nep-gth New Economics Papers
on Game Theory
Issue of 2016‒10‒16
eleven papers chosen by
László Á. Kóczy
Magyar Tudományos Akadémia

  1. Prudent Equilibria and Strategic Uncertainty in Discontinuous Games By Philippe Bich
  2. Games on concept lattices: Shapley value and core By Ulrich Faigle; Michel Grabisch; Andres Jiménez-Losada; Manuel Ordóñez
  3. An allocation rule for dynamic random network formation By Jean-François Caulier; Michel Grabisch; Agnieszka Rusinowska
  4. The evolution of taking roles By Herold, Florian; Kuzmics, Christoph
  5. Weighted nucleoli and dually essential coalitions By Solymosi, Tamás
  6. The Category of Node-And-Choice Forms for Extensive-Form Games By Peter A. Streufert
  7. Monetization Strategies for Internet Companies By Voigt, Sebastian
  8. Uniformity and games decomposition By Joseph Abdou; Nikolaos Pnevmatikos; Marco Scarsini
  9. Inspired and inspiring: Hervé Moulin and the discovery of the beauty contest game By Rosemarie Nagel; Christoph Bühren; Björn Frank
  10. Influence networks and public goods By Dunia Lopez-Pintado
  11. Optimal abatement and taxation for internalizing externalities: A dynamic game with feedback strategies By Halkos, George; Papageorgiou, George

  1. By: Philippe Bich (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics)
    Abstract: We introduce the new concept of prudent equilibrium to model strategic uncertainty, and prove it exists in large classes of discontinuous games. When the game is better-reply secure, we show that prudent equilibrium refines Nash equilibrium. In contrast with the current literature, we don't use probabilities to model players' strategies and beliefs about other players' strategies. We provide examples (first-price auctions, location game, Nash demand game, etc.) where the prudent equilibrium is the intuitive solution of the game.
    Keywords: prudent equilibrium,Nash equilibrium,refinement,strategic uncertainty,better-reply secure
    Date: 2016–06–24
  2. By: Ulrich Faigle (Universität zu Köln - Mathematisches Institut); Michel Grabisch (PSE - Paris School of Economics, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Andres Jiménez-Losada (Escuela Superior de Ingenieros); Manuel Ordóñez (Escuela Superior de Ingenieros)
    Abstract: We introduce cooperative TU-games on concept lattices, where a concept is a pair (S,S' ) with S being a subset of players or objects, and S' a subset of attributes. Any such game induces a game on the set of players/objects, which appears to be a TU-game whose collection of feasible coalitions is a lattice closed under intersection, and a game on the set of attributes. We propose a Shapley value for each type of game, axiomatize it, and investigate the geometrical properties of the core (nonemptiness, boundedness, pointedness, extremal rays).
    Abstract: Nous introduisons la notion de jeu coopératif sur les treillis de concepts, où un concept est une paire (S,S' ) avec S un sous-ensemble de joueurs et S' un sous-ensemble d'attributs. Un tel jeu induit un jeu sur l'ensemble des joueurs/objets, qui s'avère être un jeu TU dont la collection des coalitions réalisables est un treillis fermé sous l'intersection, et un jeu sur l'ensemble des attributs. Nous proposons une valeur de Shapley pour chaque type de jeu, l'axiomatisons et étudions les propriétés géométriques du cœur (conditions pour être non vide, borné et pointé).
    Keywords: Shapley value,core,cooperative game,restricted cooperation,concept lattice,jeu coopératif,valeur de Shapley,coopération restreinte,coeur,treillis de concept
    Date: 2014–10
  3. By: Jean-François Caulier (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Michel Grabisch (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Agnieszka Rusinowska (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics)
    Abstract: Most allocation rules for network games presented in the literature assume that the network structure is fixed. We put explicit emphasis on the construction of networks and examine the dynamic formation of networks whose evolution across time periods is stochastic. Time-series of networks are studied that describe processes of network formation where links may appear or disappear at any period. Moreover, convergence to an efficient network is not necessarily prescribed. Transitions from one network to another are random and ruled by a stochastic process, typically a Markov chain. We propose the link-based scenario allocation rule for such dynamic random network formation processes and provide its axiomatic characterization. By considering a monotone game and a particular (natural) network formation process we recover the link-based flexible network allocation rule of Jackson (2015).
