nep-gth New Economics Papers
on Game Theory
Issue of 2018‒08‒13
twenty-six papers chosen by
Sylvain Béal
Université de Franche-Comté

  1. Generalized Potentials, Value, and Core By Takaaki Abe; Satoshi Nakada
  2. On bargaining sets of supplier-firm-buyer games By Ata Atay; Tamas Solymosi
  3. A Mechanism Design Approach to Identification and Estimation By Bradley Larsen; Anthony Lee Zhang
  4. Core stability and core-like solutions for three-sided assignment games By Ata Atay; Marina Núnez
  5. Take-it-or-leave-it contracts in many-to-many matching markets By Antonio Romero-Medina; Matteo Triossi
  6. Equilibria in ordinal status games By Kukushkin, Nikolai S.
  7. Group strategy-proof stable mechanisms in priority-based resource allocation under multi-unit demand: a note By Antonio Romero-Medina; Matteo Triossi
  8. Analysis of a Dynamic Voluntary Contribution Mechanism Public Good Game By Dmytro Bogatov
  9. On the existence of Pairwise stable weighted networks By Philippe Bich; Lisa Morhaim
  10. Multidimensional global games and some applications By Dzsamila Vonnak
  11. Contesting an international trade agreement By Matthew T. Cole; James Lake; Ben Zissimos
  12. The weighted Shapley support levels values By Besner, Manfred
  13. Stochastic Switching Games By Liangchen Li; Michael Ludkovski
  14. Does response time predict withdrawal decisions? Lessons from a bank-run experiment By Hubert Janos Kiss; Ismael Rodriguez-Lara; Alfonso Rosa-Garcia
  15. The Blockchain Folk Theorem By Bruno Biais; Christophe Bisiere; Matthieu Bouvard; Catherine Casamatta
  16. Voting rules in multilateral bargaining: using an experiment to relax procedural assumptions By Tremewan, James; Vanberg, Christoph
  17. Common Values, Unobserved Heterogeneity, and Endogenous Entry in U.S. Offshore Oil Lease Auction By Giovanni Compiani; Philip Haile; Marcelo Sant'Anna
  18. Nash equilibrium for risk-averse investors in a market impact game with transient price impact By Xiangge Luo; Alexander Schied
  19. On the benefits of set-asides By Philippe Jehiel; Laurent Lamy
  20. A Note on Efficiency in a Unifying Model of Strategic Network Formation By Olaizola Ortega, María Norma; Valenciano Llovera, Federico
  21. Bringing Tax Avoiders to Light: Moral Framing and Shaming in a Public Goods Experiment By Tsikas, Stefanos A.; Wagener, Andreas
  22. A mechanism design approach to the Tiebout hypothesis By Philippe Jehiel; Laurent Lamy
  23. A Simple Algorithm for Solving Ramsey Optimal Policy with Exogenous Forcing Variables By Jean-Bernard Chatelain; Kirsten Ralf
  24. A Geometric Approach to Inference in Set-Identified Entry Games By Bontemps, Christian; Kumar, Rohit
  25. Investment strategy and selection bias: An equilibrium perspective on overoptimism By Philippe Jehiel
  26. Preparing a (quantum) belief system By Vladimir Ivanovitch Danilov; Ariane Lambert-Mogiliansky

  1. By: Takaaki Abe (Graduate School of Economics, Waseda University); Satoshi Nakada (Department of Business Economics, Tokyo University of Science)
    Abstract: Our objective is to analyze the relationship between the Shapley value and the core from the perspective of the potential of a game. To this end, we introduce a new concept, generalized HM-potential, which is a generalization of the potential function defined by Hart and Mas-colell (1989). We show that the Shapley value lies in the core if and only if the maximum of the generalized HM-potential of a game is less than a cutoff value. Moreover, we show that this is equivalent to the minimum of the generalized HM-potential of a game being greater than another, different cutoff value. We also provide a geometric characterization of the class of games in which the Shapley value lies in the core, which also shows the relationship with convex games and average convex games as a corollary. Our results suggest a new approach to utilizing the potential function in cooperative game theory.
