nep-gth New Economics Papers
on Game Theory
Issue of 2015‒01‒03
seventeen papers chosen by
László Á. Kóczy
Magyar Tudományos Akadémia

  1. Strategic stability of equilibria: the missing paragraph By GRIGIS DE STEFANO, Federico
  2. Supermodular NTU-games By Koshevoy, G.A.; Suzuki, T.; Talman, A.J.J.
  3. Structural restrictions in cooperation By Selçuk, O.
  4. Sequences in Pairing Problems: A new approach to reconcile stability with strategy-proofness for elementary matching problems By Jens Gudmundsson
  5. Cooperation among Strangers in the Presence of Defectors: An Experimental Study By Luciana Cecilia Moscoso Boedo; Lucia Quesada; Marcela Tarazona
  6. Resource Allocation Problems with Concave Reward Functions By Grundel, S.; Borm, P.E.M.; Hamers, H.J.M.
  7. Power indices when players can commit to reject coalitions By László Á. Kóczy
  8. Network Monitoring and Punishment in Public Goods Experiments By Luke Boosey; R. Mark Isaac
  9. Axiomatizations Of Symmetrically Weighted Solutions By Kleppe, J.; Reijnierse, J.H.; Sudhölter, P.
  10. Strategic Formation of Homogeneous Bargaining Networks By Florian Gauer
  11. Auction Mechanisms and Bidder Collusion: Bribes, Signals and Selection By Aniol Llorente-Saguer; Ro’i Zultan
  12. Punishment and Reward Institutions with Harmed Minorities By Sagi Dekel; Sven Fischer; Ro’i Zultan
  13. Identifying Social Norms Using Coordination Games: Spectators vs. Stakeholders By Hande Erkut; Daniele Nosenzo; Martin Sefton
  14. Round-Robin Versus Elimination in Tournaments with a Dominant Player By Krumer, Alex; Megidish, Reut; Sela, Aner
  15. Bankruptcy and the Per Capita Nucleolus By Huijink, S.; Borm, P.E.M.; Reijnierse, J.H.; Kleppe, J.
  16. Privacy concerns, voluntary disclosure of information, and unraveling: An experiment By Benndorf, Volker; Kübler, Dorothea; Normann, Hans-Theo
  17. Dynamic Spatial Competition Between Multi-Store Firms By Aguirregabiria, Victor; Vicentini, Gustavo

  1. By: GRIGIS DE STEFANO, Federico (Université catholique de Louvain, CORE, Belgium)
    Abstract: This paper introduces two set valued Nash equilibrium refinements that are a natural generalization of the concept of stable set of equilibria introduced in Kohlberg and Mertens (1986) and satisfy all the properties defined in Mertens (1989). It also establishes a connection between Nash equilibrium refinements and stochastic games as a tool to define a stable set of equilibria.
    Keywords: game theory, equilibrium refinements, strategic stability, stochastic games
    JEL: A23 C72
    Date: 2014–06–11
  2. By: Koshevoy, G.A.; Suzuki, T. (Tilburg University, Center For Economic Research); Talman, A.J.J. (Tilburg University, Center For Economic Research)
    Abstract: A cooperative game with non-transferable utility (NTU-game) consists of a collection of payoffsets for the subsets of a nite set of players, for which it has to be determined how much payof each player must receive. The core of an NTU-game consists of all payoffvectors that are in the payoff set of the coalition of all players and cannot be improved upon by any coalition of players. For cooperative games with transferable utility (TU-games) the notion of convexity was introduced to guarantee that the Shapley value, being the average of all marginal vectors of the game, is an element of the core. Convexity of a TU-game is equivalent to supermodularity of the characteristic function underlying the game. In this paper we introduce the concept of supermodularity for NTU-games. Super-modularity for NTU-games is weaker than other existing types of convexity. Under super-modularity of an NTU-game it is shown that all appropriately dened marginal vectors of the game are elements of the core. As solution concept for NTU-games we propose a set of solutions that is determined by the average of all marginal vectors of the game. For TU-games the solution set coincides with the Shapley value of the game. Also conditions are stated under which the solution set is a subset of the core and is the set of bargaining solutions of a corresponding bargaining problem.
