nep-gth New Economics Papers
on Game Theory
Issue of 2015‒04‒19
fourteen papers chosen by
László Á. Kóczy
Magyar Tudományos Akadémia

  1. Bayes Correlated Equilibrium and the Comparison of Information Structures in Games By Dirk Bergemann; Stephen Morris
  2. On the nonemptiness of approximate cores of large games By Nizar Allouch; Myrna Wooders
  3. Young's axiomatization of the Shapley value - a new proof By Pintér, Miklós
  4. Authority and Centrality: Power and Cooperation in Social Dilemma Networks By Ramalingam, Abhijit; Rojo Arjona, David; Schram, Arthur; Van Leeuwen, Boris
  5. No-Envy and Egalitarian-Equivalence under Multi-Object-Demand for Heterogeneous Objects By Duygu Yengin
  6. Welfare Lower Bounds and Strategyproofness in the Queueing Problem By Duygu Yengin; Youngsub Chun
  7. Communication and Coordination in a Two-Stage Game By Tjaša Bjedov; Thierry Madiès; Marie Claire Villeval
  8. Coincidence of Cooperative Game Theoretic Solutions in the Appointment Problem By Youngsub Chun; Nari Park; Duygu Yengin
  9. Evaluating Assignment without Transfers: A Market Perspective By He, Yinghua; Li, Sanxi; Yan, Jianye
  10. A Bertrand-Edgeworth oligopoly with a public firm By Rácz, Zoltán; Tasnádi, Attila
  11. Do Negative Emotions Explain Punishment in Power-to-Take Game Experiments ? By Fabio Galeotti
  12. Identifcation and Estimation of Incomplete Information Games with Multiple Equilibria By Ruli Xiao
  13. Bank Networks: Contagion, Systemic Risk and Prudential Policy By Aldasoro, Iñaki; Delli Gatti, Domenico; Faia, Ester
  14. Depth of Reasoning and Higher Order Beliefs By Strzalecki, Tomasz

  1. By: Dirk Bergemann (Cowles Foundation, Yale University); Stephen Morris (Dept. of Economics, Princeton University)
    Abstract: A game of incomplete information can be decomposed into a basic game and an information structure. The basic game defines the set of actions, the set of payoff states the payoff functions and the common prior over the payoff states. The information structure refers to the signals that the players receive in the game. We characterize the set of outcomes that can arise in Bayes Nash equilibrium if players observe the given information structure but may also observe additional signals. The characterization corresponds to the set of (a version of) incomplete information correlated equilibria which we dub Bayes correlated equilibria. We identify a partial order on many player information structures (individual sufficiency) under which more information shrinks the set of Bayes correlated equilibria. This order captures the role of information in imposing (incentive) constraints on behavior.
    Keywords: Correlated equilibrium, Incomplete information, Bayes Nash equilibrium, Bayes correlated equilibrium, Robust predictions, Information structure, Sufficiency, Blackwell ordering
    JEL: C72 D82 D83
    Date: 2013–09
  2. By: Nizar Allouch (Queen Mary, University of London); Myrna Wooders (vanderbilt)
    Abstract: We provide a new proof of the non-emptiness of approximate cores of games with many players of a finite number of types. Earlier papers in the literature proceed by showing that, for games with many players, equal-treatment cores of their "balanced cover games", which are non-empty, can be approximated by equal-treatment ε-cores of the games themselves. Our proof is novel in that we rely on a fixed point theorem.
    Keywords: NTU games, core, approximate cores, small group effectiveness, coalition formation, payoff dependent balancedness.
    JEL: C7
    Date: 2014–11–03
  3. By: Pintér, Miklós
    Abstract: We give a new proof of Young's characterization of the Shapley value. Moreover, as applications of the new proof, we show that Young's axiomatization of the Shapley value is valid on various well-known subclasses of TU games.
    Keywords: TU games, Shapley value, Young's axiomatization
    JEL: C71
    Date: 2015–04–02
  4. By: Ramalingam, Abhijit; Rojo Arjona, David; Schram, Arthur; Van Leeuwen, Boris
    Abstract: We investigate the effects of power on cooperation in repeated social dilemma settings. Groups of five players play either multi-player trust games or VCM-games on a fixed network. Power stems from having the authority to allocate funds raised through voluntary contributions by all members and/or from having a pivotal position in the network (centrality). We compare environments with and without ostracism by allowing players in some treatments to exclude others from further participation in the network. Our results show that power matters but that its effects hinge strongly on the type involved. Reminiscent of the literature on leadership, players with authority often act more cooperatively than those without such power. Nevertheless, when possible, they are quickly ostracized from the group. Thus, this kind of power is not tolerated by the powerless. In stark contrast, centrality leads to less cooperative behavior and this free riding is not punished; conditional on cooperativeness, players with power from centrality are less likely to be ostracized than those without. Hence, not only is this type of power tolerated, but so is the free riding it leads to.
