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on Game Theory |
| By: | Juan M. Benito-Ostolaza (Departamento de Econom´ıa.Universidad P´ublica de Navarra, Campus Arrosadia s/n. 31006 Pamplona. Navarra. Spain.); Pablo Brañas-Garza (Middlesex University London, Business School, London NW4 4BT, England.); Penélope Hern´andez (Departamento de An´alisis Econ´omico y ERI-CES, Facultad de Econom´ıa. Avda. dels Tarongers, s/n. 46022 Valencia. Spain.; ERI-CES and Department of Applied Economics II, University of Valencia. Facultad de Economía. Avenida dels Tarongers s/n, 46022 Valencia, Spain.) |
| Abstract: | In this paper we experimentally test Schelling’s (1971) segregation model and confirm the striking result of segregation. In addition, we extend Schelling’s model theoretically by adding strategic behaviour and moving costs. We obtain a unique subgame perfect equilibrium in which rational agents facing moving costs may find it optimal not to move (anticipating other participants’ movements). This equilibrium is far from full segregation. We run experiments for this extended Schelling model, and find that the percentage of full segregated societies notably decreases with the cost of moving and that the degree of segregation depends on the distribution of strategic subjects. |
| Keywords: | Subgame perfect equilibrium, segregation, experimental games |
| JEL: | C72 C9 R23 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:eec:wpaper:1504&r=gth |
| By: | Pablo Amorós (Department of Economic Theory, Universidad de Málaga) |
| Abstract: | A jury has to decide the winner of a competition among a group of contestants. All members of the jury know who the deserving winner is, but this contestant is unknown to the planner. The social optimum is that the jury select the deserving winner. Each individual juror may be biased in favor (friend) or against (enemy) some contestant, and therefore her goal does not necessarily coincide with the social objective. We analyze the problem of designing extensive form mechanisms that give the jurors the right incentives to always choose the deserving winner when the solution concept is subgame perfect equilibrium. We restrict the class of mechanisms considered to those which satisfy two conditions: (1) the jurors take turns to announce the contestant they think should win the competition, and (2) telling the truth is always part of a profile equilibrium strategies. A necessary condition for these mechanisms to exist is that, for each possible pair of contestants, there is at least one juror who is impartial with respect to them. This condition, however, is not sufficient. In addition, the planner must know the friend or the enemy of at least one juror. |
| Keywords: | Mechanism design; Jury; Subgame perfect equilibrium |
| JEL: | C72 D71 D78 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:mal:wpaper:2015-4&r=gth |
| By: | Kaustav Das (Department of Economics, University of Exeter) |
| Abstract: | In this paper, I examine the effect of introducing heterogeneity between players in a model of strategic experimentation. I consider a two-armed bandit problem in continuous time with one safe arm and a risky arm. There are two players and each has an access to such a bandit. A player using the safe arm experiences a safe flow payoff. The risky arm can either be good or bad. A bad risky arm is worse than the safe arm and the good risky arm is better than the safe arm. Players start with a common prior about the probability of the risky arm being good. At a time point, a player can choose only one of the arms. I show that if the degree of heterogeneity between the players is high enough, then there exists a unique Markov perfect equilibrium in simple cut-off strategies. The non-cooperative equilibrium in the heterogeneous model in terms of welfare, always gets a higher rank than any non-cooperative equilibrium of a homogeneous players model with same or more amount of experimentation in the benchmark. |
| Keywords: | Two-armed Bandit, Free-Riding, Learning. |
| JEL: | C73 D83 O31 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:exe:wpaper:1507&r=gth |
| By: | Schoch, Daniel |
| Abstract: | Judgement aggregation theory provides us by a dilemma since it is plagued by impossibility results. For a certain class of logically interlinked agendas, full independence for all issues leads to Arrovian dictatorship. Since independence restricts the possibility of strategic voting, it is nevertheless a desirable property even if only partially fulfilled. We explore a “Goldilock” zone of issue-wise sequential aggregation rules which offers just enough independence not to constrain the winning coalitions among different issues, but restrict the possibilities of strategic manipulation. Perfect Independence, as we call the associated axiom, characterises a gameform like representation of the aggregation function by a binary tree, where each non-terminal node is associated with an issue on which all voters make simultaneous decisions. Our result is universal insofar as any aggregation rule satisfying independence for sufficiently many issues has a game-form representation. One corollary of the game form representation theorem implies that dictatorial aggregation rules have game-form representations, which can be “democratised” by simply altering the winning coalitions at every node. |