    Keywords: Shapley value; Core; Potential; Cooperative game
    JEL: C71
    Date: 2018–08
  2. By: Ata Atay (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences); Tamas Solymosi (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences and Department of Operations Research and Actuarial Sciences, Corvinus University of Budapest)
    Abstract: We study a special three-sided matching game, the so-called supplier-firm-buyer game, in which buyers (customers) and sellers (suppliers) trade indirectly through middlemen (firms). Stuart (Stuart, 1997) showed that all supplier-firm-buyer games have non-empty core. We show that for these games the core coincides with the classical bargaining set (Davis and Maschler, 1967), and also with the Mas-Colell bargaining set (Mas-Colell, 1989).
    Keywords: Bargaining set, core, matching market, assignment game, cooperative game
    JEL: C71
    Date: 2018–02
  3. By: Bradley Larsen; Anthony Lee Zhang
    Abstract: This paper presents a two-step identification argument for a large class of quasilinear utility trading games, imputing agents' values using revealed preference based on their choices from a convex menu of expected outcomes available in equilibrium. This generalizes many existing two-step approaches in the auctions literature and applies to many cases for which there are no existing tools and where the econometrician may not know the precise rules of the game, such as incomplete-information bargaining settings. We also derive a methodology for settings in which agents' actions are not perfectly observed, bounding menus and agents' utilities based on features of the data that shift agents' imperfectly observed actions. We propose nonparametric value estimation procedures based on our identification results for general trading games. Our procedures can be combined with previously existing tools for handling unobserved heterogeneity and non-independent types. We apply our results to analyze efficiency and surplus division in the complex game played at wholesale used-car auctions, that of a secret reserve price auction followed by sequential bargaining between the seller and high bidder.
    JEL: C1 C7 D4 D8 L0
    Date: 2018–07
  4. By: Ata Atay (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences); Marina Núnez (University of Barcelona, Department of Mathematics for Economics, Finance and Actuarial Sciences)
    Abstract: In this paper, we study different notions of stability for three-sided assignment games. Since the core may be empty in this case, we first focus on other notions of stability such as the notions of subsolution and von Neumann-Morgenstern stable sets. The dominant diagonal property is necessary for the core to be a stable set, and also sufficient in the case where each sector of the market has two agents. Furthermore, for any three-sided assignment market, we prove that the union of the extended cores of all µ-compatible subgames, for a given optimal matching µ, is the core with respect to those allocations that are compatible with that matching, and this union is always non-empty.
    Keywords: Assignment game; core; subsolution; von Neumann-Morgenstern stable set
    JEL: C71 C78
    Date: 2018–03
  5. By: Antonio Romero-Medina; Matteo Triossi
    Abstract: We study a class of sequential non-revelation mechanisms where hospitals make simultaneous take-it-or-leave-it o?ers to doctors that either accept or reject them. We show that the mechanisms in this class are equivalent. They (weakly) implement the set of stable allocations in subgame perfect equilibrium. When all preferences are substitutable, the set of equilibria of the mechanisms in the class forms a lattice. Our results reveal a first-mover advantage absent in the model without contracts. We apply our findings to centralize school admissions problems, and we show obtaining pairwise stable allocations is possible through the immediate acceptance mechanism.Economic Literature Classification Numbers: C78, D78. Key words: Keywords: Many-to-many, contracts, ultimatum games.
    Date: 2017
  6. By: Kukushkin, Nikolai S.
    Abstract: Several agents choose positions on the real line (e.g., their levels of conspicuous consumption). Each agent's utility depends on her choice and her "status," which, in turn, is determined by the number of agents with greater choices (the fewer, the better). If the rules for the determination of the status are such that the set of the players is partitioned into just two tiers ("top" and "bottom"), then a strong Nash equilibrium exists, which Pareto dominates every other Nash equilibrium. Moreover, the Cournot tatonnement process started anywhere in the set of strategy profiles inevitably reaches a Nash equilibrium in a finite number of steps. If there are three tiers ("top," "middle," and "bottom"), then the existence of a Nash equilibrium is ensured under an additional assumption; however, there may be no Pareto efficient equilibrium. With more than three possible status levels, there seems to be no reasonably general sufficient conditions for Nash equilibrium existence.
