nep-gth New Economics Papers
on Game Theory
Issue of 2017‒03‒19
seven papers chosen by
László Á. Kóczy
Magyar Tudományos Akadémia

  1. School Choice: Nash Implementation of Stable Matchings through Rank-Priority Mechanisms By Paula Jaramillo; Ça?atay Kay?; Flip Klijn
  2. The symmetric equilibria of symmetric voter participation games with complete information By Nöldeke, Georg; Peña, Jorge
  3. Take-it-or-leave-it contracts in many-to-many matching markets By Triossi, Matteo; Romero-Medina, Antonio
  4. Is trustworthiness written on the face? By Dilger, Alexander; Müller, Julia; Müller, Michael
  5. An experimental investigation of rating-market regulation By Claudia Keser; Asri Özgümüs; Emmanuel Peterlé; Martin Schmidt
  6. Providing efficient network access to green power generators: : A long-term property rights perspective. By Petropoulos, G.; Willems, Bert
  7. Regulating the tragedy of commons: nonlinear feedback solutions of a differential game with a dual interpretation By L. Lambertini

  1. By: Paula Jaramillo; Ça?atay Kay?; Flip Klijn
    Abstract: We consider school choice problems (Abdulkadiro?lu and Sönmez, 2003) where students are assigned to public schools through a centralized assignment mechanism. We study the family of so-called rank-priority mechanisms, each of which is induced by an order of rank-priority pairs. Following the corresponding order of pairs, at each step a rank-priority mechanism considers a rank-priority pair and matches an available student to an unfilled school if the student and the school rank and prioritize each other in accordance with the rank-priority pair. The Boston or immediate acceptance mechanism is a particular rank-priority mechanism. Our first main result is a characterization of the subfamily of rank-priority mechanisms that Nash implement the set of stable (i.e., fair) matchings (Theorem 1). We show that our characterization also holds for "sub-implementation" and "sup-implementation" (Corollaries 3 and 4). Our second main result is a strong impossibility result: under incomplete information, no rank-priority mechanism implements the set of stable matchings (Theorem 2).
    Keywords: school choice, rank-priority mechanisms, stability, Nash implementation
    JEL: C78 D61 D78 I20
    Date: 2017–03
  2. By: Nöldeke, Georg; Peña, Jorge
    Abstract: We characterize the symmetric Nash equilibria of the symmetric voter participation game with complete information introduced by Palfrey and Rosenthal (1983). Our results confirm their conjecture on the existence, multiplicity, and comparative statics of such equilibria and yield more precise information on how changes in team size affect the location of equilibria.
    JEL: D72 C72 C02
    Date: 2016
  3. By: Triossi, Matteo; Romero-Medina, Antonio
    Abstract: We study a class of sequential non-revelation mechanisms where hospitals make simultaneous take-it-or-leave-it offers to doctors that either accept or reject them. We show that the mechanisms in this class are equivalent. They (weakly) implement the set of stable allocations in subgame perfect equilibrium. When all preferences are substitutable, the set of equilibria of the mechanisms in the class forms a lattice. Our results reveal a first-mover advantage absent in the model without contracts. We apply our findings to centralize school admissions problems, and we show obtaining pairwise stable allocations is possible through the immediate acceptance mechanism.
    Keywords: ultimatum games; contracts; Many-to-many
    Date: 2017–02
  4. By: Dilger, Alexander; Müller, Julia; Müller, Michael
    Abstract: Trust is an important driver of economic transactions, but how do people decide whom to trust? We conduct an experiment to investigate whether people are able to predict trustworthiness by judging the face of a stranger. The behavior of the second player in the Trust Game is used as a measure of trustworthiness. Other subjects assess the trustworthiness of the second players of the Trust Game in the second stage using standardized photos of their faces. We find no significant interrelation in our statistical estimations between trustworthiness ratings and the behavior of the examined players. Surprisingly, players that were rated as more attractive sent back significantly less in the Trust Game.
    JEL: C72 C91 D03 D81 J71
    Date: 2017
  5. By: Claudia Keser; Asri Özgümüs; Emmanuel Peterlé; Martin Schmidt
    Abstract: We introduce a simple game-theoretical model that captures the main aspects of the repeated interaction between an issuer and a credit-rating agency. It involves up-front payments of issuer-fees and direct publication of requested ratings. Due to pecuniary injuries for untruthful ratings, the credit-rating agency should always report truthfully in the subgame perfect equilibrium. Knowing this, the issuer should never request a rating. Conducting laboratory experiments, we find that behavior significantly deviates from the equilibrium prediction in favor of a cooperative solution: issuers frequently do request ratings, which is often reciprocated with untruthful good ratings.
    Keywords: Game theory, laboratory experiments, rating agencies, regulation,
    JEL: C70 C9 G0
    Date: 2017–03–06
  6. By: Petropoulos, G.; Willems, Bert
    Abstract: Coordinating the timing of new production facilities is one of the challenges of liberalized power sectors. It is complicated by the presence of transmission bottlenecks, oligopolistic competition and the unknown prospects of low-carbon technologies. We build a model encompassing a late and early investment stage, an existing dirty (brown) and a future clean (green) technology and a single transmission bottleneck, and compare dynamic efficiency of several market designs. Allocating network access on a short-term competitive basis distorts investment decisions, as brown firms will preempt green competitors by investing early. Dynamic efficiency is restored with long-term transmission rights that can be traded on a secondary market. We show that dynamic efficiency does not require the existence of physical rights for accessing the transmission line, but financial rights on receiving the scarcity revenues generated by the transmission line suffice.
    Keywords: network access, congestion management, renewable energy sources, power markets
    JEL: C72 D43 L13 L94
    Date: 2017–02
  7. By: L. Lambertini
    Abstract: A well established dynamic model describing the impact of oligopolistic interaction on a renewable resource is revisited here to illustrate its dual interpretation as a waste removal differential game. The regulatory implications are illustrated by assuming that the public agency may control market price and possibly also access to the commons. Two different formulations of the managerial or CSR objective are envisaged, based on a combination of profits and either output or the individual share of the waste stock. It is shown that if the representative firm’s objective includes the residual waste stock, there exists a unique regulated price driving to zero the steady state stock itself. Hence, the present analysis delivers some useful indications concerning an appropriate definition of the CSR objective firms should adopt.
    JEL: C73 L13 Q20 Q53
    Date: 2017–03

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