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

  1. Stable partitions for games with non-transferable utilities and externalities By Dominik Karos
  2. Costless delay in negotiations By Herings P.J.J. ; Houba H
  3. Equilibrium selection in similar repeated games: Experimental evidence on the role of precedents By Duffy, John ; Fehr, Dietmar
  4. When and How the Punishment Must Fit the Crime By Mailath, George J. ; Nocke, Volker ; White, Lucy
  5. Solutions for cooperative games with and without transferable utility By Suzuki, T.
  6. Generalized three-sided assignment markets: consistency and the core By Atay, Ata ; Llerena Garrés, Francesc ; Núñez, Marina (Núñez Oliva)
  7. Two-step values for games with two-level communication structure By Sylvain Béal ; Anna Khmelnitskaya ; Philippe Solal
  8. Stochastic Games with Hidden States By Yuichi Yamamoto
  9. Efficient extensions of the Myerson value By Sylvain Béal ; André Casajus ; Frank Huettner
  10. Knowing me, imagining you: Projection and overbidding in auctions By Breitmoser, Yves
  11. On the Credibility of Punishment in Repeated Social Dilemma Games By Ralph-C Bayer
  12. Assortative matching through signals By Friedrich Poeschel ; ; ;
  13. Frustration and Anger in Games By Pierpaolo Battigalli ; Martin Dufwenberg ; Alec Smith
  14. Attention, Coordination, and Bounded Recall By Alessandro Pavan
  15. One-Shot Bargaining Mechanisms By Yakov Babichenko ; Leonard J. Schulman
  16. Rent-seeking contests with private valuations By Andrea Gallice
  17. Contracting on Networks By Mohamed Belhaj ; Frédéric Deroian
  18. Individual Performance after Success and Failure - A Natural Experiment By Christoph Bühren ; Stefan Krabel
  19. Minimum participation rules in international environmental agreements: Empirical evidence from a survey among delegates in international climate negotiations By Kesternich, Martin
  20. From Rationality to Irrationality : Dynamic Interacting Structures By Gosselin, Pierre ; Lotz, Aïleen ; Wambst, Marc
  21. Dynamic Moral Hazard without Commitment By Johannes Horner ; Larry Samuelson
  22. Money as Minimal Complexity By Pradeep Dubey ; Siddhartha Sahi ; Martin Shubik
  23. Networks, Shocks, and Systemic Risk By Daron Acemoglu ; Asuman Ozdaglar ; Alireza Tahbaz-Salehi
  24. On bargaining sets for finite economies By Hervés-Estévez, Javier ; Moreno-García, Emma
  25. Strategic Effects and the Porter Hypothesis By André, Francisco J.
  26. Research clusters: How public subsidies matter?. By Marie-Laure Cabon-Dhersin ; Emmanuelle Taugourdeau
  27. The Economic Consequences of Social Network Structure By Jackson, Matthew O. ; Rogers, Brian ; Zenou, Yves
  28. The Dynamics of Social Influence By Bary S.R. Pradelski

  1. By: Dominik Karos
    Abstract: We provide a model of coalitional bargaining with claims in order to solve games with non-transferable utilities and externalities.  We show that, for each such game, payoff configurations exist which will not be renegoiated.  In the original game derived from these payoff configurations, we can find a partition in which no group of players has an incentive to jointly change their coalitions.  For games without externalities this partition and the corrresponding payoffs constitute a strong Nash equilirium in a strategic form game with complete information.  We use our model to provide a common framework for a variety of solutions for cooperative games, bargaining problems and bankruptcy problems.
