nep-gth New Economics Papers
on Game Theory
Issue of 2015‒12‒01
eight papers chosen by
László Á. Kóczy
Magyar Tudományos Akadémia

  1. On strategic complementarities in discontinuous games By Pavlo Prokopovych; Nicholas C. Yannelis
  2. Other-Regarding Preferences and Reciprocity: Insights from Experimental Findings and Satisfaction Data By L. Becchetti; V. Pelligra; S.F. Taurino
  3. First Price Auctions with General Information Structures: Implications for Bidding and Revenue By Dirk Bergemann; Benjamin Brooks; Stephen Morris
  4. LeChatelier-Samuelson principle in games and pass-through of shocks By Alexei Alexandrov; Özlem Bedre-Defolie
  5. On the Impact of Quotas and Decision Rules in Ultimatum Collective Bargaining By Feicht, Robert; Grimm, Veronika; Rau, Holger A.; Stephan, Gesine
  6. On the equivalence of bayesian and dominant strategy implementation: the case of non-linear utilities By Alexey Kushnir; Shuo Liu
  7. The St. Petersburg paradox: an experimental solution By Da Silva, Sergio; Matsushita, Raul
  8. Signaling Cooperation By Heinz, Matthias; Schumacher, Heiner

  1. By: Pavlo Prokopovych (Kyiv School of Economics); Nicholas C. Yannelis (University of Iowa)
    Abstract: We study the existence of a pure strategy Nash equilibrium in normal-form games with strategic complementarities where the players' payoff functions are not necessarily upper semicontinuous in their own strategies. The new equilibrium existence results obtained in this paper cover examples to which the seminal works of Vives (1990), Milgrom and Shannon (1994), and Reny (1999) cannot be applied.
    Keywords: Discontinuous game; Strategic complementarities; Better-reply security; Directional single crossing; Increasing correspondence
    JEL: C65 C72
    Date: 2015–11
  2. By: L. Becchetti; V. Pelligra; S.F. Taurino
    Abstract: We measure satisfaction about experimental outcomes, personal and other participants’ behaviour after a multiperiod ‘hybrid contribution’ multiplayer prisoner’s dilemma (the Vote-with-the-Wallet game). Our work shows that participants who cooperated above median (which we define as strong cooperators) are significantly more satisfied with the game in proportion to their cooperative choice, irrespective of the material pay- off they obtain. On the contrary, their satisfaction for the other players’ behavior is negatively correlated with the extent of their own cooperative behavior and the non-cooperative behavior of the latter. The satisfaction of strong cooperators for their behavior in the game depends in turn on the share of their own cooperative choices. We document that a broader utility function including heterogeneity in expectations on other players’ behavior, other-regarding preferences, and a negative reciprocity argument may account for the combination of the behavioral and self-reported data.
    Keywords: Subjective Well-Being, social preferences, Vote-with-the-Wallet, lab experiment
    JEL: C72 C92 I31
    Date: 2015
  3. By: Dirk Bergemann (Cowles Foundation, Yale University); Benjamin Brooks (Dept. of Economics, University of Chicago); Stephen Morris (Dept. of Economics, Princeton University)
    Abstract: We explore the impact of private information in sealed bid first price auctions. For a given symmetric and arbitrarily correlated prior distribution over values, we characterize the lowest winning bid distribution that can arise across all information structures and equilibria. The information and equilibrium attaining this minimum leave bidders uncertain whether they will win or lose and indifferent between their equilibrium bids and all higher bids. Our results provide lower bounds for bids and revenue with asymmetric distributions over values. We report further analytic and computational characterizations of revenue and bidder surplus including upper bounds on revenue. Our work has implications for the identification of value distributions from winning bid data and for the informationally robust comparison of alternative bidding mechanisms.
    Keywords: First price auction, Information structure, Bayes correlated equilibrium, Private values, Interdependent values, Common values, Revenue, Surplus, Welfare bounds, Reserve price
    JEL: C72 D44 D82 D83
    Date: 2015–08
  4. By: Alexei Alexandrov (Consumer Financial Protection Bureau); Özlem Bedre-Defolie (ESMT European School of Management and Technology)