    Keywords: status game; strong equilibrium; Nash equilibrium; Cournot tatonnement
    JEL: C72
    Date: 2018–06–28
  7. By: Antonio Romero-Medina; Matteo Triossi
    Abstract: In this note we prove that group strategy-proofness and strategy-proofness are equivalent requirements on stable mechanisms in priority-based resource allocation problems with multi-unit demand. JEL Classiffication Numbers: C71; C78; D71; D78; J44. Key words: Keywords: Matching; Multi-unit demand; Stability; Strategy-proofness, Group Strategy-proofness; Essential homogeneity.
    Date: 2017
  8. By: Dmytro Bogatov
    Abstract: I present a dynamic, voluntary contribution mechanism, public good game and derive its potential outcomes. In each period, players endogenously determine contribution productivity by engaging in costly investment. The level of contribution productivity carries from period to period, creating a dynamic link between periods. The investment mimics investing in the stock of technology for producing public goods such as national defense or a clean environment. After investing, players decide how much of their remaining money to contribute to provision of the public good, as in traditional public good games. I analyze three kinds of outcomes of the game: the lowest payoff outcome, the Nash Equilibria, and socially optimal behavior. In the lowest payoff outcome, all players receive payoffs of zero. Nash Equilibrium occurs when players invest any amount and contribute all or nothing depending on the contribution productivity. Therefore, there are infinitely many Nash Equilibria strategies. Finally, the socially optimal result occurs when players invest everything in early periods, then at some point switch to contributing everything. My goal is to discover and explain this point. I use mathematical analysis and computer simulation to derive the results.
    Date: 2018–07
  9. By: Philippe Bich (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Lisa Morhaim (CRED - Centre de Recherche en Economie et Droit - UP2 - Université Panthéon-Assas)
    Abstract: We provide the existence of pairwise stable weighted networks under assumptions similar to Nash theorem. In particular, contrarily to the case of unweighted networks, the existence of closed improving cycles does not prevent the existence of Pairwise stable weighted networks. Then, we extend our existence result, allowing payoffs to depend on some game-theoretic strategies. Many applications are given.
    Keywords: Pairwise Stable Network,Weighted Network
    Date: 2017–07–19
  10. By: Dzsamila Vonnak (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences)
    Abstract: I extend the standard global games framework by introducing an addition target on which agents can coordinate on. I compare this multidimensional case to the standard global games problem. Furthermore, I investigate the effects of consolidating the multiple targets. I find that introducing an additional option generates a negative strategic correlation between the options and thus weakens the coordination. However, unifying the options eliminates the endogenous correlation and thus restores the coordination. I also show two potential applications to be modeled by these kinds of games.
    Keywords: global games, coordination
    JEL: C72 D84
    Date: 2018–01
  11. By: Matthew T. Cole (California Polytechnic State University); James Lake (Southern Methodist University); Ben Zissimos (University of Exeter Business School)
    Abstract: We develop a new theoretical political economy framework, called a "parallel contest", that emphasizes the political fight over trade agreement (TA) ratification within countries. TA ratification is inherently uncertain in each country, where anti- and pro-trade interest groups contest each other to influence their own governments' ratification decision. Unlike prior literature, the protection embodied in negotiated TA tariffs reflects a balance between the liberalizing force of lobbying and inherently protectionist government preferences. Moreover, new international political externalities emerge that are not internalized by governments that just internalize terms of trade externalities.
    Keywords: Trade Agreement, ratification, tariff, contest, lobbying, contribution, externalities
    JEL: C72 F02 F13
    Date: 2018–07
  12. By: Besner, Manfred
    Abstract: This paper presents a new class of weighted values for level structures. The new values, called weighted Shapley support levels values, extend the weighted Shapley values to level structures and contain the Shapley levels value (Winter, 1989) as a special case. Since a level structure with only two levels coincides with a coalition structure we obtain, as a side effect, also new axiomatizations of weighted coalition structure values, presented in Levy and McLean (1989).
