nep-gth New Economics Papers
on Game Theory
Issue of 2015‒11‒21
fourteen papers chosen by
László Á. Kóczy
Magyar Tudományos Akadémia

  1. The Stable Fixtures Problem with Payments By Peter Biró; Walter Kern; Daniel Paulusma; Peter Wojuteczky
  2. Forecasting with Colonel Blotto By Peeters R.J.A.P.; Wolk K.L.
  3. From Sabotage Games to Border Protection By Kvasov, Dmitriy
  4. Efficiency versus equality in real-time bargaining with communication By Fabio Galeotti; Maria Montero; Anders Poulsen
  5. Diffusing Coordination Risk By Zhen Zhou; Deepal Basak
  6. Beyond Truth-Telling: Preference Estimation with Centralized School Choice By Fack, Gabrielle; Grenet, Julien; He, Yinghua
  7. The Vote With the Wallet as a Multiplayer Prisoner’s Dilemma By Leonardo Becchetti; Francesco Salustri
  8. Voting and transfer payments in a threshold public goods game By Feige, Christian; Ehrhart, Karl-Martin
  9. A decomposition for the space of games with externalities By Sanchez-Perez, Joss
  10. Markets for leaked information By Huck, Steffen; Weizsäcker, Georg
  11. Complementarity in the Private Provision of Public Goods by Homo Pecuniarius and Homo Behavioralis By Fenig, Guidon; Gallipoli, Giovanni; Halevy, Yoram
  12. Strategy proofness and unanimity in private good economies with single-peaked preferences By Mostapha Diss; Ahmed Doghmi; Abdelmonaim Tlidi
  13. Dynamic Bidding in Second Price Auction By Maryam Saeedi; Hugo A. Hopenhayn
  14. Multilateral versus sequential negotiations over climate change By PEREAU Jean-Christophe; CAPARROS Alejandro

  1. By: Peter Biró (Institute of Economics - Centre for Economic and Regional Studies - Hungarian Academy of Sciences and Department of Operations Research and Actuarial Sciences, Corvinus University of Budapest); Walter Kern (Faculty of Electrical Engineering - Mathematics and Computer Science - University of Twente); Daniel Paulusma (School of Engineering and Computing Sciences, Durham University, Science Laboratories); Peter Wojuteczky (Institute of Economics - Centre for Economic and Regional Studies - Hungarian Academy of Sciences)
    Abstract: We generalize two well-known game-theoretic models by introducing multiple partners matching games, dened by a graph G = (N;E), with an integer vertex capacity function b and an edge weighting w. The set N consists of a number of players that are to form a set M E of 2-player coalitions ij with value w(ij), such that each player i is in at most b(i) coalitions. A payo is a mapping p : N N ! R with p(i; j) + p(j; i) = w(ij) if ij 2 M and p(i; j) = p(j; i) = 0 if ij =2 M. The pair (M; p) is called a solution. A pair of players i; j with ij 2 E nM blocks a solution (M; p) if i; j can form, possibly only after withdrawing from one of their existing 2-player coalitions, a new 2-player coalition in which they are mutually better o. A solution is stable if it has no blocking pairs. We give a polynomial-time algorithm that either nds that no stable solution exists, or obtains a stable solution. Previously this result was only known for multiple partners assignment games, which correspond to the case where G is bipartite (Sotomayor, 1992) and for the case where b 1 (Biro et al., 2012). We also characterize the set of stable solutions of a multiple partners matching game in two dierent ways and perform a study on the core of the corresponding cooperative game, where coalitions of any size may be formed. In particular we show that the standard relation between the existence of a stable solution and the non-emptiness of the core, which holds in the other models with payments, is no longer valid for our (most general) model.
    Keywords: stable solutions, cooperative game, core
    JEL: C61 C63 C71 C78
    Date: 2015–09
  2. By: Peeters R.J.A.P.; Wolk K.L. (GSBE)
    Abstract: In this paper we design and test a competitive forecasting mechanism based on the Colonel Blotto game. In the game, forecasters allocate a fixed number of resources to different battlefields. Each field is realized with a probability that is determined by a stochastic process. Subjects learn about the underlying process during the course of the experiment and thereby form beliefs about the probability that a field is selected. Once a field is selected, the subject competes for a payoff that is associated with the number of resources allocated to that field. We implement two different payment rules, a lottery and an auction, and find that the lottery outperforms the auction. This relative underperformance of the auction can be attributed to the strategic uncertainty being too high in the auction and the strong incentives to misalign allocations.
