nep-gth New Economics Papers
on Game Theory
Issue of 2016‒06‒18
fourteen papers chosen by
László Á. Kóczy
Magyar Tudományos Akadémia

  1. Double round-robin tournaments By Francesco De Sinopoli; Claudia Meroni; Carlos Pimienta
  2. Game Theory, Institutions and the Schelling-Bacharach Principle: Toward an Empirical Social Ontology By Cyril Hédoin; Lauren Larrouy
  3. Social Choice Theory: A Neglected Path to Possibility By Korpela Ville
  4. Mean field games of timing and models for bank runs By Rene Carmona; Daniel Lacker
  5. Designing contests between heterogeneous contestants: An experimental study of tie-breaks and bid-caps in all-pay auctions By Llorente-Saguer, Aniol; Sheremeta, Roman M.; Szech, Nora
  6. Nash on a rotary : two theorems with implications for electoral politics By Basu,Kaushik; Mitra,Tapan
  7. Rationalizable partition-confirmed equilibrium By Fudenberg, Drew; Kamada, Yuichiro
  8. The Shapley-Shubik Index in the Presence of Externalities By Mikel Alvarez-Mozos; José María Alonso-Meijide; María Gloria Fiestras-Janeiro
  9. It's the thought that counts: The role of intentions in noisy repeated games By Rand, David Gertler; Fudenberg, Drew; Dreber, Anna
  10. Why did he do that? Using counterfactuals to study the effect of intentions in extensive form games By Yola Engler; Rudolf Kerschbamer; Lionel Page
  11. Estimating Matching Games with Transfers By Jeremy Fox
  12. Solving the second-order free rider problem in a public goods game: An experiment using a leader support system By Hiroki Ozono; Nobuhito Jin; Motoki Watabe; Kazumi Shimizu
  13. Guilt-Averse or Reciprocal? Looking at Behavioural Motivations in the Trust Game By Yola Engler; Rudolf Kerschbamer; Lionel Page
  14. Winner determination in geometrical combinatorial auctions By Bart Vangerven; Dries Goossens; Frits Spieksma

  1. By: Francesco De Sinopoli (Department of Economics, University of Verona); Claudia Meroni (Department of Economics, University of Verona); Carlos Pimienta (School of Economics, UNSW Business School, UNSW)
    Abstract: A tournament is a simultaneous n-player game that is built on a two-player game g. We generalize Arad and Rubinstein’s model assuming that every player meets each of his opponents twice to play a (possibly) asymmetric game g in alternating roles (using sports terminology, once "at home" and once "away"). The winner of the tournament is the player who attains the highest total score, which is given by the sum of the payoffs that he gets in all the matches he plays. We explore the relationship between the equilibria of the tournament and the equilibria of the game g. We prove that limit points of equilibria of tournaments as the number of players goes to infinity are equilibria of g. Such a refinement criterion is satisfied by strict equilibria. Being able to analyze arbitrary two-player games allows us to study meaningful economic applications that are not symmetric, such as the ultimatum game.
    Keywords: tournaments, asymmetric games, ultimatum game, double round-robin
    JEL: C72 C73 D70
    Date: 2016–05
  2. By: Cyril Hédoin (University of Reims Champagne-Ardenne, France); Lauren Larrouy (University of Nice Sophia Antipolis, France; GREDEG CNRS)
    Abstract: This article defends a methodological and theoretical claim according to which the combination of epistemic game theory with the recent developments in the so-called “theory of mind” is able to provide an empirically grounded and theoretically consistent perspective on the mechanisms through which institutions determine the individuals’ beliefs and choices. This move toward an empirical social ontology is captured through what we call the Schelling-Bacharach principle in game theory. According to it, game-theoretic analysis of coordination and cooperation should study how the players are actually reasoning in different game situations.
    Keywords: Social ontology, epistemic game theory, institutions, theory of Mind, Schelling-Bacharach principle
    JEL: B41 C72 D02
    Date: 2016–06
  3. By: Korpela Ville (Department of Economics, University of Turku)
    Abstract: Often preferences of agents are such that any sensible goal of the collective must admit a tie between all alternatives. The standard formulation in mechanism design demand that in this case all alternatives are equilibrium outcomes of the social choice mechanism. However, as far as the idea of an equilibrium is to predict the outcome of a game, we could just as well demand that there are no equilibria at all. Although this may seem innocent, and in a technical sense that’s right, it is a neglected path to possibility.
