nep-gth New Economics Papers
on Game Theory
Issue of 2016‒08‒07
thirteen papers chosen by
László Á. Kóczy
Magyar Tudományos Akadémia

  1. Cooperation among behaviorally heterogeneous players in social dilemma with stay of leave decisions By Xiaochuan Huang; Takehito Masuda; Yoshitaka Okano; Tatsuyoshi Saijo
  2. Values for Environments with Externalities - The Average Approach By Inés Macho-Stadler; David Pérez-Castrillo; David Wettstein
  3. Intra Firm Bargaining and Shapley Values By Pieter Gautier; Guido Menzio; Bjoern Bruegemann
  4. Self-organization in a distributed coordination game through heuristic rules By S. Agarwal; D. Ghosh; A. S. Chakrabarti
  5. Does Experience Affect Fairness and Reciprocity in Lab Experiments? By Tiziana Medda; Vittorio Pelligra; Tommaso Reggiani
  6. Contractible contracts in common agency problems By Balázs Szentes
  7. Who are the voluntary leaders? Experimental evidence from a sequential contribution game By Raphaële Préget; Phu Nguyen Van; Marc Willinger
  8. Market approval process, responsibility failure, and pressure groups. By Pierre FAUVET
  9. Assigning pollution permits: are uniform auctions efficient? By Alvarez, Francisco; André, Francisco J.; Mazón, Cristina
  10. International Trade and Environmental Cooperation among Heterogeneous Countries By Soham Baksi; Amrita Ray Chaudhuri
  11. Sequential Auctions of Heterogeneous Objects By Akitoshi Muramoto; Ryuji Sano
  12. Proportionality, Equality, and Duality in Bankruptcy Problems with Nontransferable Utility By Dietzenbacher, Bas; Estévez-Fernández, A.; Borm, Peter; Hendrickx, Ruud
  13. Credible Signaling via Transfers, Job Application Fees By Fan Yang; Ron Harstad

  1. By: Xiaochuan Huang (DT Capital Management Co., Ltd.); Takehito Masuda (Institute of Economic Research, Kyoto University); Yoshitaka Okano (School of Economics and Management, Kochi University of Technology); Tatsuyoshi Saijo (School of Economics and Management, Kochi University of Technology)
    Abstract: We experimentally test a two-stage mechanism called the stay-leave mechanism to achieve cooperation in n-plyer prisoner's dilemma situations. Under this mechanism, each cooperator has the chance to revise his choice when players' choices are not unanimous. We say a player is selfish if he eliminates dominated choices in each stage. If all participants of the stay-leave mechanism are selfish, for any value of public good benefit that arises, the unique equilibrium is unanimous cooperation. The average cooperation rate in the stay-leave mechanism experiment averaged 86.6% across 15 periods, with an upward trend, increasing to 96.0% after period 5. By examining earlier period data, we detected that selfish and conditionally cooperative subjects coexist at a proportion of approximately 3:1. Finally, we extended our model to incorporate a mixture of the observed two types and misbeliefs about others' types. Paradoxically, unanimous cooperation is less likely to occur as the number of conditionally cooperative players increase. The model also partially explains the observed upward trend in the cooperation rate in the stay-leave mechanism sessions.
    Keywords: social dilemma; experiment; conditional cooperator; behavioral heterogeneity
    JEL: C72 C72 D74 H41 P43
    Date: 2016–07
  2. By: Inés Macho-Stadler; David Pérez-Castrillo; David Wettstein
    Abstract: We propose the average approach,where the worth of a coalition is a weighted average of its worth for di/erent partitions of the playersset, as a unifying method to extend values for characteristic function form games. Our method allows us to extend the equal division value, the equal surplus value, the consensus value, the -egalitarian Shapley value, and the least-square family. For each of the rst three extensions, we also provide an axiomatic characterization of a particular value for partition function form games. And for each of the last two extensions, we nd a family of values that satisfy the properties.
    Keywords: Externalities, sharing the surplus, average approach
    JEL: D62 C71
    Date: 2016–07
  3. By: Pieter Gautier (VU University Amsterdam); Guido Menzio (University of Pennsylvania); Bjoern Bruegemann (VU University Amsterdam)
    Abstract: The paper revisits the problem of wage bargaining between a firm and multiple workers. We show that the Subgame Perfect Equilibrium of the extensive-form game proposed by Stole and Zwiebel (1996a) does not imply a profile of wages and profits that coincides with the Shapley values as claimed in their classic paper. We propose an alternative extensive-form bargaining game, the Rolodex Game, that follows a simple and realistic protocol and that, under some mild restrictions, admits a unique Subgame Perfect Equilibrium generating a profile of wages and profits that are equal to the Shapley values. The vast applied literature that refers to the Stole and Zwiebel game to give a game-theoretic foundation to the use of the Shapley values as the outcome of the bargain between a firm and multiple workers should instead refer to the Rolodex game.
