nep-gth New Economics Papers
on Game Theory
Issue of 2017‒04‒02
ten papers chosen by
László Á. Kóczy
Magyar Tudományos Akadémia

  1. Formation of coalition structures as a non-cooperative game By Dmitry Levando
  2. Belief-Free Rationalizability and Informational Robustness By Dirk Bergemann; Stephen Morris
  3. Asymmetric information in simple bargaining games: An experimental study By Klempt, Charlotte; Pull, Kerstin; Stadler, Manfred
  4. Information Transmission in Hierarchies By Simon Schopohl
  5. Ranking Languages in the European Union: Before and After Brexit By Victor Ginsburgh; Juan D. Moreno-Ternero; Shlomo Weber
  6. Equilibrium Arrival Times to Queues: The Case of Last-Come First-Serve Preemptive-Resume By Breinbjerg, Jesper; Østerdal, Lars Peter
  7. An Evolutionary Approach to International Environmental Agreements with Full Participation By Hsiao-Chi Chen; Shi-Miin Liu
  8. Deception and Reception: The Behavior of Information Providers and Users By Sheremeta, Roman; Shields, Timothy
  9. Competing first-price and second-price auctions By J.M.J. Delnoij; K.J.M. De Jaegher
  10. Is Competition Among Cooperative Banks a Negative Sum Game? By Paolo Coccorese; Giovanni Ferri

