nep-gth New Economics Papers
on Game Theory
Issue of 2015‒10‒10
nineteen papers chosen by
László Á. Kóczy
Magyar Tudományos Akadémia

  1. On dynamic games with randomly arriving players By Pierre Bernhard; Marc Deschamps
  2. On the Existence of Nash Equilibrium in Bayesian Games By Oriol Carbonell-Nicolau; Richard McLean
  3. Nash equilibrium uniqueness in nice games with isotone best replies By Ceparano, Maria Carmela; Quartieri, Federico
  4. A Pseudo-Market Approach to Allocation with Priorities By He, Yinghua; Miralles, Antonio; Pycia, Marek; Yan, Jianye
  5. An Experiment on Lowest Unique Integer Games By Takashi Yamada; Nobuyuki Hanaki
  6. Experience Transmission : Truth-telling Adoption in Matching By Christophe Bravard; Liza Charroin
  7. Agricultural marketing cooperatives with direct selling: A cooperative–non-cooperative game By Maxime Agbo; Damien Rousselière; Julien Salanié
  8. Universalized Prisoner's Dilemma With Risk By Paul Studtmann
  9. Trading Networks with Bilateral Contracts By Tam\'as Fleiner; Zsuzsanna Jank\'o; Akihisa Tamura; Alexander Teytelboym
  10. Decomposing the Afternoon Effect: An Empirical Investigation of Sequential Train Ticket Auctions By Andersson , Ola; Andersson , Tommy
  11. Does Environmental Connotation Affect Coordination Issues in Experimental Stag Hunt Game? By Dimitri Dubois; Mathieu Desole; Stefano Farolfi; Mabel Tidball; Annie Hofstetter
  12. Conditional risk measures in a bipartite market structure By Oliver Kley; Claudia Kl\"uppelberg; Gesine Reinert
  13. Researcher's Dilemma By Bobtcheff, Catherine; Bolte, Jérôme; Mariotti, Thomas
  14. Can a Platform Make Profit with Consumer' Mobility? A Two-Sided Monopoly Model with Random Endogenous Side-Swiching By Pierre Andreoletti; Pierre Gaze; Maxime Menuet
  15. The Gender Difference in the Value of Winning By Chen, Zhuoqiong; Ong, David; Sheremeta, Roman
  16. The Effect of Voting on Contributions in a Public Goods Game By le Sage, Sander; van der Heijden, Eline
  17. Modeling a Satisficing Judge By Christoph Engel; Werner Güth
  18. Public-Good Provision in Large Economies By Felix J. Bierbrauer; Martin F. Hellwig
  19. The Limits of Price Discrimination By Dirk Bergemann; Benjamin Brooks; Stephen Morris

  1. By: Pierre Bernhard (BIOCORE team, INRIA Sophia Antipolis-Méditerranée); Marc Deschamps (CRESE, BETA-CNRS and OFCE-Sciences Po., Univ. Bourgogne Franche-Comté)
    Abstract: We consider a dynamic game where additional players (assumed identical, even if there will be a mild departure from that hypothesis) join the game randomly according to a Bernoulli process. The problem solved here is that of computing their expected payoff as a function of time and the number of players present when they arrive, if the strategies are given. We consider both a finite horizon game and an infinite horizon, discounted game. As illustrations, we discuss some examples relating to oligopoly theory (Cournot, Stackelberg, cartel).
    Keywords: Dynamic game, Bernoulli process of entry, Oligopoly
    JEL: C72 C61 D21 L13
    Date: 2015–09
  2. By: Oriol Carbonell-Nicolau (Rutgers University); Richard McLean (Rutgers University)
    Abstract: We furnish conditions on the primitives of a Bayesian game that guarantee the existence of a Bayes-Nash equilibrium. By allowing for payoff discontinuities in actions, we cover various applications that cannot be handled by extant results.
    Keywords: discontinuous game, infinite game of incomplete information, behavioral strategy, distributional strategy, payoff security
    JEL: C72
    Date: 2015–10–06
  3. By: Ceparano, Maria Carmela; Quartieri, Federico
    Abstract: We prove the existence of a unique pure-strategy Nash equilibrium in nice games with isotone chain-concave best replies and compact strategy sets. We establish a preliminary fixpoint uniqueness argument showing sufficient assumptions on the best replies of a nice game that guarantee the existence of exactly one Nash equilibrium. Then, by means of a comparative statics analysis, we examine the necessity and sufficiency of the conditions on (marginal) utility functions for such assumptions to be satisfied; in particular, we find necessary and sufficient conditions for the isotonicity and chain-concavity of best replies. We extend the results on Nash equilibrium uniqueness to nice games with upper unbounded strategy sets and we present "dual" results for games with isotone chain-convex best replies. A final application to Bayesian games is exhibited.
