nep-gth New Economics Papers
on Game Theory
Issue of 2015‒01‒14
nine papers chosen by
László Á. Kóczy
Magyar Tudományos Akadémia

  1. Essays in behavioral economics : Applied game theory and experiments By Mermer, A.G.
  2. Uniformity and games decomposition. By Joseph Abdou; Nikolaos Pnevmatikos; Marco Scarsini
  3. An individualistic approach to institution formation in public good games By Abhijit Ramalingam; Sara Godoy; Antonio J. Morales; James M. Walker
  4. Equilibrium existence in group contests of incomplete information By Philip Brookins; Dmitry Ryvkin
  5. Centrality Computation in Weighted Networks Based on Edge-Splitting Procedure By Belik, Ivan; Jörnsten, Kurt
  6. Strategic Activity as Bundled Affordances By Demir, Robert
  7. College Admissions By M. Bumin Yenmez
  8. College Admissions as Non-Price Competition: The Case of South Korea By Christopher Avery; Soohyung Lee; Alvin E. Roth
  9. An Empirical Model of the Medical Match By Nikhil Agarwal

  1. By: Mermer, A.G. (Tilburg University, School of Economics and Management)
    Abstract: Behavioral Economics aims at understanding the decision of economic agents who are not necessarily monetary utility maximizers and accounts for the fact that agents may have other concerns next to economic gain. This thesis contributes to the literature by studying the behavior of economic agents who are not necessarily monetary utility maximizers in situations with strategic interaction. The second chapter solves a game-theoretic model of contests assuming that agents have reference-dependent preferences. The results help to explain behavior observed in recent experiments that is hard to reconcile with the assumption of standard preferences. The optimal price mechanism is derived which differs markedly from the one derived under the assumption of standard preferences. The third and fourth chapters use laboratory experimentation which allows for careful scrutinizing of behavioral assumptions made in economic models. The third chapter experimentally investigates agents’ cooperative behavior in indefinitely-repeated dilemma games with different strategic environments. It is reported that subjects play collusive choices significantly more often when actions exhibit strategic substitutability than when actions exhibit strategic complementarity. In Chapter 4 we experimentally study information acquisition in a social dilemma game. It is reported that in a twice-repeated trust game trustors choose to be informed about the type of the trustee in a setting where, theoretically, having such information is detrimental for cooperation and material payoffs.
    Date: 2014
  2. By: Joseph Abdou (Centre d'Economie de la Sorbonne - Paris School of Economics); Nikolaos Pnevmatikos (Centre d'Economie de la Sorbonne - Paris School of Economics); Marco Scarsini (Engineering System Design Pillar - Singapore University)
    Abstract: We introduce the classes of uniform and non interactive games. We study appropriate projection operators over the space of games, in order to propose a novel canonical direct sum decomposition of an arbitrary game into three components, which we refer to as the uniform with zero constant, the non interactive total sum zero and the constant components. Under a natural inner product, we show that the components are orthogonal and we provide explicit expressions for the closet uniform and non interactive games to a given game. We characterize the set of its approximate equilibria in terms of the uniformly mixed and dominant strategies equilibria profiles of its closest uniform and non interactive games respectively.
    Keywords: Decomposition of games, projection operator, dominant strategy equilibrium, uniformly mixed strategy.
    JEL: C70 C79
    Date: 2014–11
  3. By: Abhijit Ramalingam (University of East Anglia); Sara Godoy (University of Essex); Antonio J. Morales (Universidad de Malaga); James M. Walker (Indiana University)
    Abstract: In a repeated public goods setting, we explore whether individuals, acting unilaterally, will provide an effective sanctioning institution. Subjects first choose unilaterally whether they will participate in a sanctioning stage that follows a contribution stage. Only those who gave themselves the “right†to punish can do so. We find that the effectiveness of the institution may not require provision of the institution at the level of the group. Individuals acting unilaterally are able to provide sanctioning institutions that effectively raise cooperation. The effectiveness of the institution, however, depends on whether the “right†to sanction entails a monetary cost or not.
    Keywords: public goods, experiment, punishment, institution formation, unilateral provision, cooperation
    JEL: C72 C91 C92 D02 H41
    Date: 2014–12–17
  4. By: Philip Brookins (Department of Economics, Florida State University); Dmitry Ryvkin (Department of Economics, Florida State University)
    Abstract: We prove the existence of monotone pure strategy Bayesian equilibria in group contests under individual-level and group-level private information. For the latter type, we develop a novel approach reducing group contests to contests between individuals with multi-dimensional types, with far-reaching implications for the existence and, in some cases, uniqueness of equilibrium in group contests with lottery contest success functions, both under group-level private information and complete information, and in symmetric perfectly discriminating group contests.
    Keywords: contest, group, incomplete information
    JEL: D72 C72 C02
    Date: 2014–12
