nep-gth New Economics Papers
on Game Theory
Issue of 2015‒05‒02
nine papers chosen by
László Á. Kóczy
Magyar Tudományos Akadémia

  1. Efficiency vs. Stability in a Mixed Network Formation Model By Olaizola Ortega, María Norma; Valenciano Llovera, Federico
  2. Transferring Ownership of Public Housing to Existing Tenants: A Market Design Approach By Andersson , Tommy; Ehlers, Lars; Svensson , Lars-Gunnar
  3. Efficient Allocations in Economies with Asymmetric Information when the Realized Frequency of Types is Common Knowledge By Aristotelis Boukouras; Kostas Koufopoulos
  4. Improving the Allocation of Spots in Child Care Facilities for Toddlers in Germany: A Mechanism Design Approach By Carlsson, Sissa; Thomsen, Stephan L.
  5. Alliance Formation in a Vertically Differentiated Market By Jean J. Gabszewicz; Marco A. Marini; Ornella Tarola
  6. Efficient Network Structures with Separable Heterogeneous Connection Costs By Babak Heydari; Mohsen Mosleh; Kia Dalili
  7. The Role of Bounded Rationality and Imperfect Information in Subgame Perfect Implementation: An Empirical Investigation By Aghion, Philippe; Fehr, Ernst; Holden, Richard; Wilkening, Tom
  8. The Evolution of a "Kantian Trait": Inferring from the Dictator Game By Lorenzo Cerda Planas
  9. International Fisheries Agreements and Non-consumptive Values By Pintassilgo, Pedro; Laukkanen, Marita; Kronbak, Lone Grønbæk; Lindroos, Marko

