nep-gth New Economics Papers
on Game Theory
Issue of 2015‒02‒22
28 papers chosen by
László Á. Kóczy
Magyar Tudományos Akadémia

  1. Elementary game theory By Soni, Himanshu; Sharma, Damini
  2. Coordination with Independent Private Values: why Pedestrians sometimes bump into each other By Kuzmics, Christoph; Mookherjee, Dilip
  3. When and How the Punishment Must Fit the Crime By George J.Mailath; Volker Nocke; Lucy White
  4. Markov Perfect Equilibria in Differential Games with Regime Switching Strategies By Ngo Van Long; Fabien Prieur; Klarizze Puzon; Mabel Tidball
  5. Matching with Slot-Specific Priorities: Theory By Scott Duke Kominers; Tayfun Sönmez
  6. Continuous Time Contests By Seel, Christian
  7. The dynamics of coalition formation - a multilateral bargaining experiment with free timing of moves By Tremewan, James; Vanberg, Christoph
  8. The Winner’s Curse: Conditional Reasoning & Belief Formation By Koch, Christian; Penczynski, Stefan P.
  9. Collective Action: Experimental Evidence By María Victoria Anauati; Brian Feld; Sebastian Galiani; Gustavo Torrens
  10. Reference-Dependent Bidding in Dynamic Auctions By Ott, Marion; Ehrhart, Karl-Martin
  11. The Social Value of Transparency and Accountability: Experimental Evidence from Asymmetric Public Good Games By Nicklisch, Andreas; Khadjavi, Menusch
  12. Decentralizability of Multi-Agency Contracting with Bayesian Implementation By Yu Chen
  13. Consequences of Connection Failure - Centrality and the Importance for Cohesion By Belau, Julia
  14. Competition for status creates superstars: An experiment on public good provision and network formation By Offerman, Theo; Schram, Arthur; Van Leeuwen, Boris
  15. Efficient lottery design By Kesten, Onur; Kurino, Morimitsu; Nesterov, Alexander
  16. Cooperation and Trustworthiness in Repeated Interaction By Glogowsky, Ulrich; Cagala, Tobias; Rincke, Johannes; Grimm, Veronika
  17. Gaming the Boston School Choice Mechanism in Beijing By He, Yinghua
  18. Teams Contribute More and Punish Less By Thum, Marcel; Auerswald, Heike; Schmidt, Carsten; Torsvik, Gaute
  19. Discrete Games in Endogenous Networks: Theory and Policy By Anton Badev
  20. Fair and Efficient Lotteries over Indivisible Goods By Basteck, Christian
  21. Smooth, strategic communication By Deimen, Inga; Szalay, Dezsö
  22. Heterogeneity in Rent-Seeking Contests with Multiple Stages: Theory and Experimental Evidence By Stracke, Rudi; Höchtl, Tanja; Kerschbamer, Rudolf; Sunde, Uwe
  23. Migration feedback effects in networks: an agent-based model By Miriam Rehm; Ali Asjad Naqvi
  24. Network Access and Market Power By Orlova, Ekaterina; Hubert, Franz
  25. Heterogeneous Beliefs and Imperfect Competition in Sequential Auction Markets By Fabrice Rousseau; Hervé Boco; Laurent Germain
  26. Many-to-Many Matching and Price Discrimination By Renato Gomes; Alessandro Pavan
  27. Effect of Homophily on Network Evolution By Kibae Kim; Jörn Altmann
  28. Sequential, multidimensional screening By Litterscheid, Sina; Szalay, Dezsö

  1. By: Soni, Himanshu; Sharma, Damini
    Abstract: The theory of games (or game theory) is a mathematical theory that deals with the general features of competitive situations. It involves strategic thinking, and studies the way people interact while making economic policies, contesting elections and other such decisions. There are various types of game models, which are based on factors, like the number of players participating, the sum of gains or losses and the number of strategies available. According to strategic reasoning, we can say that the phenomenon where each player responds best to the other is Nash Equilibrium. It is a solution concept of a non-cooperative game comprising of two or more players, in which each player is assumed to know the equilibrium strategies of the other players, and no player has anything to gain by only changing their own strategy. Nash equilibrium is best for both players, if all players abide by it. The normal form game (strategic form) does not incorporate any notion of sequence or time of the action of the players. In a normal form game, both players choose their strategy together without knowing the strategies of other players in the game. While the extensive form game is a game, which makes the temporal structure explicit i.e. it allows us to think more naturally about factors such as time. In an extensive game with perfect information there are no simultaneous moves and every player at any point of time is made aware of all the previous choices of all other players.In coalitional games, our focus is on what group of agents, rather than individual agents can achieve.
