nep-gth New Economics Papers
on Game Theory
Issue of 2015‒04‒02
fourteen papers chosen by
László Á. Kóczy
Magyar Tudományos Akadémia

  1. Generalizations of the General Lotto and Colonel Blotto Games By Dan Kovenock; Brian Roberson
  2. An experimental online matching pennies game By Aurora García-Gallego; Penelope Hernández-Rojas; Amalia Rodrigo-González
  3. Dynamic Games with Almost Perfect Information By Wei He; Yeneng Sun
  4. Influence Networks and Public Goods By Dunia López-Pintado
  5. Revising the school choice problem By Duddy, Conal
  6. Bargaining under surveillance: Evidence from a three-person ultimatum game By Lauri Saaksvuori; Abhijit Ramalingam
  7. Equal distribution or equal payoffs? Reciprocity and inequality aversion in the investment game By Rodriguez-lara, Ismael
  8. Isolating and identifying motivations: A voluntary contribution mechanism experiment with interior Nash equilibria By Takehisa Kumakawa; Tatsuyoshi Saijo; Takehiko Yamato
  9. Ultimatum game: A meta-analysis of the past three decades of experimental research By Jean-Christian Tisserand
  10. Argumentation Quantity and Quality: A Litigation Success Function By Osório-Costa, António M.
  11. Policy Implications of Economic Complexity and Complexity Economics By Elsner, Wolfram
  12. The willingness to pay-willingness to accept gap: A failed replication of Plott and Zeiler By Fehr, Dietmar; Hakimov, Rustamdjan; Kübler, Dorothea
  13. The Welfare Effects of Coordinated Assignment: Evidence from the NYC HS Match By Atila Abdulkadiroğlu; Nikhil Agarwal; Parag A. Pathak
  14. Dynamic Directed Search By Gabriele Camera; Jaehong Kim

  1. By: Dan Kovenock (Economic Science Institute, Argyros School of Business and Economics, Chapman University); Brian Roberson (Purdue University, Department of Economics, Krannert School of Management)
    Abstract: In this paper, we generalize the General Lotto game (budget constraints satisfied in expectation) and the Colonel Blotto game (budget constraints hold with probability one) to allow for battlefield valuations that are heterogeneous across battlefields and asymmetric across players, and for the players to have asymmetric resource constraints. We completely characterize Nash equilibrium in the generalized version of the General Lotto game and then show how this characterization can be applied to identify equilibria in the Colonel Blotto version of the game. In both games, we find that there exist sets of non-pathological parameter configurations of positive Lebesgue measure with multiple payoff nonequivalent equilibria.
    Keywords: Colonel Blotto game, General Lotto game, Multi-battle contest, Redistributive politics, All-pay auction
    JEL: C72 D72 D74
    Date: 2015
  2. By: Aurora García-Gallego (University Jaume I, LEE & Department of Economics); Penelope Hernández-Rojas (University of Valencia, ERI-CES & Department of Economics Analysis); Amalia Rodrigo-González (University of Valencia, Department of Corporate Finance)
    Abstract: The theoretical communication model by Gossner et al. (2006) (GHN henceforth) based on the matching pennies game has recently been implemented by García-Gallego et al. (2013) (GHR henceforth) in the lab, emphasizing the transmission of information among players with aligned incentives. The present work contributes to characterize the optimal structure of the equilibrium strategies or the set up under consideration. Also, we establish the length of the sequence of the experimental game for which the players' optimal strategy is the majority rule, considering a minimal length of 3. Finally, we aim at testing the model by GHN (2006). Experimental findings give! support to the theoretical results in GHN (2006).
    Keywords: experiments, coordination, cheap-talk, efficiency
    JEL: D8 C91 C73
    Date: 2015
  3. By: Wei He; Yeneng Sun
    Abstract: This paper aims to solve two fundamental problems on finite or infinite horizon dynamic games with perfect or almost perfect information. Under some mild conditions, we prove (1) the existence of subgame-perfect equilibria in general dynamic games with almost perfect information, and (2) the existence of pure-strategy subgame-perfect equilibria in perfect-information dynamic games with uncertainty. Our results go beyond previous works on continuous dynamic games in the sense that public randomization and the continuity requirement on the state variables are not needed. As an illustrative application, a dynamic stochastic oligopoly market with intertemporally dependent payoffs is considered.
    Date: 2015–03
  4. By: Dunia López-Pintado (Universidad Pablo de Olavide)
    Abstract: We consider a model of social interactions in which agents are assumed to acquire information from others through a certain sampling process that generates an influence network. These networks comprise a wide array of options depending on the level of correlation assumed between agents' in and out degree. We study the provision of public goods in influence networks and show that the equilibrium (of the corresponding best-shot game) always exists and it is unique. We derive further insights for this problem by performing a comparative statics analysis.
