nep-gth New Economics Papers
on Game Theory
Issue of 2016‒09‒04
thirteen papers chosen by
László Á. Kóczy
Magyar Tudományos Akadémia

  1. Networks: An economic perspective By Jackson, Matthew O.; Rogers, Brian; Zenou, Yves
  2. Coevolution of cooperation, preferences, and cooperative signals in social dilemmas By Müller, Stephan; von Wangenheim, Georg
  3. Arrovian Efficiency in Allocation of Discrete Resources By Marek Pycia; M. Utku Ünver
  4. The Rapid Evolution of Homo Economicus: Brief Exposure to Neoclassical Assumptions Increases Self-Interested Behavior By Ifcher, John; Zarghamee, Homa
  5. Non-equilibrium Play in Centipede Games By Garcia-Pola, Bernardo; Iriberri, Nagore; Kovarik, Jaromir
  6. Honesty and Informal Agreements By Dufwenberg, Martin; Servátka, Maroš; Vadovič, Radovan
  7. Insensitivity to Prices in a Dictator Game By Jim Engle-Warnick; Natalia Mishagina
  8. On the existence of the Dutta-Ray’s egalitarian solution By Llerena Garrés, Francesc; Mauri Masdeu, Llúcia
  9. Consistency distinguishes the (weighted) Shapley value, the (weighted) surplus division value and the prenucleolus By Calleja, Pere; Llerena Garrés, Francesc
  10. Match or Mismatch? Automatic Admissions and College Preferences of Low- and High-Income Students By Jane Arnold Lincove; Kalena E. Cortes
  12. Learning-by-Doing in an Ambiguous Environment By Jim Engle-Warnick; Sonia Laszlo
  13. Competitive balance and assortative matching in the German Bundesliga By Sittl, Roman; Warnke, Arne Jonas