    Keywords: Game Theory, extensive games, Nash equilibrium, coalitional game theory, prisoner's dilemma, mixed strategy, normal games
    JEL: C7 C70 C71 C73 C79
    Date: 2015–01–29
  2. By: Kuzmics, Christoph; Mookherjee, Dilip
    Abstract: Motivated by trying to better understand the norms that govern pedestrian traffic, I study symmetric two-player coordination games with independent private values. The strategies of "always pass on the left" and "always pass on the right" are always equilibria of this game. Some such games, however, also have other (pure strategy) equilibria with a positive likelihood of mis-coordination. Perhaps sur- prisingly, in some such games, these Pareto-inefficient equilibria, with a positive likelihood of mis-coordination, are the only evolutionarily stable equilibria of the game.
    JEL: C72 C73 D82
    Date: 2014
  3. By: George J.Mailath (Department of Economics and PIER, University of Pennsylvania, and Research School of Economics, Australian National University); Volker Nocke (University of Mannheim, CESifo and CEPR); Lucy White (Harvard Business School and CEPR)
    Abstract: In repeated normal-form (simultaneous-move) games, simple penal codes (Abreu, 1986, 1988) permit an elegant characterization of the set of subgame-perfect outcomes. We show that the logic of simple penal codes fails in repeated extensive-form games. By means of examples, we identify two types of settings in which a subgame-perfect outcome may be supported only by a profile with the property that the continuation play after a deviation is tailored not only to the identity of the deviator, but also to the nature of the deviation.
    Keywords: Simple Penal Code, Subgame Perfect Equilibrium, Repeated Extensive Game, Optimal Punishment.
    JEL: C70 C72 C73
    Date: 2015–02–15
  4. By: Ngo Van Long; Fabien Prieur; Klarizze Puzon; Mabel Tidball
    Abstract: We propose a new methodology exploring Markov perfect equilibrium strategies in differential games with regime switching. We develop a general game with two players. Players choose an action that inuences the evolution of a state variable, and decide on the switching time from one regime to another. Compared to the optimal control problem with regime switching, necessary optimality conditions are modifed for the first-mover. When choosing her optimal switching strategy, this player considers the impact of her choice on the other player's actions and consequently on her own payoffs. In order to determine the equilibrium timing of regime changes, we derive conditions that help eliminate candidate equilibrium strategies that do not survive deviations in switching strategies. We then apply this new methodology to an exhaustible resource extraction game.
    Keywords: differential games, regime switching strategies, technology adoption, non-renewable resources
    JEL: C61 C73 Q32
    Date: 2014–12–31
  5. By: Scott Duke Kominers (Harvard University); Tayfun Sönmez (Boston College)
    Abstract: We introduce a two-sided, many-to-one matching with contracts model in which agents with unit demand match to branches that may have multiple slots available to accept contracts. Each slot has its own linear priority order over contracts; a branch chooses contracts by filling its slots sequentially, according to an order of precedence. We demonstrate that in these matching markets with slot-specific priorities, branches' choice functions may not satisfy the substitutability conditions typically crucial for matching with contracts. Despite this complication, we are able to show that stable outcomes exist in this framework and can be found by a cumulative offer mechanism that is strategy-proof and respects unambiguous improvements in priority.
    Keywords: Market Design, Matching with Contracts, Stability, Strategy-Proofness, School Choice, Affirmative Action, Airline Seat Upgrades.
    JEL: C78 D63 D78
    Date: 2014–12–17
  6. By: Seel, Christian
    Abstract: This paper introduces a class of contest models in which each player decides when to stop a privately observed Brownian motion with drift and incurs costs depending on his stopping time. The player who stops his process at the highest value wins a prize. We prove existence and uniqueness of a Nash equilibrium outcome and derive the equilibrium distribution in closed form. As the variance tends to zero, the equilibrium outcome converges to the symmetric equilibrium of an all-pay auction. For two players and constant costs, each player's equilibrium pro fit decreases if the drift increases, the variance decreases, or the costs increase.
