|
on Game Theory |
| By: | Alan Gelder (Economic Science Institute, Chapman University); Dan Kovenock (Economic Science Institute, Chapman University); Roman Sheremeta (Economic Science Institute, Chapman University and Department of Economics, Weatherhead School of Management, Case Western Reserve University) |
| Abstract: | Despite the wide occurrence of ties in a variety of contest settings, the strategic interaction that arises when ties are treated as viable outcomes has received little attention. Building on recent theoretical work, we experimentally examine an extension of the canonical two-player all-pay auction in which a tie occurs unless one player’s bid exceeds the other’s by some critical threshold. In the event of a tie, each player receives an identical fraction of the prize. For the case where players receive one-half of the prize when they tie, we find that players’ expenditures are non-monotonic in the threshold required for victory. Moreover, for certain positive thresholds, expenditures may even be higher than under the standard all-pay auction. We also find that decreasing the fraction of the prize players receive for tying may either increase or decrease total expenditures. In accordance with theory, the effect depends upon the threshold. |
| Keywords: | All-pay auction, contest, tie, draw, bid differential, experiment |
| JEL: | C72 C92 D44 D72 D74 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:15-22&r=gth |
| By: | Mao, Liang |
| Abstract: | Two players, $A$ and $B$, bargain to divide a perfectly divisible pie. In a bargaining model with constant discount factors, $\delta_A$ and $\delta_B$, we extend \cite{Rubinstein82}'s alternating offers procedures to more general deterministic procedures so that any player in any period can be the proposer. We show that each bargaining game with a deterministic procedure has a unique subgame perfect equilibrium (SPE) payoff outcome, which is efficient. Conversely, each efficient division of the pie can be supported as an SPE outcome by some procedure if $\delta_A+\delta_B\geq 1$, while almost no division can ever be supported in SPE if $\delta_A+\delta_B < 1$. |
| Keywords: | noncooperative bargaining, subgame perfect equilibrium, bargaining procedure |
| JEL: | C72 C78 |
| Date: | 2015–09–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:67859&r=gth |
| 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 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:67765&r=gth |
| By: | A. Estévez-Fernández (VU University Amsterdam, the Netherlands); P. Borm (Tilburg University, the Netherlands); M.G. Fiestras-Janeiro (Universidade de Vigo, Spain); M.A. Mosquera (Universidade de Vigo, Spain); E. Sánchez-Rodríguez (Universidade de Vigo, Spain) |
| Abstract: | This paper analyzes the 1-nucleolus and, in particular, its relation to the nucleolus and compromise value. It is seen that the 1-nucleolus of a cooperative game can be characterized using a combination of standard bankruptcy rules for associated bankruptcy problems. In particular, for any zero-normalized balanced game, the 1-nucleolus coincides with the Aumann-Maschler rule (Aumann and Maschler, 1985} in this sense. From this result, not only necessary conditions on a compromise stable game are derived such that the 1-nucleolus and the nucleolus coincide, but also necessary and sufficient conditions such that the 1-nucleolus and the compromise value of exact games coincide. |
| Keywords: | 1-nucleolus; Compromise stable games; Exact games; Aumann-Maschler rule; Nucleolus; Compromise value |
| JEL: | C71 |
| Date: | 2015–11–02 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20150123&r=gth |
| By: | Mostapha Diss (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France, Université Jean Monnet, Saint-Etienne, F-42000, France); Ahmed Doghmi (University of Rabat, Mohammadia School of Engineering, the QSM Laboratory, Avenue Ibn Sina B.P. 765 Agdal, 10100 Rabat, Morocco); Abdelmonaim Tlidi (University of Marrakech, National School of Applied Science - Safi, Route Sidi Bouzid B.P. 63, 46000 Safi, Morocco) |
| Abstract: | In this paper we examine the relation between strategy-proofness and unanimity in a domain of private good economies with single-peaked preferences. We prove that, under a mild condition, a social choice function satisfies strategy-proofness if and only if it is unanimous. As implication, we show that when the property of citizen sovereignty holds, strategy proofness and Maskin monotonicity become equivalent. We also give applications to implementation literature: We provide a full characterization for dominant strategy implementation, standard Nash implementation, and partially honest Nash implementation and we prove that these theories are equivalent. |
