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on Game Theory |
| By: | Engl, Florian (university of cologne); Riedl, Arno (General Economics 1 (Micro)); Weber, Roberto A. (university of zurich) |
| Abstract: | Institutions are an important means for fostering prosocial behaviors, but in many contexts their scope is limited and they govern only a subset of all socially desirable acts. We use a laboratory experiment to study how the presence and nature of an institution that enforces prosocial behavior in one domain affects behavior in another domain and whether it also alters prosocial preferences and beliefs about others' behavior. Groups play two identical public good games. We vary whether, for only one game, there is an institution enforcing cooperation and vary also whether the institution is imposed exogenously or arises endogenously through voting. Our results show that the presence of an institution in one game generally enhances cooperation in the other game thus documenting a positive spillover effect. These spillover effects are economically substantial amounting up to 30 to 40 percent of the direct effect of institutions. When the institution is determined endogenously spillover effects get stronger over time, whereas they do not show a trend when it is imposed exogenously. Additional treatments indicate that the main driver of this result is not the endogeneity but the temporal trend of the implemented institution. We also find that institutions of either type enhance prosocial preferences and beliefs about others' prosocial behavior, even toward strangers, suggesting that both factors are drivers of the observed spillover effects. |
| Keywords: | public goods, institutions, spillover effect, social preferences, beliefs |
| JEL: | C92 D02 D72 H41 |
| Date: | 2017–06–13 |
| URL: | http://d.repec.org/n?u=RePEc:unm:umagsb:2017016&r=gth |
| By: | Ed Hopkins |
| Abstract: | We investigate the relationship between the continuous time best response dynamic, its perturbed version and evolutionary dynamics in relation to mixed strategy equilibria. We find that as the level of noise approaches zero, the perturbed best response dynamic has the same quantitative properties as a broad class of evolutionary dynamics. That is, stability properties of equilibria are robust across learning dynamics of quite different origins and motivations. |
| Keywords: | games, learning, evolution, mixed strategies |
| JEL: | C72 D83 |
| URL: | http://d.repec.org/n?u=RePEc:edn:esedps:3&r=gth |
| By: | Dirk Bergemann (Cowles Foundation, Yale University); Francisco Castro (Graduate School of Business, Columbia University); Gabriel Weintraub (Graduate School of Business, Stanford University) |
| Abstract: | We study the classic sequential screening problem under ex-post participation constraints. Thus the seller is required to satisfy buyers’ ex-post participation constraints. A leading example is the online display advertising market, in which publishers frequently cannot use up-front fees and instead use transaction-contingent fees. We establish when the optimal selling mechanism is static (buyers are not screened) or dynamic (buyers are screened), and obtain a full characterization of such contracts. We begin by analyzing our model within the leading case of exponential distributions with two types. We provide a necessary and sufficient condition for the optimality of the static contract. If the means of the two types are sufficiently close, then no screening is optimal. If they are sufficiently apart, then a dynamic contract becomes optimal. Importantly, the latter contract randomizes the low type buyer while giving a deterministic allocation to the high type. It also makes the low type worse-off and the high type better-off compared to the contract the seller would offer if he knew the buyer’s type. Our main result establishes a necessary and sufficient condition under which the static contract is optimal for general distributions. We show that when this condition fails, a dynamic contract that randomizes the low type buyer is optimal. |
| Keywords: | Sequential screening, Ex-post participation constraints, Static contract, Dynamic contract |
| JEL: | C72 D82 D83 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:2078r&r=gth |
| By: | Schweighofer-Kodritsch, Sebastian (Humboldt University Berlin and WZB Berlin) |
| Abstract: | This paper presents an analysis of general time preferences in the canonical Rubinstein (1982) model of bargaining, allowing for arbitrarily history-dependent strategies. I derive a simple sufficient structure for optimal punishments and thereby fully characterize (i) the set of equilibrium outcomes for any given preference profile, and (ii) the set of preference profiles for which equilibrium is unique. Based on this characterization, I establish that a weak notion of present bias - implied, e.g., by any hyperbolic or quasi-hyperbolic discounting - is sufficient for equilibrium to be unique, stationary and efficient. Conversely, I demonstrate how certain violations of present bias give rise to multiple (non-stationary) equilibria that feature delayed agreement under gradually increasing offers. |
| Keywords: | time preferences; dynamic inconsistency; alternating offers; bargaining; optimal punishments; delay; |
| JEL: | C78 D03 D74 |
| Date: | 2017–06–18 |
| URL: | http://d.repec.org/n?u=RePEc:rco:dpaper:38&r=gth |
| By: | Ed Hopkins |
| Abstract: | Fictitious play and "gradient" learning are examined in the context of a large population where agents are repeatedly randomly matched. We show that the aggregation of this learning behaviour can be qualitatively different from learning at the level of the individual. This aggregate dynamic belongs to the same class of simply defined dynamic as do several formulations of evolutionary dynamics. We obtain sufficient conditions for convergence and divergence which are valid for the whole class of dynamics. These results are therefore robust to most specifications of adaptive behaviour. |
