nep-gth New Economics Papers
on Game Theory
Issue of 2015‒01‒31
fifteen papers chosen by
László Á. Kóczy
Magyar Tudományos Akadémia

  1. Coarse Correlated Equilibria in an Abatement Game By Moulin, Herve ; Ray, Indrajit ; Gupta, Sonali Sen
  2. Equilibrium Selection in Similar Repeated Games: Experimental Evidence on the Role of Precedents By John Duffy ; Dietmar Fehr
  3. Learning in Monotone Bayesian Games By Alan Beggs
  4. Payoff Shares in Two-Player Contests By Samuel Haefner ; Georg Nöldeke
  5. Object Allocation via Deferred-Acceptance : Strategy-Proofness and Comparative Statics By Lars EHLERS ; Bettina KLAUS
  6. Power indices when players can commit to reject coalitions By László Á. Kóczy
  7. On the Interaction between Player Heterogeneity and Partner Heterogeneity in Strict Nash Networks By Charoensook, Banchongsan
  8. A Dynamic Game of Emissions Pollution with Uncertainty and Learning By Nahid Masoudi ; Marc Santugini ; Georges Zaccour
  9. Diverse Behavior Patterns in a Symmetric Society with Voluntary Partnerships By Takako Fujiwara-Greve ; Masahiro Okuno-Fujiwara
  10. Auction Mechanisms and Bidder Collusion: Bribes, Signals and Selection By Aniol Llorente-Saguer ; Ro'i Zultan
  11. More than outcomes: The role of self-image in other-regarding behavior By Astrid Matthey ; Tobias Regner
  12. Commitment Problems in Conflict Resolution By Kimbrough, Erik ; Rubin, Jared ; Sheremeta, Roman ; Shields, Timothy
  13. A School Choice Compromise: Between Immediate and Deferred Acceptance By Harless, Patrick
  14. Efficiency may Improve when Defectors Exist By Takako Fujiwara-Greve Author-Name: Masahiro Okuno-Fujiwara ; Nobue Suzuki
  15. Global environmental agreements and international trade: Asymmetry of countries matters By Thomas Eichner ; Rüdiger Pethig

  1. By: Moulin, Herve ; Ray, Indrajit (Cardiff Business School ); Gupta, Sonali Sen
    Abstract: We consider the well-analyzed abatement game (Barrett 1994) and prove that correlation among the players (nations) can strictly improve upon the Nash equilibrium payoffs. As these games are potential games, correlated equilibrium — CE — (Aumann 1974, 1987) cannot improve upon Nash; however we prove that coarse correlated equilibria — CCE — (Moulin and Vial 1978) may do so. We compute the largest feasible total utility and hence the efficiency gain in any CCE in those games: it is achieved by a lottery over only two pure strategy profiles.
    Keywords: Abatement game; Coarse correlated equilibrium; Efficiency gain
    JEL: C72 Q52
    Date: 2014–12
  2. By: John Duffy (Department of Economics, University of California-Irvine ); Dietmar Fehr (WZB Berlin, Germany )
    Abstract: We report on an experiment examining behavior and equilibrium selection in two similar, infinitely repeated games, Stag Hunt and Prisoner's Dilemma under anonymous random matching. We are interested in the role that precedents may play for equilibrium selection between these two stage game forms. We find that a precedent for efficient play in the repeated Stag Hunt game does not carry over to the repeated Prisoner's Dilemma game despite the possibility of efficient play in the latter game. Similarly, a precedent of inefficient play in the Prisoner's Dilemma game does not extend to the repeated Stag Hunt game. We conclude that equilibrium selection between similar repeated games has little to do with historical precedents and is mainly determined by strategic considerations associated with the different payoffs of these similar repeated games.
    Keywords: Sentiment; Equilibrium selection; Precedent; Beliefs; Stag hunt; Prisoner's dilemma; Repeated games; Experimental economics.
    JEL: C72 C73 C92 D83
    Date: 2014–12
  3. By: Alan Beggs
    Abstract: This paper studies learning in monotone Bayesian games with one-dimensional types and finitely many actions. Players switch between actions at a set of thresholds.  A learning algorithm under which players adjust their strategies in the direction of better ones using payoffs received at similar signals to their current thresholds is examined.  Convergence to equilibrium is shown in the case of supermodular games and potential games.
    Keywords: bayesian games, monotone strategies, learning, stochastic approximation, supermodular games
    JEL: C72 D83
    Date: 2015–01–08
  4. By: Samuel Haefner ; Georg Nöldeke (University of Basel )
    Abstract: In contest models with symmetric valuations, equilibrium payoffs are positive<br />shares of the value of the prize. In contrast to a bargaining situation, these<br />shares sum to less than one because a share of the value is lost due to rent-dissipation. We ask: can every such division into payoff shares arise as the<br />outcome of the unique pure-strategy Nash equilibrium of a simple asymmetric<br />contest in which contestants dier in the effectiveness of their efforts? For<br />two-player contests the answer is shown to be positive.