    Keywords: Cooperative game · Level structure · (Weighted) Shapley (levels) value · Weighted proportionality · Harsanyi set · Dividends
    JEL: C70 C71
    Date: 2018–06–22
  13. By: Liangchen Li; Michael Ludkovski
    Abstract: We study nonzero-sum stochastic switching games. Two players compete for market dominance through controlling (via timing options) the discrete-state market regime $M$. Switching decisions are driven by a continuous stochastic factor $X$ that modulates instantaneous revenue rates and switching costs. This generates a competitive feedback between the short-term fluctuations due to $X$ and the medium-term advantages based on $M$. We construct threshold-type Feedback Nash Equilibria which characterize stationary strategies describing long-run dynamic equilibrium market organization. Two sequential approximation schemes link the switching equilibrium to (i) constrained optimal switching, (ii) multi-stage timing games. We provide illustrations using an Ornstein-Uhlenbeck $X$ that leads to a recurrent equilibrium $M^\ast$ and a Geometric Brownian Motion $X$ that makes $M^\ast$ eventually "absorbed" as one player eventually gains permanent advantage. Explicit computations and comparative statics regarding the emergent macroscopic market equilibrium are also provided.
    Date: 2018–07
  14. By: Hubert Janos Kiss (Research fellow in the Momentum (LD-004/2010) Game Theory Research Group, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences Department of Economics, Eötvös Loránd University, Budapest, Hungary.); Ismael Rodriguez-Lara (Department of Economics, Middlesex University London, UK); Alfonso Rosa-Garcia (Facultad de Ciencias Jurídicas y de la Empresa, Universidad Católica San Antonio, Murcia, Spain)
    Abstract: We study how response time in a laboratory experiment on bank runs affects withdrawal decisions. In our setup, the bank has no fundamental problems, depositors decide equentially (if to keep the money in the bank or to withdraw) and may observe previous decisions depending on the information structure. We consider two levels of difficulty of decisionmaking conditional on the presence of strategic dominance and strategic uncertainty. We posit that i) decisions in information sets characterized by the lack of strategic dominance are more difficult than in those with strategic dominance; ii) in the latter group, decisions are more difficult when there is strategic uncertainty. We investigate how response time associates with the difficulty and optimality of withdrawal decision. We hypothesize that a) the more difficult the decision, the longer the response time; b) the predictive power of response time depends on difficulty. We find that response time is longer in information sets with strategic uncertainty compared to those without (as expected), but we do not find such relationship when considering strategic dominance (contrary to our hypothesis). Response time correlates negatively with optimal decisions in information sets with a dominant strategy (contrary to our expectation) and also when decisions are obvious in the absence of strategic uncertainty (in line with our hypothesis). When there is strategic uncertainty, we find suggestive evidence that response time predicts optimal decisions. Thus, freezing deposits for some time may be beneficial and help to avoid massive withdrawals as it engthens response times.
    Keywords: bank run, cognitive abilities, coordination games, dominant strategy, experiment, response time, sequential rationality, strategic uncertainty
    JEL: C72 C91 D80 G21
    Date: 2018–05
  15. By: Bruno Biais (University of Toulouse 1); Christophe Bisiere (University of Toulouse); Matthieu Bouvard (McGill University); Catherine Casamatta (University of Toulouse 1)
    Abstract: Blockchains are distributed ledgers, operated within peer-to-peer networks. If reliable and stable, they could offer a new, cost effective way to record transactions, but are they? We model the proof-of-work blockchain protocol as a stochastic game and analyse the equilibrium strategies of rational, strategic miners. Mining the longest chain is a Markov perfect equilibrium, without forking, in line with Nakamoto (2008). The blockchain protocol, however, is a coordination game, with multiple equilibria. There exist equilibria with forks, leading to orphaned blocks and persistent divergence between chains. We also show how forks can be generated by information delays and software upgrades. Last we identify negative externalities implying that equilibrium investment in computing capacity is excessive.
    Keywords: blockchain, forks, proof-of-work, distributed ledger, multiplicity of equilibria, coordination game
    JEL: C73 G2 L86
    Date: 2018–01
  16. By: Tremewan, James; Vanberg, Christoph
    Abstract: Experiments can be used to relax technical assumptions that are made by necessity in theoretical analysis, and further test the robustness of theoretical predictions. To illustrate this point we conduct a three-person bargaining experiment examining the effect of different decision rules (unanimity and majority rule). Our experiment implements the substantive assumptions of the Baron-Ferejohn model but imposes no structure on the timing of proposals and votes. We compare our results to those obtained from an earlier experiment which implemented the specific procedural assumptions of the model. Our results are in many ways very similar to those from the more structured experiment: we find that most games end with the formation of a minimum winning coalition, and unanimity rule is associated with greater delay. However, the earlier finding of "proposer power" is reversed. While some important patterns are robust to the less stringent implementation of procedural assumptions, our less structured experiment provides new insights into how multilateral bargaining may play out in real world environments with no strict procedural rules on timing of offers and agreements.