    JEL: C72 C73 D44
    Date: 2014
  7. By: Tremewan, James; Vanberg, Christoph
    Abstract: We experimentally study behavior in a finitely repeated coalition formation game played in real time. Subjects interact in groups of three, bargaining over the distribution of payments which occur at regular time intervals. During a given interval, payments occur if and only if a majority is in agreement about their allocation. Aside from these rules, we purposefully impose little structure on the bargaining process. We investigate the frequency and stability of different types of agreements, as well as transitions between them. The most frequent agreement is an equal split between two players, leaving the third with nothing. The most stable is the three-way equal split. Transitions between agreements are frequent and generally consistent with myopic payoff maximization. We find evidence that both fairness concerns and risk aversion may explain the prevalence of the three-way equal split, and that loyalty can play a role in cementing coalitions.
    Keywords: Bargaining; group choice; experiments; coalition formation
    Date: 2015–02–10
  8. By: Koch, Christian; Penczynski, Stefan P.
    Abstract: We investigate the relevance of conditional reasoning and belief formation for the occurrence of the winner’s curse with the help of two experimental manipulations. First, we compare results from a very simple common-value auction game with results from a transformed version of this game that does not require any conditioning on future events. In human opponent settings, we observe significant differences in behavior across the two games. Second, we investigate subjects’ behavior when they face naïve computerized opponents and after they have faced them. We find that both strong and weak assistance in belief formation changes subjects’ play significantly in the auction game. Overall, the results suggest that the difficulty of conditioning on future events is at least as important in explaining frequent occurrences of the winner’s curse as is the challenge to form beliefs.
    Keywords: Auctions , Winner’s curse , Conditional Reasoning , Beliefs
    JEL: D44 D81 D82
    Date: 2015
  9. By: María Victoria Anauati; Brian Feld; Sebastian Galiani; Gustavo Torrens
    Abstract: We conducted a laboratory experiment to test the comparative statics predictions of a new approach to collective action games based on the method of stability sets. We find robust support for the main theoretical predictions. As we increase the payoff of a successful collective action (accruing to all players and only to those who contribute), the share of cooperators increases. The experiment also points to new avenues for refining the theory. We find that, as the payoff of a successful collective action increases, subjects tend to upgrade their prior beliefs as to the expected share of cooperators. Although this does not have a qualitative effect on comparative static predictions, using the reported distribution of beliefs rather than an ad hoc uniform distribution reduces the gap between theoretical predictions and observed outcomes. This finding also allows to decompose the mechanism that leads to more cooperation into a ”belief effect” and a ”range of cooperation effect”.
    JEL: C92 D72 H0 O0
    Date: 2015–02
  10. By: Ott, Marion; Ehrhart, Karl-Martin
    Abstract: We investigate equilibrium bidding behavior of bidders with reference-dependent preferences and independent private values in single-unit English and Dutch clock auctions. Bidders' reference points are endogenous and determined by their strategy and their beliefs about the other bidders. In deriving their strategy, bidders anticipate changes in their reference point due to updated information about others' values (i.e., the own winning probability) during the course of the auction, and make optimal binary decisions at each price (approve or quit in the English auction and wait or bid in the Dutch auction). First, we solve for personal equilibrium profiles, i.e., profiles of bids that contain for each bidder a bidding strategy that is optimal given the others' bidding strategies and the reference point induced by the own and others' strategies. Second, we consider locally preferred personal equilibrium (LPPE) profiles, i.e., personal equilibrium profiles where no bidder can locally find a better personal equilibrium given the others' fixed strategies by varying his reference point via considering different own strategies. The expected revenue in the Dutch auction is higher than in the English auction in the respective unique LPPE profiles. The difference is mainly driven by the aversion to losing the item in the Dutch auction.
    JEL: D44 D03 C72
    Date: 2014
  11. By: Nicklisch, Andreas; Khadjavi, Menusch
    Abstract: Transparency and accountability are often regarded as crucial for good governance and the efficient organization of public affairs. To systematically explore the impact of transparency and accountability on cooperation, we conduct a series of laboratory experiments on a variation of the public good game with agents that differ in their action space. While some agents may only contribute to the public good, one (special) agent has the additional option to exploit the existing public good stock. In the absence of a sanction mechanism, we identify a surprising, yet intuitive effect: transparency backfires as special agents extract significantly more resources. Introducing a peer punishment mechanism sustains contributions to the public good if types or actions of agents are made transparent. When actions are not known we however identify a stigmatization effect for the special agent as he receives substantially more peer punishment while contributions by other agents do not change. Finally full transparency of all agents actions creates full accountability as it allows targeted punishment and thereby increases contributions by all agents.
