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on Game Theory |
| By: | Marie Laclau (CNRS - Centre National de la Recherche Scientifique, PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), PSE - Paris School of Economics); Tristan Tomala (HEC Paris - Department of Economics and Decision Sciences) |
| Abstract: | We consider repeated games with compact actions sets and pure strategies in which players commonly observe a public signal which reveals imperfectly the action profile. We characterize the set of payoffs profiles that can be sustained by a perfect equilibrium, as players become increasingly patient. There are two conditions: admissibility and joint rationality. An admissibly feasible payoff can be achieved by an action profile that offers no unilateral deviation which is both undetectable and profitable. It is jointly rational if for all weights on players, the weighted payoff is greater than or equal to the minmax level of the weighted payoff function. This characterization is alternative to the one provided by the " score method " of Fuden-berg and Levine (1994). We provide a simple construction of equilibrium strategies based on cooperation, punishments and rewards. Punishments rely on Blackwell's approachability algorithm. |
| Keywords: | Repeated games, approachability, imperfect public monitoring. |
| Date: | 2016–03–09 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01285326&r=gth |
| 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 (University of Seville Escuela Técnica Superior de Ingenieros de Sevilla); Manuel Ordóñez (University of Seville Escuela Técnica Superior de Ingenieros de Sevilla) |
| 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 (non-emptiness, boundedness, pointedness, extremal rays). In particular, we derive the equivalence of the intent and extent core for the class of distributive concepts. |
| Keywords: | Shapley value,cooperative game,restricted cooperation,core,concept lattice |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:hal-01379699&r=gth |
| By: | Hugo Hopenhayn; Maryam Saeedi |
| Abstract: | This paper studies bidding dynamics where values and bidding opportunities follow an unrestricted joint Markov process, independent across agents. Bids cannot be retracted, as is frequently the case in auctions. Our main methodological contribution is that we construct a mapping from this general stochastic process into a distribution of values that is independent of the type of auction considered. The equilibria of a static auction with this distribution of values is used to characterize the equilibria of the dynamic auction, making this general class very tractable. As a result of the option of future rebidding, early bids are shaded and under mild conditions increase toward the end of the auction. Our results are consistent with repeated bidding and skewness of the time distribution of winning bids, two puzzling observations in dynamic auctions. As an application, we estimate the model by matching moments from eBay auctions. |
| JEL: | C73 D44 D81 L81 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22716&r=gth |
| By: | Andrés Salamanca Lugo (TSE - Toulouse School of Economics - Toulouse School of Economics); Olga Manrique Chaparro (Universidad Nacional de Colombia [Bogotá]) |
| Abstract: | In this paper we experimentally analyze the use of private information in a class of zero-sum repeated games with incomplete information on one side and perfect monitoring. We analyze whether the information disclosure by the informed players, and its use by the uninformed players, matches the theoretical predictions. We consider two games that differ according to the amount of information that the informed player should optimally disclose: in the first game, the informed player should entirely conceal his information. In contrast, in the second game the informed player should fully disclose his information. We find that the flow of information is higher than predicted in the first game and lower than predicted in the second game. However, the use of information is strictly higher in the second game than in the first one. Uninformed subjects tend not to use the revealed information in the first game, and seem to misinterpret the revealed information in the second game. |
| Keywords: | Repeated games,incomplete information,experiments |
| Date: | 2016–04–20 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01305213&r=gth |
| By: | Stéphane Gonzalez (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - CNRS - Centre National de la Recherche Scientifique); Aymeric Lardon (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | We introduce axiomatically a new solution concept for cooperative games with transferable utility inspired by the core. While core solution concepts have investigated the sustainability of cooperation among players, our solution concept, called contraction core, focuses on the deterrence of cooperation. The main interest of the contraction core is to provide a monetary measure of the robustness of cooperation into the grand coalition. We motivate this concept by providing optimal fine imposed by competition authorities for the dismantling of cartels in oligopolistic markets. We characterize the contraction core on the set of balanced cooperative games with transferable utility by four axioms: the two classic axioms of non-emptiness and individual rationality, a superadditivity principle and a new axiom of consistency. |
