nep-gth New Economics Papers
on Game Theory
Issue of 2016‒01‒29
eight papers chosen by
László Á. Kóczy
Magyar Tudományos Akadémia

  1. Information Design, Bayesian Persuasion and Bayes Correlated Equilibrium By Dirk Bergemann; Stephen Morris
  2. To Switch or Not to Switch Payment Scheme? Determinants and Effects in a Bargaining Game By Arianna Galliera; Noemi Pace
  3. Fair solutions to the random assignment problem By Christian Basteck
  4. Strategy-proof location of public facilities By Jorge Alcalde Unzu; Marc Vorsatz
  5. Self-enforcing environmental agreements and trade in fossil energy deposits By Thomas Eichner; Rüdiger Pethig
  6. From spanning trees to arborescences: new and extended cost sharing solutions By Eric Bahel; Christian Trudeau
  7. A revealed preference theory of monotone choice and strategic complementarity By Koji Shirai
  8. A simple dynamic climate cooperation model with large coalitions and deep emissions cuts By Robert C. Schmidt; Eugen Kovac

  1. By: Dirk Bergemann (Cowles Foundation, Yale University); Stephen Morris
    Abstract: A set of players have preferences over a set of outcomes. We consider the problem of an "information designer" who can choose an information structure for the players to serve his ends, but has no ability to change the mechanism (or force the players to make particular action choices). We describe a unifying perspective for information design. We consider a simple example of Bayesian persuasion with both an uninformed and informed receiver. We extend information design to many players and relate it to the literature on incomplete information correlated equilibrium.
    Keywords: Information design, Bayesian persuasion, Bayes correlated equilibrium, Information structure
    JEL: C72 D82 D83
    Date: 2016–01
  2. By: Arianna Galliera (Department of Economics, University Of Venice Cà Foscari); Noemi Pace (Department of Economics, University Of Milan, Bicocca)
    Abstract: The incentive scheme selected in a laboratory experiment might trigger different type of behavior in participants. This paper is an attempt to screen the strategies adopted by agents in a bargaining game when buyer and seller have partly conflicting interests and are asymmetrically informed. We allow participants to choose the incentive scheme through which they will be paid at the end of the experiment controlling for past experience and individual characteristics. It is well known that payment method is highly correlated to the risk preferences shown by individuals, but little research is devoted to the analysis of the behavior induced by Random Lottery Incentive scheme (RLI for short) and Cumulative Scheme payment (CS for short) both on individual and social results. This paper aims to fill the gap.
    Keywords: bargaining, experiment, gender, payment scheme.
    JEL: C78 C91 D82 J16 J33
    Date: 2015
  3. By: Christian Basteck (Technische Universitaet Berlin)
    Abstract: We study the problem of assigning indivisible goods to individuals where each is to receive one good. To guarantee fairness in the absence of monetary compensation, we consider random assignments that individuals evaluate according to first order stochastic dominance (sd). In particular, we find that solutions that guarantee sd-no-envy (e.g. the Probabilistic Serial) are incompatible even with the weak sd-core from equal division. Solutions on the other hand that produce assignments in the strong sd-core from equal division (e.g. Hylland and Zeckhauser’s Walrasian Equilibria from Equal Incomes) are incompatible with the strong sd-equal-division-lower-bound. As an alternative, we present a solution, based on Walrasian equilibria, that is sd-efficient, in the weak sd-core from equal division and satisfies the strong sd-equal-division-lower-bound.
    Keywords: Probabilistic Serial; Sd-efficiency; Sd-envy-free; Sd-core from equal division; Sd-equal-division-lower-bound
    JEL: C70 D63
    Date: 2016–01–21
  4. By: Jorge Alcalde Unzu (Departamento de Economía-UPNA); Marc Vorsatz
    Abstract: Agents frequently have di fferent opinions on where to locate a public facility. While some agents consider the facility a good and prefer to have it nearby, others dislike it and would like to see it built far away from their own locations. To aggregate agents' preferences in these situations, we propose a new preference domain according to which each agent is allowed to have single-peaked or single-dipped preferences on the location of the facility, but in such a way that the peak or dip is situated in her own location. We characterize all strategy-proof rules in this general framework and show that they are also group strategy-proof. Finally, we characterize for some focal cases the rules that additionally satisfy Pareto efficiency.
    Keywords: Single-peaked preferences, single-dipped preferences, social choice rule, strategy-proofness, Pareto efficiency.
    Date: 2015
  5. By: Thomas Eichner; Rüdiger Pethig
    Keywords: climate coalition, deposit, fuel, Nash, self-enforcing IEA
    JEL: C72 Q38 Q58
    Date: 2015
  6. By: Eric Bahel (Department of Economics, Virginia Polytechnic Institute and State University); Christian Trudeau (Department of Economics, University of Windsor)
    Abstract: The paper examines minimal cost arborescence problems, which generalize the well-known minimal cost spanning tree (mcst) problems. We propose a new family of cost sharing methods that are easy to compute, as they closely relate to the network-building algorithm. These methods, called minimal incoming cost rules for arborescences (MICRAs), include as a particular case the extension of the folk solution introduced by Dutta and Mishra (2012). A simpler computational procedure thus obtains for this method. We also provide new axiomatizations of (a) the set of stable and symmetric MICRAs and (b) the folk solution. Finally, we closely examine two remarkable MICRAs. The first one relates to the cycle-complete rule for mcst problems introduced in Trudeau (2012). The second one contrasts with the folk rule by fully rewarding agents who help others connect to the source.
    Keywords: arborescence problems; stable allocations, minimal incoming cost rules, leftover cost matrix
    JEL: C71 D63
    Date: 2016–01
  7. By: Koji Shirai (School of Economics, Kwansei Gakuin University)
    Abstract: We develop revealed preference characterizations of (1) monotone choice in the context of individual decision making and (2) strategic complementarity in the context of simultaneous games. We first consider the case where the observer has access to panel data and then extend the analysis to the case where data sets are cross sectional and preferences heterogenous. Lastly, we apply our techniques to investigate the possibility of spousal influence in smoking decisions.
    Keywords: monotone comparative statics, single crossing di↵erences, interval dominance, supermodular games, lattices
    JEL: C6 C7 D7
    Date: 2015–12
  8. By: Robert C. Schmidt (Humboldt-Universitaet zu Berlin); Eugen Kovac (University of Duisburg-Essen)
    Abstract: A standard result from the game theoretic literature on international environmental agreements is that coalitions are either 'broad but shallow' or 'narrow but deep'. Hence, the stable coalition size is small when the potential welfare gains are large. We modify a standard climate coalition game by adding a – seemingly – small but realistic feature: we allow countries to delay climate negotiations until the next 'round' if a coalition forms but decides to remain inactive. It turns out that results are surprisingly different under this modication. In particular, a large coalition with deep emissions cuts forms if countries are sufficiently patient. Our results also indicate that countries should try hard to overcome coordination problems in the formation of a coalition. A more cooperative outcome may then be reached, and it may be reached more quickly.
    Date: 2015–10–26

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