nep-gth New Economics Papers
on Game Theory
Issue of 2017‒05‒14
eleven papers chosen by
László Á. Kóczy
Magyar Tudományos Akadémia

  1. Matching with Myopic and Farsighted Players By Herings, P. Jean-Jacques; Mauleon, Ana; Vannetelbosch, Vincent
  2. Dynamic competition over social networks By Antoine Mandel; Xavier Venel
  3. How Asymmetrically Increasing Joint Strike Costs Need Not Lead to Fewer Strikes By Pantsios, Archontis L.; Polachek, Solomon
  4. Identifying preferences in networks with bounded degree By Áureo de Paula; Seth Richards-Shubik; Elie Tamer
  5. The Pay-What-You-Want Game: What can be learned from the experimental evidence on Dictator and Trust Games? By Matthias Greiff; Henrik Egbert
  6. Optimal stopping and a non-zero-sum Dynkin game in discrete time with risk measures induced by BSDEs By Miryana Grigorova; Marie-Claire Quenez
  7. The Strategy of Conquest By Dziubinski, M.; Goyal, S.; Minarsch, D . E. N.
  8. It Pays to Be a Man: Rewards for Leaders in a Coordination Game By Philip J. Grossman; Catherine Eckel; Mana Komai; Wei Zhan
  9. Promises and Endogenous Reneging Costs By Heller, Yuval; Sturrock, David
  10. Obviously Strategy-Proof Mechanisms By Li, Shengwu
  11. A Theory of Sticky Rents: Search and Bargaining with Incomplete Information By Verbrugge, Randal; Gallin, Joshua H.

  1. By: Herings, P. Jean-Jacques (General Economics 1 (Micro)); Mauleon, Ana (university of louvain, louvain la neuve); Vannetelbosch, Vincent (university of louvain, louvain la neuve)
    Abstract: We study stable sets for marriage problems under the assumption that players can be both myopic and farsighted. We introduce the new notion of the myopic-farsighted stable set, which is based on the notion of a myopic-farsighted improving path. A myopic-farsighted stable set is the set of matchings such that there is no myopic-farsighted improving path from any matching in the set to another matching in the set (internal stability) and there is a myopic-farsighted improving path from any matching outside the set to some matching in the set (external stability). For the special cases where all players are myopic and where all players are farsighted, our concept predicts the set of matchings in the core. When all men are myopic and the top choice of each man is a farsighted woman, we show that the singleton consisting of the woman-optimal stable matching is a myopic-farsighted stable set. The same result holds when all women are farsighted. We present examples where this is the unique myopic-farsighted stable set as well as examples of myopic-farsighted stable sets consisting of a core element different from the woman-optimal matching or even of a non-core element.
    Keywords: marriage problems, stable sets, myopic and farsighted players
    JEL: C70 C78
    Date: 2017–05–01
  2. By: Antoine Mandel (Paris School of Economics - Centre d'Economie de la Sorbonne); Xavier Venel (Paris School of Economics - Centre d'Economie de la Sorbonne)
    Abstract: We provide an analytical approach to the problem of influence maximization in a social network when two players compete by means of dynamic targeting strategies. We formulate the problem as a two-player zero-sum stochastic game. We prove the existence of the uniform value: if the players are sufficiently patient, both players can guarantee the same mean-average opinion without knowing the exact discount factor. Further, we put forward some elements for the characterization of equilibrium strategies. In general, players must implement a trade-off between a forward-looking perspective, according to which they shall aim at maximizing the future spread of their opinion in the network, and a backward-looking perspective, according to which they shall aim at counteracting their opponent's previous actions. When the influence potential of players is small, an equilibrium strategy is to systematically target the agent with the largest eigenvector centrality
    Keywords: Social Network; Dynamic games; Targeting; Stochastic games
    JEL: C71 D85
    Date: 2017–02
  3. By: Pantsios, Archontis L. (Liverpool Hope University); Polachek, Solomon (Binghamton University, New York)
    Abstract: The "joint costs" model states that the incentive to strike is inversely related to the total costs associated with workers' and firms' strike activities. Not only has this model been tested with mixed results, but also the joint costs model is problematic in explaining several stylized facts in the strike literature because higher strike costs do not always yield a lower incidence of strike activity. This paper illustrates how the joint cost model can yield these counterintuitive results. It shows that strike incidence need not decrease when joint strike costs increase. The innovation is to raise union and firm joint strike costs in an asymmetric way. Increasing a particular side's strike costs necessarily decreases its incentive to strike. However, in response, the other side's incentive can increase, since under a number of circumstances it holds out with a higher probability in order to collect the relatively larger expected rents coming about because the other side's implicit threat point decreases. To illustrate this, we model contract negotiations as a simple one-period game. (No need for more complex repeated games such as attrition since our point is only to show as simply as possible why the joint-costs model yields ambiguous results.) We use standard Hicksian concession curves to derive a payoff matrix. The payoff matrix results in contract negotiations following along the lines of a "game of chicken". The solution to the game yields no one stable pure Nash-equilibrium strategy, but instead a mixed strategy so that choices become probabilistic depending upon union and firm concession curve parameters. The results indicate that increasing either party's strike costs can have ambiguous effects on strike incidence. This ambiguity may explain why higher strike costs need not always lead to fewer strikes, and thus may account for the mixed success observed in studies that empirically test the joint costs model with strike incidence data. Although couched in terms of strikes, the results are equally applicable to other negotiation situations.