    Keywords: Games with non-transferable utilities in partition function form, Bargaining with claims, Ordinal games, Core stable partitions, Non-cooperative coalition formation
    JEL: C71 C78 G34
    Date: 2015–02–20
  2. By: Herings P.J.J. ; Houba H (GSBE )
    Abstract: We study strategic negotiation models featuring costless delay, general recognition procedures, endogenous voting orders, and finite sets of alternatives. Two examples show 1. non-existence of stationary subgame-perfect equilibrium SSPE. 2. the recursive equations and optimality conditions are necessary for SSPE but insufficient because these equations can be singular. Strategy profiles excluding perpetual disagreement guarantee non-singularity. The necessary and sufficient conditions for existence of stationary best responses additionally require either an equalizing condition or a minimality condition. Quasi SSPE only satisfy the recursive equations and optimality conditions. These always exist and are SSPE if either all equalizing conditions or all minimality conditions hold.
    Keywords: Noncooperative Games; Stochastic and Dynamic Games; Evolutionary Games; Repeated Games; Bargaining Theory; Matching Theory;
    JEL: C72 C73 C78
    Date: 2015
  3. By: Duffy, John ; Fehr, Dietmar
    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 payouts of these similar repeated games.
    Keywords: Equilibrium Selection,Precedent,Beliefs,Stag Hunt,Prisoner's Dilemma,Repeated Games,Experimental Economics
    JEL: C72 C73 C92 D83
    Date: 2015
  4. By: Mailath, George J. ; Nocke, Volker ; White, Lucy
    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
  5. By: Suzuki, T. (Tilburg University, School of Economics and Management )
    Abstract: When individuals generate benefits from their cooperation, allocation<br/>problems may occur regarding how much of the benefit from the<br/>cooperation each individual should take. In many economic situations,<br/>defining the contribution of each individual in a fair way is essential. This<br/>thesis is on cooperative game theory, a mathematical tool that models<br/>and analyses cooperative situations between individuals. Throughout<br/>the monograph, allocation rules that are based on the contributions of<br/>individuals are studied.<br/><br/>The first two parts of this thesis are on the class of transferable utility<br/>games, in which benefits from cooperation can be freely transferred<br/>between agents. In the first part, allocation rules when the cooperation<br/>between agents is restricted by a communication structure are studied.<br/>A chapter of this part gives a new characterization of a known allocation<br/>rule. In the next chapter, allocation rules are investigated for the class of<br/>games in which the underlying communication structure is represented<br/>by a circle. The second part of this thesis introduces a new type of<br/>restriction on cooperation between players, called quasi-building system,<br/>which covers many known structures. The third part of this thesis deals<br/>with situations in which benefits from cooperation are not transferable<br/>between individuals. This part focuses on when an allocation rule based<br/>on contributions of individuals leads to an economically satisfying result.
    Date: 2015
  6. By: Atay, Ata ; Llerena Garrés, Francesc ; Núñez, Marina (Núñez Oliva)
    Abstract: A class of three-sided markets (and games) is considered, where value is generated by pairs or triplets of agents belonging to different sectors, as well as by individuals. For these markets we analyze the situation that arises when some agents leave the market with some payoff To this end, we introduce the derived market (and game) and relate it to the Davis and Maschler (1965) reduced game. Consistency with respect to the derived market, together with singleness best and individual anti-monotonicity axiomatically characterize the core for these generalized three-sided assignment markets. These markets may have an empty core, but we define a balanced subclass, where the worth of each triplet is defined as the addition of the worths of the pairs it contains. Keywords: Multi-sided assignment market, Consistency, Core, Nucleolus. JEL Classification: C71, C78
    Keywords: Jocs cooperatius, 33 - Economia,
    Date: 2014
  7. By: Sylvain Béal (CRESE, Université de Franche-Comté ); Anna Khmelnitskaya (Saint-Petersburg State University, Faculty of Applied Mathematics, Saint-Petersburg, Russia ); Philippe Solal (Université de Saint-Etienne, CNRS UMR 5824 GATE Lyon Saint-Etienne )
    Abstract: TU games with two-level communication structure, in which a two-level communication structure relates fundamentally to the given coalition structure and consists of a communication graph on the collection of the a priori unions in the coalition structure, as well as a collection of communication graphs within each union, are considered. For such games we introduce two families of two-step values inspired by the two-step procedures staying behind the Owen value (Owen, 1977) and the two-step Shapley value (Kamijo, 2009) for games with coalition structures. Our approach is based on the unified treatment of several component efficient values for games with communication structure and it generates two-stage solution concepts that apply component efficient values for games with communication structure on both distribution levels. Comparable axiomatic characterizations are provided.