    Keywords: Contests, Pure-Strategy Equilibrium, Rent-Dissipation
    JEL: C72 D72 D74
    Date: 2014
  5. By: Lars EHLERS ; Bettina KLAUS
    Abstract: We study the problem of assigning indivisible and heterogenous objects (e.g., houses, jobs, offices, school or university admissions etc.) to agents. Each agent receives at most one object and monetary compensations are not possible. We consider mechanisms satisfying a set of basic properties (unavailable-type-invariance, individual-rationality, weak non-wastefulness, or truncation-invariance). In the house allocation problem, where at most one copy of each object is available, deferred-acceptance (DA)-mechanisms allocate objects based on exogenously fixed objects' priorities over agents and the agent-proposing deferred-acceptance-algorithm. For house allocation we show that DA-mechanisms are characterized by our basic properties and (i) strategy-proofness and population-monotonicity or (ii) strategy-proofness and resource-monotonicity. Once we allow for multiple identical copies of objects, on the one hand the first characterization breaks down and there are unstable mechanisms satisfying our basic properties and (i) strategy-proofness and population-monotonicity. On the other hand, our basic properties and (ii) strategy-proofness and resource-monotonicity characterize (the most general) class of DA-mechanisms based on objects' fixed choice functions that are acceptant, monotonic, substitutable, and consistent. These choice functions are used by objects to reject agents in the agent-proposing deferred-acceptance-algorithm. Therefore, in the general model resource-monotonicity is the “stronger” comparative statics requirement because it characterizes (together with our basic requirements and strategy-proofness) choice-based DA-mechanisms whereas population-monotonicity (together with our basic properties and strategy-proofness) does not.
    Keywords: indivisible objects allocation, deferred-acceptance-algorithm, strategy-proofness, resource-monotonicity, population-monotonicity
    JEL: D63 D70
    Date: 2014
  6. By: László Á. Kóczy (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 dened if power is measured by an index that takes only minimal winning coalitions into account. Keywords and phrases: quarrelling, rejected coalitions, a priori voting power, power indices, minimal winning coalitions, rational players.
    Keywords: Apportionment, voting, elections, Venice Commission, proportionality, lexicographic ordering JEL Codes: C71, D71.
    Date: 2013–11
  7. By: Charoensook, Banchongsan
    Abstract: This paper brings together analyses of Strict Nash networks under exclusive player heterogeneity assumption and exclusive partner heterogeneity assumption. This is achieved through examining how the interactions between these two assumptions influence important properties of Strict Nash networks. Built upon the findings of Billand et al (2011) and Galleotti et al (2006), which assume exclusive partner hetero- geneity and exclusive player heterogeneity respectively, I provide a proposition that generalizes the results of these two models by stating that: (i) Strict Nash network consists of multiple non-empty components as in Galleotti et al (2006), and (ii) each non-empty component is a branching or Bi network as in Billand et al (2011). This proposition requires that a certain restriction on link formation cost (called Uniform Partner Rankng), which encloses exclusive partner heterogeneity and exclusive player heterogeneity as a specific case, is satisfied. In addition, this paper shows that value heterogeneity plays a relatively less important role in changing the shapes of Strict Nash networks.
    Keywords: Strict Nash Network, Two-way Flow Network, Information Network, Branch- ing Network, Agent Heterogeneity
    JEL: C72 D85
    Date: 2015–01–10
  8. By: Nahid Masoudi ; Marc Santugini ; Georges Zaccour
    Abstract: We introduce learning in a dynamic game of international pollution, with ecological uncertainty. We characterize and compare the feedback non-cooperative emissions strategies of players when the players do not know the distribution of ecological uncertainty but they gain information (learn) about it. We then compare our learning model with the benchmark model of full information, where players know the distribution of ecological uncertainty. We find that uncertainty due to anticipative learning induces a decrease in total emissions, but not necessarily in individual emissions. Further, the effect of structural uncertainty on total and individual emissions depends on the beliefs distribution and bias. Moreover, we obtain that if a player’s beliefs change toward more optimistic views or if she feels that the situation is less risky, then she increases her emissions while others react to this change and decrease their emissions.
    Keywords: Pollution emissions, Dynamic games, Uncertainty, Learning
    JEL: Q50 D83 D81 C73
    Date: 2015
  9. By: Takako Fujiwara-Greve ; Masahiro Okuno-Fujiwara
    Abstract: In the literature of voluntarily repeated Prisoner's Dilemma, the focus is on how long-term cooperation is established, when newly matched partners cannot know the past actions of each other. In this paper we investigate how non-cooperative and cooperative players co-exist. In many incomplete information versions of a similar model, inherently non-cooperative players are assumed to exist in the society, but their long-run fitness has not been analyzed. In reality and in experiments, we also observe that some people are cooperative, while others never cooperate. We show that a bimorphic equilibrium of the most cooperative strategy and the most myopic strategy exists for sufficiently high survival rate of players, and that it is evolutionarily stable under uncoordinated mutations. For lower survival rates, adding initial periods of defection makes similar bimorphic equilibria. Both types of equilibria confirm persistence of defectors. Length: 48 pages
    Date: 2013–10
  10. By: Aniol Llorente-Saguer (School of Economics and Finance, Queen Mary, University of London ); Ro'i Zultan (Department of Economics, 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 firstprice (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 first-price auctions.