    Date: 2018–07–18
  17. By: Giovanni Compiani; Philip Haile; Marcelo Sant'Anna
    Abstract: An oil lease auction is the classic example motivating a common values model. However, formal testing for common values has been hindered by unobserved auction-level heterogeneity, which is likely to affect both participation in an auction and bidders’ willingness to pay. We develop and apply an empirical approach for first-price sealed bid auctions with affiliated values, unobserved heterogeneity, and endogenous bidder entry. The approach also accommodates spatial dependence and sample selection. Following Haile, Hong and Shum (2003), we specify a reduced form for bidder entry outcomes and rely on an instrument for entry. However, we relax their control function requirements and demonstrate that our specification is generated by a fully specified game motivated by our application. We show that important features of the model are nonparametrically identified and propose a semiparametric estimation approach designed to scale well to the moderate sample sizes typically encountered in practice. Our empirical results show that common values, affiliated private information, and unobserved heterogeneity—three distinct phenomena with different implications for policy and empirical work—are all present and important in U.S. offshore oil and gas lease auctions. We find that ignoring unobserved heterogeneity in the empirical model obscures the presence of common values. We also examine the interaction between affiliation, the winner’s curse, and the number of bidders in determining the aggressiveness of bidding and seller revenue
    JEL: L0
    Date: 2018–07
  18. By: Xiangge Luo; Alexander Schied
    Abstract: We consider a market impact game for $n$ risk-averse agents that are competing in a market model with linear transient price impact and additional transaction costs. For both finite and infinite time horizons, the agents aim to minimize a mean-variance functional of their costs or to maximize the expected exponential utility of their revenues. We give explicit representations for corresponding Nash equilibria and prove uniqueness in the case of mean-variance optimization. A qualitative analysis of these Nash equilibria is conducted by means of numerical analysis.
    Date: 2018–07
  19. By: Philippe Jehiel (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Laurent Lamy (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CNRS - Centre National de la Recherche Scientifique - ENPC - École des Ponts ParisTech - AgroParisTech - EHESS - École des hautes études en sciences sociales - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement)
    Abstract: Set-asides programs consist in forbidding access to specific participants, and they are commonly used in procurement auctions. We show that when the set of potential participants is composed of an incumbent (who bids for sure if allowed to) and of entrants who show up endogenously (in such a way that their expected rents are fixed by outside options), then it is always beneficial for revenues to exclude the incumbent in the second-price auction. This exclusion principle is generalized to auction formats that favor the incumbent in the sense that he would always gets the good when he values it most. By contrast, set-asides need not be desirable if the incumbent's payoff is included into the seller's objective or in environments with multiple incumbents. Various applications are discussed.
    Keywords: set-asides, entry restrictions, auctions with endogenous entry,entry deterrence, asymmetric buyers, incumbents, government procurement,procurement competition policy
    Date: 2017–07
  20. By: Olaizola Ortega, María Norma; Valenciano Llovera, Federico
    Abstract: The main point of this note is to provide a simpler and shorter proof of the result on efficiency in Olaizola and Valenciano (2017a) based on a result on efficiency of weighted networks in Olaizola and Valenciano (2017b). Additionally, this shorter proof allows to refine the result by establishing new conclusions for the zero-measure boundaries separating the different regions of values of the parameters where different structures were proved to be the only efficient ones.
    Keywords: network, formation, efficiency
    JEL: A14 C72 D85
    Date: 2018–05–15
  21. By: Tsikas, Stefanos A.; Wagener, Andreas
    Abstract: With a series of public goods games in a 2x2-design, we analyze two channels that might moderate social dilemmas and increase cooperation without using pecuniary incentives: moral framing and shaming. Cooperation increases when non-contributing to a public good is framed as morally debatable and socially harmful tax avoidance. However, cooperation is only durable when free-riders are "shamed" by disclosing their misdemeanor. We find shaming effects to be strong enough to make appeals to morality redundant for participants' decisions.
