nep-gth New Economics Papers
on Game Theory
Issue of 2016‒05‒08
ten papers chosen by
László Á. Kóczy
Magyar Tudományos Akadémia

  1. Communication, sequentiality and strategic power. A prisoners’ dilemma experiment By Luigi Mittone; Andrew Musau
  2. Can there be a market for cheap-talk information? Some experimental evidence By Cabrales, Antonio; Feri, Francesco; Gottardi, Piero; Meléndez-Jiménez, Miguel A.
  3. (In)visible Hands in Matching Markets. By Alcalde, José
  4. Equity dynamics in bargaining without information exchange By Heinrich H. Nax
  5. Motivational Ratings By Johannes Horner; Nicolas Lambert
  6. Inefficient Lock-in with Sophisticated and Myopic Players By Aidas Masiliunas
  7. Brownian Signals: Information Quality, Quantity and Timing in Repeated Games By Osório, António (António Miguel)
  8. Dissecting turst: Evidence From a Field Experiment in Rural Cameroon By Meriggi, Niccolo; Leuvelf, Koen
  9. Delegation and Public Pressure in a Threshold Public Goods Game: Theory and Experimental Evidence By İriş, Doruk; Lee, Jungmin; Tavoni, Alessandro
  10. Social capital, perceptions and economic performance By Hernández, José; Guerrero-Luchtenberg, César

