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on Game Theory |
| By: | Takuo Sugaya (Stanford Graduate School of Business); Yuichi Yamamoto (Department of Economics, University of Pennsylvania) |
| Abstract: | We study repeated games in which players learn the unknown state of the world by observing a sequence of noisy private signals. We find that for generic signal distributions, the folk theorem obtains using ex-post equilibria. In our equilibria, players commonly learn the state, that is, the state becomes asymptotic common knowledge. |
| Keywords: | repeated game, private monitoring, incomplete information, ex-post equilibrium, individual learning |
| JEL: | C72 C73 |
| Date: | 2019–04–26 |
| URL: | http://d.repec.org/n?u=RePEc:pen:papers:19-008&r=all |
| By: | Carlos Segura-Rodriguez (Department of Economics, University of Pennsylvania) |
| Abstract: | I study endogenous network formation in an environment in which individuals want to forecast a stochastic state and it is costly for them to communicate with others to exchange some exogenously observed information. Due to the existence of information complementarities, individuals’ preferences for networks in which they have multiple neighbors cannot be characterized by a linear ranking of the pairwise correlations between their signals. Instead, these complementarities generate a counterintuitive result: for a fixed number of individuals, information structures exist in which all signals are conditionally positively correlated, and these are preferred to a structure in which all signals are conditionally independent. Therefore, it may be that the only strongly stable network consists of two cliques with signals that are highly positively correlated within each clique that generate different beliefs across cliques, even when there are opportunities to exchange information with individuals sharing less correlated signals. Thus, this model exemplifies how homophily and belief polarization can coexist in a rational environment. |
| Keywords: | Information, Communication, Endogenous Networks, Homophily, Polarization |
| JEL: | C71 D83 D85 |
| URL: | http://d.repec.org/n?u=RePEc:pen:papers:19-007&r=all |
| By: | Norde, Henk (CentER and Department of Econometrics and Operations Research, Tilburg University); Voorneveld, Mark (Dept. of Economics) |
| Abstract: | The rational choice paradigm in game theory and other fields of economics has agents best-responding to beliefs about factors that are outside their control. And making certain options a best response is a common problem in mechanism design and information elicitation. But not every correspondence can be made into a best-response correspondence. So what characterizes a feasible best-response correspondence? And once we know that, can we find some or even all utility functions that give rise to this best-response correspondence? We answer these three questions for an expected-utility maximizing agent with finitely many actions and probabilistic beliefs over finitely many states or opponents' strategies. We apply our results to information elicitation problems where contracts (scoring rules) are designed to financially reward an expected-payoff maximizing agent to truthfully reveal a property of her belief by sending a report from some finite set of messages. This leads to a number of new insights: firstly, we characterize exactly which properties can be elicited using scoring rules; secondly, we show that in this class of problems quadratic scoring rules are both necessary and sufficient methods of doing so. |
| Keywords: | best-response correspondence; best-response equivalence; information elicitation; scoring rule |
| JEL: | C72 D82 D83 |
| Date: | 2019–04–25 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:hastec:2019_002&r=all |
| By: | Ghidoni, Riccardo (Tilburg University, Center For Economic Research); Suetens, Sigrid (Tilburg University, Center For Economic Research) |
| Abstract: | Sequentiality of moves in an infinitely repeated prisoner’s dilemma does not change the conditions under which mutual cooperation can be supported in equilibrium as compared to simultaneous decision-making. The nature of the interaction is different, however, given that the second mover in a sequential-move game does not face strategic uncertainty in the stage game. We study in an experiment whether sequentiality has an effect on cooperation rates. We find that with intermediate incentives to cooperate, sequentiality increases cooperation rates by around 40 percentage points after learning, whereas with very low or high incentives to cooperate, cooperation rates are respectively very low or high in both settings. |
| Keywords: | cooperation; infinitely repeated games; sequential prisoner's dilemma; strategic uncertainty; experiment |
| JEL: | C70 C90 D70 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiucen:ff3a441f-e196-4e45-ba59-c86864a966fc&r=all |
| By: | Hiroaki SAKAMOTO; Larry KARP |
| Abstract: | We analyze a dynamic model of international environmental agreements (IEAs) where countries cannot make long-term commitments or use sanctions or rewards to induce cooperation. Countries can communicate with each other to build endogenous beliefs about the random consequences of (re)opening negotiation. If countries are patient, an effective agreement can be reached after a succession of short-lived ineffective agreements. This eventual success requires \sober optimism": the understanding that cooperation is possible but not easy to achieve. Negotiations matter because beliefs are important. An empirical application illustrates the importance of sober optimism in the climate agreement. |
