nep-gth New Economics Papers
on Game Theory
Issue of 2017‒08‒13
nine papers chosen by
László Á. Kóczy
Magyar Tudományos Akadémia

  1. Global Inspection Games (GIG) in the laboratory By Sanchez Villalba, Miguel
  2. Competition and Networks of Collaboration By Roketskiy, Nikita
  3. Entry in Beauty-Contest Games By Sanchez Villalba, Miguel; Martinez Gorricho, Silvia
  4. Round-Robin Tournaments with Limited Resources By Dmitry Dagaev; Andrey Zubanov
  5. Strategic Sample Selection By Di Tillio, Alfredo; Ottaviani, Marco; Sorensen, Peter Norman
  6. Le Pouvoir de Vote dans les Etablissements Publics de Coopération Intercommunale de la Martinique et de la Guadeloupe By Dia, Ibrahima; Kamwa, Eric
  7. Stable marriage with and without transferable utility: nonparametric testable implications By Laurens Cherchye; Thomas Demuynck; Bram De Rock; Frederic Vermeulen
  8. A Mean Field Competition By Marcel Nutz; Yuchong Zhang
  9. Contracting with long-term consequences By Vasama, Suvi

  1. By: Sanchez Villalba, Miguel
    Abstract: Sanchez Villalba (2015) claims inspection games can be modelled as global games when agents face common shocks. For the tax evasion game -his leading example- he prescribes that the tax agency should audit each individual taxpayer with a probability that is a non-decreasing function of every other taxpayer's declarations ("relative auditing strategy"). This paper uses experimental data to test the predictions of the model and finds supporting evidence for the hypothesis that the relative auditing strategy is superior to the alternative "cut-off" one. It also finds that data fit the qualitative predictions of the global game model, regarding both participants' decisions and the experiment's comparative statics.
    Keywords: Global Games, Experimental Economics, Tax Evasion, Rationality, Information, Beliefs
    JEL: C7 C91 D8 H26
    Date: 2017–08
  2. By: Roketskiy, Nikita
    Abstract: I develop a model of collaboration between tournament participants in which agents collaborate in pairs, and an endogenous structure of collaboration is represented by a weighted network. The agents are forward-looking and capable of coordination. They value collaboration with others and higher tournament rankings. I use von Neumann-Morgenstern stable sets as a solution. I find stable networks in which agents collaborate only within exclusive groups. Both absence of intergroup collaboration and excessive intragroup collaboration lead to inefficiency. I provide a necessary and sufficient condition for the stability of efficient outcomes in winner-takes-all tournaments. I show that the use of transfers does not repair efficiency.
    Keywords: networks; tournaments
    JEL: C71 D85
    Date: 2017–07
  3. By: Sanchez Villalba, Miguel; Martinez Gorricho, Silvia
    Abstract: We study how voluntary participation in Beauty Contest Games (BCGs) affects the actions and payoffs of type-heterogenous players. In a BCG, players have two goals --one personal, the other social-- and so BCGs appropriately model relevant economic situations like participating in a social network, partaking in the coding of an open-source software, or the choice of research topics by academics, among others. Key in these and other cases is the concept of "social norm" that will emerge in the associated "community", and so people's entry choices will depend crucially on their expectations regarding not only how many but who (which types) will join in. We find that in equilibrium there is entry as long as the BCG is "attractive" and that there might be multiple equilibria, each indexed by its associated social norm. We also find that, when finite, there is an odd number of equilibria and that --if ordered based on the value of the associated social norm-- odd/even equilibria are stable/unstable. Further, for low attractiveness, equilibrium social norms are univocally associated with the extrema of the distribution of types in the economy, so that stable/unstable equilibria are linked to maxima/interior minima. We find that "universal" communities in which everybody joins the BCG (as implicitly assumed by the literature) only occur when the BCG is sufficiently attractive and the economy's average type is not extreme. In non-universal communities, social norms are affected by the attractiveness of the BCG and the functional form of the distribution of types in the economy (especifically, its skewness around extrema). Attractiveness affects both the size and the composition of the community. Thus, an increase in attractiveness could lead both to the entry of new members and to the exit of some others.
    Keywords: Beauty contest game, endogenous entry, social norms
    JEL: C7 L17 Z1
    Date: 2017
  4. By: Dmitry Dagaev (National Research University Higher School of Economics); Andrey Zubanov (National Research University Higher School of Economics)