    JEL: H41 C91 C92
    Date: 2014
  12. By: Yu Chen (Indiana University)
    Keywords: multi-agency, Bayesian implementation, mechanism design, menu design, del- egation principle
    JEL: C72 D82 D86
    Date: 2013–08
  13. By: Belau, Julia
    Abstract: This paper suggests a new approach for centrality measures for general (weighted) networks taking into account the importance for cohesion and relative power of connections. While existing literature either ignores the importance for cohesion or measures it by analyzing consequences arising from the failure of whole nodes, this approach analyzes consequences of tie failures. Using cooperative game theory, we assign weights to every tie of the network where the cooperative game accounts for the cohesion of the network. These weights are combined with the weights of the original network where emphasis for the latter and for cohesion can be regulated individually. Then, the degree measure and Eigenvector measure are applied. This provides the first centrality approach accounting for cohesion and relative importance/power of connections. We provide axiomatic characterizations for the degreebased measures in the case of binary networks and discuss computational complexity. Furthermore, we give examples discussing the drawbacks of existing measures in contrast to our suggested one and as a political application, we show how our Approach can be used to forcast government formation by the case of the state parliament election in Hamburg, Germany.
    JEL: C71 D72 D85
    Date: 2014
  14. By: Offerman, Theo; Schram, Arthur; Van Leeuwen, Boris
    Abstract: We investigate a mechanism that facilitates the provision of public goods in a network formation game. We show how competition for status encourages a core player to realize efficiency gains for the entire group. In a laboratory experiment we systematically examine the effects of group size and status rents. The experimental results provide very clear support for a competition for status dynamic that predicts when, and if so which, repeated game equilibrium is reached. Two control treatments allow us to reject the possibility that the supergame effects we observe are driven by social motives.
    JEL: C91 D85 H41
    Date: 2014–12
  15. By: Kesten, Onur; Kurino, Morimitsu; Nesterov, Alexander
    Abstract: There has been a surge of interest in stochastic assignment mechanisms which proved to be theoretically compelling thanks to their prominent welfare properties. Contrary to stochastic mechanisms, however, lottery mechanisms are commonly used for indivisible good allocation in real-life. To help facilitate the design of practical lottery mechanisms, we provide new tools for obtaining stochastic improvements in lotteries. As applications, we propose lottery mechanisms that improve upon the widely-used random serial dictatorship mechanism and a lottery representation of its competitor, the probabilistic serial mechanism. The tools we provide here can be useful in developing welfare-enhanced new lottery mechanisms for practical applications such as school choice.
    Keywords: lottery,ex post efficiency,sd-efficiency,random serial dictatorship
    JEL: C71 C78 D71 D78
    Date: 2015
  16. By: Glogowsky, Ulrich; Cagala, Tobias; Rincke, Johannes; Grimm, Veronika
    Abstract: Cooperation in public good provision often depends on the trustworthiness of an administrator who may reduce contributors' returns from cooperation to her own benefit, and who herself may respond to the degree of cooperation among contributors. This paper analyses the interdependencies between cooperation and trustworthiness in a repeated game that replaces the mechanical public good administration in the Public Good Game with a human administrator. We present a new approach for visualizing conditional behavior in repeated sequential games. Our approach identifies the causal effects of cooperation on trustworthiness and vice versa by combining standard methods from time-series analysis with a design based identification strategy. We find that contributors and the administrator strongly respond to each other, resulting in cooperation and trustworthiness being strongly mutually interdependent. Furthermore, cooperation and trustworthiness are rather driven by changes in cooperation than by changes in trustworthiness.
    JEL: H41 H40 H49
    Date: 2014
  17. By: He, Yinghua
    Abstract: The Boston mechanism is criticized for its poor incentive and welfare performance compared with the Gale-Shapley deferred-acceptance mechanism (DA). Using school choice data from Beijing, I investigate parents' behavior under the Boston mechanism, taking into account parents' possible mistakes when they strategize. Evidence shows that parents are overcautious as they play "safe" strategies too often. There is no evidence showing that wealthier and more-educated parents are any more adept at strategizing. If others behave as in the data, an average naive parent who is always truth-telling experiences a utility loss in switching from the Boston to the DA, equivalent to an 8% increase in the distance from home to school or substituting a 13% chance at the best school with an equal chance at the second best. She has a 27% chance to be better off and a 55% chance being worse off. If instead parents are either sophisticated (always playing a best response against others) or naive, results are mixed: Under the DA, naive ones enjoy a utility gain on average when less than 80% of the population is naive, while still about 42% worse off and only 39% better off. Sophisticated parents always loose more.
