nep-gth New Economics Papers
on Game Theory
Issue of 2015‒08‒01
nine papers chosen by
László Á. Kóczy
Magyar Tudományos Akadémia

  1. Existence, Uniqueness, and Comparative Statics in Contests By Martin Kaae Jensen
  2. Market games as social dilemmas By Iván Barreda Tarrazona; Aurora García-Gallego; Nikolaos Georgantzis; Nikolas Ziros
  3. Shapley Allocation - the effect of Services on Diversification By Peter Mitic; Bertrand K. Hassani
  4. Abstract Economies with Endogenous Sharing Rules By Philippe Bich; Rida Laraki
  5. On the Salience-Based Level-k Model By Irenaeus Wolff
  6. Some determinants of trust formation and pro social behaviours in investment games: An experimental study By Di Bartolomeo Giovanni; Papa Stefano
  7. Pledges of commitment and cooperation in partnerships By Lachlan Deer; Ralph-C. Bayer
  8. Conditional Cooperation and Betrayal Aversion By Robin Cubitt; Simon Gaechter; Simone Quercia
  9. Cooperative Behavior in Farmer Clubs: Experimental Evidence from Malawi By Maertens, Annemie; Michelson, Hope; Nourani, Vesall

  1. By: Martin Kaae Jensen
    Abstract: Many important games are aggregative allowing for robust comparative statics analysis even when a game does not exhibit strategic complements or substitutes (Acemoglu and Jensen (2013)). This paper establishes such comparative statics results for contests improving upon existing results by (i) allowing payoff functions to be discontinuous at the origin, and (ii) allowing for asymmetric rent-seeking contests and patent races. A leading example where (i) is relevant is the classical Tullock contest (Tullock (1980)). The paper also studies existence and uniqueness of equilibria extending the results of Szidarovszky and Okuguchi (1997) and Cornes and Hartley (2005) to patent races.
    Keywords: Comparative statics, Uniqueness, Existence, Contest, Rent-seeking, Aggregative game, Local solvability condition.
    JEL: C61 D80 D90 E20 I30
    Date: 2015–07
  2. By: Iván Barreda Tarrazona (LEE & Economics Department, Universitat Jaume I, Castellón, Spain); Aurora García-Gallego (LEE & Economics Department, Universitat Jaume I, Castellón, Spain); Nikolaos Georgantzis (UJI-LEE, Spain and Agriculture Policy and Development, University of Reading, UK); Nikolas Ziros (Department of Economics, University of Cyprus, Cyprus)
    Abstract: We study an experimental exchange market based on Shapley and Shubik (1977). Two types of players with different preferences and endowments independently submit quantities of the goods they wish to exchange in the market. We implement a case in which the Nash equilibrium involves minimum exchange or no trade at all. This is almost never confirmed by our laboratory data. On the contrary, after a sufficiently large number of periods, convergence close to full trade is obtained, which can be supported as an epsilon symmetric strategy evolutionary stable equilibrium. We also study cheap talk communication within pairs of traders from the same (horizontal) and opposite (vertical) sides of the market. As predicted by the theory, horizontal communication restricts trade, whereas vertical communication leads to higher bids, but always lower or equal than those achieved tacitly by learning alone. Vertical messages limit the collusive effect of horizontal communication when the former precede the latter. Results do not differ when players are allowed to choose the communication mode.
    Keywords: Efficiency, strategic market games, experiments, vertical communication, horizontal communication Technology
    JEL: D43 C91 C73
    Date: 2015
  3. By: Peter Mitic (Santander UK); Bertrand K. Hassani (Grupo Santander et Centre d'Economie de la Sorbonne)
    Abstract: The Shapley method is applied to capital allocation in the context of a simple business model, where many business units supported by services. In this model the services are capable of either reducing the capital payable by the business units, or the opposite. A simple model of evaluating the value of coalitions is proposed, with a modification if a service is a member of the coalition. A closed form formula for the Shapley allocation to all players is derived, thus eliminating combinatorial problems
    Keywords: Allocation; Shapley; operational risk; diversification; service; Game theory; capital value
    JEL: C71
    Date: 2015–06
  4. By: Philippe Bich (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS); Rida Laraki (LAMSADE - Laboratoire d'analyse et modélisation de systèmes pour l'aide à la décision - CNRS - Université Paris IX - Paris Dauphine, Department of Economics, Ecole Polytechnique - Polytechnique - X - CNRS)
    Abstract: Endogenous sharing rules was introduced by Simon and Zame to model payoff indeterminacy in discontinuous games. Their main result concerns the existence of a solution, i.e., a mixed Nash equilibrium and an associated sharing rule. This note extends their result to abstract economies where, by definition, players are restricted to pure strategies, and provide an interpretation of Simon and Zame's model in terms of preference incompleteness.
