Dept. of Management, Università Ca' Foscari Venice)
    Abstract: The paper aims at studying other-regarding preferences of decision makers in the domain of losses. For this purpose the framework of the Dictator Game is adopted, with two research questions under investigation. First, how will the dictator divide the pie with an anonymous recipient, after a bi-directional loss of equal amount? Second, how will the dictator divide the pie with a poor recipient from a third world country after a bidirectional loss, where the loss of the recipient is bigger than that of the dictator? Interestingly, the data illustrate that other-regarding motives of the dictators do not vanish in any of the treatments in which losses are introduced. The results are explained from the perspective of power-dependence relationship between the dictator and the recipient (Handgraaf et al., 2008, van Dijk and Vermunt, 2000).
    Keywords: Dictator Games, Loss, Other-Regarding Preferences
    JEL: C90 D63 D64 I30
    Date: 2014–03

This nep-gth issue is ©2014 by Laszlo A. Koczy. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.