
on Game Theory 
By:  Dmitry Levando 
Abstract:  The paper suggests a noncooperative simultaneous game, with a number of potential deviators is a parameter of the game. A definition of the game embeds mechanism design. The game has an equilibrium in mixed strategies. The equilibrium encompasses intra and inter group externalities and individual payoffs that make it different from a strong Nash, coalitionproof equilibrium and some other equilibrium concepts. We offer a noncooperative stability criterion to describe a robustness of an equilibrium strategy profile to an increase in a number of deviators. The criterium may serve as a way to measure trust for the equilibrium in terms of a number of potential deviators. 
Keywords:  Noncooperative games 
JEL:  C72 
Date:  2016 
URL:  http://d.repec.org/n?u=RePEc:ven:wpaper:2016:15&r=gth 
By:  Qinglong Zhou; Gaofeng Zong 
Abstract:  We consider a general timeinconsistent stochastic linearquadratic differential game. The timeinconsistency arises from the presence of quadratic terms of the expected state as well as statedependent term in the objective functionals. We define an equilibrium strategy, which is different from the classical one, and derived a sufficient conditions for equilibrium strategies via a system of forwardbackward stochastic differential equations. When the state is onedimensional and the coefficients are all deterministic, we find an explicit equilibrium strategy. The uniqueness of such equilibrium strategy is also given. 
Date:  2016–07 
URL:  http://d.repec.org/n?u=RePEc:arx:papers:1607.00638&r=gth 
By:  Martin Geiger; Richard Hule 
Abstract:  We study the potential role of correlated refinancing abilities among different countries for the disruption of government bond markets in a currency union. Following Morris and Shin (2004) we use a global games framework and model the simultaneous investment decision into two assets, which are subject to correlated fundamental states, as a coordination problem with correlated imperfect information. Based on this model we evaluate the role of information about one country for the coordination of creditors of another country. We find, however, that the contagious effects on the price of debt precipitated through correlation are modest. Hence, assuming that investors behave as modeled in the global game, we conclude that correlated fundamentals that precipitate informational spillovers appear to be unlikely to play a major role for e.g. the disruption of some Eurozone government bond markets in the aftermath of the recent financial and economic crisis. 
Keywords:  Government bond refinancing, global games, creditor coordination, currency union 
JEL:  D82 G12 
Date:  2016–06 
URL:  http://d.repec.org/n?u=RePEc:inn:wpaper:201619&r=gth 
By:  Aghadadashli, Hamid; DertwinkelKalt, Markus; Wey, Christian 
Abstract:  We reexamine the Nash bargaining solution when an upstream and a downstream firm bargain over a linear input price. We show that the profit sharing rule is given by a simple and instructive formula which depends on the parties' disagreement payoffs, the profit weights in the Nashproduct and the elasticity of derived demand. A downstream firm's profit share increases in the equilibrium derived demand elasticity which in turn depends on the final goods' demand elasticity. Our simple formula generalizes to bargaining with N downstream firms when bilateral contracts are unobservable. 
Keywords:  Nash Bargaining,Demand Elasticity 
JEL:  L13 
Date:  2016 
URL:  http://d.repec.org/n?u=RePEc:zbw:dicedp:224&r=gth 
By:  Ennio Bilancini; Leonardo Boncinelli (Dipartimento di Scienze per l'Economia e l'Impresa) 
Abstract:  In this paper we study the long run convention emerging from staghunt interactions when errors converge to zero at a rate that is positively related to the payoff earned in the previous period. We refer to such errors as conditiondependent mistakes. We find that, if interactions are sufficiently stable over time, then the payoffdominant convention emerges in the long run. Moreover, if interactions are neither too stable nor too volatile, then the riskdominant convention is selected in the long run. Finally, if interactions are quite volatile, then the maximin convention emerges even if it is not riskdominant. We introduce the notion of \emph{conditionadjustedriskdominance} to characterize the convention emerging in the long run under conditiondependent mistakes. We contrast these results with the results obtained under alternative error models: uniform mistakes, i.e., errors converge to zero at a rate that is constant over states, and payoffdependent mistakes, i.e., errors converge to zero at a rate that depends on expected losses. 
Keywords:  riskdominant; payoffdominant; maximin; mistakes; stag hunt; stochastic stability. 
JEL:  C72 C73 
Date:  2016 
URL:  http://d.repec.org/n?u=RePEc:frz:wpaper:wp2016_11.rdf&r=gth 
By:  Seres, Gyula (Tilburg University, School of Economics and Management) 
Abstract:  Manipulating prices in auctions raises antitrust concerns. Collusion lowers the revenue of the auctioneer and creates information rents. Bid rigging is a prevalent phenomenon and the affected market is enormous. Public procurement amounts to between 10 and 25 percent of national GDP in industrialized countries. This doctoral thesis contributes to the literature by showing that the source of information asymmetry between cartel members has a profound effect on the feasibility and form of collusion. This point is not without policy relevance. Results of this thesis can contribute to our understanding on combating collusion and promoting allocative efficiency. Chapter 1 builds up a model showing public revelation of information by the auctioneer may foster cartel formation and decrease expected revenue, contradicting the Linkage Principle. Chapter 2 investigates the form of cartel mechanisms. A theoretical model shows why knockout auctions are the prevalent form of bid rigging. Full information revelation within cartel is generally not possible in equilibrium. Chapter 3 is an experimental study focusing on the effect of auction cartels on allocative efficiency. Robust estimates show that the effect is negative and significant. 
Date:  2016 
URL:  http://d.repec.org/n?u=RePEc:tiu:tiutis:c4bba81c5f874fbab6c4432ef4a34d70&r=gth 