nep-gth New Economics Papers
on Game Theory
Issue of 2016‒05‒14
ten papers chosen by
László Á. Kóczy
Magyar Tudományos Akadémia

  1. The Impact of Redistribution Mechanisms in the Vote with the Wallet Game: Experimental Results By Becchetti, Leonardo; Salustri, Francesco; Pelligra, Vittorio
  2. Revising claims and resisting ultimatums in bargaining problems By Johannes Spinnewijn; Frans Spinnewyn
  3. First Price Auctions with General Information Structures: Implications for Bidding and Revenue By Dirk Bergemann; Benjamin Brooks; Stephen Morris
  4. Strategic Voting with Almost Perfect Signals By Venturini, Andrea
  5. The Interplay of Cultural Aversion and Assortativity for the Emergence of Cooperation By Ennio Bilancini; Leonardo Boncinelli; Jiabin Wu
  6. The effects of the three-point rule in individual sports: Evidence from chess By Parinduri, Rasyad; Lee, Yoong Hon; Tiong, Kung Ming
  7. Networks in the Diaspora By Gil S. Epstein; Odelia Heizler (Cohen)
  8. Nonzero-sum stochastic differential games with impulse controls and applications to retail energy markets By Ren\'e A\"id; Matteo Basei; Giorgia Callegaro; Luciano Campi; Tiziano Vargiolu
  9. High-Roller Impact: A Large Generalized Game Model of Parimutuel Wagering By Erhan Bayraktar; Alexander Munk
  10. The Formation of GM-free and GM Coasean clubs By Maarten, J. Punt; Wesseler, Justus

