nep-gth New Economics Papers
on Game Theory
Issue of 2020‒03‒30
25 papers chosen by
Sylvain Béal
Université de Franche-Comté

  1. Stability in games with continua of equilibria By Sebastian Bervoets; Mathieu Faure
  2. On the Existence of Equilibrium in Bayesian Games Without Complementarities By Idione Meneghel; Rabee Tourky
  3. Multilateral Bargaining with Proposer Selection Contest By Duk Gyoo Kim; Sang-Hyun Kim
  4. Uniqueness of DP-Nash Subgraphs and D-sets in Capacitated Graphs of Netflix Games By Gregory Gutin; Philip R Neary; Anders Yeo
  5. Asymmetric auctions with risk averse preferences By Sanyyam Khurana
  6. Estimation of Discrete Games with Weak Assumptions on Information By Magnolfi, Lorenzo; Roncoroni, Camilla
  7. Volatility-Reducing Biodiversity Conservation Under Strategic Interactions By Emmanuelle Augeraud-Véron; Giorgio Fabbri; Katheline Schubert
  8. Costly pretrial agreements By Anderlini, Luca; Felli, Leonardo; Immordino, Giovanni
  9. A Kuhn-Tucker Model for Behaviour in Dictator Games By Peter G Moffatt; Graciela Zevallos-Porles
  10. A Mean Field Game Approach to Equilibrium Pricing with Market Clearing Condition By Masaaki Fujii; Akihiko Takahashi
  11. Keeping the Listener Engaged: a Dynamic Model of Bayesian Persuasion By Yeon-Koo Che; Kyungmin Kim; Konrad Mierendorff
  12. Optimization of a Dynamic Profit Function using Euclidean Path Integral By P. Pramanik; A. M. Polansky
  13. Platform Competition with Multi-Homing on Both Sides: Subsidize or Not? By Yannis Bakos; Hanna Halaburda
  14. Escaping Cannibalization? Correlation-Robust Pricing for a Unit-Demand Buyer By Moshe Babaioff; Michal Feldman; Yannai A. Gonczarowski; Brendan Lucier; Inbal Talgam-Cohen
  15. Rules versus Discretion in Central Bank Communication By Raphael Galvao; Felipe Shalders
  16. It Ain’t Over Until It’s Over: English Auctions with Subsequent Negotiations By Onur A. Koska; Frank Stähler
  17. A Dominant Strategy, Double Clock Auction with Estimation-Based Tatonnement By Loertscher, Simon; Mezzetti, Claudio
  18. Power to Ignore: An Experimental Study By Chulyoung Kim; Sang-Hyun Kim; Myunghwan Lee
  19. Leaping into the dark: A theory of policy gambles By Anand, Kartik; Gai, Prasanna; König, Philipp Johann
  20. Who withdraws first? Line formation during bank runs By Hubert J. Kiss; Ismael Rodriguez-Lara; Alfonso Rosa-Garcia
  21. Resolution rules in a system of financially linked firms By Gabrielle Demange
  22. Lords and Vassals : Power, Patronage, and the Emergence of Inequality By Akerlof, Robert; Li, Hongyi; Yeo, Jonathan
  23. Mediation Design By Gottardi, Piero; Mezzetti, Claudio
  24. Overestimate yourself or underestimate others? Two sources of bias in bargaining with joint production By Quentin Cavalan; Vincent Gardelle; Jean-Christophe Vergnaud
  25. Electoral systems and international trade policy By Serkan Kucuksenel; Osman Gulseven

  1. By: Sebastian Bervoets (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Mathieu Faure (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The stability of Nash equilibria has often been studied by examining the asymptotic behavior of the best-response dynamics. This is generally done in games where interactions are global and equilibria are isolated. In this paper, we analyze stability in contexts where interactions are local and where there are continua of equilibria. We focus on the public good game played on a network, where the set of equilibria is known to depend on the network structure (Bramoullé and Kranton, 2007), and where, as we show, continua of equilibria often appear. We provide necessary and sufficient conditions for a component of Nash equilibria to be asymptotically stable vis-à-vis the best-response dynamics. Interestingly, we demonstrate that these conditions relate to the structure of the network in a simple way. We also provide corresponding results for several dynamical systems related to the best response.