    Keywords: Condorcet Criterion; Collective Decision Making; Implementation; Impossibility Result; Nash Equilibrium; Social Choice Theory
    JEL: C72 D71
    Date: 2016–05
  4. By: Rene Carmona; Daniel Lacker
    Abstract: The goal of the paper is to introduce a set of problems which we call mean field games of timing. We motivate the formulation by a dynamic model of bank run in a continuous-time setting. We briefly review the economic and game theoretic contributions at the root of our effort, and we develop a mathematical theory for continuous-time stochastic games where the strategic decisions of the players are merely choices of times at which they leave the game, and the interaction between the strategic players is of a mean field nature.
    Date: 2016–06
  5. By: Llorente-Saguer, Aniol; Sheremeta, Roman M.; Szech, Nora
    Abstract: A well-known theoretical result in the contest literature is that greater heterogeneity decreases performance of contestants because of the "discouragement effect." Leveling the playing field by favoring weaker contestants through bid-caps and favorable tie-breaking rules can reduce the discouragement effect and increase the designer's revenue. We test these predictions in an experiment. Our data show that indeed, strengthening weaker contestants through tie-breaks and bid-caps significantly diminishes the discouragement effect. Bid-caps can also improve revenue. Most deviations from Nash equilibrium can be explained by the level-k model of reasoning.
    Keywords: all-pay auction,rent-seeking,bid-caps,tie-breaks,contest design
    JEL: C72 C91 D72
    Date: 2016
  6. By: Basu,Kaushik; Mitra,Tapan
    Abstract: The paper provides a complete characterization of Nash equilibria for games in which n candidates choose a strategy in the form of a platform, each from a circle of feasible platforms, with the aim of maximizing the stretch of the circle from where the candidate?s platform will receive support from the voters. Using this characterization, it is shown that if the sum of all players? payoffs is 1, the Nash equilibrium payoff of each player in an arbitrary Nash equilibrium must be restricted to the interval [1/2(n ? 1), 2/(n + 1)]. This implies that in an election with four candidates, a candidate who is attracting less than one-sixth of the voters can do better by changing his or her strategy.
    Keywords: ICT Economics,Economic Theory&Research,Common Property Resource Development,Coastal and Marine Environment,Disease Control&Prevention
    Date: 2016–06–08
  7. By: Fudenberg, Drew; Kamada, Yuichiro
    Abstract: Rationalizable partition-confirmed equilibrium (RPCE) describes the steady-state outcomes of rational learning in extensive-form games when rationality is common knowledge and players observe a partition of the terminal nodes. RPCE allows players to make inferences about unobserved play by others. We discuss the implications of this using numerous examples, and discuss the relationship of RPCE to other solution concepts in the literature.
    Date: 2015
  8. By: Mikel Alvarez-Mozos (Universitat de Barcelona); José María Alonso-Meijide (Universidade de Santiago de Compostela); María Gloria Fiestras-Janeiro (Universidade de Vigo)
    Abstract: In this note we characterize the restriction of the externality-free value of de Clippel and Serrano (2008) to the class of simple games with externalities introduced in Alonso-Meijide et al. (2015).
    Keywords: Externality-free value, Shapley--Shubik index, Partition function.
    JEL: C71
    Date: 2016
  9. By: Rand, David Gertler; Fudenberg, Drew; Dreber, Anna
    Abstract: We examine cooperation in repeated interactions where intended actions are implemented with noise but intentions are perfectly observable. Observable intentions lead to more cooperation compared to control games where intentions are unobserved, allowing subjects to reach similar cooperation levels as in games without noise. Most subjects condition exclusively on intentions, and use simpler, lower-memory strategies compared to games where intentions are unobservable. When the returns to cooperation are high, some subjects are tolerant, using good outcomes to forgive attempted defections; when the returns to cooperation are low, some subjects are punitive, using bad outcomes to punish accidental defections.