    Keywords: Boston Mechanism, Gale-Shapley Deferred-Acceptance Mechanism, School Choice, Bayesian Nash Equilibrium, Strategy-Proofness, Moment Inequalities
    JEL: C72 D61 I24
    Date: 2015–01
  18. By: Thum, Marcel; Auerswald, Heike; Schmidt, Carsten; Torsvik, Gaute
    Abstract: Many decisions in politics and business are made by teams rather than by single individuals. In contrast, economic models typically assume an individual rational decision maker. A rapidly growing body of (experimental) literature investigates team decisions in different settings. We study team decisions in a public goods contribution game with a costly punishment option and compare it to the behavior of individuals in a laboratory experiment. We also consider different team decision-making rules (unanimity, majority). We find that teams contribute significantly more and punish less than individuals, regardless of the team decision rule. Overall, teams yield higher payoffs than individuals.
    JEL: C72 C92 H41
    Date: 2014
  19. By: Anton Badev (Federal Reserve Board)
    Abstract: This paper develops a framework for analyzing individuals' choices in the presence of endogenous social networks and implements it with data on teen smoking decisions and friendship networks. By allowing actions and friendships to be jointly chosen, the framework extends the literature on social interactions, which either models choices, taking the social network as given, or which models friendship selection without incorporating additional choices. In the context of a large population network game, this paper also introduces the notion of k-player Nash stability. This solution concept subsumes the Nash equilibrium and, as k decreases, gradually relaxes the assumptions of rationality and coordination underlying the Nash play. I show how the strategic interactions of the static one-shot play are embedded in an evolutionary model of network formation, which I estimate with social network data from United States high schools. The empirical analysis demonstrates the importance of modeling the joint decisions of friendships and smoking in evaluating existing and proposed new policies targeting teen smoking prevalence. These include policies related to school racial desegregation, separating middle and high school grades, and anti-smoking campaigns. Neglecting the endogeneity of the friendship network leads to a downward bias of 10% to 15% on the predicted effect of these policies on adolescent smoking rates.
    Date: 2014
  20. By: Basteck, Christian
    Abstract: We study the problem of assigning indivisible goods to individuals where each is to receive one object. To guarantee fairness in the absence of monetary compensation, we consider random assignments and analyse various equity criteria for such lotteries. In particular, we find that sd-no-envy (as championed by the Probabilistic Serial) is incompatible with the sd-core from equal division. As an alternative, we present a Walrasian mechanism, whose outcomes are sd-efficient, group sd-envy-free, lie in the sd-core from equal division and satisfy the sd-equal-division-lower-bound.
    JEL: C70 D63 D50
    Date: 2014
  21. By: Deimen, Inga; Szalay, Dezsö
    Abstract: We study strategic communication between a Sender and Receiver who are both uncertain about their preferred actions. The Sender observes noisy signals about both players' ideal policies and then communicates with the Receiver. Even though Sender and Receiver disagree about ideal policies as a function of the Sender's information, we can show that: i) there are information structures such that in equilibrium the Sender credibly communicates his ideal policy and the Receiver correctly takes the Sender's advice at face value and ii) the unique outcome of Nash-bargaining over information structures induces precisely a situation where communication about ideal policies is credible. The resulting equilibrium features message strategies that are smooth in a subspace of the Sender's information. Smooth communication equilibria are extremely tractable. Senders with better aligned preferences are endogenously endowed with better information and therefore give more accurate advice.
    JEL: D82 D83 D82
    Date: 2014
  22. By: Stracke, Rudi; Höchtl, Tanja; Kerschbamer, Rudolf; Sunde, Uwe
    Abstract: This paper investigates how heterogeneity in contestants' investment costs affects the competition intensity in a dynamic elimination contest. Theory predicts that the absolute level of investment costs has no effect on the competition intensity in homogeneous interactions. Relative cost differences in heterogeneous interactions, however, reduce equilibrium expenditures. Evidence from lab experiments for treatments with homogeneous participants is qualitatively in line with the theoretical prediction. The effect of cost differences on expenditures is positive rather than negative, however, in all heterogeneous treatments.