    Keywords: Collusion, experiment, auctions, bribes
    JEL: C72 C91 D44
    Date: 2014–11
  11. By: Astrid Matthey (Max Planck Institute of Economics, Jena ); Tobias Regner (Max Planck Institute of Economics, Jena )
    Abstract: We conduct a modified dictator game in order to analyze the role self-image concerns play in other-regarding behavior. While we generally follow Konow (2000), a cognitive dissonance-based model of other-regarding behavior in dictator games, we relax one of its assumptions as we allow for individual heterogeneity among individuals' standards of behavior. Subjects' self-image, their belief regarding the average socially appropriate behavior of others and our proxies for the cognitive dissonance costs are positively correlated with the dictator game choices. We also find that subjects whose choices involve two psychologically inconsistent cognitions indeed report higher levels of experienced conflict and take more time for their decisions (our proxies for cognitive dissonance).
    Keywords: social preferences, other-regarding behavior, self-image, cognitive dissonance, social norms
    JEL: C72 C91 D03 D80
    Date: 2014–12–21
  12. By: Kimbrough, Erik ; Rubin, Jared ; Sheremeta, Roman ; Shields, Timothy
    Abstract: Commitment problems are inherent to non-binding conflict resolution mechanisms, since an unsatisfied party can ignore the resolution and initiate conflict. We provide experimental evidence suggesting that even in the absence of binding contractual agreements individuals often avoid conflict by committing to the outcome of a conflict resolution mechanism. Commitment problems are mitigated to a greater extent for groups that opt-in to the conflict resolution mechanism, but only when opting-in is costly. Although conflict rates are higher when opting-in is costly than when it is free or exogenously imposed, commitment problems are greatly reduced among those groups who choose to opt-in.
    Keywords: conflict resolution, commitment problem, opting-in, contests, experiments
    JEL: C72 C91 D72
    Date: 2015–01–10
  13. By: Harless, Patrick
    Abstract: School assignment procedures aim to improve student welfare, but must balance efficiency and equity goals and provide incentives for students to report their preferences truthfully. Debate centers largely on two rules: immediate acceptance (IA), the so-called Boston mechanism, and deferred acceptance (DA). IA's strength is efficiency, while DA is touted for its superior strategic properties. Thinking of these as extremes, we advocate a compromise rule, immediate-acceptance-with-skips (IA+), which slightly modifies IA to achieve better strategic properties while retaining efficiency. IA+ proceeds in rounds of applications and, like IA, �finalizes assignments in each round. However, unlike IA or DA, IA+ allows students to "skip" applications to schools with no remaining capacity. We show that IA+ is efficient and less manipulable than IA+. Unfortunately, IA+ violates solidarity properties that both IA and DA satisfy. Considering robustness, we �find that each of the three rules satisfies a different set of three natural invariance properties.
    Keywords: School choice; deferred acceptance; immediate acceptance; immediateacceptance-with-skips; Boston mechanism
    JEL: C78 D63 H75 I28
    Date: 2014–06–14
  14. By: Takako Fujiwara-Greve Author-Name: Masahiro Okuno-Fujiwara ; Nobue Suzuki
    Abstract: Voluntarily Separable Repeated Prisoner's Dilemma (Fujiwara-Greve and Okuno-Fujiwara, 2009) has many kinds of equilibria. Focusing on monomorphic and bimorphic equilibria, we show that a bimorphic equilibrium consisting of cooperators and defectors is most efficient, under a mild payoff condition. This is a striking contrast to ordinary repeated Prisoner's Dilemma, where the symmetric efficient payoff is achieved by the symmetric C-trigger equilibrium. Our result indicates that behavioral diversity can be beneficial for the society, when players are free to escape from personalized punishments. Length: 34 pages
    Date: 2013–10
  15. By: Thomas Eichner ; Rüdiger Pethig
    Abstract: We investigate the formation of global climate agreements (= stable grand climate coalitions) in a model, in which climate policy takes the form of carbon emission taxation and fossil fuel and consumption goods are traded on world markets. We expand the model of Eichner and Pethig (2014) by considering countries that are identical within each of two groups but differ across groups with respect to climate damage or fossil fuel demand. Our numerical analysis suggests that climate damage asymmetry tends to discourage cooperation in the grand coalition. The effects of fuel-demand asymmetry depend on fossil fuel abundance. If fuel is very abundant, the grand coalition fails to be stable independent of the degree of fuel demand asymmetry. If fuel is sufficiently scarce, low degrees of fuel demand asymmetry discourage cooperation whereas higher degrees of asymmetry stabilize the grand coalition.
    Keywords: fuel demand, climate damage, international trade, asymmetry, stability, grand coalition
    JEL: C72 F02 Q50 Q58
    Date: 2014

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