  1. By: Luigi Mittone; Andrew Musau
    Abstract: One shot two-player sequential game experiments are characterized by an asymmetry in the observed payoffs of participants. In the ultimatum game, for example, the distribution favors first-movers, whereas in the in- vestment game, it favors second movers. A comparison to sequential move games are symmetric simultaneous move games, which entail symmetry in actions and payoffs. We experimentally examine the role of first-mover anticipated communication on the inter-player strategic power dynamics that exist in a symmetric simultaneous move prisoners’ dilemma, and a sequential move investment game, and show that such communication has a significant effect in inducing payoff asymmetries in symmetric games.
    Keywords: strategic power, communication, prisoners’ dilemma, investment game, experiment
    JEL: C72 C91
    Date: 2016
  2. By: Cabrales, Antonio; Feri, Francesco; Gottardi, Piero; Meléndez-Jiménez, Miguel A.
    Abstract: This paper reports on experiments testing the viability of markets for cheap talk information. We find that these markets are fragile. The reasons are surprising given the previous experimental results on cheap-talk games. Our subjects provide low-quality information even when doing so does not increase their monetary payoff. We show that this is not because subjects play a different (babbling) equilibrium. By analyzing subjects' behavior in another game, we find that those adopting deceptive strategies tend to have envious or non-pro-social traits. The poor quality of the information transmitted leads to a collapse of information markets.
    Keywords: Auction; cheap talk; Experiment; Information Acquisition; Information Sale
    JEL: C72 D83 G14
    Date: 2016–03
  3. By: Alcalde, José (IUDESP, University of Alicante)
    Abstract: This paper explores sequential mechanisms for (many-to-one) two-sided matching problems. In these mechanisms, agents belonging to a side of the market determine an eligibility restriction; and the agents on the other side select their preferred mates, constrained by the above eligibility. We find out some asymmetries, as well as some coincidences, related to the mechanisms in which the first decision is made by the individuals or the institutions. In particular, for the two classes of mechanisms, it is likely that the outcome is stable. This can be interpreted as if the sequentiality in which agents decide takes the place of the coordination among the whole society. As a main difference, it is found that an extra coordination between individuals is exercised when they impose the eligibility restriction. A consequence of such an ‘over-coordination’ is that the likely outcome coincides with the individuals optimal stable matching. The dual result yielding the institutions’ optimal stable allocation does not hold when these agents are the ones to impose eligibility.
    Keywords: Sequentiality; (Pairwise) Stability; Matching Markets
    JEL: C78 D61 D61 D78
    Date: 2016–04–12
  4. By: Heinrich H. Nax
    Abstract: In this paper, completely uncoupled dynamics for n-player bargaining are proposed that mirror key behavioral elements of early bargaining and aspiration adjustment models (Zeuthen, 1930; Sauermann and Selten, 118:577–597 1962). Individual adjustment dynamics are based on directional learning adjustments, solely driven by histories of own realized payoffs. Bargaining this way, all possible splits have positive probability in the stationary distribution of the process, but players will split the pie almost equally most of the time. The expected waiting time for almost equal splits to be played is quadratic.
    Keywords: bargaining; cooperative game theory; equity; evolutionary game theory; (completely uncoupled) learning
    JEL: C71 C73 C78 D83
    Date: 2015–11
  5. By: Johannes Horner (Cowles Foundation, Yale University); Nicolas Lambert (Stanford Graduate School of Business - Knight Management Center)
    Abstract: Rating systems not only provide information to users but also motivate the rated agent. This paper solves for the optimal (effort-maximizing) rating system within the standard career concerns framework. It is a mixture two-state rating system. That is, it is the sum of two Markov processes, with one that reflects the belief of the rater and the other the preferences of the rated agent. The rating, however, is not a Markov process. Our analysis shows how the rating combines information of different types and vintages. In particular, an increase in effort may affect some (but not all) future ratings adversely.
    Keywords: Career Concerns, Mechanism Design, Ratings
    JEL: C72 C73
    Date: 2016–04
  6. By: Aidas Masiliunas (Aix-Marseille University (Aix-Marseille School of Economics), CNRS & EHESS)
    Abstract: Path-dependence in coordination games may lead to lock-in on inefficient outcomes, such as adoption of inferior technologies (Arthur, 1989) or inefficient economic institutions (North, 1990). We aim to find conditions under which lock-in is overcome by developing a solution concept that makes ex-ante predictions about the adaptation process following lock-in. We assume that some players are myopic, forming beliefs according to fictitious play, while others are sophisticated, anticipating the learning process of the myopic players. We propose a solution concept based on a Nash equilibrium of the strategies chosen by sophisticated players. Our model predicts that no players would switch from the efficient to the inefficient action, but deviations in the other direction are possible. Three types of equilibria may exist: in the first type lock-in is sustained, while in the other two types lock-in is overcome. We determine the existence conditions for each of these equilibria and show that the equilibria in which lock-in is overcome are more likely and the transition is faster when sophisticated players have a longer planning horizon, or when the history of inefficient coordination is shorter.
    Keywords: Game theory, Learning, Lock-in, Farsightedness, Coordination
    JEL: C73 D83
    Date: 2016–04–19
  7. By: Osório, António (António Miguel)
    Abstract: This paper examines different Brownian information structures for varying time intervals. We focus on the non-limit case and on the trade-offs between information quantity and quality to efficiently establish incentives. These two dimensions of information tend to complement each other when signals quality is sufficiently high. Otherwise, information quantity tends to replace information quality. Any conclusion depends crucially on the rate at which information quality improves or decays with respect to the discounting incentives. JEL: C73, D82, D86. KEYWORDS: Repeated Games, Frequent Monitoring, Information Quantity, Information Quality.
    Keywords: Jocs, Teoria de, Teoria de la informació (Economia), Contractes -- Aspectes econòmics, 33 - Economia,
    Date: 2015
  8. By: Meriggi, Niccolo; Leuvelf, Koen
    Abstract: Trust plays a key role in promoting cooperation, exchanges, and interactions among individuals and therefore it is believed to foster economic and societal development. Sender's behaviour in the popular "investment game" (Berg et al. 1995) is widely employed to measure trust among individuals, but recent economic literature has cast doubts on the accuracy of this measure of trust. These studies, however, were mostly conducted in controlled environmentsm having university students as subject polls. We played the "investment game" with 3320 rural households from 200 villages in the Adamawa region of Cameroon, recording for each participant his expectations of return on the edowment shared as first mover. In addition, participants played two additional games obtained by separating the "investment game" into two sub-games, "Triple dictator game" and "reverse triple dictator game"/ The latter two games were used to measure participants' altruism and distributional preferences. All participants were randomly assigned to two treatments with different secrecy levels to create exogenous variation in social pressure, and measure the effect of social norms on behaviour in investment game. We use behaviour observed in the sub games to test whether senders behaviour in the investment game only measures trust (and therefore a belief in someone else's trustworthiness), and whether trustworthiness in turn is a reciprocation of kindness with kindness, or unkindness with unkindness. We control for risk preferences and other demographics, and find that senders behaviour in the investment game measures mostly trust, but it is not an accurate measure of trust.
    Keywords: Consumer/Household Economics, Financial Economics,
    Date: 2015
  9. By: İriş, Doruk; Lee, Jungmin; Tavoni, Alessandro
    Abstract: The provision of global public goods, such as climate change mitigation and managing fisheries to avoid overharvesting, requires the coordination of national contributions. The contributions are managed by elected governments who, in turn, are subject to public pressure on the matter. In an experimental setting, we randomly assign subjects into four teams, and ask them to elect a delegate by a secret vote. The elected delegates repeatedly play a one shot public goods game in which the aim is to avoid losses that can ensue if the sum of their contributions falls short of a threshold. Earnings are split evenly among the team members, including the delegate. We find that delegation causes a small reduction in the group contributions. Public pressure, in the form of teammates’ messages to their delegate, has a significant negative effect on contributions, even though the messages are designed to be payoff-inconsequential (i.e., cheap talk). The reason for the latter finding is that delegates tend to focus on the least ambitious suggestion. In other words, they focus on the lower of the two public good contributions preferred by their teammates. This finding is consistent with the prediction of our model, a modified version of regret theory.
    Keywords: Delegation, Cooperation, Threshold Public Goods Game, Climate Experiment, Regret Theory, Research Methods/ Statistical Methods, C72, C92, D81, H4, Q54,
    Date: 2016–04–15
  10. By: Hernández, José; Guerrero-Luchtenberg, César
    Abstract: This paper describes how social capital emerges, relates to economic performance and evolves in the long run. Using the concept of psychological equilibrium, two types of individuals are generated in the population regarding their willingness to cooperate. We propose an evolutionary (learning) process over those types driven by the total payoffs of the psychological game, and provide a complete description of its dynamics. Macro-perceptions, defined as the individual perception of how cooperative the society is as a whole, are key to explain convergence to the full social capital state in the long run.
    Keywords: Psychological Equilibrium, Belief-dependent Behavior, Evolutionary Games, Replicator Dynamics, Economic Development.
    JEL: C73 O1
    Date: 2016–04–16

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