| Keywords: | Strategy-proofness; Unanimity; Maskin monotonicity; Private good economies; Single-peaked preferences |
| JEL: | C72 D71 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:1528&r=gth |
| By: | Emara, Noha; Owens, David; Smith, John; Wilmer, Lisa |
| Abstract: | We investigate the strategic behavior of highly informed agents playing zero-sum games under highly incentivized conditions. We examine data from 3455 National Football League (NFL) games from the 2000 season through the 2012 season, and categorize each play as "rush" or a "pass." We find that the pass-rush mix exhibits negative serial correlation: play types alternate more frequently than an independent stochastic process. This is an exploitable strategy, and we find that this serial correlation negatively affects play efficacy. Our analysis suggests that teams could profit from more clustered play selections, which switch play type less frequently. Our results are consistent with the explanation that teams excessively switch play types in an effort to be perceived as unpredictable. |
| Keywords: | serial correlation, game theory, mixed strategies, matching pennies |
| JEL: | C72 C93 D03 |
| Date: | 2014–09–26 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:67862&r=gth |
| By: | Samahita, Margaret (Department of Economics, Lund University) |
| Abstract: | Conflicts often lead to expression of emotion to unrelated parties. We study non-instrumental emotion expression in binary ultimatum games, where receivers can express emotion either privately or to a third-party audience prior to accepting or rejecting the offer. The possibility of emotion expression to an audience increases welfare, but this is driven by senders behaving more fairly rather than any change in receivers' behaviour. We thus show that the role of emotion expression in increasing co-operation is mainly driven by the punishment motive. There is demand for emotion expression even when it is unobserved, this is motivated by low self-esteem. |
| Keywords: | ultimatum game; co-operation; emotion; fairness; self-esteem |
| JEL: | C72 C91 D03 D63 |
| Date: | 2015–11–10 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lunewp:2015_033&r=gth |
| By: | Orestis Troumpounis; Pau Balart; Subhasish Chowdhury |
| Abstract: | We provide a theoretical link between the two most prominent ways of modeling<br/>individual and collective contests as proposed by Tullock (1980) and Nitzan (1991) respectively. By introducing Nitzan's sharing rule as a way of modeling individual contests we obtain a contest success function nesting a standard Tullock contest and a fair lottery. We first provide an equivalence result between the proposed contest and Tulllock's contest for the two-player set-up. We then employ this nested contest as a way of introducing noise in multi-player contests when in the Tullock contest a closed form solution for the equilibrium in pure strategies does not exist. We conclude by comparing the proposed contest with the existing ones in the literature. |
| Keywords: | Individual contest, Collective contest, Equivalence |
| JEL: | C72 D72 D74 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:lan:wpaper:98653895&r=gth |
| By: | Stéphane Zuber (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics) |
| Abstract: | This paper studies the extension of Harsanyi's theorem (Harsanyi, 1995) in a framework involving uncertainty. It seeks to extend the aggregation result to a wide class of Monotonic Bernoullian and Archimedean preferences (Cerreia-Vioglio et al., 2011) that subsumes many models of choice under uncertainty proposed in the literature. An impossibility result is obtained, unless we are in the specific framework where all individuals and the decision-maker are subjective expected utility maximizers sharing the same beliefs. This implies that non-expected utility preferences cannot be aggregated consistently. |
| Keywords: | Subjective expected utility,Harsanyi's theorem,Pareto principle,Monotonic Bernoullian and Archimedean preferences |
| Date: | 2015–09 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-01224145&r=gth |
| By: | Samuel N. Cohen; Victor Fedyashov |
| Abstract: | In this paper we consider non zero-sum games where multiple players control the drift of a process, and their payoffs depend on its ergodic behaviour. We establish their connection with systems of Ergodic BSDEs, and prove the existence of a Nash equilibrium under the generalised Isaac's conditions. We also study the case of interacting players of different type. |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1511.02716&r=gth |