    Keywords: power, cooperation, networks, public goods
    JEL: C91 D02 D03 H41
    Date: 2015–03
  5. By: Duygu Yengin (School of Economics, University of Adelaide)
    Abstract: We study the problem of allocating heterogeneous indivisible tasks in a multi-object-demand model (i.e., each agent can be assigned multiple objects) where monetary transfers are allowed. Agents. costs for performing tasks are their private information and depend on what other tasks they are obtained with. First, we show that when costs are unrestricted or superadditive, then there is no envy-free and egalitarian-equivalent mechanism that assigns the tasks efficiently. Then, we characterize the class of envy-free and egalitarian-equivalent Groves mechanisms when costs are subadditive. Finally, within this class, we identify the Pareto-dominant subclass under a bounded-deficit condition. We show that the mechanisms in this subclass are Pareto-undominated by any other Groves mechanism or neutral Weighted-Groves mechanism satisfying the same bounded-deficit condition.
    Keywords: egalitarianism, egalitarian-equivalence, no-envy, strategy-proofness, population monotonicity, fair division, the Groves mechanisms, the Weighted-Groves mechanisms, allocation of indivisible goods and money, multi-object-demand, discrete public goods.
    JEL: C79 D61 D63
    Date: 2015–03
  6. By: Duygu Yengin (School of Economics, University of Adelaide); Youngsub Chun (Seoul National University)
    Abstract: We investigate the implications of welfare lower bounds together with queue-efficiency and strategyproofness in the context of the queueing problem. As a consequence, we provide alternative characterizations of the k-pivotal mechanisms (Mitra and Mutuswami [13]). First, we introduce the k-welfare lower bound, which ensures that no agent is worse off than the case where she is assigned to the kth position in the queue without any monetary transfer. For each k; we show that the k-pivotal mechanisms generate the minimal budget deficit in each queueing problem among all mechanisms satisfying queue-efficiency, strategyproofness and the k-welfare lower bound. Next, we consider a well-known welfare lower bound, the identical preferences lower bound and show that when there are odd number of agents, the k-pivotal mechanisms with k = (n+1)/2 generate the minimal budget deficit in each queueing problem among all mechanisms satisfying queue-efficiency, strategyproofness and the identical preferences lower bound.
    Keywords: Queueing problem, queue-efficiency, strategyproofness, k-pivotal mechanisms, k-welfare lower bound, identical preferences lower bound.
    JEL: C72 D63 D71 D82
    Date: 2015–03
  7. By: Tjaša Bjedov (Université de Lyon, F-69007, France; CNRS, GATE Lyon St Etienne, 93, Chemin des Mouilles, F-69130, Ecully, France; University of Fribourg, Bd de Pérolles 90 CH-1700 Fribourg, Switzerland); Thierry Madiès (University of Fribourg, Bd de Pérolles 90 CH-1700 Fribourg, Switzerland); Marie Claire Villeval (Université de Lyon, F-69007, France; CNRS, GATE Lyon St Etienne, 93, Chemin des Mouilles, F-69130, Ecully, France)
    Abstract: We study the impact of communication on behavior in a two-stage coordination game with asymmetric payoffs. We test experimentally whether individuals can avoid a head-to-head confrontation by means of coordinated strategies. In particular we analyze whether and how quickly a conflict-avoidance take-turn strategy can emerge. First, our results show that players learn to solve the conflict by choosing opposite options at both stages of the game. Second, many adopt a take-turn strategy to sustain coordination over time and alleviate the inequality induced by the asymmetry of payoffs. Third, communication increases the likelihood of conflict resolution even when a single pair member has the right to communicate.
    Keywords: Coordination, communication, turn taking, conflict, experiment
    JEL: C91 D74 L15 H71
    Date: 2015
  8. By: Youngsub Chun (Seoul National University); Nari Park (Seoul National University); Duygu Yengin (School of Economics, University of Adelaide)
    Abstract: The fixed-route traveling salesman problem with appointments, simply the appointment problem, is concerned with the following situation. Starting from home, a traveller makes a scheduled visit to a set of sponsors and returns home. If a sponsor in the route cancels her appointment, the traveller returns home and waits for the next appointment. We are interested in finding a way of dividing the total traveling cost among sponsors in the appointment problem by applying solutions developed in the cooperative game theory. We show that the well-known solutions of the cooperative game theory, the Shapley value, the nucleolus (or the prenucleolus), and the t -value, coincide under a mild condition onthe traveling cost.