    Keywords: strike activity, joint strike costs, game of chicken
    JEL: J51 J52 C72 C78
    Date: 2017–04
  4. By: Áureo de Paula (Institute for Fiscal Studies and University College London); Seth Richards-Shubik (Institute for Fiscal Studies); Elie Tamer (Institute for Fiscal Studies and Harvard University)
    Abstract: This paper provides a framework for identifying preferences in a large network where links are pairwise stable. Network formation models present dificulties for identification, especially when links can be interdependent: e.g., when indirect connections matter. We show how one can use the observed proportions of various local network structures to learn about the underlying preference parameters. The key assumption for our approach restricts individuals to have bounded degree in equilibrium, implying a fi nite number of payoff -relevant local structures. Our main result provides necessary conditions for parameters to belong to the identi fied set. We then develop a quadratic programming algorithm that can be used to construct this set. With further restrictions on preferences, we show that our conditions are also suficient for pairwise stability and therefore characterize the identi fied set precisely. Overall, the use of both the economic model along with pairwise stability allows us to obtain e ffective dimension reduction.
    Keywords: preferences, networks, with bounded degree
    Date: 2016–12–16
  5. By: Matthias Greiff (Justus-Liebig-University Giessen); Henrik Egbert (Anhalt University of Applied Sciences)
    Abstract: This paper introduces the Pay-What-You-Want game which represents the interaction between a buyer and a seller in a Pay-What-You-Want (PWYW) situation. The PWYW game embeds the dictator game and the trust game as subgames. This allows us to use previous experimental studies with the dictator and the trust game to identify three factors that can influence the success of PWYW pricing in business practice: (i) social context, (ii) social information, and (iii) deservingness. Only few cases of PWYW pricing for a longer period of time have been documented. By addressing repeated games, we isolate two additional factors which are likely to contribute to successful implementations of PWYW as a long term pricing strategy. These are (iv) communication and (v) the reduction of goal conflicts. The central contribution of this study is an attempt to bridge the gap between laboratory experiments and the research on PWYW pricing, which relies largely on evidence from the field. By reviewing the relevant experiments, this study identifies factors crucial for the success of PWYW pricing and provides guidance to developing long-term applications of PWYW pricing.
    Keywords: Pay-What-You-Want, PWYW Game, pricing, dictator game, trust game
    JEL: C90 D12 D49 M21 M30
    Date: 2017–05
  6. By: Miryana Grigorova (LPMA); Marie-Claire Quenez (LPMA)
    Abstract: We first study an optimal stopping problem in which a player (an agent) uses a discrete stopping time in order to stop optimally a payoff process whose risk is evaluated by a (non-linear) $g$-expectation. We then consider a non-zero-sum game on discrete stopping times with two agents who aim at minimizing their respective risks. The payoffs of the agents are assessed by g-expectations (with possibly different drivers for the different players). By using the results of the first part, combined with some ideas of S. Hamad{\`e}ne and J. Zhang, we construct a Nash equilibrium point of this game by a recursive procedure. Our results are obtained in the case of a standard Lipschitz driver $g$ without any additional assumption on the driver besides that ensuring the monotonicity of the corresponding $g$-expectation.