    Keywords: Noncooperative Games; Design of Experiments: Laboratory, Group Behavior; Asymmetric and Private Information; Mechanism Design; Search; Learning; Information and Knowledge; Communication; Belief;
    JEL: C72 C92 D82 D83
    Date: 2015
  3. By: Kvasov, Dmitriy
    Abstract: Sabotage games on a graph involve Runner who wants to travel between two given vertices and Blocker who aims to prevent Runner from arriving at his destination by destroying edges. This paper introduces and studies several generalizations of sabotage games. First, it completely characterizes games with multiple destinations on weighted trees for both local and global cutting rules of arbitrary capacity, using an algorithmic labeling procedure. Second, it introduces the transformation procedure that associates a weighted tree with any weighted graph. The procedure allows complete characterization of games on weighted graphs for local cutting rules of arbitrary capacity and provides sufficient conditions for Blocker to win for global cutting rules. The applications of sabotage games to the issue of border security are discussed.
    Keywords: sabotage games, games on graphs, dynamic graph reliability, network interdiction, border security
    JEL: C72 C73 D85
    Date: 2015–06
  4. By: Fabio Galeotti (University of Lyon); Maria Montero (University of Nottingham); Anders Poulsen (University of East Anglia)
    Abstract: We collect experimental data from unstructured bargaining situations where bargainers are free to communicate via written messages. We vary the set of feasible contracts, thereby allowing us to assess the focality of three properties of bargaining outcomes: equality, Pareto efficiency, and total earnings maximization. Our main findings are that subjects avoid an equal earnings contract if it is Pareto inefficient; a large proportion of bargaining pairs avoid equal and Pareto efficient contracts in favor of unequal and total earnings maximizing contracts, and this proportion increases when unequal contracts offer larger earnings to one of the players, even though this implies higher inequality. Finally, observed behavior violates the Independence of Irrelevant Alternatives axiom, a result we attribute to a 'compromise effect'.
    Keywords: bargaining, efficiency, equality, communication, experiment, independence of irrelevant alternatives
    JEL: C70 C72 C92
    Date: 2015–10–24
  5. By: Zhen Zhou (New York University); Deepal Basak (NYU)
    Abstract: This paper designs an optimal mechanism to correct coordination failure. A planner wants her agents to coordinate on a cooperative action. Agents gather noisy private information regarding the underlying fundamental and decide whether to cooperate or not. The global game literature uniquely identifies the chance of coordination failure when the coordination risk is concentrated at one point in time. We analyze the case when the planner diffuses the coordination risk over time. The planner approaches the agents sequentially - only a proportion of agents at a time and advancing further only when the coordination failure has been averted so far. The public information of survival works as a coordination device and helps in mitigating the coordination risk. We show that if the planner can diffuse the coordination risk enough, then she can achieve the first best as the unique equilibrium outcome. However, if the planner has only limited power to diffuse the coordination risk, multiple equilibria can arise. A max-min planner should diffuse the coordination risk as much as possible. We also show that if some groups are more reluctant to cooperate than others, a max-min planner should approach the more reluctant groups first. Our mechanism is robust to various generalizations and can be applied to a wide range of coordination games.
    Date: 2015
  6. By: Fack, Gabrielle; Grenet, Julien; He, Yinghua
    Abstract: We propose novel approaches and tests for estimating student preferences with data from school choice mechanisms, e.g., the Gale-Shapley Deferred Acceptance. Without requiring truth-telling to be the unique equilibrium, we show that the matching is (asymptotically) stable, or justified-envy-free, implying that every student is assigned to her favorite school among those she is qualified for \emph{ex post}. Having validated the methods in simulations, we apply them to data from Paris and reject truth-telling but not stability. Our estimates are then used to compare the sorting and welfare effects of alternative admission criteria prescribing how schools rank students in centralized mechanisms.
    Keywords: Gale-Shapley Deferred-Acceptance Mechanism, School Choice, Stable Matching, Student Preferences, Admission Criteria
    JEL: C78 D50 D61 I21
    Date: 2015–10
  7. By: Leonardo Becchetti (University of Rome Tor Vergata); Francesco Salustri (DEDI, University of Rome "Tor Vergata")
    Abstract: Socially responsible consumers and investors are increasingly using their consumption and saving choices as a “vote with the wallet” to award companies which are at vanguard in reconciling the creation of economic value with social and environmental sustainability. In our paper we model the vote with the wallet as a multiplayer prisoner’s dilemma, outline equilibria and possible solutions to the related coordination failure problem, apply our analysis to domains in which the vote with the wallet is empirically more relevant, and provide policy suggestions
    Keywords: Corporate Social Responsibility, Multiplayer Prisoner’s Dilemma, Voting with the Wallet
    JEL: C72 C73 D11 H41 M14
    Date: 2015–11–08
  8. By: Feige, Christian; Ehrhart, Karl-Martin
    Abstract: In a laboratory experiment, we investigate if groups consisting of two heterogeneous player types (with different marginal contribution costs) can increase their total contributions and payoffs in a threshold public goods game if transfer payments are possible among the players. We find that transfer payments are indeed used in many groups to shift contributions from high-cost players to low-cost players, thereby not only increasing social welfare, but also equalizing payoffs. In a repeated setting with individual voluntary contributions and transfers, this redistribution effect takes a few rounds to manifest and high-cost players benefit the most in terms of payoffs. The same beneficial effect of transfer payments can also be achieved in a one-shot setting by having the groups vote unanimously on contributions and transfers of all players.