| Keywords: | Judgment aggregation; Arrow’s theorem; Escape-routes; Game form |
| JEL: | D70 D71 |
| Date: | 2015–01–24 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:64311&r=gth |
| By: | Hannes Rusch |
| Abstract: | Phenomena like meat sharing in hunter-gatherers, self-sacrifice in intergroup conflicts, and voluntary contribution to public goods provision in laboratory experiments have led to the development of numerous theories on the evolution of altruistic in-group beneficial behavior in humans. Many of these theories abstract away from the effects of kinship on the incentives for public goods provision, though. Here, it is investigated analytically how genetic relatedness changes the incentive structure of that paradigmatic game which is conventionally used to model and experimentally investigate collective action problems: the linear public goods game. Using recent anthropological data sets on relatedness in 61 contemporary hunter-gatherer and horticulturalist societies the relevant parameters of this model are then estimated. It turns out that the kinship patterns observed in these societies substantially reduce the negative effect of increasing group size on incentives for public goods provision. It is suggested, therefore, that renewed attention should be given to inclusive fitness theory in the context of public goods provision also in sizable groups, because its explanatory power with respect to this central problem in the evolution of human cooperativeness and altruism might have been substantially underrated. |
| Keywords: | public goods, inclusive fitness, altruism, relatedness, kinship |
| JEL: | B15 C72 D64 H41 |
| Date: | 2015–05–03 |
| URL: | http://d.repec.org/n?u=RePEc:kls:series:0082&r=gth |
| By: | Pradeep Dubey; John Geanakoplos |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:nys:sunysb:14-02&r=gth |
| By: | Wagner, Peter |
| Abstract: | This paper considers a "war of attrition" game in which agents learn about an uncertain state of the world through private signals and from their peers. I provide existence and uniqueness results for a class of equilibria that satisfy a "full-participation" condition, and show that asymmetries in the distribution of information can lead to excessive stopping and an oversupply of information relative to the social optimum. |
| Date: | 2015–05–04 |
| URL: | http://d.repec.org/n?u=RePEc:trf:wpaper:500&r=gth |
| By: | Wagner, Peter |
| Abstract: | This paper considers a "war of attrition" game in which agents learn about an uncertain state of the world through private signals and from their peers. I provide existence and uniqueness results for a class of equilibria that satisfy a "full-participation" condition, and show that asymmetries in the distribution of information can lead to excessive stopping and an oversupply of information relative to the social optimum. |
| Date: | 2015–05–04 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:24764&r=gth |
| By: | Mark Kagan; Frederick van der Ploeg; Cees Withagen |
| Abstract: | Industria imports oil, produces final goods and wishes to mitigate global warming. Oilrabia exports oil and buys final goods from the other country. Industria uses the carbon tax to impose an import tariff on oil and steal some of Oilrabia’s scarcity rent. Conversely, Oilrabia has monopoly power and sets the oil price to steal some of Industria’s climate rent. We analyze the relative speeds of oil extraction and carbon accumulation under these strategic interactions for various production function specifications and compare these with the efficient and competitive outcomes. We prove that for the class of HARA production functions the oil price is initially higher and subsequently lower in the open-loop Nash equilibrium than in the efficient outcome. The oil extraction rate is thus initially too low and in later stages too high. The HARA class includes linear, loglinear and semi-loglinear demand functions as special cases. For non-HARA production functions Oilrabia may in the open-loop Nash equilibrium initially price oil lower than the efficient level, thus resulting in more oil extraction and climate damages. We also contrast the open-loop Nash and efficient outcomes numerically with the feedback Nash outcomes. We find that the optimal carbon tax path in the feedback Nash equilibrium is flatter than in the open-loop Nash equilibrium. It turns out that for certain demand functions using the carbon tax as an import tariff may hurt consumers’ welfare as the resulting user cost of oil is so high that the fall in welfare wipes out the gain from higher tariff revenues. |
| Keywords: | exhaustible resources, Hotelling rule, efficiency, carbon tax, climate rent, differential game, open-loop Nash equilibrium, subgame-perfect nash equilibrium, HARA production functions |
| JEL: | C73 H30 Q32 Q37 Q54 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:oxcrwp:155&r=gth |