  1. By: Jackson, Matthew O.; Rogers, Brian; Zenou, Yves
    Abstract: We discuss social network analysis from the perspective of economics. We organize the presentation around the theme of externalities: the effects that one's behavior has on others' welfare. Externalities underlie the interdependencies that make networks interesting to social scientists. We discuss network formation, as well as interactions between peoples' behaviors within a given network, and the implications in a variety of settings. Finally, we highlight some empirical challenges inherent in the statistical analysis of network-based data.
    Keywords: economic networks; externalities; Game theory; network formation; network games; Networks; peer effects; Social Networks
    JEL: C72 D85 L14 Z13
    Date: 2016–08
  2. By: Müller, Stephan; von Wangenheim, Georg
    Abstract: We study the coevolution of cooperation, preferences and cooperative signals in an environment where individuals engage in a signaling-extended prisoner's dilemma. We identify a new type of evolutionary equilibrium - a transitional equilibrium - which is constituted and stabilized by the dynamic interaction of multiple Bayesian equilibria. A transitional equilibrium: (1) exists under mild conditions, and (2) can stabilize a population that is characterized by the heterogeneity of behavior, preferences, and signaling. We thereby offer an explanation for persistent regularities observed in laboratory and field data on cooperative behavior. Furthermore, this type of equilibria is least demanding with respect to differences in signaling costs between 'conditional cooperators' and 'opportunists.' Indeed, and quite surprisingly, a transitional equilibrium is consistent with 'conditional cooperators' bearing higher signaling cost in terms of fitness than 'opportunists.'
    Keywords: evolutionary game theory,cooperation,signaling
    JEL: C73 D64 D82
    Date: 2016
  3. By: Marek Pycia (UCLA); M. Utku Ünver (Boston College)
    Abstract: Efficiency in the Pareto sense and strategy-proofness have been the central design desiderata in market design for allocation of discrete resources, such as dorm allocation, school choice, and kidney exchange. However, more precise efficiency objectives, such as welfare maximization, have been neglected. In a setting where heterogeneous indivisible goods are being allocated without monetary transfers and each agent has a unit demand, we use Arrovian efficiency as the notion of welfare optimization and show that a mechanism is individually strategy-proof and Arrovian efficient, i.e., it always selects the best outcome with respect to some Arrovian social welfare function, if and only if the mechanism is group strategy-proof and Pareto efficient. If the Arrovian social welfare function completely ranks all matchings, then the individually strategy-proof and Arrovian-efficient mechanisms are almost sequential dictatorships.
    Keywords: Individual strategy-proofness, group strategy-proofness, Pareto efficiency, Arrovian preference aggregation, matching, no-transfer allocation and exchange
    JEL: C78 D78
    Date: 2016–08–24
  4. By: Ifcher, John (Santa Clara University); Zarghamee, Homa (Barnard College)
    Abstract: Economics students have been shown to exhibit more selfishness than other students. Because the literature identifies the impact of long-term exposure to economics instruction (e.g., taking a course), it cannot isolate the specific course content responsible; nor can selection, peer effects, or other confounds be properly controlled for. In a laboratory experiment, we use a within- and across-subject design to identify the impact of brief, randomly-assigned economics lessons on behavior in games often used to measure selfishness: the ultimatum game (UG), dictator game (DG), prisoner's dilemma (PD), and public-goods game (PGG). We find that a brief lesson that includes the assumptions of self-interest and strategic considerations moves behavior toward traditional economic rationality in UG, PD, and DG. Despite entering the study with higher levels of selfishness than others, subjects with prior exposure to economics instruction have similar training effects. We show that the lesson reduces efficiency and increases inequity in the UG. The results demonstrate that even brief exposure to commonplace neoclassical economics assumptions measurably moves behavior toward self-interest.
    Keywords: economics instruction, self-interest, game theory, laboratory experiment, social preferences
    JEL: A2 D6 C9 C7 A1
    Date: 2016–08
  5. By: Garcia-Pola, Bernardo; Iriberri, Nagore; Kovarik, Jaromir
    Abstract: Centipede games represent a classic example of a strategic situation, where the equilibrium prediction is at odds with human behavior. This study is explicitly designed to discriminate among the proposed explanations for initial responses in Centipede games. Using many different Centipede games, our approach determines endogenously whether one or more explanations are empirically relevant. We find that non-equilibrium behavior is too heterogeneous to be explained by a single model. However, most non-equilibrium choices can be fully explained by level-k thinking and quantal response equilibrium, in roughly equal proportions. Preference-based models play a negligible role in explaining non-equilibrium play.
    Date: 2016–08
  6. By: Dufwenberg, Martin; Servátka, Maroš; Vadovič, Radovan
    Abstract: We develop, and experimentally test, models of informal agreements. Agents are assumed to be honest but suffer costs of overcoming temptations. We extend two classical bargaining solutions -- split-the-difference and deal-me-out -- to this informal agreement setting. For each solution there are two natural ways to do this, leaving us with 2x2 models to explore. In the experiment, a temptations-constrained version of deal-me-out emerges as the clear winner.
    Keywords: agreement, bargaining, behavioral economics, contract, deal, experiment, honesty, lost wallet game, negotiation, temptation
    JEL: C7 C91
    Date: 2016–08–30
  7. By: Jim Engle-Warnick; Natalia Mishagina
    Abstract: In this paper we examine the relationship between prices and violations of the Generalized Axiom of Revealed Preference (GARP) in dictator games. Using new experimental data and a new algorithm that adjusts budget prices to eliminate GARP violations, we introduce a new measure of consistency of choices, and we identify a systemic relationship between prices and violations. We find that pushing prices away from extremes tends to eliminate the violations of most subjects, a phenomenon that we call “price insensitivity”.
    Keywords: Revealed Preference, GARP, Measures of Rationality, Dictator Game,
    JEL: C90 D11 D12
    Date: 2016–08–24
  8. By: Llerena Garrés, Francesc; Mauri Masdeu, Llúcia
    Abstract: A class of balanced games, called exact partition games, is introduced. Within this class, it is shown that the egalitarian solution of Dutta and Ray (1989) behaves as in the class of convex games. Moreover, we provide two axiomatic characterization by means of suitable properties such as consistency, rationality and Lorenz-fairness. As a by-product, alternative characterizations of the egalitarian solution over the class of convex games are obtained.
    Keywords: Jocs, Teoria de, 51 - Matemàtiques,
    Date: 2016
  9. By: Calleja, Pere; Llerena Garrés, Francesc
    Abstract: On the domain of cooperative games with transferable utility, we investigate how the main results in Hart and Mas-Colell (1989) vary when we replace self consistency by projected consistency or max consistency. As a consequence, we obtain several axiomatic comparison among the (weighted) Shapley value, the (weighted) surplus division solution and the prenucleolus.
    Keywords: Jocs cooperatius, 33 - Economia,
    Date: 2016
  10. By: Jane Arnold Lincove; Kalena E. Cortes
    Abstract: We examine the role of information in the college matching behavior of low- and high-income students, exploiting a state automatic admissions policy that provides some students with perfect a priori certainty of college admissions. We find that admissions certainty encourages college-ready low-income students to seek more rigorous universities. Low-income students who are less college-ready are not influenced by admissions certainty and are sensitive to college entrance exams scores. Most students also prefer campuses with students of similar race, income, and high school class rank, but only highly-qualified low-income students choose institutions where they have fewer same-race and same-income peers.
    JEL: I21 I23 J15
    Date: 2016–08
  11. By: Ori Haimanko (BGU)
    Keywords: Simple Games, Banzhaf Power Index, Semivalues, 2-Effciency, Superadditivity, Transfer, Symmetry, Positivity, Dummy.
    JEL: C71 D72
    Date: 2016
  12. By: Jim Engle-Warnick; Sonia Laszlo
    Abstract: We apply an instrument to measure ambiguity preferences in an experiment and show that revealed ambiguity preferences, but not risk preferences, predict behavior in a separate game that involves exploitation vs. exploration of a maximization problem. We provide direct evidence of ambiguity preferences acting on decision making separately from risk preferences, and advance knowledge regarding how ambiguity preferences operate on decision-making.
    Keywords: Learning-by-doing; Technology choice; Risk preferences; Risk measurement instruments; Ambiguity Aversion; Experimental economics,
    Date: 2016–08–24
  13. By: Sittl, Roman; Warnke, Arne Jonas
    Abstract: In this paper we consider trends in the distribution of player talent across association football clubs over time. Player talent is the most important prerequisite for team success in professional sports leagues and changes in players' assortativeness in regard to the clubs they play for may arguably be an important factor for changes in competitive balance. We offer a new approach for measuring player talent and its distribution - the partial correlation of each player with the goal margin. We use this measure to analyze the degree of competitive balance over time. This approach enables us to examine how player mobility drives competitive balance over time. Empirical results are based on 19 seasons of the first two divisions of the German Bundesliga as well as domestic cup games. Our results show a decrease in competitive balance over time; better teams tend to attract increasingly better players. We show that this is driven by an increasingly unequal inter-divisional distribution of teams, coaches and players, as well as increasing assortativeness in the 1st Bundesliga. We further demonstrate that player transfers between Bundesliga teams results in assortative matching between players and teams. These domestic transfers do not, however, explain the reduction in competitive balance over time. Furthermore, we show that UEFA Champions League payments may have contributed to the reduction in competitive balance over the last two decades.
    Keywords: competitive balance,uncertainty of outcome,player mobility,playing talent,football,association football,soccer,sports economics,Bundesliga,UEFA champions league
    JEL: Z2 J44 J63 L51 L83
    Date: 2016

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