    Date: 2015
  10. By: Yola Engler; Rudolf Kerschbamer; Lionel Page
    Abstract: We investigate the role of intentions in two-player two-stage games. For this purpose we systematically vary the set of opportunity sets the first mover can chose from and study how the second mover reacts not only to opportunities of gains but also of losses created by the choice of the first mover. We find that the possibility of gains for the second mover (generosity) and the risk of losses for the first mover (vulnerability) are important drivers for second mover behavior. On the other hand, efficiency concerns and an aversion against violating trust seem to be far less important motivations. We also find that second movers compare the actual choice of the first mover and the alternative choices that would have been available to him to allocations that involve equal material payoffs.
    Keywords: Social Preferences, Other-Regarding Preferences, Intentions, Reciprocity, Trust Game, Experimental Economics, Behavioral Economics
    JEL: C91 C92 D63 D64
    Date: 2016–06
  11. By: Jeremy Fox (Institute for Fiscal Studies and University of Michigan)
    Abstract: I explore the estimation of transferable utility matching games, encompassing many-to-many matching, marriage and matching with trading networks (trades). I introduce a matching maximum score estimator that does not suffer from a computational curse of dimensionality in the number of agents in a matching market. I apply the estimator to data on the car parts supplied by automotive suppliers to estimate the returns from different portfolios of parts to suppliers and automotive assemblers.
    Date: 2016–03–24
  12. By: Hiroki Ozono (Faculty of Law, Economics and Humanities, Kagoshima University); Nobuhito Jin (School of Psychology Practices, College of Integrated Human and Social Welfare Studies, Shukutoku University); Motoki Watabe (School of Business, MonashUniversity, Malaysia, Jalan Lagoon Selatan); Kazumi Shimizu (School of Political Science and Economics, Waseda University)
    Abstract: To study the collective action problem, researchers have investigated public goods games (PGG), in which each member decides to contribute to a common pool that returns benefits to all members equally. Punishment of non-cooperators—free riders—can lead to high cooperation in PGG. However, the existence of second-order free riders, who do not pay punishment costs, reduces the effectiveness of punishment. We focus on a “leader support system,” in which one group leader can freely punish group followers using capital pooled through the support of group followers. In our experiment, participants were asked to engage in three stages: a PGG stage in which followers decided to cooperate for their group; a support stage in which followers decided whether to support the leader or not; and a punishment stage in which the leader could punish any follower. We found both higher cooperation and higher support for a leader achieved under linkage-type leaders—who punished both non-cooperators and non-supporters. In addition, linkage-type leaders themselves earned higher profits than other leader types because they withdrew more support. This means that a leader who effectively punishes followers could increase their own benefits and the second-order free rider problem would be solved.
  13. By: Yola Engler; Rudolf Kerschbamer; Lionel Page
    Abstract: For the trust game, recent models of belief-dependent motivations make opposite predictions regarding the correlation between back-transfers and secondorder beliefs of the trustor: While reciprocity models predict a negative correlation, guilt-aversion models predict a positive one. This paper tests the hypothesis that the inconclusive results in previous studies investigating the reaction of trustees to their beliefs are due to the fact that reciprocity and guilt-aversion are behaviorally relevant for different subgroups and that their impact cancels out in the aggregate. We find little evidence in support of this hypothesis and conclude that type heterogeneity is unlikely to explain previous results.
    JEL: C25 C70 C91 D63 D64
    Date: 2016–06–07
  14. By: Bart Vangerven; Dries Goossens; Frits Spieksma
    Abstract: We consider auctions of items that can be arranged in rows. Examples of such a setting appear in allocating pieces of land for real estate development, or seats in a theater or stadium. The objective is, given bids on subsets of items, to find a subset of bids that maximizes auction revenue (often referred to as the winner determination problem). We describe a dynamic programming algorithm which, for a k-row problem with connected and gap-free bids, solves the winner determination problem in polynomial time. We study the complexity for bids in a grid, complementing known results in literature. Additionally, we study variants of the geometrical winner determination setting. We provide a NP-hardness proof for the 2-row setting with gap-free bids. Finally, we extend this dynamic programming algorithm to solve the case where bidders submit connected, but not necessarily gap-free bids in a 2-row and a 3-row problem.
    Date: 2016–04

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