| Keywords: | Environmental agreements; Climate change; Dynamic game |
| JEL: | C72 C73 D62 H41 Q54 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:kue:epaper:e-19-002&r=all |
| By: | Jeanne Hagenbach (Département d'économie); Frédéric Koessler (Ecole d'Économie de Paris - Paris School of Economics (PSE)) |
| Abstract: | This paper proposes an equilibrium concept, Language-Based Expectation Equilibrium, which accounts for partial language understanding in sender-receiver cheap talk games. Each player is endowed with a privately known language competence which represents all the messages that he understands. For the messages he does not understand, he has correct but only coarse expectations about the equilibrium strategies of the other player. In general, a language-based expectation equilibrium outcome differs from Nash and communication equilibrium outcomes, but is always a Bayesian solution. Partial language competence of the sender rationalizes information transmission and lies in pure persuasion problems, and facilitates information transmission from a moderately biased sender. |
| Keywords: | Analogy-based expectations; Bayesian solution; Bounded rationality, cheap talk; Language; Pure persuasion; Strategic information transmission |
| JEL: | C72 D82 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/3b2230a4419v9ojcpu27tsdrtb&r=all |
| By: | Morten Hedegaard; Rudolf Kerschbamer; Mueller Daniel; Jean-Robert Tyran |
| Abstract: | We use a large and heterogeneous sample of the Danish population to investigate the importance of distributional preferences for behavior in a public good game and a trust game. We find robust evidence for the significant explanatory power of distributional preferences. In fact, compared to twenty-one covariates, distributional preferences turn out to be the single most important predictor of behavior. Specifically, subjects who reveal benevolence in the domain of advantageous inequality contribute more to the public good and are more likely to pick the trustworthy action in the trust game than other subjects. Since the experiments were spread out more than one year, our results suggest that there is a component of distributional preferences that is stable across games and over time. |
| Keywords: | Distributional preferences, social preferences, Equality-Equivalence Test, representa- tive online experiment, trust game, public goods game, dictator game. |
| JEL: | C72 C91 D64 |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2019-09&r=all |
| By: | Pierre Dehez; Victor Ginsburgh |
| Abstract: | Approval voting allows electors to list any number of candidates and their scores are obtained by summing the votes cast in their favor. Equal-and-even cumulative voting instead follows the One-person-one-vote principle by endowing electors with a single vote that they may evenly distribute among several candidates. It corresponds to satisfaction approval voting introduced by Brams and Kilgour (2014) as an extension of approval voting to a multiwinner election. It also corresponds to the concept of Shapley ranking introduced by Ginsburgh and Zang (2012) as the Shapley value of a cooperative game with transferable utility. In the present paper, we provide an axiomatic foundation of Shapley ranking and analyze the properties of the resulting social welfare function. |
| Keywords: | Search and matching models, Collective bargaining, Experience rating, Employment protection. |
| JEL: | D71 C71 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2019-17&r=all |
| By: | Jørgen-Vitting Andersen (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Philippe de Peretti (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | We introduce a new methodology that enables the detection of onset of convergence towards Nash equilibria, in simple repeated-games with infinite large strategy spaces. The method works by constraining on a special and finite subset of strategies. We illustrate how the method can predict (in special time periods) with a high success rate the action of participants in a series of experiments. |
| Keywords: | multi-period games,infinite strategy space,decoupling,bounded rationality,agent-based modeling |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-01960900&r=all |
| By: | Gisèle Umbhauer |
| Abstract: | We go into classroom experiments on the Traveler’ Dilemma in order to show the impact of the common knowledge of the value of the luggage. This value becomes a focal point that canalizes the behavior of the students. This leads us to commenting on the impact of such focal points both on the reasoning of the players and on the structure of the game. We construct a new game which models this impact and we study its Nash equilibrium. |
| Keywords: | traveler’s dilemma, Nash equilibrium, focal point, classroom experiment, fairness, honesty.. |
| JEL: | C72 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2019-13&r=all |
| By: | Gannon, Kim (The Abdul Latif Jameel Poverty Action Lab); Zhang, Hanzhe (Michigan State University, Department of Economics) |