    Keywords: TU game with two-level communication structure, Owen value, two-step Shapley value, component efficiency, deletion link property
    JEL: C71
    Date: 2015–02
  8. By: Yuichi Yamamoto (Department of Economics, University of Pennsylvania )
    Abstract: This paper studies infinite-horizon stochastic games in which players observe noisy public information about a hidden state each period. We find that if the game is connected, the limit feasible payoff set exists and is invariant to the initial prior about the state. Building on this invariance result, we provide a recursive characterization of the equilibrium payoff set and establish the folk theorem. We also show that connectedness can be replaced with an even weaker condition, called asymptotic connectedness. Asymptotic connectedness is satisfied for generic signal distributions, if the state evolution is irreducible.
    Keywords: stochastic game, hidden state, connectedness, stochastic selfgeneration, folk theorem
    JEL: C72 C73
    Date: 2015–01–14
  9. By: Sylvain Béal (CRESE, Université de Franche-Comté ); André Casajus (Economics and Information Systems, HHL Leipzig Graduate School of Management and LSI Leipziger Spieltheoretisches Institut, Leipzig, Germany ); Frank Huettner (Economics and Information Systems, HHL Leipzig Graduate School of Management and LSI Leipziger Spieltheoretisches Institut, Leipzig, Germany )
    Abstract: We study values for transferable utility games enriched by a communication graph (CO-games) where the graph does not necessarily a¤ect the productivity but can in?uence the way the players distribute the worth generated by the grand coalition. Thus, we can envisage values that are efficient instead of values that are component efficient. For CO-games with connected graphs, efficiency and component efficiency coincide. In particular, the Myerson value (Myerson, 1977) is efficient for such games. Moreover, fairness is characteristic of the Myerson value. We identify the value that is efficient for all CO-games, coincides with the Myerson value for CO-games with connected graphs, and satisfies fairness.
    Keywords: communication graph, fairness, efficiency, efficient extension, Shapley value, Myerson value
    JEL: C71 D60
    Date: 2015–02
  10. By: Breitmoser, Yves
    Abstract: People overestimate the probability that others share their values or preferences. I introduce type projection equilibrium (TPE) to capture such projection in Bayesian games. TPE allows each player to believe his opponents share his type with intermediate probability \rho. After establishing existence, I address my main question: How does projection affect behavior in games? I analyze auctions and distribution games. In auctions, projection implies an increased sense of competition, which induces overbidding in all (first-price) auctions. In addition, it biases the perceived value distribution, which induces cursed bidding in common value auctions. Thus, projection induces a hitherto neglected bias in bidding. It is novel in that it explains behavior across conditions and it is independently founded in psychology. I test projection equilibrium in multiple ways on existing data and find that it substantially improves on alternative concepts, both in isolation and in addition to them. The findings are cross-validated by testing projection of social preferences in distribution games.
    Keywords: auctions, overbidding, winner's curse, projection, risk aversion, cursed equilibrium, level-k, social preferences
    JEL: C72 C91 D44
    Date: 2015–02–10
  11. By: Ralph-C Bayer (School of Economics, University of Adelaide )
    Abstract: Various experimental studies have shown that the availability of a punishment option can increase the prevalence of cooperative behaviour in repeated social dilemmas. A punishment option should only matter if it is a credible threat. We investigate if the degree of credibility depends on standard strategic equilibrium considerations (i.e. SPNE or NE logic) or stems from a non-strategic motivation such as reciprocity. We find that for punishment to be credible non-strategic motivations are sufficient and that subgame perfection does not further improve credibility.