    Keywords: Best-response dynamics,Public good games,Stability
    Date: 2019–01
  2. By: Idione Meneghel (Australian National University College of Business and Economics); Rabee Tourky (Australian National University College of Business and Economics)
    Abstract: This paper presents new results on the existence of pure-strategy Bayesian equilibria in specified functional forms. These results broaden the scope of methods developed by Reny (2011) well beyond monotone pure strategies. Applications include natural models of first-price and all-pay auctions not covered by previous existence results. To illustrate the scope of our results, we provide an analysis of three auctions: (i) a first-price auction of objects that are heterogeneous and imperfect substitutes; (ii) a first-price auction in which bidders’ payoffs have a very general interdependence structure; and (iii) an all-pay auction with non-monotone equilibrium.
    Keywords: Bayesian games, Monotone strategies, Pure-strategy equilibrium, Auctions
    JEL: C72 D44
    Date: 2019–08
  3. By: Duk Gyoo Kim (Univ of Mannheim); Sang-Hyun Kim (Yonsei Univ)
    Abstract: This study investigates the competition to be selected as the proposer in a subsequent multilateral bargaining game experimentally. The experimental environment varies in two dimensions: reservation payoffs (homogeneous or heterogeneous) and information on the extent of each subject’s investment in the competition (public or private). The proposer’s share was significantly lower than what theory predicts, and with taking into account the proposer’s partial rent extraction, subjects over-invest to increase their chances of winning the right of proposal. More importantly, we find that inefficiency (due to the levels of spending) and inequality go hand in hand; the surplus was distributed most efficiently and most equally when the reservation payoffs were heterogeneous, and subjects were informed of who had spent how much in the competition. The proportion of proposals being rejected was smaller in public treatments than in private treatments. This study contributes to the literature by identifying formal rules that are more effective in establishing efficient informal norms.
    Keywords: Multilateral bargaining, Contest, Public choice, Laboratory experiments
    JEL: C72 C92 D72
    Date: 2019–10
  4. By: Gregory Gutin; Philip R Neary; Anders Yeo
    Abstract: We explore the uniqueness of pure strategy Nash equilibria in the Netflix Games of Gerke et al. (arXiv:1905.01693, 2019). Let $G=(V,E)$ be a graph and $\kappa:\ V\to \mathbb{Z}_{\ge 0}$ a function, and call the pair $(G, \kappa)$ a capacitated graph. A spanning subgraph $H$ of $(G, \kappa)$ is called a $DP$-Nash subgraph if $H$ is bipartite with partite sets $X,Y$ called the $D$-set and $P$-set of $H$, respectively, such that no vertex of $P$ is isolated and for every $x\in X,$ $d_H(x)=\min\{d_G(x),\kappa(x)\}.$ We prove that whether $(G,\kappa)$ has a unique $DP$-Nash subgraph can be decided in polynomial time. We also show that when $\kappa(v)=k$ for every $v\in V$, the problem of deciding whether $(G,\kappa)$ has a unique $D$-set is polynomial time solvable for $k=0$ and 1, and co-NP-complete for $k\ge2.$
    Date: 2020–03
  5. By: Sanyyam Khurana (Department of Economics, Delhi School of Economics)
    Abstract: In this paper, we characterize all the Bayesian equilibria of a firstprice auction for asymmetric bidders with risk averse preferences. The necessary conditions for an equilibrium are pure strategy, continuity and strict monotonicity. Next, we show that first-order stochastic dominance is a necessary condition and conditional stochastic dominance is a sufficient condition to unambiguously rank the bidding strategies. We establish bidders’ preferences for the first-price and the second-price auction under different types of risk aversion. Finally, for a special family of utility functions and distribution functions, we study the impact of asymmetry on seller’s revenue in a first-price auction.