    Date: 2016
  4. By: S. Agarwal; D. Ghosh; A. S. Chakrabarti
    Abstract: In this paper we consider a distributed coordination game played by a large number of agents with finite information sets, which characterizes emergence of a single dominant attribute out of a large number of competitors. Formally, $N$ agents play a coordination game repeatedly which has exactly $N$ Nash equilibria and all of the equilibria are equally preferred by the agents. The problem is to select one equilibrium out of $N$ possible equilibria in the least number of attempts. We propose a number of heuristic rules based on reinforcement learning to solve the coordination problem. We see that the agents self-organize into clusters with varying intensities depending on the heuristic rule applied although all clusters but one are transitory in most cases. Finally, we characterize a trade-off in terms of the time requirement to achieve a degree of stability in strategies and the efficiency of such a solution.
    Date: 2016–07
  5. By: Tiziana Medda (University of Cagliari); Vittorio Pelligra (University of Cagliari); Tommaso Reggiani (LUMSA University)
    Abstract: One of the most common criticisms about the external validity of lab experiments in economics concerns the representativeness of participants usually considered in these studies. The ever-increasing number of experiments and the prevalent location of research centers in university campuses produced a peculiar category of subjects: Students with high level of laboratory experience built through repeated participations in experimental sessions. We investigate whether the experience accumulated in this way biases subjects’ behaviour in a set of simple games widely used to study social preferences (Dictator Game, Ultimatum Game, Trust Game, and Prisoner’s Dilemma Game). Our main finding shows that subjects with a high level of experience in lab experiments do not behave in a significantly different way from novices.
    Keywords: Experimental Methodology, External Validity, Experience, Lab Experiment
    JEL: D03 D83 C91 C92
    Date: 2016–07
  6. By: Balázs Szentes
    Abstract: This article analyses contractual situations between many principals and many agents. The agents have private information, and the principals take actions. Principals have the ability to contract not only on the reports of the agents but also on the contracts offered by other principals. Contracts are required to be representable in a formal language. The main result of the article is a characterization of the allocations that can be implemented as equilibria in our contracting game. We then restrict attention to exclusive-contracting environments, in which the agent may select the contract of at most one principal. In this setting, our characterization result implies that principals can collude to implement the monopolist outcome. Finally, in general, equilibrium contracts turn out to be incomplete. That is, a contract will restrict the action space of a principal but will not necessarily determine a single action.
    Keywords: Common agency; Contractible contracts
    JEL: J1
    Date: 2015–07–28
  7. By: Raphaële Préget (LAMETA - Laboratoire Montpelliérain d'Économie Théorique et Appliquée - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - UM3 - Université Paul-Valéry - Montpellier 3 - INRA Montpellier - Institut national de la recherche agronomique [Montpellier] - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique); Phu Nguyen Van (UMR Beta - CNRS - Centre National de la Recherche Scientifique); Marc Willinger (LAMETA - Laboratoire Montpelliérain d'Économie Théorique et Appliquée - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - UM3 - Université Paul-Valéry - Montpellier 3 - INRA Montpellier - Institut national de la recherche agronomique [Montpellier] - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique, Université de Montpellier)
    Abstract: We rely on the methodology of Fischbacher et al. (2001) in order to identify subjects’ behavioral types. We then link the likelihood to act as a leader in a repeated public goods game to the elicited behavioral types. The leader in a group is defined as the subject who voluntarily decides in the first place about his contribution. The leader’s contribution is then reported publicly to the remaining group members who take their contribution decisions simultaneously. Our main findings are that leaders emerge in almost all rounds and that subjects who are identified as conditional cooperators are more likely to act as leaders than other types, e.g. free-riders or triangle-contributors. We also find that voluntary leaders, irrespective of their behavioral type, contribute always more than followers. However the presence of leadership does not prevent the decay that is commonly observed in linear public goods experiments.
    Keywords: Voluntary Contribution Mechanism,Leadership,Public Goods,Experimental Economics
    Date: 2016
  8. By: Pierre FAUVET
    Abstract: We consider the market approval process of a potential dangerous product for health and/or environment. In this context, the impact of a failure responsibility of the industrial pressure groups is studied. This failure may be due to the fact either that the industrial group responsibility is not recognized, or that the victims group does not request compensation for damages. Assuming that the pressure groups have private information about the damages, we analyse the incentives for a benevolent regulator to pay attention to the lobbying activities through a contest (Tullock, 1980). In particular, if there is no failure of th e responsibility system, we attest that the regulator could pay attention to the lobbies. However, failure responsibility of the industrial group never implements an optimal state of economy. Finally, we find that it is socially beneficial that the pressure groups play sequentially.