    Keywords: Cooperation, Punishment, Credible Threats
    JEL: D03 D62
    Date: 2014–05
  12. By: Friedrich Poeschel ; ; ;
    Abstract: When agents do not know where to find a match, they search. However, agents could direct their search to agents who strategically choose a certain signal. Introducing cheap talk to a model of sequential search with bargaining, we find that signals will be truthful if there are mild complementarities in match production: supermodularity of the match production function is a necessary and sufficient condition. It simultaneously ensures perfect positive assortative matching, so that single-crossing property and sorting condition coincide. As the information from signals allows agents to avoid all unnecessary search, this search model exhibits nearly unconstrained efficiency.
    Keywords: Assortative matching, sorting, search, signals, information
    JEL: J64 D83 C78
    Date: 2013–08
  13. By: Pierpaolo Battigalli ; Martin Dufwenberg ; Alec Smith
    Abstract: Frustration, anger, and aggression have important consequences for economic and social behavior, concerning for example monopoly pricing, contracting, bargaining, tra¢ c safety, violence, and politics. Drawing on insights from psychology, we develop a formal approach to exploring how frustration and anger, via blame and aggression, shape interaction and outcomes in economic settings. KEYWORDS: frustration, anger, blame, belief-dependent preferences, psychological games JEL codes: C72, D03
    Date: 2015
  14. By: Alessandro Pavan
    Abstract: I consider a exible framework of strategic interactions under incomplete information in which, prior to committing their actions (consumption, production, or investment decisions), agents choose the attention to allocate to an arbitrarily large number of information sources about the primitive events that are responsible for the incompleteness of information (the exogenous fundamentals). The analysis sheds light on what type of payoff¤ interdependencies contribute to inefficiency in the allocation of attention. The results for the case of perfect recall (in which the agents remember the inuence of each source on their posterior beliefs) are compared to those for the case of bounded recall (in which posterior beliefs about the underlying fundamentals are consistent with Bayesian updating, but in which the agents are unable to keep track of the influence of individual sources on their posterior beliefs).
    Keywords: attention, endogenous information, strategic complementarity/substitutability, externalities, efficiency, welfare, bounded recall JEL Classification: C72, D62, D83, E50
    Date: 2014–01–14
  15. By: Yakov Babichenko ; Leonard J. Schulman
    Abstract: We consider the situation that two players have cardinal preferences over a finite set of alternatives. These preferences are common knowledge to the players, and they engage in bargaining to choose an alternative. In this they are assisted by an arbitrator (a mechanism) who does not know the preferences. Our main positive result suggests a satisfactory-alternatives mechanism wherein each player reports a set of alternatives. If the sets intersect, then the mechanism chooses an alternative from the intersection uniformly at random. If the sets are disjoint, then the mechanism chooses an alternative from the union uniformly at random. We show that a close variant of this mechanism succeeds in selecting Pareto efficient alternatives only, as pure Nash equilibria outcomes. Then we characterize the possible and the impossible with respect to the classical bargaining axioms. Namely, we characterize the subsets of axioms can be satisfied simultaneously by the set of pure Nash equilibria outcomes of a mechanism. We provide a complete answer to this question for all subsets of axioms. In all cases that the answer is positive, we present a simple and intuitive mechanism which achieves this goal. The satisfactory-alternatives mechanism constitutes a positive answer to one of these possibility cases (arguably the most interesting case). Our negative results exclude the possibility of an efficient mechanism with unique equilibrium outcome, and exclude the possibility of an efficient symmetric mechanism which is invariant with respect to repetition of alternatives.
    Date: 2015–02
  16. By: Andrea Gallice
    Abstract: We study a rent-seeking contest in which players have heterogeneous and private valuations. In addition to their own type, agents only know that all valuations are drawn from an unspeciÂ…ed distribution, of which they only know the mean. We obtain a closed-form solution for agentsÂ’ optimal level of investment and subject it to comparative statics analy- sis. We also investigate the issue of entry in the game and the amount of rent dissipation that results in equilibrium. Finally, we compare our results with those that would emerge in a context of perfect information.
