nep-gth New Economics Papers
on Game Theory
Issue of 2017‒06‒04
ten papers chosen by
László Á. Kóczy
Magyar Tudományos Akadémia

  1. Monotone equilibria in signalling games By Shuo Liu; Harry Pei
  2. Belief-Free Rationalizability and Informational Robustness By Dirk Bergemann; Tibor Heumann; Stephen Morris
  3. Matching through institutions By Francis Bloch; David Cantala; Damián Gibaja
  4. Experienced vs. inexperienced participants in the lab: Do they behave differently? By Benndorf, Volker; Moellers, Claudia; Normann, Hans-Theo
  5. Cooperative games and network structures By Musegaas, Marieke
  6. Winner-Take-All Tournaments By Drugov, Mikhail; Ryvkin, Dmitry
  7. Nash equilibria in all-pay auctions with discrete strategy space By Li, Zheng
  8. Mismatch As Choice By Francisco M. Gonzalez; Yu Chen; Matthew Doyle
  9. Selfishness vs Altruism vs Balance By Pradeep Dubey; Yair Tauman
  10. Investments, positive externalities and majority bargaining By Daniel Cardona; Antoni Rubí-Barceló

  1. By: Shuo Liu; Harry Pei
    Abstract: We study the monotonicity of sender’s equilibrium strategy with respect to her type in signalling games. We use counterexamples to show that when the sender’s payoff is non-separable, the Spence-Mirrlees condition cannot rule out equilibria in which the sender uses non-monotone strategies. These equilibria can survive standard refinements as incentives are strict and the sender plays every action with positive probability. We provide sufficient conditions under which the sender’s strategy is monotone in every Nash equilibrium. Our conditions require the sender’s payoff to have strictly increasing differences between the state and the action profile and monotone with respect to each player’s action. We also identify and fully characterize a novel property on the sender’s payoff that we call increasing absolute differences over distributions, under which every pair of distributions over the receiver’s actions can be ranked endogenously. Our sufficient conditions fit into a number of applications, including advertising, warranty provision, education and job assignment, etc.
    Keywords: Signalling game, monotone equilibrium, Spence-Mirrlees condition, monotonesupermodular payoff, quasi-concavity preserving, increasing absolute differences over distributions
    JEL: C72 D82
    Date: 2017–05
  2. By: Dirk Bergemann (Cowles Foundation, Yale University); Tibor Heumann (Dept. of Economics, Yale University); Stephen Morris (Dept. of Economics, Princeton University)
    Abstract: We study a linear interaction model with asymmetric information. We first characterize the linear Bayes Nash equilibrium for a class of one dimensional signals. It is then shown that this class of one dimensional signals provide a comprehensive description of the first and second moments of the distribution of outcomes for any Bayes Nash equilibrium and any information structure. We use our results in a variety of applications: (i) we study the connections between incomplete information and strategic interaction, (ii) we explain to what extent payoff environment and information structure of a economy are distinguishable through the equilibrium outcomes of the economy, and (iii) we analyze how equilibrium outcomes can be decomposed to understand the sources of individual and aggregate volatility.
    Keywords: Networks, Incomplete Information, Bayes Correlated Equilibrium, Volatility, Moments Restrictions, Linear Best Responses, Quadratic Payoffs
    JEL: C72 C73 D43 D83
    Date: 2017–05
  3. By: Francis Bloch (Université Paris 1 and Paris School of Economics); David Cantala (El Colegio de México); Damián Gibaja (Universidad Popular Autónoma del Estado de Puebla)
    Abstract: We model a matching market with institutions -inspired by the assignment of social housing in Paris- as a three-sided market. Institutions own objects and have agents attached to them. Agents have preferences over objects. Objects have priorities over institutions. We show that fair assignments satisfying distributional constraints may fail to exist, and propose a sufficient condition -the over-demand condition- under which we prove existence. Existence derives from the construction of a new algorithm, the Nested Deferred Acceptance (NDA) algorithm, which combines a one-to-one matching between agents and objects and a one-to-many matching between objects and institutions. If interrupters are eliminated from the preference list, as in Kesten (2010), the NDA algorithm produces an assignment which is fair, Pareto optimal among fair assignments and strategy-proof for agents.
    Keywords: matching, institutions, deferred acceptance algorithm, social housing
    JEL: C78 D47
    Date: 2017–02