| Keywords: | TU-game, contraction core, optimal fine, Cournot oligopoly, axiomatization |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01333392&r=gth |
| By: | Mago, Shakun; Sheremeta, Roman |
| Abstract: | We examine behavior of subjects in simultaneous and sequential multi-battle contests, where each individual battle is modeled as an all-pay auction with complete information. In simultaneous best-of-three contests, subjects are predicted to make positive bids in all three battles, but we find that subjects often make positive bids in only two battles. In sequential contests, theory predicts sizable bids in the first battle and no bids in the subsequent battles. Contrary to this prediction, subjects significantly underbid in the first battle and overbid in subsequent battles. Consequently, instead of always ending in the second battle, contests often proceeds to the third battle. Finally, although the aggregate bid in simultaneous contests is similar to that in sequential contests, in both settings, subjects make higher aggregate bids than predicted. The observed behavior of subjects can be rationalized by a combination of multi-dimensional iterative reasoning and a non-monetary utility of winning. |
| Keywords: | multi-battle contest, experiments, iterative reasoning, overdissipation |
| JEL: | C72 C91 D72 |
| Date: | 2016–09–17 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:74524&r=gth |
| By: | Grégoire Rota-Graziosi (CERDI - Centre d'études et de recherches sur le developpement international - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | Pareto-improving tax coordination, and even tax harmonization, are Nash implementable between sovereign countries without any supranational tax authorities. Following Schelling's approach, we consider voluntary commitment, which constrains countries' respective tax rate choices. We develop a commitment game where countries choose their strategy sets in preliminary stages and play consistently during the final one. We determine the set of tax rates, which are implementable by commitment. This allows countries to reach Pareto-improving equilibriums. We also establish that complete tax harmonization may emerge as the subgame perfect Nash equilibrium of the commitment game as long as the asymmetry between countries remains limited. Our analysis contributes to the rationale of tax ranges and, more broadly, of non binding but self-enforcing commitments (not equivalent to cheap talk) in the context of tax competition. |
| Keywords: | Tax competition,Tax coordination,Commitment. |
| Date: | 2016–06–15 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01332058&r=gth |
| By: | Shakun D. Mago (Department of Economics, Robins School of Business, University of Richmond); Roman M. Sheremeta (Weatherhead School of Management, Case Western Reserve University and Economic Science Institute, Chapman University) |
| Abstract: | We examine behavior of subjects in simultaneous and sequential multi-battle contests, where each individual battle is modeled as an all-pay auction with complete information. In simultaneous bestof-three contests, subjects are predicted to make positive bids in all three battles, but we find that subjects often make positive bids in only two battles. In sequential contests, theory predicts sizable bids in the first battle and no bids in the subsequent battles. Contrary to this prediction, subjects significantly underbid in the first battle and overbid in subsequent battles. Consequently, instead of always ending in the second battle, contests often proceeds to the third battle. Finally, although the aggregate bid in simultaneous contests is similar to that in sequential contests, in both settings, subjects make higher aggregate bids than predicted. The observed behavior of subjects can be rationalized by a combination of multi-dimensional iterative reasoning and a non-monetary utility of winning. |
| Keywords: | multi-battle contest, experiments, iterative reasoning, overdissipation |
| JEL: | C72 C91 D72 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:16-25&r=gth |
| By: | Di Bartolomeo Giovanni; Papa Stefano |
| Abstract: | This paper aims to study the effects of free-form messages (cheap talk) in an investment game as Berg et al. (1995). We guess that messages matter, but they may not affect the outcomes on average because different outcomes of communication can be systematically misunderstood generating different effects that offset each other. Considering a non-binary choice game, where misunderstandings are more likely to be observed, we test our intuition in two steps. First, we classify messages by their contents and then we verify their impact on participants’ behavior accordingly to their kind. |