    Abstract: La notion de règle de partage endogène (« Endogenous sharing rules ») a été introduite par Simon et Zame (Econometrica 1990) afin de modéliser la possible indétermination des paiements dans les jeux stratégiques discontinus. Leur résultat principal est l'existence d'une solution, c'est à dire qu'un équilibre de Nash mixte et d'une règle de partage associée. Dans cette note, l'on étend leur résultat au cas d'une économie abstraite, où, par définition, les joueurs doivent choisir des stratégies pures, et l'on fournit une interprétation du modèle Simon et Zame en terme de préférences incomplètes.
    Date: 2015–06
  5. By: Irenaeus Wolff
    Abstract: Crawford and Iriberri (AER, 2007) show how a level-k model can be based on salience to explain behaviour in games with distinctive action labels, taking hideand-seek games as an example. This study presents four different experiments designed to measure salience. When based on any of these empirical salience measures, their model does not explain behaviour. Modifying the model such that players follow salience when payoffs are equal, the model fits hide-and-seek data well. However, neither the original nor the modified model account for data from a discoordination game. This holds true even when incorporating the heterogeneity in measured salience perceptions.
    Keywords: ABAA, hide and seek, cognitive hierarchy, strategic reasoning, saliency
    Date: 2015
  6. By: Di Bartolomeo Giovanni; Papa Stefano
    Date: 2014–09
  7. By: Lachlan Deer; Ralph-C. Bayer
    Abstract: We use experimental methods to investigate whether pledges of commitment can improve cooperation in endogenously formed partnerships facing a social dilemma. Treatments vary in terms of the individual’s (a) opportunity to commit to their partner, (b) the cost of dissolving committed partnerships, and (c) the distribution of these dissolution costs between partners. Our findings show that pledges of commitment increase cooperation in committed partnerships when costs to dissolve them are shared equally among partners. In contrast, when costs to dissolve committed partnerships fall solely on the individual choosing to break up, pledges of commitment fail to improve cooperation and instead decrease cooperation.
    Keywords: Commitment, cooperation, endogenous group formation, experiment
    JEL: C92 D03 D83 H41
    Date: 2015–07
  8. By: Robin Cubitt (Department of Economics, University of Nottingham); Simon Gaechter (Department of Economics, University of Nottingham); Simone Quercia (University of Bonn, Institute for Applied Microeconomics)
    Abstract: We investigate whether there is a link between conditional cooperation and betrayal aversion. We use a public goods game to classify subjects by type of contribution preference and by belief about the contributions of others; and we measure betrayal aversion for different categories of subject. We find that, among conditional cooperators, only those who expect others to contribute little to the public good are significantly betrayal averse, while there is no evidence of betrayal aversion for those who expect substantial contributions by others. This is consistent with their social risk taking in public goods games, as the pessimistic conditional cooperators tend to avoid contribution to avoid exploitation, whereas the optimistic ones typically contribute to the public good and thus take the social risk of being exploited.
    Keywords: public goods game, conditional cooperation, trust, betrayal aversion, exploitation aversion, free riding, experiments
    Date: 2015
  9. By: Maertens, Annemie; Michelson, Hope; Nourani, Vesall
    Abstract: Farmer clubs play an important role in improving the lives of millions of farmers in developing countries as they can resolve critical market failures, ranging from providing access to output markets and club-based input credit to sharing technology and marketing information. The efficacy of farmer clubs, however, depends on successful collaboration between members and their ability to overcome free-riding. In this study, we conducted a public goods game among farmer clubs in Malawi. In this game, club members were asked to divide 400 Malawian kwacha between an individual account and a common account. At the end of the game, the funds in the common account were multiplied by two and used by the club to provide a public good of their choice. Using the amount contributed into the common account as a measure of cooperative behavior, we find that most club members display some level of cooperative behavior, and that the extent of this cooperative behavior critically depends on an individual’s relative status within the club. Individuals with a higher status cooperate less compared to individuals with a lower status. In addition, women appear to be less cooperative compared to men. We show that these results are consistent with the predictions of a Voluntary Contribution Nash Equilibrium in which club members are uncertain about each other’s valuations and expect a bargaining process (as opposed to democratic process) to resolve these uncertainties and provide a resolution as to which public good the club selects at the end of the game.
    Keywords: Farmer clubs, Malawi, Public Goods Game, Political Economy, Public Economics, O1, Q1, H4,
    Date: 2015

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