    Abstract: We propose a theoretical model of a round-robin tournament with limited resources motivated by the fact that in a real-world round-robin sport tournament participating teams are sometimes forced to distribute their effort over an extended period. We assume that the participating teams have a limited amount of effort that must be distributed between all matches. We model the outcome of each match as a first-price sealed-bid auction. Results are aggregated after all matches are played with respect to the number of wins. The teams distribute their effort striving to maximize the expected payoff at tournament completion. For a three team tournament, we describe the set of all subgame perfect Nash equilibria in pure strategies. For tournaments with a relatively low first prize, we found two types of equilibria: ‘effort-saving’ and ‘burning out’, both leading to unequal payoffs. In contrast, for tournaments with a large first prize a limited budget of effort, in general, does not allow for the first or the last move advantage to be exploited.
    Keywords: contest, round-robin tournament, limited resources, first-price auction, first-mover advantage.
    JEL: C73 D44
    Date: 2017
  5. By: Di Tillio, Alfredo; Ottaviani, Marco; Sorensen, Peter Norman
    Abstract: What is the impact of sample selection on the inference payoff of an evaluator testing a simple hypothesis based on the outcome of a location experiment? We show that anticipated selection locally reduces noise dispersion and thus increases informativeness if and only if the noise distribution is double logconvex, as with normal noise. The results are applied to the analysis of strategic sample selection by a biased researcher and extended to the case of uncertain and unanticipated selection. Our theoretical analysis offers applied research a new angle on the problem of selection in empirical studies, by characterizing when selective assignment based on untreated outcomes benefits or hurts the evaluator.
    Keywords: Comparison of experiments; Dispersion; Persuasion; Strategic selection; welfare
    JEL: C72 C90 D82 D83
    Date: 2017–08
  6. By: Dia, Ibrahima; Kamwa, Eric
    Abstract: This paper deals with the distribution of seats between municipalities in the inter-communal council (EPCI) of Martinique and Guadeloupe. In each of the EPCIs, we calculate the voting power of municipalities using the Shapley-Shubik and Banzhaf indices. Our analysis allows us to show that in almost all the EPCIs of Martinique and Guadeloupe, there is no similarity between the distribution of power indices and the distribution of population percentages. There is also a distortion between the distribution of power indices and the distribution of delegate percentages.
    Keywords: Banzhaf, Municipalities, Shapley- Shubik, Vote, Voting power
    JEL: C71 D7
    Date: 2017–08–02
  7. By: Laurens Cherchye; Thomas Demuynck; Bram De Rock; Frederic Vermeulen
    Abstract: We show that transferable utility has no nonparametrically testable implications for marriage stability in settings with a single consumption observation per household and heterogeneous individual preferences across households. This completes the results of Cherchye, Demuynck, De Rock, and Vermeulen (2017), who characterized Pareto efficient household consumption under the assumption of marriage stability without transferable utility. First, we show that the nonparametric testable conditions established by these authors are not only necessary but also sufficient for rationalizability by a stable marriage matching. Next, we demonstrate that exactly the same testable implications hold with and without transferable utility between household members. We build on this last result to provide a primal and dual linear programming characterization of a stable matching allocation for the observational setting at hand. This provides an explicit specification of the marital surplus function rationalizing the observed matching behavior.
    Date: 2017–07
  8. By: Marcel Nutz; Yuchong Zhang
    Abstract: We introduce a mean field game with rank-based reward: competing agents optimize their effort to achieve a goal, are ranked according to their completion time, and paid a reward based on their relative rank. First, we propose a tractable Poissonian model in which we can describe the optimal effort for a given reward scheme. Second, we study the principal--agent problem of designing an optimal reward scheme. A surprising, explicit design is found to minimize the time until a given fraction of the population has reached the goal.
    Date: 2017–08
  9. By: Vasama, Suvi
    Abstract: I examine optimal managerial compensation and turnover policy in a principal-agent model in which the firm output is serially correlated over time. The model captures a learning-by-doing feature: higher effort by the manager increases the quality of the match between the firm and the manager in the future. The optimal incentive scheme entails an inefficiently high turnover rate in the early stages of the employment relationship. The optimal turnover probability depends on the past performance and the likelihood of turnover decreases gradually with superior performance. Following weak performance, the contract implements a permanently inefficient turnover rate. With correlated outcome, a permanent inefficiency is needed to save on information rents to the agent, even when the agent does not have persistent private information.
    JEL: C73 D82 D86
    Date: 2017–08–03

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