| By: | Jorge M. Streb |
| Abstract: | A Nash equilibrium can also be seen as a Cournot-Nash equilibrium, though this is debated because Cournot provided a specific application, not a general formulation. In my view, another of Nash’s fundamental contributions stands out when contrasting him to Cournot. Cournot treated economic decisions as optimization problems, but his stability analysis of duopoly led to endless discussions because players did not use the available information. Nash solves this with his rational interpretation: when players know the structure of the game, they can use the solution to predict the equilibrium. He thus introduces rational expectations. Nash additionally offers an adaptive interpretation: when players do not know the structure of the game, they can adjust their strategies to maximize payoffs. These adaptive expectations were anticipated by Cournot in his analysis of monopoly. In brief, Nash was not only extraordinary as a mathematician; his deep insights allow solving decades-long debates in economics. |
| Keywords: | equilibrium, rational players, consistent beliefs, adaptive expectations, rational expectations |
| JEL: | B1 B2 B3 C7 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:cem:doctra:575&r=gth |
| By: | Cason, Timothy; Sheremeta, Roman; Zhang, Jingjing |
| Abstract: | Within-group communication in competitive coordination games has been shown to increase competition between groups and lower efficiency. This study further explores potentially harmful effects of communication, by addressing the questions of (i) asymmetric communication and (ii) the endogenous emergence of communication. Our theoretical analysis provides testable hypotheses regarding the effect of communication on competitive behavior and efficiency. We test these predictions using a laboratory experiment. The experiment shows that although asymmetric communication is not as harmful as symmetric communication, it leads to more aggressive competition and lower efficiency relative to the case when neither group can communicate. Moreover, groups vote to endogenously open communication channels even though this leads to lower payoffs and efficiency. |
| Keywords: | between-group competition, within-group competition, communication, coordination, contests, experiments |
| JEL: | C70 D72 H41 |
| Date: | 2015–11–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:67664&r=gth |
| By: | Timothy N. Cason (Department of Economics, Krannert School of Management, Purdue University); Roman M. Sheremeta (Department of Economics, Weatherhead School of Management, Case Western Reserve and Economic Science Institute, Chapman University); Jingjing Zhang (Economics Discipline Group, University of Technology Sydney) |
| Abstract: | Within-group communication in competitive coordination games has been shown to increase competition between groups and lower efficiency. This study further explores potentially harmful effects of communication, by addressing the questions of (i) asymmetric communication and (ii) the endogenous emergence of communication. Our theoretical analysis provides testable hypotheses regarding the effect of communication on competitive behavior and efficiency. We test these predictions using a laboratory experiment. The experiment shows that although asymmetric communication is not as harmful as symmetric communication, it leads to more aggressive competition and lower efficiency relative to the case when neither group can communicate. Moreover, groups vote to endogenously open communication channels even though this leads to lower payoffs and efficiency. |
| Keywords: | between-group competition, within-group competition, communication, coordination, contests, experiments |
| JEL: | C70 D72 H41 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:15-23&r=gth |
| By: | Tom Dedeurwaerdere (Université Catholique de Louvain and Fonds National de la Recherche Scientifique (FNRS), Biogov Unit); Paolo Melindi-Ghidi (Aix-Marseille University (Aix-Marseille School of Economics), CNRS & EHESS, GREQAM); Willem Sas (Center for Economics Studies (CES), KU Leuven) |