    JEL: C72 D72 C99
    Date: 2014
  23. By: Miriam Rehm (Chamber of Labour, Austria); Ali Asjad Naqvi (Center for Economic Research in Pakistan (CERP))
    Keywords: migration, agent-based modeling, networks
    JEL: C63 F22 J61
    Date: 2013–10
  24. By: Orlova, Ekaterina; Hubert, Franz
    Abstract: We study the impact of the liberalization of EU natural gas markets on the balance of power between `local champions', customers, and outside producers. We distinguish between two steps of the reform: 1. opening access to transit pipes and 2. opening access to distribution systems, hence customers. Using the Shapley value as a power index, we find a modest and rather heterogeneous impact from the first step. The impact of the second step is much larger and yields a clear pattern: all local champions lose, while all customers and all outside players gain. As one third of the losses of champions within EU leaks to players abroad, current reforms might enhance the dominance of already powerful outside producers. This effect, however, completely vanishes, when network power is assessed with the nucleolus.
    JEL: L51 L95 C71
    Date: 2014
  25. By: Fabrice Rousseau (Department of Economics, Finance and Accounting, National University of Ireland, Maynooth); Hervé Boco (Toulouse University, Toulouse Business School, France); Laurent Germain (Toulouse University, Toulouse Business School, France)
    Abstract: This paper analyzes a multi-auction setting in which informed strategic agents are endowed with heterogeneous noisy signals about the liquidation value of a risky asset. One result is that when the variance of the noise is small the competition between traders takes the form of a rat race during all the periods of trading. As we increase the level of the noise in the traders’ signals, a waiting game phase appears and the intensity of the rat race, observed only at the last auctions, decreases. In sharp contrast with the previous literature, when the variance of the noise is very large, we only observe a waiting game.
    Keywords: efficiency, asymmetric information, noise, liquidity, adverse selection, competition
  26. By: Renato Gomes; Alessandro Pavan
    Abstract: We study centralized many-to-many matching in markets where agents have private information about (vertical) characteristics that determine match values. Our analysis reveals how matching patterns reflect cross-subsidization between sides. Agents are endogenously partitioned into consumers and inputs. At the optimum, the costs of procuring agents-inputs are compensated by the gains from agents-consumers. We show how such cross-subsidization can be achieved through matching rules that have a simple threshold structure and are assortative in the weak-order (set inclusion) sense. We then deliver testable predictions relating the optimal matching rules and price schedules to the distribution of the agents’ characteristics. The analysis has implications for the design of large matching intermediaries, such as advertising exchanges, business-to-business platforms, and online job-matching agencies.
    Keywords: vertical matching markets, many-to-many matching, asymmetric information, mechanism design, cross-subsidization JEL Classification: D82
    Date: 2014–06–01
  27. By: Kibae Kim (Technology Management, Economics, and Policy Program; College of Engineering; Seoul National University); Jörn Altmann (Technology Management, Economics, and Policy Program; College of Engineering; Seoul National University)
    Abstract: As empirical studies have found that large complex networks (e.g., WWW) are scale-free, the preferential attachment model is commonly applied to generate this network topology. This model assumes a node with higher degree is more likely to gain a new link, and ignore node attributes except the node degree. However, recent empirical studies also found that node attributes are not identical across all nodes of a network, and a node prefers connecting to other nodes with similar attributes. This preference is called homophily. Therefore, the research question rises whether the preferential attachment model always generates a scale-free network if homophily exists. In this paper, we explore the effect of homophily on network evolution by applying the preferential attachment model with homophily to five different seed networks (i.e., a single dipole, a multiple dipoles, a ring, a star, and a random network). Our simulation results for all five seed networks suggest that homophily distorts the network evolution of a scale-free network, which has a concavely shaped cumulative degree distribution, towards a convexly shaped cumulative degree distribution. These results can explain why some of the empirical complex networks show a linear cumulative degree distribution in log-log scale while others show either concave or convex shape. The implication of our results calls for attention when applying network formation models to complex network studies. These models should consider not only the graph theoretic properties but also node attributes, depending on the environment that governs the network evolution.
    Keywords: Network Evolution, Scale-Free Networks, Preferential Attachment Rule, Homophily, Concave/Convex Power-Law.
    JEL: A12 C63 C73 D85 Z13
    Date: 2015–01
  28. By: Litterscheid, Sina; Szalay, Dezsö
    Abstract: We study a sequential screening problem where the agent produces an object consisting of multiple items and has a multidimensional type that he learns over time. Depending on the strength of complementarity/substitutability of the items, the optimal allocation features a different pattern of distortions. For mild complements or substitutes, a simple solution procedure picks up the optimum.
    JEL: D80 D86 D82
    Date: 2014

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