  1. By: Olaizola Ortega, María Norma; Valenciano Llovera, Federico
    Keywords: network formation, unilateral link-formation, bilateral link-formation, stability, efficiency, cost share
    JEL: A14 C72 D20 J00
    Date: 2015–03–26
  2. By: Andersson , Tommy (Department of Economics, Lund University); Ehlers, Lars (Département de sciences économiques, Université de Montréal); Svensson , Lars-Gunnar (Department of Economics, Lund University)
    Abstract: This paper explores a housing market with an existing tenant in each house and where the existing tenants initially rent their houses. The idea is to identify equilibrium prices for the housing market given the prerequisite that a tenant can buy any house on the housing market, including the one that he currently is possessing, or continue renting the house he currently is occupying. The main contribution is the identification of an individually rational, equilibrium selecting, and group non-manipulable price mechanism in a restricted preference domain that contains almost all preference profiles. In this restricted domain, the identified mechanism is the equilibrium selecting mechanism that transfers the maximum number of ownerships to the existing tenants. We also argue that the theoretical model represents an extension and an improvement of the U.K. Housing Act 1980 whose main objective is to transfer the ownership of the houses to the existing tenants.
    Keywords: Existing tenants; equilibrium; minimum equilibrium prices; maximum trade; group non-manipulability; dynamic price process
    JEL: C71 C78 D71 D78
    Date: 2015–04–24
  3. By: Aristotelis Boukouras; Kostas Koufopoulos
    Abstract: We consider a general economy, where agents have private information about their types. Types can be multi-dimensional and potentially interdependent. We show that, if the realized frequency of types (the exact number of agents for each type) is common knowledge, then a mechanism exists, which is consistent with truthful revelation of private information and which implements first-best allocations of resources as the unique equilibrium. The result requires the single crossing property on utility functions and the anonymity of the Pareto correspondence.
    Keywords: adverse selection, first-best, full implementation, mechanism design, single-crossing property
    JEL: D71 D82 D86
    Date: 2015–04
  4. By: Carlsson, Sissa (NIW Hannover, Leibniz Universität Hannover); Thomsen, Stephan L. (NIW Hannover, Leibniz Universität Hannover)
    Abstract: The undersupply of spots in German daycare facilities for toddlers challenges parents' possibilities to work. To ease the situation, the government implemented a new law entitling every child between ages one and three to daycare supervision for about four hours per day. Nevertheless, the stressed situation of matching demand and supply does not only result from limited spaces but also from inefficient allocation. By means of simulations under different scenarios, we contrast a stylized version of decentralized allocation to a centralized allocation mechanism which applies a deferred-acceptance algorithm. This centralized system results in better and faster matches.
    Keywords: allocation mechanism, deferred-acceptance algorithm, early education, child care
    JEL: C78 D82 J13
    Date: 2015–04
  5. By: Jean J. Gabszewicz (CORE UniversitŽ Catholique de Louvain); Marco A. Marini (Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza"); Ornella Tarola (Dipartimento di Scienze sociali ed economiche, Universita' degli Studi di Roma "La Sapienza")
    Abstract: This paper studies how the possibility for firms to sign collusive agreements (as for instance being part of alliances, cartels and mergers) may affect their quality and price choice in a market with vertically differentiated goods. For this purpose we model the firm decisions as a three-stage game in which, at the first stage, firms can form an alliance via a sequential game of coalition formation and, at the second and third stage, they decide simultaneously their product qualities and prices, respectively. In such a setting we study whether there exist circumstances under which either full or partial collusion can be sustained as a subgame perfect Nash equilibrium of the coalition formation game. Also, we analyse the effects of different coalition structures on equilibrium qualities, prices and profits accruing to firms. It is shown that only intermediate coalition structures arise at the equilibrium, with the bottom quality firm always included. Moreover, all equilibrium price and quality configurations always coincide with that observed in the duopoly case, with only two quality variants on sale.
    Keywords: Vertically differentiated market ; endogenous alliance formation ; coalition structures ; price collusion ; grand coalition ; coalition stability ; sequential games of coalition formation
    Date: 2015
  6. By: Babak Heydari; Mohsen Mosleh; Kia Dalili
    Abstract: We introduce a heterogeneous connection model for network formation to capture the effect of cost heterogeneity on the structure of efficient networks. In the proposed model, connection costs are assumed to be separable, which means the total connection cost for each agent is uniquely proportional to its degree. For these sets of networks, we provide the analytical solution for the efficient network and discuss stability impli- cations. We show that the efficient network exhibits a core-periphery structure, and for a given density, we find a lower bound for clustering coefficient of the efficient network.
    Date: 2015–04
  7. By: Aghion, Philippe (Harvard University); Fehr, Ernst (University of Zurich); Holden, Richard (University of New South Wales); Wilkening, Tom (University of Melbourne)
    Abstract: In this paper we conduct a laboratory experiment to test the extent to which Moore and Repullo's subgame perfect implementation mechanism induces truth-telling in practice, both in a setting with perfect information and in a setting where buyers and sellers face a small amount of uncertainty regarding the good's value. We find that Moore-Repullo mechanisms fail to implement truth-telling in a substantial number of cases even under perfect information about the valuation of the good. This failure to implement truth-telling is due to beliefs about the irrationality of one's trading partner. Therefore, although the mechanism should – in theory – provide incentives for truth-telling, many buyers in fact believe that they can increase their expected monetary payoff by lying. The deviations from truth-telling become significantly more frequent and more persistent when agents face small amounts of uncertainty regarding the good's value. Our results thus suggest that both beliefs about irrational play and small amounts of uncertainty about valuations may constitute important reasons for the absence of Moore-Repullo mechanisms in practice.
    Keywords: implementation theory, incomplete contracts, experiments
    JEL: D23 D71 D86 C92
    Date: 2015–04
  8. By: Lorenzo Cerda Planas (Paris School of Economics - Centre d'Economie de la Sorbonne)
    Abstract: The aim of this paper is twofold. Starting from the population dynamics literature, which usually finds the resulting distribution of a trait in a population, according to some parents' preferences, I answer the inverted question: Which preference function would yield into a given trait distribution? I solve this using a continuous trait, instead of finite types of agents. Using this result, I connect this transmission theory of social traits with the well-known results of Dictator Game (DG) experiments. I use a specific definition of a Kantian trait applied to DG results, and determine the distribution of this trait that is commonly found in these experiments. With these two ingredients, I show that homo-oeconomicus parents have a greater' dislike' or disutility of having offspring with different traits from them compared to their Kantian counterparts. This could be a result of myopic empathy being stronger in homo-oeconomicus parents, driving this dislike of difference
    Keywords: Population dynamics; Kantian morale; evolutionary equilibrium
    JEL: C62 C63 C73 C61 D64
    Date: 2015–03
  9. By: Pintassilgo, Pedro (Faculty of Economics and Research Centre for Spatial and Organizational Dynamics); Laukkanen, Marita (VATT Institute for Economic Research); Kronbak, Lone Grønbæk (Department of Business and Economics); Lindroos, Marko (Department of Economics and Management)
    Abstract: The management of internationally shared fish stocks is a major economic, environmental and political issue. According to international law, these resources should be managed cooperatively under international fisheries agreements (IFAs). This paper studies the formation and stability of IFAs through a coalition game that accounts for both direct consumptive values (harvesting profits) and non-consumptive values of the fish stock per se. The results show that accounting for non-consumptive values helps conserve the fish stock in that equilibrium fishing efforts are smaller and fish stock larger than without non-consumptive values under all possible coalition scenarios (full, partial and no cooperation). However, considering non-consumptive values does not affect the outcome of the game in terms of the prospects for cooperation: even with substantial non-consumptive benefits, the outcome is full non-cooperation. Hence, the trap of non-cooperation in international fisheries management cannot be overcome simply by explicitly accounting for non-consumptive values within IFAs. It is suggested that strengthening the role of IFAs and limiting the ability of non-member countries to free-ride be further investigated as measures fostering cooperation.
    Keywords: Coalition games; international fisheries agreements; non-consumptive values; non-use values; shared fish stocks
    JEL: C70 F53 Q22
    Date: 2015–04–17

This nep-gth issue is ©2015 by László Á. Kóczy. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.