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on Game Theory |
| By: | Dirk Bergemann (Cowles Foundation, Yale University); Stephen Morris (Dept. of Economics, Princeton University) |
| Abstract: | The set of outcomes that can arise in Bayes Nash equilibria of an incomplete information game where players may have access to additional signals beyond the given information structure is equivalent to the set of a version of incomplete information correlated equilibrium which we dub Bayes correlated equilibrium. A game of incomplete information can be decomposed into a basic game, given by actions sets and payoff functions, and an information structure. We identify a partial order on many player information structures (individual sufficiency) under which more information shrinks the set of Bayes correlated equilibria. |
| Keywords: | Correlated equilibrium, Incomplete information, Robust predictions, Information structure, Sufficiency, Blackwell ordering |
| JEL: | C72 D82 D83 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:1909rr&r=gth |
| By: | Michel Grabisch (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris) |
| Abstract: | In cooperative games, the core is the most popular solution concept, and its properties are well known. In the classical setting of cooperative games, it is generally assumed that all coalitions can form, i.e., they are all feasible. In many situations, this assumption is too strong and one has to deal with some unfeasible coalitions. Defining a game on a subcollection of the power set of the set of players has many implications on the mathematical structure of the core, depending on the precise structure of the subcollection of feasible coalitions. Many authors have contributed to this topic, and we give a unified view of these different results. |
| Keywords: | TU-game; Solution concept; Core; Feasible coalition; Communication graph; Partially ordered set |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-00803233&r=gth |
| By: | Gilles Grandjean; Marco Mantovani; Ana Mauleon; Vincent Vannetelbosch |
| Abstract: | The paper analyzes the role of the structure of communication - i.e. who is talking with whom - on the choice of messages, on their credibility and on actual play. We run an experiment in a three-player coordination game with Pareto ranked equilibria, where a pair of agents has a profitable joint deviation from the Pareto-dominant equilibrium. According to our analysis of credibility, the subjects should communicate and play the Pareto optimal equilibrium only when communication is public. When pairs of agents exchange messages privately, the players should play the Pareto dominated equilibrium and disregard communication. The experimental data conform to our predictions: the agents reach the Pareto-dominant equilibrium only when announcing to play it is credible. When private communication is allowed, lying is prevalent, and players converge to the Pareto-dominated equilibrium. Nevertheless, at the individual level, players’ beliefs and choices tend to react to messages even when these are non-credible. |
| Keywords: | cheap talk, coordination, coalitions, experiment |
| JEL: | C72 C91 D03 D83 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:mib:wpaper:285&r=gth |
| By: | Koji Abey (Faculty of International Social Sciences, Yokohama National University); Hajime Kobayashi (Faculty of Economics, Kansai University); Hideo Suehiro (Graduate School of Business Administration, Kobe University) |
| Abstract: | We consider the economic consequences of fairness concerns under the freedom to choose the timing of moves by developing a new economic theory of leadership. We study the prisoner' s dilemma in which players are endowed with Fehr and Schmidt preferences with inequity aversion as their private information and then choose cooperation or defection once at one of two timings that they prefer. In this model, we consider an equilibrium in which a leader-follower relationship endogenously emerges as a consequence of players' heterogeneous inequity aversions. We present three results. First, we provide a sufficient condition for the existence of a leadership equilibrium. Then, we present a comparative statics analysis of the equilibrium. Finally, we investigate who takes the leadership, depending on the game parameters. We provide a characterization of the equilibrium leadership patterns. These results also hold when agents can choose the timing of moves from more than two timings. |
| Keywords: | Leadership, Endogenous Timing, Prisoner' s Dilemma, Inequity Aversion |
| JEL: | C72 D03 D82 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:kbb:dpaper:2014-09&r=gth |
| By: | Weifeng Liu |
| Abstract: | Matching mechanisms have been proposed to mitigate underprovision of public goods in voluntary contribution models. This paper investigates Pareto-improving equilibria under various matching schemes with two heterogeneous players. First, this matching mechanism avoids free riding and each player has incentives to provide matching contributions at interior equilibria because providing matching contributions is better off while accepting matching contributions is worse off. Second, given any income distribution within the interiority zone players can always implement small matching schemes to make them both better off. This finding is useful for cooperation, particularly in the context without complete information of global preferences or at the international level without a central government. Third, on the contrary, at corner equilibria providing matching contributions is worse off while accepting matching contributions is better off. Thus, if income distribution is beyond the interiority zone, there are no Pareto-improving matching equilibria. |
| Keywords: | Public goods, Matching mechanisms, Pareto improvements, Aggregative games, Interiority |
| JEL: | C78 H41 H77 Q54 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:een:camaaa:2014-63&r=gth |
| By: | Sergio Currarini; Elena Fumagalli,; Fabrizio Panebianco |