| Abstract: | This paper provides an evolutionary justification for overconfidence. Players are pairwise matched to fight for a resource and there is uncertainty about who wins the resource if they engage in the fight. Players have different confidence levels about their chance of winning although they actually have the same chance of winning in reality. Each player may know or may not know her opponent’s confidence level. We characterize the evolutionary stable equilibrium, represented by players’ strategies and distribution of confidence levels. Under different informational environments, majority of players are overconfident, i.e. overestimate their chance of winning. We also characterize the evolutionary dynamics and the rate of convergence to the equilibrium. |
| Keywords: | overconfidence; evolutionary game |
| JEL: | C73 D83 |
| Date: | 2019–04–25 |
| URL: | http://d.repec.org/n?u=RePEc:ris:msuecw:2019_004&r=all |
| By: | Ulrich Faigle (Mathematisches Institut, Universität zu Köln); Michel Grabisch (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics) |
| Abstract: | An interaction system has a finite set of agents that interact pairwise, depending on the current state of the system. Symmetric decomposition of the matrix of interaction coefficients yields the representation of states by self-adjoint matrices and hence a spectral representation. As a result, cooperation systems, decision systems and quantum systems all become visible as manifestations of special interaction systems. The treatment of the theory is purely mathematical and does not require any special knowledge of physics. It is shown how standard notions in cooperative game theory arise naturally in this context. In particular, Fourier transformation of cooperative games becomes meaningful. Moreover, quantum games fall into framework. Finally, a theory of Markov evolution of interaction states is presented that generalizes classical homogeneous Markov chains to the present context. |
| Abstract: | Un système d'interaction a un nombre fini d'agents qui interagissent par paire, dépendant de l'état courant du système. La décomposition symétrique de la matrice d'interaction donne la représentation des états par des matrices auto-adjointes et donc une représentation spectrale. De ce fait, les systèmes de coopération, les systèmes de décision et les systèmes quantiques deviennent tous visibles comme des manifestations de systèmes d'interaction spéciaux. Le traitement de la théorie est purement mathématique et ne requiert pas de connaissance en physique. On montre comment les notions standard de la théorie des jeux coopératifs apparaissent dans ce contexte. En particulier, la transformée de Fourier des jeux coopératifs acquiert une signification. De plus, les jeux quantiques font partie de ce cadre. Enfin, une théorie markovienne de l'évolution des états d'interaction est présentée, qui généralise les chaînes de Markov homogènes classiques au présent contexte. |
| Keywords: | cooperative game,decision system,Fourier transform,interaction system,measurement,quantum game,jeu coopératif,système de décision,évolution,transformée de Fourier,système d'interaction,mesurage,jeux quantique |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-01659148&r=all |
| By: | Tiziano De Angelis; Erik Ekstr\"om |
| Abstract: | We study a class of optimal stopping games (Dynkin games) of preemption type, with uncertainty about the existence of competitors. The set-up is well-suited to model, for example, real options in the context of investors who do not want to publicly reveal their interest in a certain business opportunity. We show that there exists a Nash equilibrium in randomized stopping times which is described explicitly in terms of the corresponding one-player game. |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1905.06564&r=all |
| By: | Michel Grabisch (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne, PSE - Paris School of Economics); Christophe Labreuche (Thales Research and Technology [Palaiseau] - THALES); Mustapha Ridaoui (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne, PSE - Paris School of Economics) |
| Abstract: | We address in this paper the problem of how to define an importance index in multicriteria decision problems, when a numerical representation of preference is given. We make no restrictive assumption on the model, which could have discrete or continuous attributes, and in particular, it is not assumed that the model is monotonically increasing or decreasing with respect to (w.r.t.) the attributes. Our analysis first considers discrete models, which are seen to be equivalent to multichoice games. We propose essentially two importance indices, namely the signed importance index and the absolute importance index, both based on the average variation of the value of the model induced by a given attribute. We provide several axiomatizations for these importance indices, extend them to the continuous case, and finally illustrate them with examples (classical simple models and a example of discomfort evaluation based on real data). |
| Abstract: | Dans ce papier, on s'intéresse au problème de définir un indice d'importance dans un problème de décision multicritère, en supposant une représentation numérique de celui-ci. Nous ne faisons aucune hypothèse restrictive sur le modèle qui peut avoir des attributs discrets ou continus, et en particulier, on ne suppose pas que le modèle est monotone croissant ou décroissant selon les attributs. Notre analyse considère d'abord des modèles discrets qui sont équivalents à des jeux multichoix. Nous proposons essentiellement deux indices d'importance, à savoir l'indice d'importance signé et l'indice d'importance absolu, tous deux basés sur la variation moyenne de la valeur du modèle induite par un attribut donné. Nous donnons plusieurs axiomatisations de ces indices d'importance, les étendons au cas continu et finalement les illustrons sur des exemples (modèles classiques simples et un exemple d'évaluation d'inconfort sur des données réelles). |