    Abstract: We show that the LeChatelier-Samuelson principle holds in many strategic environments: the adjustment to changes in parameters (shocks) in the short run (only by one player) is smaller in magnitude than the adjustment in the long run (allowing other players to adjust as well). We show that the principle holds for supermodular games (strategic complements) regardless of whether the shock directly affects only one player's action ("idiosyncratic" shock). The principle holds for submodular games (strategic substitutes) if the shock is idiosyncratic and there are only two players. We provide a simple sufficient condition for the principle to hold in submodular games with more than two players. The principle might fail to hold in submodular games if the shock is not idiosyncratic. We show that our findings explain the breakdown of the principle in non-strategic environments as well, apply our results to multiproduct monopoly and oligopoly cost pass-through, and argue that the principle might explain the empirical findings of overshifting of cost and tax changes.
    Date: 2015–11–19
  5. By: Feicht, Robert (Public Administration of Bavaria); Grimm, Veronika (University of Erlangen-Nuremberg); Rau, Holger A. (University of Göttingen); Stephan, Gesine (Institute for Employment Research (IAB), Nuremberg)
    Abstract: We conduct multi-person one-shot ultimatum games that reflect important aspects of collective bargaining. In all treatments a proposer has to divide a pie among herself and two groups of three recipients each. She cannot discriminate within, but across groups. A committee with representatives from one or both groups takes acceptance decisions. In a 2x2 design we vary (i) representation in the decision committee (one vs. both groups) and (ii) the decision rule (unanimity vs. majority voting). We find that (i) representation of a group in the committee is crucial for receiving a significant share, (ii), proposals are balanced only if both groups have veto power (iii) negotiations often fail if the decision environment gives insufficient guidance on what an appropriate proposal is and (iv) non-binding communication substantially reduces rejection rates and proposer shares.
    Keywords: multi person ultimatum game, dictator game, collective decisions, experiments
    JEL: C92 C72 C78 J31 J52
    Date: 2015–11
  6. By: Alexey Kushnir; Shuo Liu
    Abstract: We extend the equivalence between Bayesian and dominant strategy implementation established by Gershkov et al. (Econometrica, 2013) to environments with non-linear utilities satisfying the average single-crossing property and the convex-valued assumption. The new equivalence result produces novel implications to the literature on the principal-agent problem with allocative externalities, environmental mechanism design, and public good provision.
    Keywords: Bayesian implementation, dominant strategy implementation, mechanism design, non-linear utilities, single-crossing
    JEL: D82
    Date: 2015–11
  7. By: Da Silva, Sergio; Matsushita, Raul
    Abstract: The St. Petersburg paradox refers to a gamble of infinite expected value, where people are likely to spend only a small entrance fee for it. There is a huge volume of literature that mostly concentrates on the psychophysics of the game; experiments are scant. Here, rather than focusing on the psychophysics, we offer an experimental, “physical” solution as if robots played the game. After examining the time series formed by one billion plays, we: confirm that there is no characteristic scale for this game; explicitly formulate the implied power law; and identify the type of -stable distribution associated with the game. We find an and, thus, the underlying distribution of the game is a Cauchy flight, as hinted by Paul Samuelson.
    Keywords: St. Petersburg paradox, alpha-stable distributions, Cauchy flight, power laws
    JEL: G00
    Date: 2015
  8. By: Heinz, Matthias; Schumacher, Heiner
    Abstract: We examine what an applicant’s vita signals to potential employers about her willingness to cooperate in teams. Intensive social engagement may credibly reveal that an applicant cares about the well-being of others and therefore is less likely to free-ride in teamwork situations. We find that contributions in a public goods game strongly increase in a subject’s degree of social engagement as indicated on her résumé (and rated by an independent third party). Engagement in other domains, such as student or sports associations, is not positively correlated with contributions. In a prediction experiment with human resource managers from various industries, we find that managers use résumé content effectively to predict relative differences in subjects’ willingness to cooperate. Thus, young professionals signal important behavioral characteristics to potential employers through the choice of their extracurricular activities.
    Keywords: extracurricular activities; labor market; public good; signaling
    JEL: C72 C92 D82
    Date: 2015–11

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