    Keywords: rent-seeking; contests; private information; imperfect information.
    JEL: D72 D82
    Date: 2014
  17. By: Mohamed Belhaj (Centrale Marseille (Aix-Marseille School of Economics), CNRS and EHESS ); Frédéric Deroian (Aix-Marseille University (Aix-Marseille School of Economics), CNRS and EHESS )
    Abstract: A principal offers bilateral contracts to a set of agents organized in a network conveying synergies, in a context where agents' efforts are observable and where the principal's objective increases with the sum of efforts. We characterize optimal contracts as a function of agents' positions on the network. The analysis shows that contract enforceability is key to understand optimality. We also examine linear contracting and we analyze the situation where the principal is constrained to contract with a single agent on the network. Last, we extend this setting to network entry.
    Keywords: optimal contracting, multi-agency, Network, Strategic Complementarity, enforceability
    JEL: C72 D85
    Date: 2015–01–12
  18. By: Christoph Bühren (University of Kassel ); Stefan Krabel (VDI/VDE Innovation+Technik GmbH )
    Abstract: The main goal of our study is to analyze how success and failure in crucial situations affect subsequent individual performance. Our study is based on evidence from a natural experiment of NBA (National Basketball Association) players: Based on play-by-play statistics of NBA games in 10 seasons (1818 observations of 345 sportsmen), we identify players who are responsible for the overtime by taking the last shot of the game. Players who miss the shot when the game is tied perform better in overtime than in the last quarter (within-subject comparison) but not significantly different to their game and season averages. Players who score the equalizer in the last shot of the regular game perform substantially worse in overtime compared to their 4th quarter performance as well as compared to their game and season averages. Yet the average performances in overtime of both groups do not differ significantly (between-subject comparison). We conclude that success in crucial situations leads to lower subsequent individual performance. Psychological explanations for this phenomenon, e.g. the role of overconfidence, are discussed. We argue that our findings can be transferred to behavior after success or failure in business settings since we have distinct identifications of performance and responsibility: the observed overtimes are clear and immediate outcomes of the last shots of our analyzed players; without their success or failure, the game would have been over after regular time.
    Keywords: success, failure, performance, psychological pressure, overconfidence, hot hand fallacy, natural experiment, basketball, NBA
    JEL: C93
    Date: 2015
  19. By: Kesternich, Martin
    Abstract: Recent contributions to the theoretical and experimental literature suggest that minimum participation rules (MPRs) are able to reduce free-riding incentives and may facilitate cooperation (or at least coordination) at the extensive margin of international environmental agreements. Based on a dataset from a world-wide survey among delegates in international climate negotiations, this paper assesses preferences for different MPRs for a future climate treaty among key players. The empirical findings provide evidence that small countries with low bargaining power rather opt for large minimum membership requirements while industrialized countries push forward the idea of a small carbon club of the largest emitters only. In contrast, delegates from countries in transition try to keep emission thresholds rather low which would allow a future agreement to come into force without their signature.
    Keywords: international climate negotiations,minimum participation rules
    JEL: C72 C92 H41
    Date: 2015
  20. By: Gosselin, Pierre ; Lotz, Aïleen ; Wambst, Marc
    Abstract: This article develops a general method to solve dynamic models of interactions between multiple strategic agents that extends the static model studied previously by the authors. It describes a general model of several interacting agents, their domination relations as well as a graph encoding their information pattern. It provides a general resolution algorithm and discusses the dynamics around the equilibrium. Our model explains apparent irrational or biased individual behaviors as the result of the actions of several goal-specific rational agents. Our main example is a three-agent model describing "the conscious", "the unconscious", and "the body". We show that, when the unconscious strategically dominates, the equilibrium is unconscious-optimal, but body and conscious-suboptimal. In particular, the unconscious may drive the conscious towards its goals by blurring physical needs. Our results allow for a precise account of agents' time rate preference. Myopic behavior among agents leads to oscillatory dynamics : each agent, reacting sequentially, adjusts its action to undo other agents' previous actions. This describes cyclical and apparently inconsistent or irrational behaviors in the dual agent. This cyclicality is present when agents are forward-looking, but can be dampened depending on the conscious sensitivity to other agents' actions.