    Keywords: influence networks; public goods; out-degree; in-degree; best-shot game
    JEL: D85 H41
    Date: 2015–03
  5. By: Duddy, Conal
    Abstract: In a school choice problem each school has a priority ordering over students. These priority orderings depend on criteria such as whether a student lives within walking distance or has a sibling already at the school. We argue that by including just the priority orderings in the problem, and not the criteria themselves, we lose crucial information. This loss of information results in mechanisms that discriminate between students in ways that are difficult to justify. We propose an alternative school choice problem and adaptations of the Gale-Shapley student optimal stable mechanism and the top trading cycles mechanism.
    Keywords: School choice; matching; justified envy
    JEL: C78
    Date: 2015–03–29
  6. By: Lauri Saaksvuori (University of Hamburg); Abhijit Ramalingam (University of East Anglia)
    Abstract: This paper examines how third-party surveillance influences preferences over distributional outcomes. In addition, we examine what motivates people to invest economic resources to monitor decision-making processes. Our results show that a large majority of individuals is willing to pay for a right to monitor decision-making processes over distributional outcomes despite pecuniary incentives to the contrary. We find that electronic third-party surveillance does not affect distributional outcomes in a three-person ultimatum game. Finally, we find that third- parties are the most over-optimistic about their own outcomes when they have a chance to signal their presence to the negotiators. Our results suggest that people may overestimate the impact of transparent decision-making on economic outcomes.
    Keywords: bargaining, communication, distributional preferences, experiment, negotiations, surveillance
    JEL: C72 C92 D01 D03 D83
    Date: 2015–03
  7. By: Rodriguez-lara, Ismael
    Abstract: We report experimental evidence on second-movers' behavior in the investment game (also known as the trust game) when there exists endowment heterogeneity. Using a within-subject analysis, we investigate whether second-movers have a tendency to be reciprocal (i.e., they return to first movers at least what they have received from them), or exhibit some taste for inequality aversion (i.e., they return a larger (smaller) share of the available funds to first-movers who are initially endowed with a lesser (larger) endowment, respectively). Our results suggest that second-movers' behavior is consistent across distribution of endowments, what indicates that second-movers (on average) do not take into consideration the level of endowments when making their decisions. This finding, in turn, implies that subjects behave according to our definition of reciprocity and that inequality-aversion receives little support from our data.
    Keywords: reciprocity, inequality aversion, investment game, trust game, endowment heterogeneity
    JEL: C72 C91 D3 D63
    Date: 2015–03–25
  8. By: Takehisa Kumakawa (Osaka University); Tatsuyoshi Saijo (School of Economics and Management, Kochi University of Technology); Takehiko Yamato (Tokyo Institute of Technology)
    Abstract: What motivates subjects in their decision making is a lingering issue in public goods experiments. Using a nonlinear payoff function and a two-subject model, we create a one-toone correspondence between contributions and motivations, enabling us to isolate and identify the following three possible motivations: Nash, cooperative, and altruistic motivations. The experimental results show that Nash- motivated behavior accounts for more than 70% of all decisions. Some subjects reveal a cooperative motivation when they know the other subject's payoff information. Altruistic motivation is found to be rare throughout the experiment.
    Keywords: Motivation, Nash, Cooperation, Altruism, Voluntary contribution mechanism
    JEL: C92 H41
    Date: 2015–03
  9. By: Jean-Christian Tisserand (CRESE)
    Abstract: The ultimatum game undoubtely lists the largest experimental literature of the past three decades. In this article, we focus on the choice of the proposer of the ultimatum game and the explanatory variables that may influence the amount offered. We perform a meta-analysis with a total of 97 observations from simple ultimatum game gathered through 42 articles published between 1983 and 2012. While the theoretical prediction announces that the equilibrium offer should be zero, our results show that the weighted average offer is 42.3% of the amount at stake. Among the numerous variables studied, only being an economist has a significant impact on the amounts offered.
    Keywords: Meta-analysis, Ultimatum game, Experimental economics, Microeconomics, Behavioral economics
    JEL: C78 C91 D03
    Date: 2014–10
  10. By: Osório-Costa, António M.
    Abstract: Arguments are statements used to persuade someone or in support of a claim. However, these are not perfect and part are be exploited by the opponent to build its own argumentation. In this paper we present a litigation success function (LSF) that considers the quality of the plainti¤ and defendant arguments and preserves the flexibility and analytical characteristics of the "rent-seeking" contest success function. On the contrary to the existent literature, the proposed LSF can be applied to the English fee shifting system, and to model criminal and civil proceedings.