  5. By: Belik, Ivan (Dept. of Business and Management Science, Norwegian School of Economics); Jörnsten, Kurt (Dept. of Business and Management Science, Norwegian School of Economics)
    Abstract: The analysis of network’s centralities has a high-level significance for many real-world applications. The variety of game and graph theoretical approaches has a paramount purpose to formalize a relative importance of nodes in networks. In this paper we represent an algorithm for the centrality calculation in the domain of weighted networks. The given algorithm calculates network centralities for weighted graphs based on the proposed procedure of edges’ splitting. The approach is tested and illustrated based on different types of network topologies.
    Keywords: Network centrality; weighted graphs; edge splitting
    JEL: C00
    Date: 2014–12–18
  6. By: Demir, Robert (Ratio)
    Abstract: This study addresses the question of how strategy actors instill strategic behavior in everyday strategic activity despite their physical absence. To do this, I draw on ecological psychology and introduce the concept of bundled affordances, multiple spatiotemporally distinct yet co-performing action possibilities offered to strategists in single strategic events. Through an in-depth qualitative study of three affiliated banks, I illustrate that affordances can be usefully bundled when familiar features of material objects are placed in the everyday perceptual field of strategists. The study further suggests that when corporate interests and individual goals are effectively entangled into affordance bundles, they not only motivate individuals to behave strategically but also make those actions intuitive rather than open-ended action possibilities, instructive rather than interpretive, and readily identifiable in events rather than in information about the properties of material objects.
    Keywords: Strategic events; strategic activity; bundled affordances; motivation; instructive
    JEL: M12 M14
    Date: 2014–12–29
  7. By: M. Bumin Yenmez
    Abstract: I propose a centralized clearinghouse for college admissions in which students can signal enthusiasm by commitment, like early-decision programs. Furthermore, students can specify financial aid in their preferences and they can be matched with multiple colleges at the same time. This clearinghouse keeps the desirable properties of the decentralized college admissions like signalling and yield management while getting rid of the undesirable aspects such as unfairness and unraveling. To study centralized college admissions, I advance the theory of stability for many-to-many matching markets with contracts. In particular, I show that stable matchings exist even when colleges do not have path-independent (or substitutable) choice rules. I provide two results on comparative statics for the student-proposing deferred acceptance algorithm. Furthermore, I introduce a new monotonicity condition on choice rules to study yield management for colleges and generalize the rural-hospitals theorem when contracts may have different weights. My framework opens new venues for market-design research and raises questions about the standard assumptions made in the literature.
    Date: 2014–12
  8. By: Christopher Avery; Soohyung Lee; Alvin E. Roth
    Abstract: This paper examines non-price competition among colleges to attract highly qualified students, exploiting the South Korean setting where the national government sets rules governing applications. We identify some basic facts about the behavior of colleges before and after a 1994 policy change that changed the timing of the national college entrance exam and introduced early admissions, and propose a game-theoretic model that matches those facts. When applications reveal information about students that is of common interest to all colleges, lower-ranked colleges can gain in competition with higher-ranked colleges by limiting the number of possible applications.
    JEL: C78 I23
    Date: 2014–12
  9. By: Nikhil Agarwal
    Abstract: This paper develops a framework for estimating preferences in two-sided matching markets with non-transferable utility using only data on observed matches. Unlike single-agent choices, matches depend on the preferences of other agents in the market. I use pairwise stability together with a vertical preference restriction on one side of the market to identify preference parameters for both sides of the market. Recovering the distribution of preferences is only possible in an environment with many-to-one matching. These methods allow me to investigate two issues concerning the centralized market for medical residents. First, I examine the antitrust allegation that the clearinghouse restrains competition, resulting in salaries below the marginal product of labor. Counterfactual simulations of a competitive wage equilibrium show that residents’ willingness to pay for desirable programs results in estimated salary markdowns ranging from $23,000 to $43,000 below the marginal product of labor, with larger markdowns at more desirable programs. Therefore, a limited number of positions at high quality programs, not the design of the match, is the likely cause of low salaries. Second, I analyze wage and supply policies aimed at increasing the number of residents training in rural areas while accounting for general equilibrium effects from the matching market. I find that financial incentives increase the quality, but not the number of rural residents. Quantity regulations increase the number of rural trainees, but the impact on resident quality depends on the design of the intervention.
    JEL: C51 C78 J41 J44 L44
    Date: 2014–12

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