| Abstract: | In this paper we develop a private-collective model of voluntary public knowledge production, where group-based social preferences have an impact on coalition formation. Our theoretical model builds on the large empirical literature on voluntary production of pooled public knowledge goods, including source code in communities of software developers or data provided to open access data repositories. Our analysis shows under which conditions social preferences such as 'group belonging' or 'peer approval' influence stable coalition size, as such rationalising several stylized facts emerging from large scale surveys of Free/Libre/Open-Source software developers (David and Shapiro, 2008), previously unaccounted for. Furthermore, heterogeneity of social preferences is added to the model to study the formation of stable, but mixed coalitions. |
| Keywords: | public knowledge goods, coalition formation, private-collective model, group belonging, peer approval, open source software |
| JEL: | C70 D71 H40 L17 |
| Date: | 2015–11–03 |
| URL: | http://d.repec.org/n?u=RePEc:aim:wpaimx:1545&r=gth |
| By: | Flip Klijn; Marc Vorsatz |
| Abstract: | We report on a laboratory experiment based on a stylized model of decentralized decision-making situations in which companies outsource production orders or jobs to multiple identical suppliers. Each firm aims to minimize the sum of its completion times. We assume that each supplier employs the shortest-first policy, i.e., processes jobs optimally by placing them in order of increasing processing time. We find that even though subjects manage to coordinate more often when matched in fixed pairs than when randomly rematched each round, the sum of all completion times (social costs) is not significantly different across treatments. This implies that social costs are more variable in the treatment with fixed partners. Finally, the treatment dynamics reveal that while subjects show more of a general tendency to play dominated stage strategies when matched in fixed pairs, they also manage over time to avoid these strategies more so in this treatment. |
| Keywords: | game theory, outsourcing, Scheduling, efficiency, shortest-first policy |
| JEL: | C72 D71 D82 |
| Date: | 2015–10 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:846&r=gth |
| By: | Welburn, Jonathan William (University of Wisconsin); Hausken, Kjell (University of Stavanger) |
| Abstract: | A game theoretic model of six kinds of players, i.e. countries, central banks, banks, firms, households, and financial inter-governmental organizations. Each player has a strategy set, with strategies such as setting interest rates, lending, borrowing, producing, consuming, investing, importing, exporting, defaulting, and penalizing default. Markets for goods, debt, and capital are modeled endogenously. This rich conceptualization of strategic opportunities for as many as six types of players is richer than anything that has been attempted earlier. The 2005-2011 empirical data for Greece is used to analyze how utility is impacted by public consumption and lump sum transfers, assuming negative productivity shocks, analyzing several time periods, with and without the possibility of default. The 2007-2008 empirical data for Greece and Germany is used to determine how the two countries’ utilities depend on Greece’s public 2007 consumption, with and without negative productivity shocks. Greece’s2 high debt burden is shown to make default optimal with high shock magnitude is low default penalty. Germany has limited ability, through its available strategies, to prevent the default, and may resort to unconventional tools such as debt forgiveness and changing the default penalty. |
| Keywords: | Game theory; sensitivity analysis; economic risk; default; contagion |
| JEL: | C60 C70 G01 |
| Date: | 2015–11–10 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:stavef:2015_007&r=gth |
| By: | Ramon Caminal (Institut d'Anàlisi Econòmica (CSIC) and Barcelona GSE); Antonio Di Paolo (AQR-Universitat de Barcelona) |
| Abstract: | Do languages matter beyond their communicative benefits? We explore the potential role of preferences over the language of use, theoretically and empirically. We focus on Catalonia, a bilingual society where everyone is fully proficient in Spanish, to isolate linguistic preferences from communicative benefits. Moreover, we exploit the language-in-education reform of 1983 to identify the causal effects of language skills. Results indicate that the policy change has improved the Catalan proficiency of native Spanish speakers, which in turn increased their propensity to find Catalan-speaking partners. Hence, the acquisition of apparently redundant language skills has expanded cooperation across speech communities. |
| Keywords: | partnership formation, preferences, segregation, language skills, language use, language policy |
| JEL: | C26 C78 I28 J12 J15 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:xrp:wpaper:xreap2015-05&r=gth |