  1. By: Becchetti, Leonardo (Associazione Italiana per la Cultura della Cooperazione e del Non Profit); Salustri, Francesco (Associazione Italiana per la Cultura della Cooperazione e del Non Profit); Pelligra, Vittorio (Associazione Italiana per la Cultura della Cooperazione e del Non Profit)
    Abstract: We use the Vote-with-the-Wallet game (VWG) to model socially or environmentally responsible consumption, an increasingly relevant but still under-researched phenomenon. Based on a theoretical model outlining game equilibria and the parametric interval of the related multiplayer prisoners’ dilemma (PD) we evaluate with a controlled lab experiment players’ behavior in the game and test the effects of an ex post redistribution mechanism between defectors and cooperators. Our findings document that the redistribution mechanism interrupts cooperation decay and stabilizes the share of cooperators at a level significantly higher, even though inferior to the Nash equilibrium.
    Keywords: vote with the wallet; prisoner’s dilemma; lab experiment
    JEL: C72 C73 C91 M14
    Date: 2015–09–22
  2. By: Johannes Spinnewijn; Frans Spinnewyn
    Abstract: We propose a simple mechanism which implements a unique solution to the bargaining problem with two players in subgame-perfect equilibrium. The mechanism incorporates two important features of negotiations; players can revise claims in an attempt to reach a compromise or pursue their claims in an ultimate take-it-or-leave-it offer. Players restrain their claims to avoid a weak bargaining position or their resistance to uncompromising behavior to acquire leadership. The Nash solution and the Kalai–Smorodinsky solution are implemented in the extreme cases when respectively no and all revisions are allowed.
    Keywords: bargaining solutions; Nash program; ultimatums
    JEL: C78 D74
    Date: 2015–06
  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 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 data on winning bids 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: Venturini, Andrea
    Abstract: A standard assumption in the literature of strategic voting is the independence of signals. Each juror observes a signal at the interim stage of the game. Then she votes according to her private information in order to maximize her expected utility. This work introduces a dependency between signals, reflecting a more realistic situation, in which evidences can be incontrovertible. We give a full characterization of the symmetric equilibria in non-weakly dominated strategies and we provide a benchmark between the classical approach and this new one.
    Keywords: Voting, Bayesian Nash Equilibrium, Condorcet Theorem
    JEL: C72 D72
    Date: 2015–11–19
  5. By: Ennio Bilancini; Leonardo Boncinelli; Jiabin Wu
    Abstract: This paper investigates the emergence of cooperation in a heterogeneous population. The population is divided into two cultural groups. Agents in the population are randomly matched in pairs to engage in a prisoner dilemma. The matching process is assortative, that is, cooperators are more likely to be matched with cooperators, defectors are more likely to be matched with defectors. When two agents of different cultures are matched, they suffer a cost due to their cultural differences. We call such a cost cultural aversion. We find that when cultural aversion is sufficiently strong, perfect correlation between culture and behavior emerges: all agents from one cultural group cooperate, while all agents from the other cultural group defect.
    Keywords: prisoner dilemma, assortativity, cultural aversion, cooperation, type-monomorphic.
    JEL: C72 C73 Z10
    Date: 2016–04
  6. By: Parinduri, Rasyad; Lee, Yoong Hon; Tiong, Kung Ming
    Abstract: We examine the effects of the three-point rule in individual sports. We consider chess in which most tournaments use the standard rule while some tournaments use the Bilbao rule, which is identical to the three-point rule in soccer: We observe the same pairs of chess players playing under both rules, a research design that fits fixed-effect models. We find the Bilbao rule makes games 33 percent more decisive, mostly to white players’ advantage who win 50 percent more games. We identify two mechanisms why the Bilbao rule works: It encourages players to play longer and discourages them from using drawish openings. These results suggest incentive schemes like the three-point rule work in individual sports in which efforts and financial rewards are directly linked and game dynamics and strategic interactions among teammates and with opponents are less complex.
    Keywords: scoring systems, three-point rule, individual sports, chess, fixed effects model
    JEL: C23 D01 L83
    Date: 2016–05
  7. By: Gil S. Epstein (Bar-Ilan University, IZA, CReAM and Centro Studi Luca d'Agliano); Odelia Heizler (Cohen) (Tel-Aviv_Yaffo Academic College)
    Abstract: In this paper, we examine possible types of network formation among immigrants in the diaspora and between those immigrants and the locals in different countries. We present the model by considering different possible interactions between immigrants and the new society in their host country. Spread of migrants from the same origin in the diaspora may well increase international trade between the different countries, depending on the types of networks formed. We present possible applications of network structure on the country of origin, such as on international trade. We find that when the size of the diaspora is sufficiently large, the natives in the different countries will be willing to bear the linking cost with the immigrants because the possible benefits increase with increasing size of the diaspora.
    Keywords: Immigrants, Networks, Diaspora
    JEL: D85 D74 J61 L14
    Date: 2016–05–09
  8. By: Ren\'e A\"id; Matteo Basei; Giorgia Callegaro; Luciano Campi; Tiziano Vargiolu
    Abstract: We study the notion of Nash equilibrium in a general nonzero-sum impulse game for two players. The main mathematical contribution of the paper is a verification theorem which provides, under some regularity conditions, the system of quasi-variational inequalities identifying the value functions and the optimal strategies of the two players. As an application, we propose a model for the competition among retailers in electricity markets. We first consider a simplified one-player setting, where we obtain a quasi-explicit expression for the value function and the optimal control. Then, we turn to the two-player case and we provide a detailed heuristic analysis of the retail impulse game, conducted along the lines of the verification theorem obtained in the general setting. This allows to identify reasonable candidates for the intervention and continuation regions of both players and their strategies.
    Date: 2016–04
  9. By: Erhan Bayraktar; Alexander Munk
    Abstract: How do large-scale participants in parimutuel wagering events affect the house and ordinary bettors? A standard narrative suggests that they may temporarily benefit the former at the expense of the latter. To approach this problem, we begin by developing a model based on the theory of large generalized games. Constrained only by their budgets, a continuum of diffuse (ordinary) players and a single atomic (large-scale) player simultaneously wager to maximize their expected profits according to their individual beliefs. Our main theoretical result gives necessary and sufficient conditions for the existence and uniqueness of a pure-strategy Nash equilibrium. Using this framework, we analyze our question in concrete scenarios. First, we study a situation in which both predicted effects are observed. Neither is always observed in our remaining examples, suggesting the need for a more nuanced view of large-scale participants.
    Date: 2016–05
  10. By: Maarten, J. Punt; Wesseler, Justus
    Abstract: The unintended presence of traces of genetically modified (GM) crops in the harvests of conventional crops plays a prominent role in the debate over the coexistence of GM and conventional crops. One way to address the issue is the formation of GM-free or GM-only clubs. We model the decisions of individual farmers to cultivate either GM or conventional crops and combine this with a game theoretic model of club formation to investigate the feasibility of clubs. We consider two liability regimes: GM farmers are liable or they are not. We also consider two benchmarks: Nash equilibrium without negotiations and the efficient configuration as well as partial cooperation through Coasean clubs. We find that relatively large clubs can form but they are not always necessary.
    Keywords: Crop Production/Industries, Research and Development/Tech Change/Emerging Technologies,
    Date: 2015

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