| Abstract: | We study linear quadratic games played on a network where strategies are complements between neighbors and substitutes between agents at distance-two. We provide micro-founded problems where this pattern of interaction is due to a local congestion effect. Equilibrium behavior systematically differs from a model of peer effects only. First, the ranking of equilibrium actions may not follow that of network centralities, with large behavior prevailing at the periphery of the network. Second, network density affects aggregate behavior in a non-monotonic way. Third, segregating agents according to their preferences has a non-monotonic effect on the polarization of behavior. We relate these patterns to evidence from smoking networks, industrial districts and ethnically fragmented societies. We conclude by discussing the implications for the identification of peer effects. |
| Keywords: | Games on Networks, Peer Effects, Key-player, Centrality, Congestion. |
| JEL: | C7 D85 I1 H23 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:lec:leecon:14/13&r=gth |
| By: | Jean-François Caulier (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne); A. Mauleon (CORE - Center of Operation Research and Econometrics [Louvain] - Université Catholique de Louvain (UCL) - Belgique); Vincent Vannetelbosch (CORE - Center of Operation Research and Econometrics [Louvain] - Université Catholique de Louvain (UCL) - Belgique) |
| Abstract: | We develop a theoretical framework that allows us to study which bilateral links and coalition structures are going to emerge at equilibrium. We define the notion of coalitional network to represent a network and a coalition structure, where the network speciÖes the nature of the relationship each individual has with his coalition members and with individuals outside his coalition. To predict the coalitional networks that are going to emerge at equilibrium we propose the concept of contractual stability which requires that any change made to the coalitional network needs the consent of both the deviating players and their original coalition partners. We show that there always exists a contractually stable coalitional network under the simple majority decision rule and the component-wise egalitarian or majoritarian allocation rules. Moreover, requiring the consent of group members may help to reconcile stability and e¢ ciency. |
| Keywords: | Networks ; Coalition Structures ; Contractual Stability ; Allocation Rules Networks ; Strong efficiency |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-00633611&r=gth |
| By: | Subhasish M. Chowdhury (University of East Anglia); Joo Young Jeon (University of East Anglia); Bibhas Saha (Durham University) |
| Abstract: | We investigate whether a pure framing has any effect on the decisions made in a dictator game. We run a between subject dictator game with a giving and a taking frame whilst keeping the strategy space the same. Complying with the literature we find no overall difference in the amount allocated to the recipient across treatments. Contributing to the literature we further find that females are not only more altruistic than males; they also allocate significantly more to the recipient in the taking game compared to the giving game. Males do not show such behavior. A taking frame makes males significantly more selfish, but females significantly more egalitarian compared to a giving frame. |
| Keywords: | altruism, dictator game, taking game, framing, gender |
| JEL: | C91 D64 D84 J16 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:uea:wcbess:14-09&r=gth |
| By: | Peter A. Coles; Ran I. Shorrer |
| Abstract: | In variants of the Electronic Mail Game (Rubinstein, 1989) where two or more players communicate via multiple channels, the multiple channels can facilitate collective action via redundancy, the sending of the same message along multiple paths or else repeatedly along the same path (Chwe, 1995 and De Jaegher, 2011). This paper offers another explanation for how multiple channels may permit collective action: parties may be able to coordinate their actions when messages' arrivals at their destinations are sufficiently correlated events. Correlation serves to fill in information gaps that arise when players are uncertain of the source of message failure, effectively strengthening messages from one player. This asymmetry in message strength in turn permits cutoff equilibria, where players take action after receiving a minimum number of confirmations. |
| URL: | http://d.repec.org/n?u=RePEc:qsh:wpaper:89381&r=gth |
| By: | Jordi Brandts (Institutd'AnalisiEconomica(CSIC); Barcelona GSE); Ayça Ebru Giritligil (Murat Sertel Center for Advanced Economic Studies; İstanbul Bilgi University); Roberto A. Weber (Department of Economics, University of Zurich) |
| Abstract: | In many areas of social life individuals receive information about a particular issue of interest from multiple sources. When these sources are connected through a network then proper aggregation of this information by an individual involves taking into account the structure of this network. The inability to aggregate properly may lead to various types of distortions. In our experiment a number of agents all want to find out the value of a particular parameter unknown to all. Agents receive private signals about the parameter and agents can communicate their estimates of the parameter repeatedly through a network, the structure of which is known by all players. We present results from experiments with four different networks. We find that the information of agents who have more outgoing links in a network gets more weight in the information aggregation of the other agents than it optimally should. Our results are consistent with the model of “persuasion bias” of De Marzo et al. (2003) and at odds with an alternative heuristic according to which the most influential agents are those with more incoming links. |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:beb:wpbels:201403&r=gth |
| By: | Ciril Bosch-Rosa; ; ; |