    Keywords: dual agent; conscious and unconscious, rationality; multi-rationality; emotions; choices and preferences; multi-agent model; consistency; game theory; strategical advantage.
    JEL: B41 D01 D81 D82
    Date: 2015–02–14
  21. By: Johannes Horner (Cowles Foundation, Yale University ); Larry Samuelson (Cowles Foundation, Yale University )
    Abstract: We study a discrete-time model of repeated moral hazard without commitment. In every period, a principal finances a project, choosing the scale of the project and a contingent payment plan for an agent, who has the opportunity to appropriate the returns of a successful project unbeknownst the principal. The absence of commitment is reflected both in the solution concept (perfect Bayesian equilibrium) and in the ability of the principal to freely revise the project's scale from one period to the next. We show that removing commitment from the equilibrium concept is relatively innocuous -- if the players are sufficiently patient, there are equilibria with payoffs low enough to effectively endow the players with the requisite commitment, within the confines of perfect Bayesian equilibrium. In contrast, the frictionless choice of scale has a significant effect on the project's dynamics. Starting from the principal's favorite equilibrium, the optimal contract eventually converges to the repetition of the stage-game Nash equilibrium, operating the project at maximum scale and compensating the agent (only) via immediate payments.
    Keywords: Moral hazard, Dynamic moral hazard, Commitment, Principal-agent, Cash flow diversion
    JEL: C72 D82 D86
    Date: 2015–02
  22. By: Pradeep Dubey (Stony Brook Center for Game Theory ); Siddhartha Sahi (Dept. of Mathematics, Rutgers University ); Martin Shubik (Cowles Foundation, Yale University )
    Abstract: We consider mechanisms that provide traders the opportunity to exchange commodity i for commodity j, for certain ordered pairs ij. Given any connected graph G of opportunities, we show that there is a unique mechanism M_G that satisfies some natural conditions of "fairness" and "convenience." Let \cal{M}(m) denote the class of mechanisms M_G obtained by varying G on the commodity set {1,...,m}. We define the complexity of a mechanism M in \cal{M}(m) to be a pair of integers \tau(M), \pi(M) which represent the "time" required to exchange i for j and the "information" needed to determine the exchange ratio (each in the worst case scenario, across all i not equal to i \ne j). This induces a quasiorder \preceq on \cal{M}(m) by the rule M \preceq M' if tau(M) \le \tau(M') and \pi(M) \le \pi(M'). We show that, for m > 3, there are precisely three \preceq-minimal mechanisms M_G in \cal{M}(m), where G corresponds to the star, cycle and complete graphs. The star mechanism has a distinguished commodity -- the money -- that serves as the sole medium of exchange and mediates trade between decentralized markets for the other commodities. Our main result is that, for any weights \lambda, \mu > 0; the star mechanism is the unique minimizer of \lambda\tau(M) + \mu\pi(M) on \cal{M}(m) for large enough m.
    Keywords: Exchange mechanism, Minimal complexity, Prices, money
    JEL: C70 C72 C79 D44 D63 D82
    Date: 2015–02
  23. By: Daron Acemoglu ; Asuman Ozdaglar ; Alireza Tahbaz-Salehi
    Abstract: This chapter develops a unified framework for the study of how network interactions can function as a mechanism for propagation and amplification of microeconomic shocks. The framework nests various classes of games over networks, models of macroeconomic risk originating from microeconomic shocks, and models of financial interactions. Under the assumption that shocks are small, we provide a fairly complete characterization of the structure of equilibrium, clarifying the role of network interactions in translating microeconomic shocks into macroeconomic outcomes. This characterization enables us to rank different networks in terms of their aggregate performance. It also sheds light on several seemingly contradictory results in the prior literature on the role of network linkages in fostering systemic risk.