| Keywords: | games, fictitious play, reinforcement learning, evolution |
| JEL: | C72 D83 |
| URL: | http://d.repec.org/n?u=RePEc:edn:esedps:2&r=gth |
| By: | Francesco Caruso (Università di Napoli Federico II); Maria Carmela Ceparano (Università di Napoli Federico II); Jacqueline Morgan (Università di Napoli Federico II and CSEF) |
| Abstract: | In one-leader one-follower two-stage games, multiplicity of Subgame Perfect Nash Equilibria (henceforth SPNE) arises when the optimal reaction of the follower to any choice of the leader is not always unique, i.e. when the best reply correspondence of the follower is not a single-valued map. This paper concerns a new selection method for SPNE which makes use of a sequence of games designed using a proximal point algorithm, well-known optimization technique related to the so-called Moreau-Yosida regularization (Moreau 1965, Martinet 1972, Rockafellar 1976, Parikh and Boyd 2014 and references therein). Any game of the obtained sequence is a classical Stackelberg game (Von Stack- elberg 1952), i.e. a one-leader one-follower two-stage game where the best reply correspondence of the follower is single-valued. This mechanism selection is in line with a previous one based on Tikhonov regularization, in Morgan and Patrone (2006), but using the class of proximal point algorithms has a twofold advantage: on the one hand, it can provide improvements in numerical implementations and, on the other hand, it has a clear interpretation: the follower payoff function is modified subtracting a term that can represent a physical and behavioural cost to move (Attouch and Soubeyran 2009). The constructive method and its effectiveness are illustrated and existence results for the selection are provided under mild assumptions on data, together with connections with other possible selection methods. |
| Keywords: | Non-cooperative game; Stackelberg game; bilevel optimization problem; subgame perfect Nash equilibrium; selection. |
| Date: | 2017–04–21 |
| URL: | http://d.repec.org/n?u=RePEc:sef:csefwp:476&r=gth |
| By: | Domenico Buccella; Luciano Fanti |
| Abstract: | This paper investigates the selection of the bargaining agenda in a unionized industry with decentralized negotiations for different competition modes. The firms choose the agenda (Right-to- Manage, RTM vs. Efficient Bargaining, EB), considering alternative timing of the bargaining game in the case of mixed duopoly. In fact, the EB (RTM) firm can be either Stackelberg wage follower (leader) or Stackelberg output leader (follower). It is developed a two-stage game in which the typology as well as the timing of the negotiations is endogenous. It is shown that, in pure strategies, no equilibria arise for a wide set of the parametersâ space while RTM appears as the unique equilibrium agenda for a different, large combination of the parameters; moreover, multiple, asymmetric equilibria emerge in a limited area of the parametersâ space. These results are in sharp contrast to the received literature in which EB can arise as an industry bargaining institution in equilibrium. |
| Keywords: | Efficient Bargaining; Right-to-Manage; Unionâoligopoly bargaining agenda. |
| JEL: | J51 L20 |
| Date: | 2017–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:pie:dsedps:2017/214&r=gth |
| By: | Gottfries, A. |
| Abstract: | This paper analyzes a model of wage bargaining with on-the-job search. The model in Shimer (2006) is extended to include an opportunity of within-match wage renegotiation. This opportunity arrives at a Poisson rate. I show that once an opportunity for wage renegotiation is introduced there is a unique equilibrium wage distribution, in contrast to the indeterminacy found by Shimer. Furthermore, the model provides a natural bridge between the results of Shimer (2006) and Pissarides (1994). When the arrival rate of renegotiation opportunities tends to infinity, the equilibrium of the model converges to the equilibrium pay-offs found by Pissarides, and when the arrival rate converges to zero, the equilibrium in the model converges to one of the equilibria found by Shimer. |
| Keywords: | On-the-job search, Bargaining, Renegotiation, Wage contracts |
| JEL: | C78 J31 J41 J64 |
| Date: | 2017–05–31 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1725&r=gth |
| By: | Franz Dietrich; Christian List; Richard Bradley |
| Abstract: | We present a general framework for representing belief-revision rules and use it to characterize Bayes's rule as a classical example and Jeffrey's rule as a non-classical one. In Jeffrey's rule, the input to a belief revision is not simply the information that some event has occurred, as in Bayes's rule, but a new assignment of probabilities to some events. Despite their differences, Bayes's and Jeffrey's rules can be characterized in terms of the same axioms: responsiveness, which requires that revised beliefs incorporate what has been learnt, and conservativeness, which requires that beliefs on which the learnt input is ‘silent’ do not change. To illustrate the use of non-Bayesian belief revision in economic theory, we sketch a simple decision-theoretic application. |
| Keywords: | Belief revision; subjective probability; Bayes's rule; Jeffrey's rule; axiomatic foundations; fine-grained versus coarse-grained beliefs; unawareness |
| JEL: | C73 D01 D80 D81 D83 D90 |
| Date: | 2015–12–02 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:64836&r=gth |