    Keywords: dynamic networks,network game,link-based allocation rule,Markov chain,characterization
    Date: 2015
  4. By: Herold, Florian; Kuzmics, Christoph
    Abstract: Individuals engage in an ex-ante symmetric situation, in which in addition to a symmetric equilibrium there are also asymmetric equilibria. Individuals can assume one of a finite set of payoff irrelevant publicly observable labels and can condition their action choice on their own assumed label as well as the label of their opponent. We study evolutionary (and neutrally) stable strategies of such games. While the formal analysis is similar to the analysis of cheap talk games with evolutionary equilibrium selection, we are here mostly interested in the social structure that underlies such equilibria. For the class of 2 × 2 games with asymmetric pure strategy equilibria (hawk-dove games) we find a key distinction between two subclasses. While the best-response structure is identical for both subclasses, the evolution is quite different for hawk-dove games in which if you play dove you would prefer the opponent to play hawk (we call these anti-coordination games), and hawk dove games in which you always prefer the opponent to choose dove (we call them conflict games). Two social structures of particular interest are a hierarchical structure and an egalitarian structure. Furthermore, complex social structures composed of simpler substructures can emerge and we characterize their evolutionary stability. We discuss when they are evolutionary stable and the consequences of different structures for welfare.
    Date: 2016
  5. By: Solymosi, Tamás
    Abstract: We consider linearly weighted versions of the least core and the (pre)nucleolus and investigate the reduction possibilities in their computation. We slightly extend some well-known related results and establish their counterparts by using the dual game. Our main results imply, for example, that if the core of the game is not empty, all dually inessential coalitions (which can be weakly minorized by a partition in the dual game) can be ignored when we compute the per-capita least core and the per-capita (pre)nucleolus from the dual game. This could lead to the design of polynomial time algorithms for the per-capita (and other monotone nondecreasingly weighted versions of the) least core and the (pre)nucleolus in specific classes of balanced games with polynomial many dually esential coalitions.
    Keywords: per-capita (pre)nucleolus, least core, computation
    JEL: C71
    Date: 2016–10–02
  6. By: Peter A. Streufert (University of Western Ontario)
    Abstract: It would be useful to have a category of extensive-form games whose isomorphisms specify equivalences between games. Toward this goal, Streufert (2016) introduced the category of node-and-choice preforms, where a "preform" is a rooted tree together with choices and information sets. This paper takes another step: It introduces the category of node-and-choice forms, where a "form" is a preform augmented with players. In addition, it derives some consequences of the category's morphisms and provides a characterization of the category's isomorphisms.
    JEL: C72
    Date: 2016
  7. By: Voigt, Sebastian
    Abstract: Many Internet service companies such as providers of two-sided markets, social networks, or online games rely on the social interaction between their user base and thus capitalize from positive network effects. For such companies, a common strategy is to offer (basic) services for free (and thereby abolish entry barrier of a one-off or recurring price) and to charge their users for premium services. Companies such as eBay, PayPal, LinkedIn, or Skype added paid services to their originally free business models, either via subscriptions, PAYG, or direct sales of virtual items. Their strategy how to make money and whom to bill however differs widely. In the Internet business, ‘monetization’ has become a frequently used buzzword for all aspects of a company’s revenue strategy which includes the decision who should be billed (e.g., for a two-sided market: seller vs. buyer vs. advertisers only), with which price model (e.g., mandatory subscription vs. optional subscriptions vs. selling virtual currency or items) and price level (e.g., differentiated between user groups), and – in case of a freemium strategy – how a new (free) user can be converted most efficiently into a paying and remunerative customer (e.g., via effective CRM measures). The overarching objective of all monetization measures is to maximize the company’s revenue and/or profit. The field of monetization offers a wide field of research opportunities. Four of these are covered in this dissertation: The Name-your-own-price model, users’ spending behavior in virtual communities, the monetization of network effects in social networks, and the legal boundaries of social network usage. As a result, this dissertation solves a series of questions currently being worked on by practitioners and uses a wide range of methods from various disciplines such as economic, psychological, and game theory.