    Keywords: core; shapley value; convexity; supermodularity; marginal vector
    JEL: C71
    Date: 2014
  3. By: Selçuk, O. (Tilburg University, School of Economics and Management)
    Abstract: Cooperative games with transferable utilities, or simply TU-games, refer to the situations where the revenues created by a coalition of players through cooperation can be freely distributed to the members of the coalition. The fundamental question in cooperative game theory deals with the problem of how much payoff every player should receive. The classical assumption for TU-games states that every coalition is able to form and earn the worth created by cooperation. In the literature, there are several different modifications of TU-games in order to cover the cases where cooperation among the players is restricted. The second chapter of this monograph provides a characterization of the average tree solution for TU-games where the restricted cooperation is represented by a connected cycle-free graph on the set of players. The third chapter considers TU-games for which the restricted cooperation is represented by a directed graph on the set of players and introduces the average covering tree solution and the dominance value for this class of games. Chapter four considers TU-games with restricted cooperation which is represented by a set system on the set of players and introduces the average coalitional tree solution for such structures. The last two chapters of this monograph belong to the social choice theory literature. Given a set of candidates and a set of an odd number of individuals with preferences on these candidates, pairwise majority comparison of the candidates yields a tournament on the set of candidates. Tournaments are special types of directed graphs which contain an arc between any pair of nodes. The Copeland solution of a tournament is the set of candidates that beat the maximum number of candidates. In chapter five, a new characterization of the Copeland solution is provided that is based on the number of steps in which candidates beat each other. Chapter six of this monograph is on preference aggregation which deals with collective decision making to obtain a social preference. A sophisticated social welfare function is defined as a mapping from profiles of individual preferences into a sophisticated social preference which is a pairwise weighted comparison of alternatives. This chapter provides a characterization of Pareto optimal and pairwise independent sophisticated social welfare functions.
    Date: 2014
  4. By: Jens Gudmundsson
    Abstract: We study two-sided ("marriage") and general pairing ("roommate") problems. We introduce "sequences," lists of matchings that are repeated in order. Stable sequences are natural extensions of stable matchings; case in point, we show that a sequence of stable matchings is stable. In addition, stable sequences can provide solutions to problems for which stable matchings do not exist. In a sense, they allow us to "balance" the interest of the agents at different matchings. In this way, sequences can be superior to matchings in terms of welfare and fairness. A seminal result due to Roth (1982, Math Oper Res 7(4), 617â628) is that no strategy-proof rule always selects stable matchings. In contrast, we show that there is a weakly group sd-strategy-proof rule that selects stable sequences. We call it the Compromises and Rewards rule, CR. We find that stronger incentive properties are incompatible with much weaker stability properties and vice versa. The CR rule satisfies two fairness axioms: anonymity and side-neutrality. For the general problem, the Generalized CR rule is sd-5-stable (cannot be blocked by groups of five or fewer agents), weakly sd-strategy-proof, and anonymous. In addition, the Extended All-Proposing Deferred Acceptance rule is sd-stable, anonymous, and individually rational at all times on a restricted domain. We provide a condition under which our results still hold if agents have cardinal preferences and compare sequences using "expected utility."
    JEL: C62 D02 D60
    Date: 2014–11–22
  5. By: Luciana Cecilia Moscoso Boedo (Division of Economics, CIDE); Lucia Quesada; Marcela Tarazona
    Abstract: Does the rotten apple spoils his companions? This is the question we analyze in the context of a repeated population game with behavioral types. Our experimental results show that the inclusion of a non-cooperative player in an anonymous community makes cooperation much more difficult to sustain but that individuals still manage to trust some of the permanent players of society. The rotten apple lowers the quality of the companions, but is not able to completely spoil them.
    Keywords: Population games, anonymous random matching, social norms.
    JEL: C71 C93
    Date: 2013–11
  6. By: Grundel, S. (Tilburg University, Center For Economic Research); Borm, P.E.M. (Tilburg University, Center For Economic Research); Hamers, H.J.M. (Tilburg University, Center For Economic Research)
    Abstract: Abstract: In a resource allocation problem there is a common-pool resource, which has to be divided among agents. Each agent is characterized by a claim on this pool and an individual concave reward function on assigned resources. An assignment of resources is optimal if the total joint reward is maximized. We provide a necessary and sufficient condition for optimality of an assignment. Analyzing the associated allocation problem of the maximal total joint reward, we consider corresponding resource allocation games. It is shown that these games have a non-empty core and thus allow for stable allocations. Moreover, an explicit expression for the nucleolus of these games is provided.