| Abstract: | We present a three-player game in which a proposer makes a suggestion on how to split $10 with a passive responder. The oer is accepted or rejected depending on the strategy prole of a neutral third-party whose payos are independent from his decisions. If the oer is accepted the split takes place as suggested, if rejected, then both proposer and receiver get $0. Our results show a decision-maker whose main concern is to reduce the inequality between proposer and responder and who, in order to do so, is willing to reject both selsh and generous oers.This pattern of rejections is robust through a series of treatments which include changing the at-fee payo of the decision-maker, introducing a monetary cost for the decision-maker in case the oer ends up in a rejection, or letting a computer replace the proposer to randomly make the splitting suggestion between proposer and responder. Further, through these dierent treatments we are able to show that decision- makers ignore the intentions behind the proposers suggestions, as well as ignoring their own relative payos, two surprising results given the existing literature. |
| Keywords: | Ultimatum game, experiment, fairness, third party |
| JEL: | C92 D71 D63 D31 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2014-057&r=gth |
| By: | Andrew F. Daughety (Vanderbilt University); Reinganum F. Reinganum (Vanderbilt University) |
| Abstract: | This Handbook chapter provides a brief review of selected settlement bargaining models in some areas where new work is developing and where additional work is likely to yield yet further important results. This work has focused on what might be thought of as the environment of the settlement negotiation process, where bargaining failure generally results in trial, and our survey will use that perspective to organize the work discussed |
| Keywords: | Settlement, bargaining |
| JEL: | K4 C7 |
| Date: | 2014–07–08 |
| URL: | http://d.repec.org/n?u=RePEc:van:wpaper:vuecon-sub-14-00005&r=gth |
| By: | G. Gozzi |
| Abstract: | In his paper of 1984 M. Pohjola generalized Lancaster’s model of capitalism as a differential game by considering the bargaining process between capitalists and workers in the analysis of the relationship between income distribution and capital accumulation. Our contribution aims to extend his model by introducing the possibility of saving for the workers and its consequences on the noncooperative equilibrium of the correspondin differential game. |
| JEL: | C73 E10 O41 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:wp971&r=gth |
| By: | Peter A. Coles; Ran I. Shorrer |
| Abstract: | Although no stable matching mechanism can induce truth-telling as a dominant strategy for all participants (Roth, 1982), recent studies have presented conditions under which truthful reporting by all agents is close to optimal (Immorlica and Mahdian, 2005,�Kojima and Pathak, 2009�and�Lee, 2011). Our results demonstrate that in large, uniform markets using the Men-Proposing Deferred Acceptance Algorithm, each woman's best response to truthful behavior by all other agents is to truncate her list substantially. In fact, the optimal degree of truncation for such a woman goes to 100% of her list as the market size grows large. In general one-to-one markets we provide comparative statics for optimal truncation strategies: reduction in risk aversion and reduced correlation across preferences each lead agents to truncate more. So while several recent papers focused on the limits of strategic manipulation, our results serve as a reminder that without pre-conditions ensuring truthful reporting, there exists a potential for significant manipulation even in settings where agents have little information. |
| URL: | http://d.repec.org/n?u=RePEc:qsh:wpaper:89386&r=gth |
| By: | René Van Den Brink (Department of Econometrics and Tinbergen Institute - VU University); Agnieszka Rusinowska (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Frank Steffen (University of Liverpool Management School (ULMS) - University of Liverpool Management School) |
| Abstract: | Opinion leaders are actors who have some power over their followers as they are able to influence their followers' choice of action in certain instances. In van den Brink et al. (2011) we proposed a two-action model for societies with opinion leaders. We introduced a power and a satisfaction score and studied some common properties. In this paper we strengthen two of these properties and present two further properties, which allows us to axiomatize both scores for the case that followers require unanimous action inclinations of their opinion leaders to follow them independently from their own action inclinations. |
| Keywords: | Collective choice ; follower ; opinion leader ; power ; satisfaction ; axiomatization |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-00756720&r=gth |
| By: | Matthew Ellman (Institute for Economic Analysis (CSIC) and BGSE, Campus UAB, 08193 Bellaterra, Spain); Sjaak Hurkens (Institute for Economic Analysis (CSIC) and BGSE, Campus UAB, 08193 Bellaterra, Spain) |
| Abstract: | This paper investigates the optimal design of crowdfunding where crowdfunders are potential consumers with standard motivations and entrepreneurs are profit-maximizing agents. We characterize the typical crowdfunding mechanism where the entrepreneur commits to produce only if aggregate funding exceeds a defined threshold. We study how the entrepreneur uses this threshold, in conjunction with a minimal price, for rent extraction. Compared to a standard posted-price mechanism, total welfare may rise because the entrepreneur can adapt the production decision to demand conditions, but may fall because rent-seeking can worsen. Crowdfunding platforms can raise threshold credibility. So we also compare outcomes when the entrepreneur commits to a threshold against those where the entrepreneur simply decides on production after observing crowdfunder bids. Finally, we contrast crowdfunding with the optimal mechanism where production is contingent on a general function of all bids, rather than the simple sum of bids obliged by the aggregate threshold rule. Crowdfunding is very different, for instance, never committing to produce the good when aggregate bids fall short of the fixed cost (even absent credit constraints). |
| Keywords: | Crowdfunding; mechanism design |
| JEL: | C72 D42 L12 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:1421&r=gth |