    Keywords: Nash equilibrium uniqueness; Chain-concave best replies; Nice games; Comparative statics; Strategic complementarity.
    JEL: C61 C72
    Date: 2015–10–05
  4. By: He, Yinghua; Miralles, Antonio; Pycia, Marek; Yan, Jianye
    Abstract: We propose a pseudo-market mechanism for no-transfer allocation of indivisible objects that honors priorities such as those in school choice. Agents are given token money, face priority-specific prices, and buy utility-maximizing assignments. The mechanism is asymptotically incentive compatible, and the resulting assignments are fair and constrained Pareto efficient. Hylland and Zeckhauser's (1979) position-allocation problem is a special case of our framework, and our results on incentives and fairness are also new in their classical setting.
    Keywords: Priority-based allocation, Efficiency, Stability, Incentive Compatibility, Pseudo-Market Approach
    JEL: C78 D82 I29
    Date: 2015–09
  5. By: Takashi Yamada (Faculty of Global and Science Studies, Yamaguchi University); Nobuyuki Hanaki (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis - CNRS)
    Abstract: We experimentally study Lowest Unique Integer Games (LUIGs). In a LUIG, N (>= 3) players submit a positive integer up to M and the player choosing the smallest number not chosen by anyone else wins. LUIGs are simplified versions of real systems such as lottery games and Lowest/Highest Unique Bid Auctions that have been attracting attention from scholars, yet experimental studies are still scarce. Here, we consider four LUIGs with N={3,4} and M={3,4}. We find that (a) choices made by a majority of subjects over 50 rounds of a LUIG were not significantly different from that in the symmetric mixed-strategy Nash equilibrium (MSE) of the LUIG; however, (b) those subjects who behaved significantly differently from what the MSE predicts won the game more frequently than those who behaved similarly to what the MSE predicts.
    Keywords: Lowest Unique Integer Game, Laboratory Experiment
    Date: 2015–09–24
  6. By: Christophe Bravard (Université Grenoble 2, UMR 1215 GAEL, F38000 Grenoble, France; CNRS, GATE Lyon-St Etienne, F-42000, France); Liza Charroin (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon Saint-Etienne, Ecully, F-69130, France; Université Lyon 2, Lyon, F-69007, France)
    Abstract: Networks facilitate the exchange of goods and information and create benefits. We consider a network composed of complementary nodes, i.e., nodes that need to be connected to generate a positive payoff. This network may face intelligent attacks on links. To study how the network should be designed, we develop a strategic model, inspired by Dziubiński and Goyal (2013), with two players : a Designer and an Adversary. The Designer has two potential ways to defend her network : forming destructible links among the given set of nodes to increase connectivity or protecting a group of nodes (with indestructible links). Links formation and protections (indestructible links) are costly. The Adversary then allocates her resources to attack links. We examine two situations which differ according to the number of protections available to the Designer. Our main findings are that if the number of protections is not limited, the Designer should either protect all the nodes, or create a large number of (destructible) links to absorb the Adversary’s attack ; if the available number of protections is limited, then a strategy that uses protections and links can be the equilibrium.
    Keywords: Networks, Network defense, Network design, Attacks on links
    JEL: D74 D85
    Date: 2015
  7. By: Maxime Agbo (African School of Economics); Damien Rousselière (AGROCAMPUS OUEST [Le Rheu] - UR1 - Université de Rennes 1, Granem - Groupe de Recherche ANgevin en Economie et Management - UA - Université d'Angers - Agrocampus Ouest - Institut National de l'Horticulture et du Paysage); Julien Salanié (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - CNRS)
    Abstract: We build a theoretical model to study a market structure of a marketing cooperative with direct selling, in which many farmers are members of an agricultural marketing cooperative. They can sell their production either to the cooperative or on an oligopolistic local market. We show that the decision to sell to the cooperative induces an anti-competitive effect on the direct selling market. The cooperative facilitates collusion on the local market by making farmers softer competitors on that market. Conversely, direct selling may create a "healthy emulation" among farmers, leading to more production benefiting the cooperative.
    Keywords: competition,direct selling,local market,marketing cooperative
    Date: 2014
  8. By: Paul Studtmann
    Abstract: In this paper I present a mathematically novel approach to the Prisoner's Dilemma. I do so by first defining recursively a distinct action type, what I call 'universalizing', that I add to the original prisoner's dilemma. Such a modified version of the Prisoner's Dilemma provides a very food productive model of the choices that would be made in a prisoner's dilemma by agents who trust each other. As I show, players playing a universalized prisoner's dilemma get as far out of the dilemma as is mathematically possible. I then add the concept of risk to the universalized version of prisoner's dilemma. Doing so provide a model that is sensitive to the trustworthiness of the agents in any prisoner's dilemma. As I show, with no risk, agents get out of the prisoners dilemma; and with maximal risk, the succumb to it. succumb to it.