    Keywords: Resource Allocation Games; Concave Reward Function; Core; Nucleolus
    JEL: C71
    Date: 2013
  7. By: László Á. Kóczy (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences and Keleti Faculty of Economics, Óbuda University)
    Abstract: Power indices have been used to evaluate the allocation of power in a wide range of voting situations. While they use the language of game theory known measures of a priori voting power are hardly more than statistical expectations assuming the random behaviour of the players. We introduce a model where players can reject certain partnerships in cooperation. For normalised indices strategic rejection may increase power. Our notion of a strategic power index is well defined if power is measured by an index that takes only minimal winning coalitions into account.
    Keywords: quarrelling, rejected coalitions, a priori voting power, power indices, minimal winning coalitions, rational players
    JEL: C71 D71
    Date: 2014–11
  8. By: Luke Boosey (Department of Economics, Florida State University); R. Mark Isaac (Department of Economics, Florida State University)
    Abstract: We report experimental findings on the impact of network structure on decentralized monitoring and punishment in public goods games. In the environment we study, individuals can only directly monitor and punish their immediate neighbors in an exogenously determined network. We examine contributions and punishment decisions in a Complete network, a Circle network, and an Asymmetric network. Average contributions are lower in the Asymmetric network, although this result is driven entirely by the player who faces only one potential punisher. We also examine whether asymmetry in the network leads some punishers to discriminate between their potential targets. After controlling for targets' contribution decisions, we find limited support for this hypothesis. However, the data indicate that some punishers may be deterred from issuing discriminatory punishment by undermonitored targets who retaliate against previous punishment more often than others. Thus, we identify an additional complication of asymmetry in the network - that it may facilitate more targeted revenge by under-monitored players.
    Keywords: networks, public goods, punishment, revenge
    JEL: C72 C91 C92 H41
    Date: 2014–12
  9. By: Kleppe, J. (Tilburg University, Center For Economic Research); Reijnierse, J.H. (Tilburg University, Center For Economic Research); Sudhölter, P.
    Abstract: If the excesses of the coalitions in a transferable utility game are weighted, then we show that the arising weighted modifications of the well-known (pre)nucleolus and (pre)kernel satisfy the equal treatment property if and only if the weight system is symmetric in the sense that the weight of a subcoalition of a grand coalition may only depend on the grand coalition and the size of the subcoalition. Hence, the symmetrically weighted versions of the (pre)nucleolus and the (pre)kernel are symmetric, i.e., invariant under symmetries of a game. They may, however, violate anonymity, i.e., they may depend on the names of the players. E.g., a symmetrically weighted nucleolus may assign the classical nucleolus to one game and the per capita nucleolus to another game. We generalize Sobolev’s axiomatization of the prenucleolus and its modification for the nucleolus as well as Peleg’s axiomatization of the prekernel to the symmetrically weighted versions. Only the reduced games have to be replaced by suitably modified reduced games whose definitions may depend on the weight system. Moreover, it is shown that a solution may only satisfy the mentioned sets of modified axioms if the weight system is symmetric.
    Keywords: TU game · Nucleolus · Kernel
    JEL: C71
    Date: 2013
  10. By: Florian Gauer (Center for Mathematical Economics, Bielefeld University)
    JEL: D85 J64 Z13
    Date: 2014–11
  11. By: Aniol Llorente-Saguer (Queen Mary University of London); Ro’i Zultan (Ben-Gurion University)
    Abstract: The theoretical literature on collusion in auctions suggests that the first-price mechanism can deter the formation of bidding rings. In equilibrium, collusive negotiations are either successful or are avoided altogether, hence such analysis neglects the effects of failed collusion attempts. In such contingencies, information revealed in the negotiation process is likely to affect the bidding behavior in first-price (but not second-price) auctions. We test experimentally a setup in which collusion is possible, but negotiations often break down and information is revealed in an asymmetric way. The existing theoretical analysis of our setup predicts that the first-price mechanism deters collusion. In contrast, we find the same level of collusion in first-price and second-price auctions. Furthermore, failed collusion attempts distort the bidding behavior in the ensuing auction, leading to loss of efficiency and eliminating the revenue dominance typically observed in firstprice auctions.