| Keywords: | Trust, reciprocity, promises, requests, empty talk |
| JEL: | D03 C91 D83 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:ter:wpaper:00123&r=gth |
| By: | Alex Dickson (Department of Economics, University of Strathclyde, Glasgow, UK, G4 0QU); Ian A. MacKenzie (School of Economics, University of Queensland, Brisbane, Australia, 4072); Petros G. Sekeris (Montpellier Business School, Montpellier, France) |
| Abstract: | This article investigates contests when heterogeneous players compete to obtain a rent share. We prove the existence and uniqueness of the Nash equilibrium when players have general preferences. Our results show that the conventional wisdom in contests-such as a monotonically increasing relationship between effort and the size of the rent-may no longer hold. We derive the key conditions on preferences under which this is the case. By providing a much broader contest environment, our approach is able to nest conventional contest analysis as well as providing a rich framework that helps to explain many previously puzzling applications. |
| Keywords: | contest; general preferences; aggregative game |
| JEL: | C72 D72 |
| Date: | 2016–10–05 |
| URL: | http://d.repec.org/n?u=RePEc:qld:uq2004:573&r=gth |
| By: | Michael R. Powers (Tsinghua University); Martin Shubik (Cowles Foundation, Yale University) |
| Abstract: | In a previous essay, we developed a simple (in)efficiency measure for matrix games. We now address the difficulties encountered in assessing the usefulness and accuracy of such a measure. |
| Keywords: | 2 × 2 matrix games |
| JEL: | C63 C72 D61 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:2053&r=gth |
| By: | Woods, Daniel; Servátka, Maroš |
| Abstract: | We propose a conjecture that self-serving but generous actions diminish the positively reciprocal response, compared to selfless generous actions. We embed our conjecture in Cox, Friedman & Sadiraj’s (2008) model of Revealed Altruism. According to Revealed Altruism reciprocal responses are influenced by a ‘more generous than’ (MGT) ordering. The MGT ordering is defined by two conditions. Condition A states that an action that increases one’s opportunity set is MGT an action that decreases, does not change, or increases the opportunity set by less. Condition B states that the action cannot increase the ‘giver’s’ opportunity set by more than the ‘recipient’s’ opportunity set. We focus on Condition B, and classify actions that satisfy Condition B as selfless generous actions, and actions that violate Condition B as self-serving generous actions. We hypothesize that selfless generous actions are MGT self-serving generous actions, and that self-serving generous actions will result in a diminished reciprocal response. We test this conjecture using two novel experimental designs and find evidence that subjects perceive self-serving generous actions as being less generous than selfless generous actions, but no empirical support for our conjecture on the diminished reciprocal response, suggesting a refinement for the MGT ordering that does not include Condition B. |
| Keywords: | Reciprocity, generosity, self-serving, experiment, Revealed Altruism, lost wallet game, investment game |
| JEL: | C7 C72 C9 C91 |
| Date: | 2016–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:74565&r=gth |
| By: | F. Aleskerov; N. Meshcheryakova; S. Shvydun |
| Abstract: | We propose a new method for assessing agents influence in network structures, which takes into consideration nodes attributes, individual and group influences of nodes, and the intensity of interactions. This approach helps us to identify both explicit and hidden central elements which cannot be detected by classical centrality measures or other indices. |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1610.05892&r=gth |
| By: | Eric Schmidbauer (University of Central Florida, Orlando, FL) |
| Abstract: | Each of n experts communicates with a principal about the privately observed quality of the expert's own project via cheap talk, with new independently drawn projects available each period until the principal adopts one. Even when experts are very biased in that they only receive a positive payoff if their own project is selected, we show that informative equilibria may exist, characterize the set of stationary equilibria, and nd the Pareto dominant symmetric equilibrium. Experts face a tradeoff between inducing acceptance now versus waiting for a better project should the game continue. When the future is more highly valued experts send more informative messages, increasing the average quality of an adopted project and resulting in a Pareto improvement, while communication is harmed and payoffs can decline when there is more competition between experts. |
| Keywords: | cheap talk, multiple senders, competition |