| Keywords: | Multiple criteria analysis,Multichoice game,Shapley value,Choquet integral,Décision multicritère,jeu multichoix,valeur de Shapley,intégral de Choquet |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-01815012&r=all |
| By: | Mustapha Ridaoui (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne, PSE - Paris School of Economics); Michel Grabisch (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne, PSE - Paris School of Economics); Christophe Labreuche (Thales Research and Technology [Palaiseau] - THALES) |
| Abstract: | We consider MultiCriteria Decision Analysis models which are defined over discrete attributes, taking a finite number of values. We do not assume that the model is monotonically increasing with respect to the attributes values. Our aim is to define an importance index for such general models, encompassing Generalized-Additive Independence models as particular cases. They can be seen as being equivalent to k-ary games (multichoice games). We show that classical solutions like the Shapley value are not suitable for such models, essentially because of the efficiency axiom which does not make sense in this context. We propose an importance index which is a kind of average variation of the model along the attributes. We give an axiomatic characterization of it. |
| Abstract: | On considère des modèles de décision multicritère qui sont définis sur des attributs discrets, prenant un nombre fini de valeurs. On ne suppose pas que le modèle est monotone croissant par rapport aux valeurs d'attributs. Notre but est de définir un indice d'importance pour de tels modèles généraux, incluant les modèles d'indépendance additive généralisée comme cas particulier. Ils peuvent être vus comme étant équivalent aux jeux k-ary (jeux multichoix). Nous montrons que les solutions classiques comme la valeur de Shapley ne conviennent pas pour de tels modèles, essentiellement parce que l'axiome d'efficience est sans signification dans ce contexte. Nous proposons un indice d'importance qui est une sorte de variation moyenne du modèle selon un attribut. Nous en donnons une caractérisation axiomatique. |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-01659796&r=all |
| By: | Bellemare, Charles; Sebald, A.; Suetens, Sigrid (Tilburg University, Center For Economic Research) |
| Abstract: | We investigate whether the concept of guilt aversion in economics is related to the psychological characterization of the same phenomenon. For trust games and dictator games we report correlations between the guilt sensitivity measured within a framework of psychological games most common in economics and the guilt sensitivity measured using a questionnaire common in psychology (TOSCA-3). We find that the two measures correlate well and significantly in the two settings. |
| Keywords: | guilt sensitivity; psychological game theory; TOSCA; laboratory experiment; guilt aversion |
| JEL: | A13 C91 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiucen:5dca2a21-519f-4f5a-834d-b39b71b11298&r=all |
| By: | Subiza, Begoña (University of Alicante, D. Quantitative Methods and Economic Theory); Peris, Josep E. (University of Alicante, D. Quantitative Methods and Economic Theory) |
| Abstract: | Minimum cost spanning tree problems have been widely studied in operation research and economic literature. Multi-criteria optimal spanning trees provide a more realistic representation of di↵erent actual problems. Once an optimal tree is obtained, how to allocate its cost among the agents defines a situation quite di↵erent from what we have in the minimum cost spanning tree problems. In this paper, we analyze a multicriteria problem where the objective is to connect a group of agents to a source with the highest possible quality at the cheapest cost. We compute optimal networks and propose cost allocations for the total cost of the project. We analyze properties of the proposed solution; in particular, we focus on coalitional stability (core selection), a central concern in the literature on minimum cost spanning tree problems. |
| Keywords: | Minimum cost spanning tree; Multi-criteria decision making; Quality; Cost sharing |
| JEL: | C71 D63 D71 |
| Date: | 2019–05–15 |
| URL: | http://d.repec.org/n?u=RePEc:ris:qmetal:2019_002&r=all |
| By: | François Maublanc; Sébastien Rouillon |
| Abstract: | We study multiple-prize contests where the number of prizes to be awarded is a random variable. We determine the symmetric Nash equilibrium of the contest game. We analyze the equilibrium outcome from the perspective of a contest designer aiming at maximizing the aggregate contest expenditure. Assuming that the total value at stake is non-increasing in the number of prizes, we show that the aggregate contest expenditure decreases with the expectation on the number of prizes (first-order stochastic dominance), with the risk in the number of prizes (second-order stochastic dominance), and increases with the number of contestants. We give sufficient conditions such that the same holds under a general specification. Accordingly, a contest designer aiming at maximizing the aggregate contest expenditure should always award a single prize, reveal this information to the contestants and open the contest game to all potential participants. |