    Date: 2015–09
  9. By: Tam\'as Fleiner; Zsuzsanna Jank\'o; Akihisa Tamura; Alexander Teytelboym
    Abstract: We consider general networks of bilateral contracts that include supply chains. We define a new stability concept, called trail stability, and show that any network of bilateral contracts has a trail-stable outcome whenever agents' preferences satisfy full substitutability. Trail stability is a natural extension of chain stability, but is a stronger solution concept in general contract networks. Trail-stable outcomes are not immune to deviations of arbitrary sets of firms. In fact, we show that outcomes satisfying an even more demanding stability property -- full trail stability -- always exist. We pin down conditions under which trail-stable and fully trail-stable outcomes have a lattice structure. We then completely describe the relationships between all stability concepts. When contracts specify trades and prices, we also show that competitive equilibrium exists in networked markets even in the absence of fully transferrable utility. The competitive equilibrium outcome is trail-stable.
    Date: 2015–10
  10. By: Andersson , Ola (Research Institute of Industrial Economics); Andersson , Tommy (Department of Economics, Lund University)
    Abstract: The afternoon effect, i.e., that prices in a sequence of auctions with identical items are decreasing with the order in which the auctions are terminated, is a frequently observed phenomenon in empirical auction studies. Using an unsurpassed amount of data from sequential online train ticket auctions, we investigate two hitherto unexplored dimensions inherent in sequential auctions, namely, the timing of auction ends and the presentation order of the auctions in a sequence. We find that both these dimensions are important for price formation in sequential auctions, but even when controlling for them, a sizable afternoon effect remains.
    Keywords: sequential auctions; afternoon effect; presentation order; timing
    JEL: D02 D44
    Date: 2015–09–30
  11. By: Dimitri Dubois; Mathieu Desole; Stefano Farolfi; Mabel Tidball; Annie Hofstetter
    Abstract: We introduce illustration identifying environmental degradation or improvement into a 2x2 coordination game with two pareto-ranked equilibria. Our contribution focuses on the environmental nature of the information provided through the illustrations, and its effects on possible pro-environmental behaviour. Our findings have some important consequences in terms of public policies. Incentives based on sensitization campaigns for environmental issues can be an alternative to economic instruments for environmental management.
    Date: 2015–10
  12. By: Oliver Kley; Claudia Kl\"uppelberg; Gesine Reinert
    Abstract: In this paper we study the effect of network structure between agents and objects on measures for systemic risk. We model the influence of sharing large exogeneous losses to the financial or (re)insuance market by a bipartite graph. Using Pareto-tailed losses and multivariate regular variation we obtain asymptotic results for systemic conditional risk measures based on the Value-at-Risk and the Conditional Tail Expectation. These results allow us to assess the influence of an individual institution on the systemic or market risk and vice versa through a collection of conditional systemic risk measures. For large markets Poisson approximations of the relevant constants are provided in the example of an insurance market. The example of an underlying homogeneous random graph is analysed in detail, and the results are illustrated through simulations.
    Date: 2015–10
  13. By: Bobtcheff, Catherine; Bolte, Jérôme; Mariotti, Thomas
    Abstract: We propose and analyze a general model of priority races. Researchers privately have breakthroughs and decide how long to let their ideas mature before disclosing them, thereby establishing priority. Two-researcher, symmetric priority races have a unique equilibrium that can be characterized by a differential equation. We study how the shape of the breakthrough distribution and of the returns to maturation affect maturation delays and research quality, both in dynamic and comparative-statics analyses. Making researchers better at discovering new ideas or at developing them has contrasted effects on research quality. Being closer to the technological frontier enhances the value of maturation for researchers, which mitigates the negative impact on research quality of the race for priority. Finally, when researchers differ in their abilities to do creative work or in the technologies they use to develop their ideas, more efficient researchers always let their ideas mature more than their less efficient opponents. Our theoretical results shed light on academic competition, patent races, and innovation quality.
    Keywords: priority races; private information
    JEL: C73 D82
    Date: 2015–10
  14. By: Pierre Andreoletti (MAPMO - Mathématiques - Analyse, Probabilités, Modélisation - Orléans - CNRS - UO - Université d'Orléans); Pierre Gaze (LEO - Laboratoire d'Economie d'Orléans - CNRS - Université d'Orléans); Maxime Menuet (LEO - Laboratoire d'Economie d'Orléans - CNRS - Université d'Orléans)
    Abstract: We model a specific two-sided monopoly market in which agents can switch from a side to the other. We define two periods of time. In the first period, agents buy the platform services on each side and in the second period of time, they can possibly enhance their satisfaction by going to the other face of the platform. We analyze the link between mobility, consumer’s utility, prices and profit. We show that mobility is a valuable feature which can be compared with an increase of product quality. Finally, the firm is able to capture the mobility in its monopoly’s profit. The relative size of each group then appears as a strategical variable for the firm.