| JEL: | D23 D74 D82 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:cfl:wpaper:2016-04&r=gth |
| By: | Aidas Masiliunas (AMSE - Aix-Marseille School of Economics - EHESS - École des hautes études en sciences sociales - Centre national de la recherche scientifique (CNRS) - Ecole Centrale Marseille (ECM) - AMU - Aix-Marseille Université) |
| Abstract: | Path-dependence in coordination games may lead to lock-in on inefficient outcomes, such as adoption of inferior technologies (Arthur, 1989) or inefficient economic institutions (North, 1990). We aim to find conditions under which lock-in is overcome by developing a solution concept that makes ex-ante predictions about the adaptation process following lock-in. We assume that some players are myopic, forming beliefs according to fictitious play, while others are sophisticated, anticipating the learning process of the myopic players. We propose a solution concept based on a Nash equilibrium of the strategies chosen by sophisticated players. Our model predicts that no players would switch from the efficient to the inefficient action, but deviations in the other direction are possible. Three types of equilibria may exist: in the first type lock-in is sustained, while in the other two types lock-in is overcome. We determine the existence conditions for each of these equilibria and show that the equilibria in which lock-in is overcome are more likely and the transition is faster when sophisticated players have a longer planning horizon, or when the history of inefficient coordination is shorter. |
| Keywords: | game theory,learning,lock-in,farsightedness,coordination |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01304178&r=gth |
| By: | Frédéric Gavrel (CREM - Centre de Recherche en Economie et Management - UR1 - Université de Rennes 1 - Université de Caen Basse-Normandie - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | In a status game, homogenous individuals first decide on their income (and on the effort necessary to that end) with the aim at Getting ahead of the Smithes (GAS). Next, they make use of a pure positional good to make incomes visible. Although the GAS hypothesis is ordinal, the signalling costs induce cardinal social concerns. The GAS hypothesis, translated into the KUJ (Keeping Up with the Joneses) (pride) concern, generates an equilibrium in which identical agents have unequal income levels. This equilibrium is an egalitarian optimum. But utilitarian and Paretian inefficiency are the price paid for equality. |
| Keywords: | Efficiency,Conspicuous consumption,Well-being,Status game,Social concerns,Income inequalities |
| Date: | 2016–05–24 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01319593&r=gth |
| By: | Battaglini, Marco; Patacchini, Eleonora |
| Abstract: | This paper studies how interest groups allocate campaign contributions when congressmen are connected by social ties. We establish conditions for the existence of a unique Nash equilibrium in pure strategies for the contribution game and characterize the associated allocation of the interest groups' moneys. While the allocations are generally complex functions of the environment (the voting function, the legislators' preferences and the social network topology), they are simple, monotonically increasing functions of the respective legislators' Bonacich centralities when the legislators are office motivated or the number of legislators is large. Using data on the 109th-113th Congresses and on congressmen's alumni connections, we estimate the model and find evidence supporting its predictions. |
| Keywords: | economics of networks; interest groups |
| JEL: | D72 D78 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11571&r=gth |
| By: | Sang-Chul Suh (Department of Economics, University of Windsor) |
| Abstract: | Despite decades of international negotiations, little progress has been made in reducing the level of the Green House Gases (GHGs) in the atmosphere. The understanding of the climate change problem in economic theory as an allocation failure of common resources is explained in "the tragedy of the commonsÉ by Hardin (1968). We start with a simple prisoners’ dilemma game (PD game) that represents the essence of Hardin’s "the tragedy of the commons". We argue that the PD game model is not adequate for explaining the failure of the climate negotiations. As an alternative explanation, we claim that countries’ irrational decision making, rather than misdirected incentives of rational countries in the PD game, is the main cause of the failure of climate negotiations. The irrationality of a government originates from ignoring the well-being of the poor and the future generations who are mostly excluded from the market activities, and hence receive the least economic benefit, contribute least to the climate problem, and yet are forced to pay most of the non-economic costs of climate change. The current paper tries to keep the resolution of the climate problem in the realm of economic discussion, while following Gardiner’s (2011) view that regards the issue of climate change as a moral problem of ignoring the wellbeing of the poor and the future generations. The immediate challenge of this approach is to measure the non-economic losses of the poor and the future generations due to climate change and to reflect them in climate change related decisions |