    Keywords: Auctions, Collusion, Bribes, Experiment
    JEL: C72 C91 D44
    Date: 2014–12
  12. By: Sagi Dekel (BGU); Sven Fischer (Max Planck Institute of Economics, Germany); Ro’i Zultan (BGU)
    Keywords: public goods, punishment, reward, externalities.
    JEL: C72 C91 H41
    Date: 2014
  13. By: Hande Erkut (Department of Economics, Maastricht University); Daniele Nosenzo (University of Nottingham, School of Economics); Martin Sefton (University of Nottingham, School of Economics)
    Abstract: We investigate social norms for dictator game giving using a recently proposed norm-elicitation procedure (Krupka and Weber, 2013). We elicit norms separately from dictator, recipient, and disinterested third party respondents and find that elicited norms are stable and insensitive to the role of the respondent. The results support the use of this procedure as a method for measuring social norms.
    Keywords: social norms; dictator games
  14. By: Krumer, Alex; Megidish, Reut; Sela, Aner
    Abstract: We study round-robin and elimination tournaments with three players where one player is dominant, i.e., he has a higher value of winning than his weaker opponents. In every stage, a pair-wise match is modelled as an all-pay auction. We demonstrate that the expected payoff of the weak players in the round-robin tournament is higher than or equal to their expected payoffs in the elimination tournament. On the other hand, the expected payoff of the dominant player in the elimination tournament could be either higher or lower than in the round-robin tournament. We also show that if a contest designer wishes to maximize the dominant player's probability to win he should organize a round-robin tournament. However, if he wishes to maximize the players' expected total effort, then if the asymmetry between the players is relatively low, he should prefer the elimination tournament, while if the asymmetry is relatively high, he should prefer the round-robin tournament.
    Keywords: all-pay auctions; elimination tournaments; round-robin tournaments
    JEL: D44
    Date: 2014–07
  15. By: Huijink, S. (Tilburg University, Center For Economic Research); Borm, P.E.M. (Tilburg University, Center For Economic Research); Reijnierse, J.H. (Tilburg University, Center For Economic Research); Kleppe, J. (Tilburg University, Center For Economic Research)
    Abstract: Abstract: This article characterizes the per capita nucleolus for bankruptcy games as a bankruptcy rule. This rule, called the cligths rule, is based on the wellknown constrained equal awards principle. The essential feature of the rule however is that, for each bankruptcy problem, it takes into account a vector of clights. These clights only depend on the vector of claims while the height of the estate determines whether the clights should be interpreted as modified claims or as rights. Finally, it is seen that both the clights rule and the Aumann-Maschler rule can be captured within the family of so-called claim and right rules.
    Keywords: Bankruptcy; (per capita) nucleolus
    JEL: C71 G33
    Date: 2013
  16. By: Benndorf, Volker; Kübler, Dorothea; Normann, Hans-Theo
    Abstract: We study the voluntary revelation of private information in a labor-market experiment where workers can reveal their productivity at a cost. While rational revelation improves a worker's payoff, it imposes a negative externality on others and may trigger further revelation. Such unraveling can be observed frequently in our data although less often than predicted. Equilibrium play is more likely when subjects are predicted to conceal their productivity than when they should reveal. This tendency of under-revelation, especially of low-productivity workers, is consistent with the level-k model. A loaded frame where the private information concerns the workers' health status leads to less revelation than a neutral frame.
    Keywords: information revelation,level-k reasoning,privacy
    JEL: C72 C90 C91
    Date: 2014
  17. By: Aguirregabiria, Victor; Vicentini, Gustavo
    Abstract: We propose a dynamic model of an oligopoly industry characterized by spatial competition between multi-store retailers. Firms compete in prices and decide where to open or close stores depending on demand conditions and the number of competitors at different locations, and on location-specific private-information shocks. We develop an algorithm to approximate a Markov Perfect Equilibrium in our model, and propose a procedure for the estimation of the parameters of the model using panel data on number of stores, prices, and quantities at multiple geographic locations within a city. We also present numerical examples to illustrate the model and algorithm.
    Keywords: cannibalization; industry dynamics; spatial competition; spatial preemption; store location; sunk costs
    JEL: C73 L13 L81 R10 R30
    Date: 2014–11

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