    Keywords: Fixed-route traveling salesman problem, appointment problem, Shapley value, prenucleolus, nucleolus, t-value, coincidence
    JEL: C71
    Date: 2015–03
  9. By: He, Yinghua; Li, Sanxi; Yan, Jianye
    Abstract: We show that every (random) assignment/allocation without transfers can be considered as a market outcome with personalized prices and an equal income. One can thus evaluate an assignment by investigating the prices and the induced opportunity sets. When prices are proportional across agents, the assignment is efficient; when prices are common, the assignment is both efficient and envy-free. Moreover, this market perspective reveals a weakness of envy-freeness.
    Keywords: allocation without transfers, competitive equilibrium, equal incomes, market perspective, envy-free, Pareto efficient, coalitional-envy-free, random assignment
    JEL: C78 D61 D63
    Date: 2015–03
  10. By: Rácz, Zoltán; Tasnádi, Attila
    Abstract: We determine conditions under which a pure-strategy equilibrium of a mixed Bertrand-Edgeworth oligopoly exists. In addition, we determine its pure-strategy equilibrium whenever it exists and compare the equilibrium outcome with that of the standard Bertrand-Edgeworth oligopoly with only private firms.
    Keywords: Bertrand-Edgeworth, mixed oligopoly
    JEL: D43 L13
    Date: 2015–04–07
  11. By: Fabio Galeotti (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France)
    Abstract: An important branch of economic research on emotions has used power-to-take game experiments to study the impact of negative emotions, such as anger, irritation and contempt, on the decision to punish. We investigate experimentally the role that the specific punishment technology adopted plays in this context, and test to what extent punishing behavior can be truly attributed to negative emotions. We find that a large part (around 70%) of the punishment behavior observed in previous PTTG studies is explained by the technology of punishment adopted instead of negative emotions. Once this effect is removed, negative emotions do still play an important role, but the efficiency costs associated to them are much smaller.
    Keywords: Emotions, punishment, power-to-take, experiment
    JEL: A12 C72 C91
    Date: 2015
  12. By: Ruli Xiao (Indiana University)
    Abstract: Multiple equilibria in games pose a big challenge for identifcation and estimation. Existing literature typically abstracts from multiplicity by assuming that the data is generated by the same equilibrium. Instead of imposing such restrictions, this paper provides a nonparametric identification methodology for finite action games with incomplete information that allow for (possibly) multiple equilibria. The method is applicable to both cross-sectional and panel data. Upon observing players' actions, the identification is achieved in two steps. First, I identify the equilibrium-specific components, such as the number of equilibria, the equilibrium selection probabilities, and individual players' strategies associated with each equilibrium. The identification is feasible by treating the underlying equilibrium as a latent variable and using results from the measurement error literature. Next, I identify the payoff functions nonparametrically with conventional exclusion restrictions. A two-step estimator is then proposed based on this identification method, which performs well based on Monte Carlo evidence. I apply the proposed methodology to study the strategic interaction among radio stations when choosing dierent time slots to air commercials. The empirical result supports the claim that multiple equilibria do exist across different cities. Moreover, I nd that each city exhibits the same equilibrium over time.
    Keywords: trade, gravity, composition, price, Washington Apples, trade-to-GDP, gains, rich, poor
    Date: 2015–03
  13. By: Aldasoro, Iñaki; Delli Gatti, Domenico; Faia, Ester
    Abstract: We present a network model of the interbank market in which optimizing risk averse banks lend to each other and invest in non-liquid assets. Market clearing takes place through a tâtonnement process which yields the equilibrium price, while traded quantities are determined by means of a matching algorithm. Contagion occurs through liquidity hoarding, interbank interlinkages and fire sale externalities. The resulting network configuration exhibits a core-periphery structure, dis-assortative behavior and low density. Within this framework we analyze the effects of prudential policies on the stability/efficiency trade-off. Liquidity requirements unequivocally decrease systemic risk but at the cost of lower efficiency (measured by aggregate investment in non-liquid assets); equity requirements tend to reduce risk (hence increasestability) without reducing significantly overall investment.
    Keywords: banking networks; contagion; fire sales; prudential regulation; systemic risk
    JEL: C63 D85 G21 G28 L14
    Date: 2015–04
  14. By: Strzalecki, Tomasz
    Abstract: As demonstrated by the email game of Rubinstein (1989), the predictions of the standard equilibrium models of game theory are sensitive to assumptions about the fine details of the higher order beliefs. This paper shows that models of bounded depth of reasoning based on level-k thinking or cognitive hierarchy make predictions that are independent of the tail assumptions on the higher order beliefs. The framework developed here provides a language that makes it possible to identify general conditions on depth of reasoning, instead of committing to a particular model such as level-k thinking or cognitive hierarchy.
    Date: 2014

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