    Date: 2017–05
  7. By: Dziubinski, M.; Goyal, S.; Minarsch, D . E. N.
    Abstract: In the study of war, a recurring observation is that con ict between two opponents is shaped by third parties. The actions of these parties are in turn in uenced by other In the study of war, a recurring observation is that conflict between two opponents is shaped by third parties. The actions of these parties are in turn influenced by other proximate players. These considerations lead us to propose a model with multiple interconnected opponents. We study the influence of resources, technology, and the network of connections, on the dynamics of war and on the prospects of peace.
    Keywords: Hegemony, preventive war, buffer states, imperial overreach, offensive and defensive realism
    Date: 2017–01–16
  8. By: Philip J. Grossman; Catherine Eckel; Mana Komai; Wei Zhan
    Abstract: We address followers’ gender-based perception of leader’s effectiveness. Our experiment’s design removes factors that might affect leadership success, such as risk-taking and competitiveness. We employ a repeated weakest-link coordination game; 10 periods without a leader and 10 periods after the leader makes a short, “scripted” speech advising followers on how to maximize earnings. Followers then choose a costly bonus for the leader. The leader’s gender is the only variable that changes across sessions. Followers are more likely to heed the advice of the male leaders, are less likely to ascribe success to female leaders, and reward male leaders more.
    Keywords: Leadership, Gender, Coordination Game
    JEL: C92 J71 J16
    Date: 2017–04
  9. By: Heller, Yuval; Sturrock, David
    Abstract: We present a novel theoretical mechanism that explains the capacity for non-enforceable communication about future actions to improve efficiency. We explore a two-player partnership game where, before choosing a level of effort to exert on a joint project, each player makes a cheap talk promise to their partner about their own future effort. We allow agents to incur a psychological cost of reneging on their promises. We demonstrate a strong tendency for evolutionary processes to select agents who incur intermediate costs of reneging, and show that these intermediate costs induce second-best optimal outcomes.
    Keywords: Promises, lying costs, joint projects, input games, partnerships.
    JEL: C73 D03
    Date: 2017–04
  10. By: Li, Shengwu
    Abstract: A strategy is obviously dominant if, for any deviation, at any information set where both strategies first diverge, the best outcome under the deviation is no better than the worst outcome under the dominant strategy. A mechanism is obviously strategy-proof (OSP) if it has an equilibrium in obviously dominant strategies. This has a behavioral interpretation: A strategy is obviously dominant iff a cognitively limited agent can recognize it as weakly dominant. It also has a classical interpretation: A choice rule is OSP-implementable iff it can be carried out by a social planner under a particular regime of partial commitment.
    Keywords: microeconomic theory; mechanism design; market design; experiment
    JEL: C7 D01 D03 D82
    Date: 2017
  11. By: Verbrugge, Randal (Federal Reserve Bank of Cleveland); Gallin, Joshua H. (Board of Governors of the Federal Reserve System)
    Abstract: The housing rental market offers a unique laboratory for studying price stickiness. This paper is motivated by two facts: 1. Tenants’ rents are remarkably sticky even though regular and expected recontracting would, by itself, suggest substantial rent flexibility. 2. Rent stickiness varies significantly across structure type; for example, detached unit rents are far stickier than large apartment unit rents. We offer the first theoretical explanation of rent stickiness that is consistent with these facts. In this theory, search and bargaining with incomplete information generates stickiness in the absence of menu costs or other commonly used modeling assumptions. Tenants’ valuations of their units, and whether they are considering other units, are both private information. At lease end, the behavior of risk-averse landlords differs according to the number of units managed. Multi-unit landlords, aided by the law of large numbers, exploit tenant moving costs. When renegotiating rent contracts, they set rent increases that exceed the inflation rate; while the majority of tenants stay, those who place low value on the unit search elsewhere and leave. Landlords with one unit loathe vacancy and offer tenants the identical contract to pre-empt search; only those who really hate the unit leave.
    Keywords: Price stickiness; Bargaining; Search; Incomplete information;
    JEL: C7 C78 D4 D83 D9 E3 R31
    Date: 2017–05–05

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