| Keywords: | Contest model · Rent-seeking · Multiple-prizes · Number uncertainty · Incomplete information |
| JEL: | C7 D4 D7 D8 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:grt:wpegrt:2019-07&r=all |
| By: | Mustapha Ridaoui (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne, PSE - Paris School of Economics); Michel Grabisch (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne, PSE - Paris School of Economics); Christophe Labreuche (Thales Research and Technology [Palaiseau] - THALES) |
| Abstract: | We provide an axiomatisation of the Banzhaf value (or power index) and the Banzhaf interaction index for multichoice games, which are generalisation of cooperative games with several levels of participation. Multichoice games can model any aggregation model in multicriteria decision making, provided the attributes take a finite number of values. Our axiomatisation uses standard axioms of the Banzhaf value for classical games (linearity, null axiom, symmetry), an invariance axiom specific to the multichoice context, and a generalisation of the 2-efficiency axiom, characteristic of the Banzhaf value. |
| Abstract: | Nous donnons une axiomatisation de la valeur de Banzhaf (ou indice de pouvoir) et de l'indice d'interaction de Banzhaf pour les jeux multichoix, qui sont une généralisation des jeux coopératifs avec plusieurs niveaux de participation. Les jeux multichoix peuvent modéliser tout modèle d'agrégation en décision multicritère quand les attributs prennent un nombre fini de valeurs. Notre axiomatisation utilise les axiomes standard de la valeur de Banzhaf pour les jeux classiques (linéarité, axiome nul, symétrie), un axiome d'invariance spécifique au contexte multichoix et une généralisation de l'axiome de 2-efficience, caractéristique de la valeur de Banzhaf. |
| Keywords: | Banzhaf value,multicriteria decision aid,multichoice games,interaction,jeu multichoix,valeur de Banzhaf,décision multicritère |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-01814977&r=all |
| By: | Agnieszka Rusinowska (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Akylai Taalaibekova (CORE - Center of Operation Research and Econometrics [Louvain] - UCL - Université Catholique de Louvain, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | We consider a model of competitive opinion formation in which three persuaders characterized by (possibly unequal) persuasion impacts try to influence opinions in a society of individuals embedded in a social network. Two of the persuaders have the extreme and opposite opinions, and the third one has the centrist opinion. Each persuader chooses one individual to target, i.e., he forms a link with the chosen individual in order to spread his own "point of view" in the society and to get the average long run opinion as close as possible to his own opinion. We examine the opinion convergence and consensus reaching in the society. We study the existence and characterization of pure strategy Nash equilibria in the game played by the persuaders with equal impacts. This characterization depends on influenceability and centrality (intermediacy) of the targets. We discuss the effect of the centrist persuader on the consensus and symmetric equilibria, compared to the framework with only two persuaders having the extreme opinions. When the persuasion impacts are unequal with one persuader having a sufficiently large impact, the game has only equilibria in mixed strategies. |
| Abstract: | Nous considérons un modèle de formation d'opinion compétitive dans lequel trois persuadeurs caractérisés par des impacts de persuasion (éventuellement inégaux) tentent d'influencer les opinions dans une société d'individus intégrés dans un réseau social. Deux des persuadeurs ont des opinions extrêmes et opposées, et le troisième a l'opinion centriste. Chaque persuadeur choisit un individu à cibler, c'est-à-dire qu'il forme un lien avec l'individu choisi pour diffuser son propre « point de vue » dans la société et obtenir l'opinion moyenne à long terme aussi proche que possible de sa propre opinion. Nous examinons l'existence et la caractérisation d'équilibres de Nash de pure stratégie dans le jeu joué par les persuadeurs avec des impacts égaux. Cette caractérisation dépend de l'influençabilité et de la centralité des cibles. Nous discutons l'effet du persuadeur centriste sur le consensus et les équilibres symétriques, comparé au cadre avec seulement deux persuadeurs ayant des opinions extrêmes. Lorsque les impacts de persuasion sont inégaux avec un persuadeur ayant un impact suffisamment important, le jeu n'a que des équilibres dans des stratégies mixtes. |
| Keywords: | social network,opinion formation,targeting,extreme and centrist persuaders,réseau social,formation d'opinion,consensus,ciblage,lobbying |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-01720017&r=all |
| By: | Anne Van den Nouweland (University of Oregon [Eugene]); Agnieszka Rusinowska (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics) |
| Abstract: | We provide a bargaining foundation for the concept of ratio equilibrium in public good economies. We define a bargaining game of alternating offers in which players bargain to determine their cost shares of public good production and a level of public good. We study the stationary subgame perfect equilibrium without delay of the bargaining game. We demonstrate that when the players are perfectly patient, they are indifferent between the equilibrium offers of all players. We also show that every stationary subgame perfect equilibrium without delay in which the ratios offered by all players are the same leads to a ratio equilibrium. In addition, we demonstrate that all equilibrium ratios are offered by the players at some stationary subgame perfect equilibrium without delay. We use these results to discuss the case when the assumption of perfectly patient players is relaxed and the cost of delay vanishes. |