    Date: 2016
  8. By: Joseph Abdou (PSE - Paris School of Economics, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Nikolaos Pnevmatikos (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Marco Scarsini (Engineering and System Design Pillar - Singapore University of Technology and Design)
    Abstract: We introduce the classes of uniform and non interactive games. We study appropriate projection operators over the space of games, in order to propose a novel canonical direct sum decomposition of an arbitrary game into three components, which we refer to as the uniform with zero constant, the non interactive total sum zero and the constant components. Under a natural inner product, we show that the components are orthogonal and we provide explicit expressions for the closet uniform and non interactive games to a given game. We characterize the set of its approximate equilibria in terms of the uniformly mixed and dominant strategies equilibria profiles of its closest uniform and non interactive games respectively.
    Abstract: On introduit les classes des jeux uniformes et non interactives. On étudie les opérateurs appropriés de projection afin de proposer une nouvelle décomposition de l'espace des jeux en somme directe des trois sous-espaces orthogonaux relativement à un produit scalaire naturel. Ainsi, chaque jeu arbitraire se décompose en trois composantes, la composante uniforme avec constante zéro, la composante non interactive avec somme totale zéro et la composante constante. On fournit alors les expressions explicites des jeux uniformes et non interactifs qui sont les plus proches à un jeu donné. Aussi, on caractérise l'ensemble des équilibres approximatifs en termes d'équilibre uniformément mixte et d'équilibre en stratégies dominantes des jeux les plus proches uniforme et non interactif.
    Keywords: decomposition of games,projection operator,dominant strategy equilibrium,uniformly mixed strategy,décomposition des jeux,opérateur de projection,équilibre en stratégies dominantes,stratégie uniformément mixte
    Date: 2014–11
  9. By: Rosemarie Nagel; Christoph Bühren; Björn Frank
    Abstract: We draw an unusually detailed picture of a discovery, the beauty contest game - with Hervé Moulin as the center of the initial inspiration. Since its inception, the beauty contest game and the descriptive level k model has widely contributed to the growth of experimental and behavioral economics and expanded also to other areas within and outside of economics. We illustrate, in particular, the recent interaction between macro theorists and experimenters, who independently had worked on the puzzles and consequences due to beauty contest features. Furthermore, we introduce a new variety of the two-person beauty contest game with two different payoff structures that leads to different game-theoretic properties unperceived by naïve subjects and game theory experts alike.
    Keywords: Keynes, Beauty Contest Games, History, Level k, Micro-, Macro-, Neuro-Economic Experiments.
    JEL: C9 D84 D87 E12 N1 N80
    Date: 2016–10
  10. By: Dunia Lopez-Pintado (Universidad Pablo de Olavide and CORE, Universite catholique de Louvain.)
    Abstract: We consider a model of local public goods in a random network context. The influence network determines (exogenously) who observes whom every period and comprises a wide array of options depending on the degree distribution and the in/out-degree correlations. We show that there exists a unique equilibrium level of public good provision and compare it with the efficient level. We derive further insights for this problem by performing a comparative statics analysis.
    Keywords: influence networks, public goods, out-degree, in-degree, best-shot game
    JEL: D85 H41
    Date: 2016–10–04
  11. By: Halkos, George; Papageorgiou, George
    Abstract: In this paper we consider a dynamic nonzero-sum game between the polluting firms and the authorities. Although the proposed game is not easily solvable for the feedback case, i.e., it is not the linear quadratic case of game and not a degenerated case, we calculate explicitly a stationary feedback equilibrium. In the proposed game the regulator has the ability to turn the optimal allocation of their efforts between abatement and taxation of the polluting firms. During the game, the regulator’s criterion is the minimization of the total discounted costs, while the criterion of the polluting firms is their utility maximization. Next, sensitivity analyses regarding the efficiency parameters of both players are provided. The conclusions are that a farsighted regulator should put much effort in abatement measures (instead of taxation measures) as well as in the improvement of abatement efficiency.
    Keywords: Differential games; Feedback equilibrium; Taxation; Pollution abatement.
    JEL: C61 C62 C7 H21 Q50 Q52 Q58
    Date: 2016–10

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