    Keywords: shaming; framing; tax avoidance; public goods experiment
    JEL: E62 H26 H30
    Date: 2018–07
  22. By: Philippe Jehiel (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Laurent Lamy (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CNRS - Centre National de la Recherche Scientifique - ENPC - École des Ponts ParisTech - AgroParisTech - EHESS - École des hautes études en sciences sociales - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement)
    Abstract: We revisit the Tiebout hypothesis in a world in which agents may learn extra information as to how they value the various local public goods once located, and jurisdictions are free to commit to whatever mechanism to attract citizens. It is shown in quasi-linear environments that efficiency can be achieved as a competitive equilibrium when jurisdictions seek to maximize local revenues but not necessarily when they seek to maximize local welfare. Interpretations and limitations of the result are discussed.
    Keywords: mechanism design,competing mechanisms,endogenous entry,Tiebout hypothesis,local public goods
    Date: 2017–07
  23. By: Jean-Bernard Chatelain (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Kirsten Ralf (Ecole Supérieure du Commerce Extérieur - ESCE - International business school)
    Abstract: This algorithm extends Ljungqvist and Sargent (2012) algorithm of Stackelberg dynamic game to the case of dynamic stochastic general equilibrium models including exogenous forcing variables. It is based Anderson, Hansen, McGrattan, Sargent (1996) discounted augmented linear quadratic regulator. It adds an intermediate step in solving a Sylvester equation. Forward-looking variables are also optimally anchored on forcing variables. This simple algorithm calls for already programmed routines for Ricatti, Sylvester and Inverse matrix in Matlab and Scilab. A final step using a change of basis vector computes a vector auto regressive representation including Ramsey optimal policy rule function of lagged observable variables, when the exogenous forcing variables are not observable. C61, C62, C73, E47, E52, E61, E63.
    Keywords: augmented linear quadratic regulator,Ramsey optimal policy,Stackelberg dynamic game,algorithm,forcing variables
    Date: 2017–08–26
  24. By: Bontemps, Christian; Kumar, Rohit
    Abstract: In this paper, we consider inference procedures for entry games with complete information. Due to the presence of multiple equilibria, we know that such a model may be set identified without imposing further restrictions. We complete the model with the unknown selection mechanism and characterize geometrically the set of predicted choice probabilities, in our case, a convex polytope with many facets. Testing whether a parameter belongs to the identified set is equivalent to testing whether the true choice probability vector belongs to this convex set. Using tools from the convex analysis, we calculate the support function and the extreme points. The calculation yields a finite number of inequalities, when the explanatory variables are discrete, and we characterized them once for all. We also propose a procedure that selects the moment inequalities without having to evaluate all of them. This procedure is computationally feasible for any number of players and is based on the geometry of the set. Furthermore, we exploit the specific structure of the test statistic used to test whether a point belongs to a convex set to propose the calculation of critical values that are computed once and independent of the value of the parameter tested, which drastically improves the calculation time. Simulations in a separate section suggest that our procedure performs well compared with existing methods.
    Keywords: set identification; entry games; convex set; support function
    Date: 2018–07
  25. By: Philippe Jehiel (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics)
    Abstract: Investors of new projects consider the returns of implemented projects delivering the same impression, and invest if the empirical mean return exceeds the cost. The steady states of such economies result in suboptimal investment decisions due to the selection bias in the sampling procedure and the dispersion of impressions across investors. Assuming better impressions are associated with higher returns, investors assessments of their projects are overoptimistic, and there is overinvestment as compared with the rational benchmark. The presence of rational investors aggravates the overoptimism bias of sampling investors, thereby illustrating a negative externality imposed by rational investors.
    Keywords: overoptimism,Investment strategy
    Date: 2017–07
  26. By: Vladimir Ivanovitch Danilov (CEMI - Central Economic Mathematical Institute - RAS - Russian Academy of Sciences [Moscow]); Ariane Lambert-Mogiliansky (PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)
    Abstract: In this paper we investigate the potential for persuasion linked to the quantum indeterminacy of beliefs. We first formulate the persuasion problem in the context of quantum-like beliefs. We provide an economic example of belief manipulation that illustrates the setting. We next establish a theoretical result showing that in the absence of constraints on measurements, any state can be obtained as the result of a suitable sequence of measurements. We finally discuss the practical significance of our result in the context of persuasion.
    Keywords: Quantum-like,Persuasion,Measurement
    Date: 2017–06

This nep-gth issue is ©2018 by Sylvain Béal. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.