| Abstract: | Nous fournissons une base de négociation pour le concept d'équilibre des ratios dans les économies des biens publics. Nous définissons un jeu de négociation d'offres alternées dans lequel les joueurs négocient pour déterminer leurs parts de coûts de la production d'un bien public et un niveau d'un bien public. Nous étudions l'équilibre parfait en sous-jeu sans délai du jeu de négociation. Nous démontrons que lorsque les joueurs sont parfaitement patients, ils sont indifférents entre les offres d'équilibre de tous les joueurs. Nous montrons aussi que tout équilibre parfait en sous-jeu sans délai dans lequel les ratios offerts par tout les joueurs sont les mêmes conduit à un équilibre de ratios. En outre, nous démontrons que tous les ratios d'équilibre sont offerts par les joueurs à un équilibre parfait en sous-jeu sans délai. Nous utilisons ces résultats pour discuter le cas où l'hypothèse de joueurs parfaitement patients est relâchée et le coût de délai disparaît. |
| Keywords: | stationary subgame perfect equilibrium,public good economy,bargaining game,ratio equilibrium,équilibre des ratios,économie des biens publics,jeu de négociation,équilibre parfait en sous-jeux |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-01720001&r=all |
| By: | Renaud Bourlès (Aix-Marseille School of Economics (CNRS / AMU / EHESS) (AMSE)); Yann Bramoullé (Aix-Marseille School of Economics (CNRS / AMU / EHESS)); Eduardo Perez (Département d'économie) |
| Abstract: | We provide the first analysis of the risk-sharing implications of altruism networks. Agents are embedded in a fixed network and care about each other. We study whether altruistic transfers help smooth consumption and how this depends on the shape of the network. We identify two benchmarks where altruism networks generate efficient insurance: for any shock when the network of perfect altruism is strongly connected and for any small shock when the network of transfers is weakly connected. We show that the extent of informal insurance depends on the average path length of the altruism network and that small shocks are partially insured by endogenous risk-sharing communities. We uncover complex structural effects. Under iid incomes, central agents tend to be better insured, the consumption correlation between two agents is positive and tends to decrease with network distance, and a new link can decrease or increase the consumption variance of indirect neighbors. Overall, we show that altruism in networks has a first-order impact on risk and generates specific patterns of consumption smoothing. |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/cpem82ltk8fgprl50i20pgomf&r=all |
| By: | Johannes Muhle-Karbe; Marcel Nutz; Xiaowei Tan |
| Abstract: | This paper studies the equilibrium price of an asset that is traded in continuous time between N agents who have heterogeneous beliefs about the state process underlying the asset's payoff. We propose a tractable model where agents maximize expected returns under quadratic costs on inventories and trading rates. The unique equilibrium price is characterized by a weakly coupled system of linear parabolic equations which shows that holding and liquidity costs play dual roles. We derive the leading-order asymptotics for small transaction and holding costs which give further insight into the equilibrium and the consequences of illiquidity. |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1905.05730&r=all |
| By: | Fortuna Casoria (Univ Lyon, CNRS, GATE UMR 5824, F-69130 Ecully, France); Alice Ciccone (Institute of Transport Economics, Oslo, Norvège) |
| Abstract: | We investigate whether upfront investments increase cooperation in settings with no enforcement mechanism, where cooperation is not easily sustained voluntarily. Such investments are a cost that individuals incur before deciding whether to cooperate and increase cooperation payoff. We find that cooperation rarely emerges in treatments without investments, while both endogenous and exogenous investments boost overall cooperation levels. For low endogenous investments, cooperation is lower than when the same investments are exogenous. For high investments, cooperation is not significantly different between endogenous and exogenous conditions. This supports low investments being interpreted as a signal of unwillingness to cooperate, triggering non-cooperative choices. |
| Keywords: | KeyCooperation, Upfront investments, Prisoners' dilemma, Experiment |
| JEL: | C7 C72 C73 C9 C91 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:1918&r=all |
| By: | Pierpaolo Battigalli; Martin Dufwenberg |
| Abstract: | The mathematical framework of psychological game theory is useful for describing many forms of motivation where preferences depend directly on own or othersbeliefs. It allows for incorporation of emotions, reciprocity, image concerns, and self-esteem in economic analysis. We explain how and why, discussing basic theory, a variety of sentiments, experiments, and applied work. Keywords: psychological game theory; belief-dependent motivation; reciprocity; emotions; image concerns; self-esteem JEL codes: C72; D91 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:igi:igierp:646&r=all |