    Keywords: externalities,side-switching,two-sided markets
    Date: 2015
  15. By: Chen, Zhuoqiong; Ong, David; Sheremeta, Roman
    Abstract: We design an all-pay auction experiment in which we reveal the gender of the opponent. Using this design, we find that women bid higher than men, but only when bidding against other women. These findings, interpreted through a theoretical model incorporating differences in risk attitude and the value of winning, suggest that women have a higher value of winning than men.
    Keywords: experiments, all-pay auction, competitiveness, gender differences
    JEL: C91 J3 J7
    Date: 2015–10–06
  16. By: le Sage, Sander; van der Heijden, Eline (Tilburg University, Center For Economic Research)
    Abstract: This paper reports the results of a public good experiment with voting. The standard game in which subjects decide simultaneously on their contributions to a public good is extended by a second stage. In this stage, subjects can express agreement or disagreement with the contributions of their group members and the resulting payoff by voting yes or no. The treatment variable is the voting threshold, which specifies how many votes are at least needed to implement the outcome. We find that average contributions are higher with a voting system, but only if the required number of votes is sufficiently high. The higher average contribution level is mainly realized because subjects manage to avoid the typical pattern of declining contributions across periods. We argue that the higher and rather stable contributions observed under high threshold levels may be related to the fact that voting is seen as a legitimate instrument. Support for this claim is provided by results from a post-experimental questionnaire.
    Keywords: public goods; laboratory experiment; voting
    JEL: C92 H41 D72 D02
    Date: 2015
  17. By: Christoph Engel (Max Planck Institute for Research on Collective Goods, Bonn); Werner Güth (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: Judges and juries frequently must decide, knowing that they do not know everything that would be relevant for deciding the case. The law uses two related institutions for enabling courts to nonetheless decide the case: the standard of proof, and the burden of proof. In this paper, we contrast a standard rational choice approach with a satisficing approach. Standard theory would want judges to rationally deal with the limitations of the evidence. We posit that this is not only descriptively implausible, but also normatively undesirable. We propose a theoretical framework for a judge who only considers scenarios that "she does not dare to neglect", and aims at decisions that are "good enough", given the undissolvable limitations of the evidence. We extend this approach to parties who strategically exploit the limited factual basis, and to judges who have to allocate limited resources for fact finding to more than one case.
    JEL: D82 C72 D81 K41 D03
    Date: 2015–10
  18. By: Felix J. Bierbrauer (University of Cologne, Chair for Public Economics CMR – Center for Macroeconomic Research); Martin F. Hellwig (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: In a large economy, a first-best provison rule for a public good is robustly implementable with budget balance because no one individual alone can affect the aggregate outcome. First-best outcomes can, however, be blocked by coalitions of agents acting in concert. With a requirement of immunity against robustly blocking coalitions, we find that, for a pubic good that come as a single indivisible unit, a monotonic social choice function cannot condition on preference intensities but only on the population shares of people favoring one outcome over another. Any such social choice function can be implemented by a simple voting mechanism. With more public-good provision levels, more complicated mechanisms are required, but they still involve the counting of votes rather than an assessment of benefits. Monotonicity and immunity against robust blocking thus provide a foundation for the use of voting mechanisms.
    Keywords: Mechanism Design, Public-good provision, Large Economy, Voting Mechanisms, Robust Incentive Compatibility, Immunity against Robustly Blocking Coalitions, Monotonic Social Choice Functions
    JEL: D82 H41 D70 D60
    Date: 2015–09
  19. By: Dirk Bergemann (Cowles Foundation, Yale University); Benjamin Brooks (Dept. of Economics, Princeton University); Stephen Morris (Dept. of Economics, Princeton University)
    Abstract: We analyze the welfare consequences of a monopolist having additional information about consumers' tastes, beyond the prior distribution; the additional information can be used to charge different prices to different segments of the market, i.e., carry out "third degree price discrimination." We show that the segmentation and pricing induced by the additional information can achieve every combination of consumer and producer surplus such that: (i) consumer surplus is non-negative, (ii) producer surplus is at least as high as profits under the uniform monopoly price, and (iii) total surplus does not exceed the surplus generated by efficient trade.
    Keywords: First degree price discrimination, Second degree price discrimination, Third degree price discrimination, Private information, Privacy, Bayes correlated equilibrium, Concavification
    JEL: C72 D82 D83
    Date: 2013–05

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