    Keywords: market approval process; contest; responsibility failure.
    JEL: C72 D7
    Date: 2016
  9. By: Alvarez, Francisco; André, Francisco J.; Mazón, Cristina
    Abstract: We study the efficiency of the uniform auction as an allocation mechanism for emission permits among polluting firms. In our model, firms have private information about their abatement costs, which differ across firms and across units, and bidders' demands are linear. We show that there is a continuum of interior Bayesian-Nash equilibria, and only one is effcient, minimizing abatement costs. We find that the existence of many bidders is not a sufficient condition to guarantee an efficient equilibrium in the uniform auction. Additionally, bidders' types have to be uncorrelated.
    Keywords: Emission permits, Uniform auction, Efficiency, Incomplete information Simultaneous games
    JEL: D44 Q58
    Date: 2016–07–26
  10. By: Soham Baksi; Amrita Ray Chaudhuri
    Abstract: We examine the impacts of trade liberalization and border tax adjustment (BTA) on the incentives of heterogeneous countries to cooperate when regulating emissions of a global pollutant. We consider an oligopoly model of trade between two countries, North and South, where production generates transboundary pollution and the pollution damage parameter is higher in the North. Each country imposes a pollution tax on its domestic firm, where the tax rate can be chosen either cooperatively or non-cooperatively. We analyze the sustainability of environmental cooperation between the countries within an infinitely repeated game framework using trigger strategies. While the North has a stronger incentive to cooperate than the South, we find that an increase in the degree of heterogeneity between the two countries in terms of their pollution damage parameter reduces the likelihood of cooperation between them. Trade liberalization increases both the global gains from cooperation as well as the likelihood of cooperation between the countries. Further, we consider the use of a border tax adjustment under non-cooperation, where the North imposes a tariff on imports of the polluting good from the South, and the tariff rate reflects the difference in pollution tax rates across the two countries. We find that imposing the BTA makes the North less likely to cooperate, while the South is more likely to cooperate provided the countries are sufficiently heterogeneous.
    Keywords: International environmental agreements, Transboundary pollution, International trade, Border tax adjustment
    JEL: Q54 Q58 F18
    Date: 2016–07
  11. By: Akitoshi Muramoto (Institute of Intellectual Property, Foundation for Intellectual Property); Ryuji Sano (Institute of Economic Research, Kyoto University)
    Abstract: We consider sequential second-price auctions in which heterogeneous objects are sold to bidders with unit demand and a single dimensional type. We show that a symmetric increasing equilibrium exists if objects are ordered in terms of dispersiveness of value distributions. Equilibrium price declines when objects are equivalent on average and additional conditions hold.
    Keywords: sequential auctions, declining price anomaly, dispersiveness
    JEL: D44
    Date: 2016–07
  12. By: Dietzenbacher, Bas (Tilburg University, Center For Economic Research); Estévez-Fernández, A.; Borm, Peter (Tilburg University, Center For Economic Research); Hendrickx, Ruud (Tilburg University, Center For Economic Research)
    Abstract: This paper analyzes bankruptcy problems with nontransferable utility as a generalization of bankruptcy problems with monetary estate and claims. Following the classical axiomatic theory of bankruptcy, we formulate some appropriate properties for NTU-bankruptcy rules and study their implications. We explore duality of bankruptcy rules and we derive several characterizations of the generalized proportional rule and the constrained relative equal awards rule.
    Keywords: NTU-bankruptcy problem; axiomatic analysis; duality; proportional rule; constrained relative equal awards rule
    JEL: C79 C63 D74
    Date: 2016
  13. By: Fan Yang (New York University Shanghai); Ron Harstad (Economics Department, University of Missouri)
    Abstract: How low might be the resource costliness of making signals credible? Using a job market as an example, We build a signaling model to determine the extent to which a transfer from an applicant might replace a resource cost as an equilibrium method of achieving signal credibility. As long as a firm’s claim to be hiring for an open position is credible, and profitability of the hiring process per se is limited to an application fee, the firm has an incentive to use the properly calibrated fee to implement a separating equilibrium. Applicant risk aversion does not necessarily discourage a monopsonist potential employer from using an application fee, but a firm hiring in a competitive labor market with risk-averse applicants may prefer a pooling equilibrium, hiring all applicants at their average productivity. Partial extension to a model with third-party assistance (a headhunter or a job board) is possible.
    Keywords: costly, signaling, asymmetric information
    JEL: D82 J24 C72 J31
    Date: 2016–07–26

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