    Keywords: threshold public good,transfer payments,experimental economics,unanimous voting,committee,heterogeneity
    JEL: C92 D71 H41
    Date: 2015
  9. By: Sanchez-Perez, Joss
    Abstract: The main goal of this paper is to present a different perspective than the more `traditional' approaches to study solutions for games with externalities. We provide a direct sum decomposition for the vector space of these games and use the basic representation theory of the symmetric group to study linear symmetric solutions. In our analysis we identify all irreducible subspaces that are relevant to the study of linear symmetric solutions and we then use such decomposition to derive some applications involving characterizations of classes of solutions.
    Keywords: Games with externalities; value; representation theory; symmetric group.
    JEL: C60 C65 C71
    Date: 2015
  10. By: Huck, Steffen; Weizsäcker, Georg
    Abstract: We study markets for sensitive personal information. An agent wants to communicate with another party but any revealed information can be intercepted and sold to a third party whose reaction harms the agent. The market for information induces an adverse sorting effect, allocating the information to those types of third parties who harm the agent most. In equilibrium, this limits information transmission by the agent, but never fully deters it. We also consider agents who naively provide information to the market. Their presence renders traded information more valuable and, thus, harms sophisticated agents by increasing the third party's demand for information. Half-baked regulatory interventions may hurt naive agents without helping sophisticated agents. Comparing monopoly and oligopoly markets, we find that oligopoly is often better for the agent: it requires a higher value of traded information and therefore has to grant the agent more privacy.
    Keywords: privacy,markets for information,naivete
    JEL: C72 D11 D18 D43
    Date: 2015
  11. By: Fenig, Guidon; Gallipoli, Giovanni; Halevy, Yoram
    Abstract: We examine coordination in private provision of public goods when agents' contributions are complementary. When complementarity is sufficiently high an additional full-contribution equilibrium emerges. We experimentally investigate subjects’ behavior using a between-subject design that varies complementarity. When two equilibria exist, subjects coordinate on the full-contribution equilibrium. When complementarity is sizable but only a zero-contribution equilibrium exists, subjects persistently contribute above it. Choice and non-choice data reveal heterogeneity among subjects and two distinct types. Homo pecuniarius maximizes profits by best-responding to beliefs, while Homo behavioralis identifies this strategy but chooses to deviate from it – sacrificing pecuniary rewards to support altruism or competitivene
    Keywords: Public goods, Voluntary Contribution Mechanism, Complementarity, Coordination, Altruism, Competitiveness, Warm-Glow, Joy of Winning, Laboratory Experi
    JEL: C92 C72 D03 D83 H41
    Date: 2015–11–15
  12. By: Mostapha Diss (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); Ahmed Doghmi (QSM Laboratory - Mohammadia School of Engineering - University of Rabat); Abdelmonaim Tlidi (ENSA Marrakech - École nationale des sciences appliquées de Marrakech (Université Cadi Ayyad))
    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: Single-peaked preferences, Maskin monotonicity, Private good economies,Strategy-proofness, Unanimity
    Date: 2015
  13. By: Maryam Saeedi (The Ohio State University); Hugo A. Hopenhayn (UCLA)
    Abstract: We consider equilibrium bidding behavior in a dynamic second price auction where agents have the option to increase bids at random times and values follow a Markov process. We prove that equilibrium exists and is unique and give an algorithm to solve for bids as a function of time and values. Equilibrium bids equal the expected final value conditional on the bid placed being the final one, meaning that either the agent doesn't get another opportunity to rebid or chooses not to increase this bid if given the option. This results in adverse selection with respect to a bidder's own future strategy, and as a result bids are shaded relative to the bidder's expected value. This is true in spite of values being independent across bidders. Under mild conditions, desired bids increase as time increases and the close of the auction is approached. Our results are consistent with repeated bidding and sniping, two puzzling observations in eBay auctions.
    Date: 2015
  14. By: PEREAU Jean-Christophe; CAPARROS Alejandro
    Abstract: We discuss a model of gradual coalition formation with positive externalities in which a leading country endogenously decides whether to negotiate multilaterally or sequentially over climate change. We show that the leader may choose a sequential path, and that the choice is determined by the convexity of the TU-game and the free-rider payoffs of the followers. Except in a few clearly defined cases, the outcome of the negotiation process is always the grand coalition, although the process may need some time. This holds for the standard IEA game with heterogeneous players even if the grand coalition is not stable in a multilateral context. We also analyze the role of a facilitating agency. The agency has an incentive to speed up intra-stage negotiations and to extend the period between negotiation stages in a sequential process.
    Keywords: multilateral bargaining, endogenous coalition formation, international negotiations, mediator, international environmental agreements.
    JEL: Q54
    Date: 2015

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