  4. By: Benndorf, Volker; Moellers, Claudia; Normann, Hans-Theo
    Abstract: We analyze whether subjects with extensive laboratory experience and first-time participants, who voluntarily registered for the experiment, differ in their behavior. Subjects play four one-shot, two-player games: a trust game, a beauty contest, an ultimatum game, a travelers' dilemma and, in addition, we conduct a singleplayer lying task and elicit risk preferences. We find few significant differences. In the trust game, experienced subjects are less trustworthy and they also trust less. Furthermore, experienced subjects submit fewer non-monotonic strategies in the risk elicitation task. We find no differences whatsoever in the other decisions. Nevertheless, the minor differences observed between experienced and inexperienced subjects may be relevant because we document a potential recruitment bias: the share of inexperienced subjects may be lower in the early recruitment waves.
    Keywords: dilemma,experienced subjects,laboratory methods,trust game
    JEL: C90 C70 C72
    Date: 2017
  5. By: Musegaas, Marieke (Tilburg University, School of Economics and Management)
    Abstract: This thesis covers various research topics involving cooperative game theory, a mathematical tool to analyze the cooperative behavior within a group of players. The focus is mainly on interrelations between operations research and cooperative game theory by analyzing specific types of cooperative joint optimization problems induced by network structures. In particular, this thesis considers minimum coloring problems and one-machine sequencing situations together with its related games. Further, it studies the problem of computing the influence of a neuronal structure in a brain network.
    Date: 2017
  6. By: Drugov, Mikhail; Ryvkin, Dmitry
    Abstract: This paper provides new general results for winner-take-all rank-order tournaments with additive and multiplicative noise. We show that the comparative statics of the individual equilibrium effort with respect to the number of players follow the shape of the density the noise distribution. For aggregate effort, a similar relation holds for the failure (hazard) rate of the noise distribution. The equilibrium effort decreases as noise becomes more dispersed, in the sense of the dispersive order or appropriately defined entropy. These results are then extended to the case of a stochastic number of players, and new results on the effects of population uncertainty are obtained. All relevant results for the Tullock contest follow as a special case.
    Keywords: dispersive order; entropy; failure rate; log-supermodularity; stochastic number of players; tournament; Tullock contest; unimodality
    JEL: C72 D72 D82
    Date: 2017–05
  7. By: Li, Zheng
    Abstract: Using two-player all-pay auctions, the author fully characterizes the Nash equilibrium under a discrete bidding strategy space. In particular, he shows that under the random tiebreaking rule, the cardinality of the set of Nash equilibrium depends on the parity of the reward size and a continuum of Nash equilibria exists. Additionally, when a simple favorone-sided tie-breaking rule is used, the equilibrium solution becomes independent of the reward size.
    Keywords: asymmetric Nash equilibrium,all-pay auction
    JEL: D44 D72
    Date: 2017
  8. By: Francisco M. Gonzalez (Department of Economics, University of Waterloo); Yu Chen (University of Calgary); Matthew Doyle (Department of Economics, University of Waterloo)
    JEL: D8 C78 E24
    Date: 2017–05
  9. By: Pradeep Dubey; Yair Tauman
    Date: 2017
  10. By: Daniel Cardona (Universitat de les Illes Balears); Antoni Rubí-Barceló (Universitat de les Illes Balears)
    Abstract: This paper analyzes the welfare implications of requiring either unanimity or simple majority in negotiations to distribute a budget among agents who previously can invest to generate positive consumption externalities to others. The present paper studies this setting with simple-majority bargaining, complementing Cardona and Rubí-Barceló (2014), that consider the unanimity case. It is shown that reducing the majority requirement reduces the profitability of investments and, as a consequence, alleviates over-investment, which is predominant under unanimous bargaining. Nevertheless, simple majority reduces the aggregate surplus attained at the bargaining stage. Therefore, the relative performance of the bargaining rules is uncertain. We show how it evolves with respect to the size of consumption externalities.
    Keywords: Investments, multilateral bargaining, efficiency, externalities
    JEL: C78 D72 D62
    Date: 2017

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