    Keywords: Litigation, Contests, Argumentation quality, Fee shifting systems
    JEL: C72 D72 D74 K41
    Date: 2015–03–23
  11. By: Elsner, Wolfram
    Abstract: Policy implications of complexity economics (CE) are investigated. CE deals with “Complex Adaptive (Economic) Systems” [CA(E)S], generally characterized by mechanisms and properties such as “emergence” of structure or some capacity of “self-organization”. With this, CE has manifold affinities with economic heterodoxies. CE has developed into a most promising economic research program in the last decades. With some time lag, and boosted by the financial crisis and Great Recession, a surge to explore their policy implications recently emerged. It demonstrated the flaws of the “neoliberal” policy prescriptions mostly derived from the neoclassical mainstream and its underlying more simplistic and teleological equilibrium models. However, most of the complexity-policy literature still remains rather general. For a subset of CA(E)S, those with heterogeneous human agents interacting, particularly on networks, using evolutionary games in the “evolution-of-cooperation” tradition, therefore, we exemplarily derive more specific policy orientations and tools, and a framework policy approach called Interactive Policy.
    Keywords: Economic complexity; complex adaptive (economic) systems; equilibrium modeling; self-organization; structural emergence; microfoundations; social-dilemma games; evolution of cooperation; economic policy; regulation; institutional design; recognized interdependence; futurity; rime horizons; network structures; interactive/institutional policy; meritorics; pragmatism; negotiated economy.
    JEL: B4 B5 C72 D02 H4 P41
    Date: 2015–03–26
  12. By: Fehr, Dietmar; Hakimov, Rustamdjan; Kübler, Dorothea
    Abstract: We report on experiments to replicate Plott and Zeiler's (2005) findings that the WTP-WTA gap disappears when using procedures that are aimed at reducing misunderstandings, such as training rounds for the BDM mechanism. Following the design by Plott and Zeiler (2005) and Isoni, Loomes, and Sugden (2011) who re-ran the Plott/Zeiler experiments to study the paid practice rounds with lotteries, we replicate the findings from the lottery tasks where a WTP-WTA gap is present in all studies. However, unlike in the two previous studies the WTP-WTA gap does not disappear in the main task where subjects state their WTA or WTP for a mug. We introduce two additional lottery tasks to classify subjects and find that even for the most rational group of subjects who never make dominated choices in the paid practice rounds, the WTP-WTA gap in the mug task exists. The findings are replicated in a similar experiment with USB sticks instead of mugs.
    Keywords: endowment effect,WTP-WTA gap,BDM mechanism,misconceptions,replication
    JEL: C72 C92
    Date: 2015
  13. By: Atila Abdulkadiroğlu; Nikhil Agarwal; Parag A. Pathak
    Abstract: Centralized and coordinated school assignment systems are a growing part of recent education reforms. This paper estimates school demand using rank order lists submitted in New York City's high school assignment system launched in Fall 2003 to study the effects of coordinating admissions in a single-offer mechanism based on the deferred acceptance algorithm. In the previous mechanism, students were allowed to rank five choices and admissions offers were not coordinated across schools. While 18% of students obtained multiple first round offers, the mechanism's uncoordinated offers led more than a third of students to be unassigned after the main round and ultimately administratively assigned. Under the new mechanism, there is a 7.2 percentage point increase in matriculation at assigned school and students are assigned to schools that are on average 0.69 miles further from home. Even though students prefer nearby schools, our estimates suggest substantial heterogeneity in willingness to travel for school. The new mechanism generates higher utility on average and across numerous subgroups of students compared to either a neighborhood school alternative or the previous uncoordinated mechanism. Across a range of estimates, we find that the average student's welfare gain from coordinating assignment is substantially more than the disutility from increased travel. These gains are significantly larger than those from relaxing mechanism design constraints within the coordinated system. Preference heterogeneity implies that choice is far from zero-sum and coordinating admissions offers across schools increases allocative efficiency.
    JEL: C78 D50 D61 I21
    Date: 2015–03
  14. By: Gabriele Camera (Chapman University, University of Basel); Jaehong Kim (Chapman University)
    Abstract: The directed search model (Peters, 1984) is static; its dynamic extensions typically restrict strategies, often assuming price or match commitments. We lift such restrictions to study equilibrium when search can be directed over time, without constraints and at no cost. In equilibrium trade frictions arise endogenously, and price commitments, if they do exist, are self-enforcing. In contrast to the typical model, there exists a continuum of equilibria that exhibit trade frictions. These equilibria support any price above the static price, including monopoly pricing in arbitrarily large markets. Dispersion in posted prices can naturally arise as temporary or permanent phenomenon despite the absence of pre-existing heterogeneity.
    Keywords: frictions, matching, price dispersion, search
    JEL: C70 D39 D49 E39
    Date: 2015

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