  1. By: Dmitry Levando (National Research University Higher School of Economics [Moscow], CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The paper defines a family of nested non-cooperative simultaneous finite games to study coalition structure formation with intra and inter-coalition externalities. Every game has two outcomes - an allocation of players over coalitions and a payoff profile for every player. Every game in the family has an equilibrium in mixed strategies. The equilibrium can generate more than one coalition with a presence of intra and inter group externalities. These properties make it different from the Shapley value, strong Nash, coalition-proof equilibrium, core, kernel, nucleolus. The paper demonstrates some applications: non-cooperative cooperation, Bayesian game, stochastic games and construction of a non-cooperative criterion of coalition structure stability for studying focal points. An example demonstrates that a payoff profile in the Prisoners' Dilemma is non-informative to deduce a cooperation of players.
    Keywords: Noncooperative games
    Date: 2017–02
  2. By: Dirk Bergemann (Cowles Foundation, Yale University); Stephen Morris (Dept. of Economics, Princeton University)
    Abstract: Fixing a game with uncertain payoffs, information design identifies the information structure and equilibrium that maximizes the payoff of an information designer. We show how this perspective unifies existing work, including that on communication in games (Myerson (1991)), Bayesian persuasion (Kamenica and Gentzkow (2011)) and some of our own recent work. Information design has a literal interpretation, under which there is a real information designer who can commit to the choice of the best information structure (from her perspective) for a set of participants in a game. We emphasize a metaphorical interpretation, under which the information design problem is used by the analyst to characterize play in the game under many different information structures.
    Keywords: Information design, Bayesian persuasion, correlated equilibrium, incomplete information, robust predictions, information structure
    JEL: C72 D82 D83
    Date: 2017–03
  3. By: Klempt, Charlotte; Pull, Kerstin; Stadler, Manfred
    Abstract: Bilateral bargaining situations are often characterized by informational asymmetries concerning the size of what is at stake: in some cases, the proposer is better informed, in others, it is the responder. We analyze the effects of both types of asymmetric information on proposer behavior in two different situations which allow for a variation of responder veto power: the ultimatum and the dictator game. We find that the extent to which proposers demand less in the ultimatum as compared to the dictator game is (marginally) smaller when the proposer is in the superior information position. Further we find informed proposers to exploit their informational advantage by offering an amount that does not reveal the true size of the pie, with proposers in the ultimatum game exhibiting this behavioral pattern to a larger extent than those in the dictator game. Uninformed proposers risk imposed rejection when they ask for more than potentially is at stake, and ask for a risk premium in dictator games. We concentrate on proposers, but also explore responder behavior: We find uninformed responders to enable proposers' hiding behavior, and we find proposer intentionality not to play an important role for informed responders when they decide whether to accept or reject an offer by an (uninformed) proposer.
    Keywords: Bargaining,Information,Experimental Games
    JEL: C72 C91 D03
    Date: 2017
  4. By: Simon Schopohl (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, EDEEM - Université Paris 1 - EDEEM - European Doctorate in Economics Erasmus Mundus, Universität Bielefeld (GERMANY), UCL - Université Catholique de Louvain)
    Abstract: We analyze a game in which players with unique information are arranged in a hierarchy. In the lowest layer each player can decide in each of several rounds either to pass the information to his successor or to hold. While passing generates an immediate payoff according to the value of information, the player can also get an additional reward if he is the last player to pass. Facing this problem while discounting over time determines the player's behavior. Once a successor has collected all information from his workers he starts to play the same game with his successor. We state conditions for different Subgame Perfect Nash Equilibria and analyse the time it takes each hierarchy to centralize the information. This allows us to compare different structures and state which structure centralizes fastest depending on the information distribution and other parameters. We show that the time the centralization takes is mostly affected by the least informed players.
    Keywords: communication network,dynamic network game,hierarchical structure,information transmission
    Date: 2017–02
  5. By: Victor Ginsburgh (ECARES, Universite Libre de Bruxelles, Belgium, and CORE, Universite catholique de Louvain, Belgium); Juan D. Moreno-Ternero (Department of Economics, Universidad Pablo de Olavide; CORE, Université catholique de Louvain); Shlomo Weber (Department of Economics, Southern Methodist University, USA, New Economic School, Moscow, Russia, and Department of Economics, Lomonosov Moscow State University, Russia)
    Abstract: This article presents a framework for evaluation of the impact of languages in multilingual societies. We consider several ranking methods based on various principles, including minimal disenfranchisement, communicative benefits, utilitarianism, and the game-theoretical concept of the Shapley Value. We use data from a Special Barometer survey to apply these methods to languages within the European Union and conclude that they generate quite consistent results. Finally, we analyse the impact of Brexit on the rankings, especially in the case where English forfeits its status as an official language of the Union.
    Keywords: Ranking methods, European Union, Communicative benefits, Linguistic disenfranchisement, Official languages
    JEL: C78 D61 D63
    Date: 2017–03
  6. By: Breinbjerg, Jesper (Department of Business and Economics); Østerdal, Lars Peter (Department of Economics)
    Abstract: We consider a non-cooperative queueing environment where a finite number of customers independently choose when to arrive at a queueing system that opens at a given point in time and serves customers on a last-come first-serve preemptive-resume (LCFS-PR) basis. Each customer has a service time requirement which is identically and independently distributed according to some general probability distribution, and they want to complete service as early as possible while minimizing the time spent in the queue. In this setting, we establish the existence of an arrival time strategy that constitutes a symmetric (mixed) Nash equilibrium, and show that there is at most one symmetric equilibrium. We provide a numerical method to compute this equilibrium and demonstrate by a numerical example that the social efficiency can be lower than the efficiency induced by a similar queueing system that serves customers on a first-come first-serve (FCFS) basis.
    Keywords: Queueing; strategic arrival times to a queue; non-cooperative games
    JEL: C72 D62 R41
    Date: 2017–03–17
  7. By: Hsiao-Chi Chen (National Taipei University); Shi-Miin Liu (National Taipei University)
    Abstract: Under two often employed imitation mechanisms, we show that an international environmental agreement with full participation can be the unique stochastically stable equilibrium if countries' efficiency of emission reductions is high. By contrast, if the efficiency of emission reduction is low, no agreement among countries to reduce emissions will be the unique stochastically stable equilibrium. We provide the convergence rates to these two equilibria as well. In addition, it is demonstrated that the equilibria are affected by different imitation rules and model's parameters, such as marginal benefits and costs of emission reduction and the number of participating countries.
    Keywords: evolutionary game, international environmental agreement, imitations, mutation, long run equilibrium, stochastically stable
    JEL: C73 Q54
    Date: 2017–03
  8. By: Sheremeta, Roman; Shields, Timothy
    Abstract: We investigate the behavior of information providers (underwriters) and users (investors) in a controlled laboratory experiment where underwriters have incentives to deceive and investors have incentives to avoid deception. Participants play simultaneously as underwriters and investors in one-shot information transmission games. The results of our experiment show a significant proportion of both deceptive and non-deceptive underwriters. Despite the presence of deceptive underwriters, investors are receptive to underwriters’ reports, gleaning information content, albeit overly optimistic. Within our sample, deception by underwriters and reception by investors are the most profitable strategies. Moreover, participants who send deceptive reports to investors, but at the same time are receptive to reports of underwriters, earn the highest payoffs. These results call into question the characterization of duped investors being irrational.
    Keywords: experiment, strategic communication, risk, deception, investment advice
    JEL: C72 C91
    Date: 2017–03–20
  9. By: J.M.J. Delnoij; K.J.M. De Jaegher
    Abstract: This paper theoretically investigates which auctions competing sellers select when they can choose between first-price and second-price auctions, and when risk averse bidders endogenously enter one of the auctions. We first consider bidders’ entry decisions between exogenously given auctions, and find that there exists a symmetric entry equilibrium that is characterized by a mixed strategy, which depends on the bidders’ degree of absolute risk aversion. In a next step, we endogenize the sellers’ choice of auctions. We show that competing sellers have a dominant strategy to select first-price auctions if bidders exhibit nondecreasing absolute risk aversion. If bidders exhibit decreasing absolute risk aversion, however, other equilibria exist in which sellers select second-price auctions as well.
    Keywords: Auctions, Entry decisions, Risk aversion
    Date: 2016–09
  10. By: Paolo Coccorese (University of Salerno); Giovanni Ferri (LUMSA University)
    Abstract: Does ‘inner’ competition – rivalry among network members – worsen performance in a network of cooperative banks? Inner competition might, in fact, endanger network-dependent scale economies. We test our hypothesis on Banche di Credito Cooperativo (BCCs), Italy’s network of mutual cooperative banks. We find a worsening of performance both at incumbent and (even more) at aggressor BCCs when they compete among themselves. Instead, the worsening is mild when BCCs compete with non-BCC comparable banks. We conclude that inner competition among cooperative banks is a negative sum game and, thus, limiting it would be desirable to preserve the stability of cooperative banking networks.
    Keywords: Cooperative Banks, Rivalry Among Network Members, Strategic Interactions, Negative Sum Game, Banking Network
    JEL: D47 G21 G34
    Date: 2017–03

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