| Keywords: | Climate Change, Negotiation, Game, Irrationality, Income Inequality, Intergenerational Conflict. |
| JEL: | Q54 C72 D62 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:wis:wpaper:1607&r=gth |
| By: | Mohamed Belhaj (AMSE - Aix-Marseille School of Economics - EHESS - École des hautes études en sciences sociales - Centre national de la recherche scientifique (CNRS) - Ecole Centrale Marseille (ECM) - AMU - Aix-Marseille Université); Frédéric Deroïan (AMSE - Aix-Marseille School of Economics - EHESS - École des hautes études en sciences sociales - Centre national de la recherche scientifique (CNRS) - Ecole Centrale Marseille (ECM) - AMU - Aix-Marseille Université) |
| Abstract: | We study the value of network information in a context of monopoly pricing in the presence of local network externalities. We compare a setting in which all players, i.e. the monopoly and consumers, know the network structure and consumers' private preferences with a setting in which players only know the joint distribution of preferences, in-degrees and out-degrees. We give conditions under which network information increases profit or/and consumer surplus. The analysis reveals the crucial role played by four properties: degree assortativity, homophily (in preferences), preference-degree assortativity and preference-Bonacich centrality assortativity. |
| Keywords: | monopoly,network effects,price discrimination,Bonacich centrality,network information,degree assortativity,homophily,preference-degree assortativity,preference-Bonacich centrality assortativity |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01314954&r=gth |
| By: | Eleftheriou, Konstantinos; Polemis, Michael |
| Abstract: | We develop a simple model with heterogeneous agents and search frictions to study how increases in matching intensity between buyers and sellers determine the level of income inequality among sellers. Our findings indicate that a reduction in search frictions leads to higher inequality and induces buyers to purchase goods and services only from specialized sellers. |
| Keywords: | game theory; income inequality; matching; technology; value functions |
| JEL: | C78 O30 |
| Date: | 2016–10–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:74579&r=gth |
| By: | Christian Roessler; Sandro Shelegia; Bruno Strulovici |
| Abstract: | We consider collective decisions made by agents whose preferences and power depend on past events and decisions. Faced with an inecient equilibrium and an opportunity to commit to a policy, can the agents reach an agreement on such a policy? We provide a consistency condition linking power structures in the dynamic setting and at the commitment stage. When the condition holds, commitment has no value: any agreement that may be reached at the outset coincides with the equilibrium without commitment. When the condition fails, as in the case of time-inconsistent preferences, commitment can improve outcomes. We discuss several applications. |
| JEL: | D70 H41 C70 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:933&r=gth |
| By: | Natalia Lazzati (Department of Economics, University of California Santa Cruz); John K.-H. Quah (Department of Economics, Johns Hopkins University); Koji Shirai (School of Economics, Kwansei Gakuin University) |
| Abstract: | We develop revealed preference characterizations of (1) monotone choice in the context of individual decision making and (2) strategic complementarity in the context of simultaneous games. We first consider the case where the observer has access to panel data and then extend the analysis to the case where data sets are cross sectional and preferences heterogenous. Lastly, we apply our techniques to investigate the possibility of spousal inuence in smoking decisions. |
| Keywords: | monotone comparative statics, single crossing differences, interval dominance, supermodular games, lattices |
| JEL: | C6 C7 D7 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:kgu:wpaper:147&r=gth |
| By: | Nikolai S. Kukushkin (Dorodnicyn Computing Centre); John K.-H. Quah (Department of Economics, Johns Hopkins University); Koji Shirai (School of Economics, Kwansei Gakuin University) |
| Abstract: | We provide an example of a data set where all the revealed preference relations seem to be consistent with single crossing differences and yet the revealed preference relations cannot be extended to a complete preference obeying that property. |
| Keywords: | monotone comparative statics, single crossing differences, interval dominance, supermodular games, lattices |
| JEL: | C6 C7 D7 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:kgu:wpaper:148&r=gth |