    JEL: D85 G01
    Date: 2015–02
  24. By: Hervés-Estévez, Javier ; Moreno-García, Emma
    Abstract: We define a bargaining set for finite economies using Aubin’s veto mechanism and show its coincidence with the set of Walrasian allocations. Then, we rewrite our notion in terms of replicated economies showing that, in contrast with Anderson, Trockel and Zhou’s (1997) non-convergence result, this Edgeworth bargaining set shrinks to the set of Walrasian allocations.
    Keywords: Bargaining sets, coalitions, core, veto mechanism.
    JEL: D00 D11 D51
    Date: 2014–07–18
  25. By: André, Francisco J.
    Abstract: Environmental protection and firms' competitiveness are typically seen as conflicting elements as firms tend to ignore the environmental consequences of their actions and any regulation forcing them to modify their policies can only make them worse-off. Contrarily to this traditional paradigm, the Porter Hypothesis suggests the existence of "low hanging fruits" in the sense that some environmental policies may simultaneously benefit the environment and domestic competitiveness. Our aim is to identify the main theoretical arguments that have been proposed in the literature to support the validity of the Porter Hypothesis and pick the most significant contributions paying special attention to the strategic and international trade aspects. After presenting some general issues and different interpretations of the Porter Hypothesis, we review different theoretical explanations such as the generation of scarcity rents, the use of environmental regulation by national governments as an instrument of strategic trade policy, the existence of externalities in technology adoption, the interaction with output quality competition and the existence of information incompleteness.
    Keywords: Porter Hypotesis; Strategic behavior; International trade; Game theory
    JEL: C72 D62 Q52 Q55 Q58
    Date: 2015–02–17
  26. By: Marie-Laure Cabon-Dhersin (CREAM - Université de Rouen ); Emmanuelle Taugourdeau (Centre d'Economie de la Sorbonne - Paris School of Economics )
    Abstract: This paper investigates the factors underlying the emergence of Research Cluster (RC), i.e. cooperation (or coordination of research efforts) through spatial proximity between public and private research teams. A ‘public lab’ and a ‘private lab’ interact in a two-stage game to decide on ‘location’ and ‘research effort’. A high level of public subsidies associated to a low asymmetry in the ‘valorisation capability’ between both labs is necessary for the formation of a cluster. We find that RC performs better than non-cooperation in terms of research efforts in a ‘public lab’ (but not in a ‘private lab’) and output gains that can be appropriated by each lab.
    Keywords: Research cooperation, spatial location, public subsidy.
    JEL: C7 H2 H4 L3 L5 O3
    Date: 2015–02
  27. By: Jackson, Matthew O. ; Rogers, Brian ; Zenou, Yves
    Abstract: We survey the literatures on the economic consequences of the structure of social networks. We develop a taxonomy of 'macro' and 'micro' characteristics of social inter-action networks and discuss both the theoretical and empirical findings concerning the role of those characteristics in determining learning, diffusion, decisions, and resulting behaviors. We also discuss the challenges of accounting for the endogeneity of networks in assessing the relationship between the patterns of interactions and behaviors.
    Keywords: centrality measures; contagion; diffusion; endogeneity; homophily; network formation.; social economics; social learning; Social networks
    JEL: C72 D85 L14 Z13
    Date: 2015–02
  28. By: Bary S.R. Pradelski
    Abstract: Individual behaviors such as smoking, fashion, and the adoption of new products is influenced by taking account of others' actions in one's decisions.  We study social influence in a heterogeneous population and analyze the long-run behavior of the dynamics.  We distinguish between cases in which social influence arises from responding to the number of current adopters, and cases in which social influence arises from responding to the cumulative usage.  We identify the equilibria of the dynamics and show which equilibrium is observed in the long-run.  We find that the models exhibit different behaviour and hence this differentiation is of importance.  We also provide an intuition for the different outcomes.
    Keywords: social influence, imitation, equilibrium selection
    JEL: C62 C70 D70 G00
    Date: 2015–02–24

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