| By: | Debopam Bhattacharya (University of Cambridge); Pascaline Dupas (Stanford University); Shin Kanaya (University of Aarhus and CREATES) |
| Abstract: | Many real-life settings of consumer-choice involve social interactions, causing targeted policies to have spillover-effects. This paper develops novel empirical tools for analyzing demand and welfare-effects of policy-interventions in binary choice settings with social interactions. Examples include subsidies for healthproduct adoption and vouchers for attending a high-achieving school. We establish the connection between econometrics of large games and Brock-Durlauf-type interaction models, under both I.I.D. and spatially correlated unobservables. We develop new convergence results for associated beliefs and estimates of preference-parameters under increasing-domain spatial asymptotics. Next, we show that even with fully parametric specifications and unique equilibrium, choice data, that are sufficient for counterfactual demand - prediction under interactions, are insufficient for welfare-calculations. This is because distinct underlying mechanisms producing the same interaction coefficient can imply different welfare-effects and deadweightloss from a policy-intervention. Standard index-restrictions imply distribution-free bounds on welfare. We illustrate our results using experimental data on mosquito-net adoption in rural Kenya. |
| Keywords: | Policy targeting, welfare analysis, social interaction, spillover, externality, convergence of Bayesian-Nash equilibria, spatial dependence, Kenya |
| JEL: | C01 H23 H4 H51 I38 O1 |
| Date: | 2019–04–26 |
| URL: | http://d.repec.org/n?u=RePEc:aah:create:2019-09&r=all |
| By: | Yadong Li; Dimitri Offengenden; Jan Burgy |
| Abstract: | We formulate banks' capital optimization problem as a classic mean variance optimization, by leveraging an accurate linear approximation to the Shapely or Constrained Aumann-Shapley (CAS) allocation of max or nested max cost functions. This reduced form formulation admits an analytical solution, to the optimal leveraged balance sheet (LBS) and risk weighted assets (RWA) target of banks' business units for achieving the best return on capital. |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1905.05911&r=all |
| By: | Egorov, Georgy; Sonin, Konstantin |
| Abstract: | We analyze persuasion in a model, in which each receiver (of many) might buy a direct access to the sender's signal or to rely on her network connections to get the same information. For the sender, a more biased signal increases the impact per subscriber (direct receiver), yet diminishes the willingness of agents to become subscribers. Contrary to the naive intuition, the optimal propaganda might target peripheral, rather than centrally located agents, and is at its maximum level when the probability that information flows between agents is either zero, or nearly one, but not in-between. The density of the network has a non-monotonic effect on the optimal level of propaganda as well. |
| Keywords: | Bayesian persuasion; networks; percolation; Propaganda |
| JEL: | D85 L82 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13723&r=all |
| By: | Annie Liang (Department of Economics, University of Pennsylvania); Xiaosheng Mu (Columbia University); Vasilis Syrgkanis (Microsoft Corporation - Microsoft Research New England) |
| Abstract: | An agent has access to multiple data sources, each of which provides information about a different attribute of an unknown state. Information is acquired continuously where the agent chooses both which sources to sample from, and also how to allocate resources across them until an endogenously chosen time. We show that the optimal information acquisition strategy proceeds in stages, where resource allocation is constant over a fixed set of providers during each stage, and at each subsequent stage a new provider is added to the set. We additionally apply this characterization to derive results regarding: (1) equilibrium information provision by competing data providers, and (2) endogenous information acquisition in a binary choice problem. |
| Date: | 2019–04–15 |
| URL: | http://d.repec.org/n?u=RePEc:pen:papers:19-005&r=all |
| By: | Nobuyuki Hanaki (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS - Centre National de la Recherche Scientifique - UNS - Université Nice Sophia Antipolis - UCA - Université Côte d'Azur); Emily Tanimura (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Nicolaas Vriend (QMUL - School of Economics and Finance - QMUL - Queen Mary University of London) |
| Abstract: | We study a linear location model (Hotelling, 1929) in which n (with n ≥ 2) boundedly rational players follow (noisy) myopic best-reply behavior. We show through numerical and mathematical analysis that such players spend almost all the time clustered together near the center, re-establishing Hotelling's " Principle of Minimum Differentiation " that had been discredited by equilibrium analyses. Thus, our analysis of the best-response dynamics shows that when considering e.g. market dynamics as well as their policy and welfare implications, it may be important to look beyond equilibrium analyses |
| Keywords: | Stochastic stability,Best-response dynamics,Nash equilibrium,Invariant measures,Hotelling location model,Principle of Minimum Differentiation |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01714582&r=all |
| By: | Louis Lévy-Garboua (CIRANO - Centre interuniversitaire de recherche en analyse des organisations - UQAM - Université du Québec à Montréal , PSE - Paris School of Economics, CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne); Muniza Askari (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne); Marco Gazel (PSE - Paris School of Economics, CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne) |
| Abstract: | We design a double-or-quits game to compare the speed of learning one's specific ability with the speed of rising confidence as the task gets increasingly difficult. We find that people on average learn to be overconfident faster than they learn their true ability and we present an intuitive-Bayesian model of confidence which integrates confidence biases and learning. Uncertainty about one's true ability to perform a task in isolation can be responsible for large and stable confidence biases, namely limited discrimination, the hard–easy effect, the Dunning–Kruger effect, conservative learning from experience and the overprecision phenomenon (without underprecision) if subjects act as Bayesian learners who rely only on sequentially perceived performance cues and contrarian illusory signals induced by doubt. Moreover, these biases are likely to persist since the Bayesian aggregation of past information consolidates the accumulation of errors and the perception of contrarian illusory signals generates conservatism and under-reaction to events. Taken together, these two features may explain why intuitive Bayesians make systematically wrong predictions of their own performance. |
| Keywords: | Confidence biases , Intuitive-Bayesian , Learning , Double or quits , experimental game , Doubt , Contrarian illusory signals |
| Date: | 2017–06–20 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01558394&r=all |
| By: | Gradín Carlos |
| Abstract: | In this paper, I quantify the contribution of a subpopulation to inequality. This is defined as the sum of the contributions of its members, with these contributions computed as the impact on inequality of a small increase in the population mass at each point of the distribution (using the Recentered Influence Function).The decomposition is shown to verify various attractive properties. I also discuss alternative approaches used in the literature of factor inequality decompositions. I show that the RIF and the marginal and Shapley factor contributions are approximately equal in the case of the Mean Log Deviation, the index with the best additive decomposability properties, when the same normalization is used. In an empirical illustration, I use the approach to identify how the richest, highly educated, and urban population has disproportionally contributed to high and increasing inequality in Mozambique in recent years. |
| Keywords: | Decomposition,Inequality,marginal,RIF,Shapley |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp2018-60&r=all |
| By: | Gabriel Mitache (Academy of Economic Studies, Bucharest and National Bank of Romania) |
| Abstract: | Before the 2007-2008 financial crisis, creditinstitutions were assured (though not officially or formally) that if they were large enough they would be rescued with tax-payers’ money, an action also known as bail-out, denoting what became known as the “too big to fail” paradigm. The introduction of the Bank Recovery and Resolution Directive (2014/59/EU) proposes a legal framework that aims at eliminating the possibility of bailing-out institutions. This paper has the objective of assessing througha game theory approachto what extent the BRRDirectivehas the potential to achieve its purpose and if there are identifiable possible improvements to this framework that could be considered for practical purposes or for a possible future review of the legal framework.The term institution, for the purpose of this paper, refers to credit institutions but can also be read as referring to other types of financial institutions such as investment firms or insurance companies |
| Keywords: | banking, banking union, bank resolution, central banking, bank recovery, bank supervision, BRRD, game theory |
| JEL: | D04 E61 G18 G21 G28 H12 K23 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:fst:wpaper:0013&r=all |
| By: | Soares, Ana Cristina |
| Abstract: | Using firm-level data between 2004 and 2012 for eleven countries of the European Union (EU), we document the size of product and labour market imperfections within narrowly defined sectors including services which are virtually undocumented. Our findings suggest that perfect competition in both product and labour markets is widely rejected. Levels of the price-cost margin and union bargaining power tend to be higher in some service sectors depicting however substantial heterogeneity. Dispersion within sector and across countries tends to be higher in some services sectors assuming a less tradable nature which suggests that the Single Market integration is partial particularly relaxing the assumption of perfect competition in the labour market. We report also figures for the aggregate economy and show that Eastern countries tend to depict lower product and labour market imperfections compared to other countries in the EU. Also, we provide evidence in favour of a very limited adjustment of both product and labour market imperfections following the international and financial crisis. |
| Keywords: | market imperfection,market structure,nash bargaining,European Union |
| JEL: | D40 J50 L10 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iwhcom:42019&r=all |