    JEL: D44 D82
    Date: 2020–02
  6. By: Magnolfi, Lorenzo (University of Wisconsin-Madison); Roncoroni, Camilla (University of Warwick)
    Abstract: We propose a method to estimate static discrete games with weak assumptions on the information available to players. We do not fully specify the information structure of the game, but allow instead for all information structures consistent with players knowing their own payoffs and the distribution of opponents’ payoffs. To make this approach tractable we adopt a weaker solution concept: Bayes Correlated Equilibrium (BCE), developed by Bergemann and Morris (2016). We characterize the sharp identified set under the assumption of BCE and no assumptions on equilibrium selection, and find that in simple games with modest variation in observable covariates identified sets are narrow enough to be informative. In an application, we estimate a model of entry in the Italian supermarket industry and quantify the effect of large malls on local grocery stores. Parameter estimates and counterfactual predictions differ from those obtained under the restrictive assumption of complete information.
    Keywords: Estimation of games ; informational robustness ; Bayes Correlated Equilibrium ; entry models ; partial identification ; supermarket industry JEL codes: C57 ; L10
    Date: 2020
  7. By: Emmanuelle Augeraud-Véron (Université de Bordeaux, France); Giorgio Fabbri (Univ. Grenoble Alpes, France); Katheline Schubert (Paris School of Economics, Université Paris 1 Panthéon-Sorbonne, France)
    Abstract: We study a model of strategic competition among farmers for land use in an agricultural economy. Each agent can take possession of a part of the collective forest land and convert it to farming. Unconverted forest land helps preserving biodiversity, which contributes to reducing the volatility of agricultural production. Agents' utility is given in terms of a Kreps Porteus stochastic differential utility capable of disentangling risk aversion and aversion to fluctuations. We characterize the land used by each farmer and her welfare at the Nash equilibrium, we evaluate the over-exploitation of the land and the agents' welfare loss compared to the socially optimal solution and we study the drivers of the inefficiencies of the decentralized equilibrium. After characterizing the value of biodiversity in the model, we use an appropriate decomposition to study the policy implications of the model by identifying in which cases the allocation of property rights is preferable to the introduction of a land conversion tax.
    Keywords: Biodiversity, insurance value,land conversion, recursive preferences, stochastic differential games
    JEL: Q56 Q58 Q10 Q15 O13 O20 C73 D62
    Date: 2020–02–28
  8. By: Anderlini, Luca; Felli, Leonardo; Immordino, Giovanni
    Abstract: Settling a legal dispute involves some costs that the parties have to incur ex ante for the pretrial negotiation and possible agreement to become feasible. Even in a full-information world, if the distribution of these costs is sufficiently mismatched with the distribution of the parties’ bargaining powers, a pretrial agreement may never be reached even though litigation is overall wasteful. Our results shed light on two key issues. First, a plaintiff may initiate a lawsuit even though the parties fully anticipate that it will be settled out of court. Second, the likelihood that a given lawsuit goes to trial is unaffected by how trial costs are distributed among the litigants. The choice of fee-shifting rule can affect only whether the plaintiff files a lawsuit in the first place. It does not affect whether it is settled before trial or litigated.
    Keywords: Pretrial Agreements; Costly Negotiations; Court Litigation
    JEL: C79 D23 D86 K12 K13
    Date: 2019–01–01
  9. By: Peter G Moffatt (School of Economics and CBESS, University of East Anglia, Norwich.); Graciela Zevallos-Porles (School of International Development and CBESS, University of East Angle, Norwich.)
    Abstract: We consider data from a dictator game experiment in which each dictator is repeatedly exposed to two different treatments: a Giving treatment in which the amount given to the recipient is constrained to be non-negative; and a Taking treatment in which the amount taken from the recipient is constrained to be non-negative. Another key design feature is that the price of transferring is varied between tasks. The data is used to estimate the parameters of a Stone-Geary utility function over own-payoff and other’spayoff. Between-subject heterogeneity is assumed in one of the selfishness parameters. The econometric model incorporates zero observations (e.g. zero-giving or zero-taking) by applying a version of the Kuhn-Tucker theorem and treating zeros as corner solutions in the Dictator’s constrained optimisation problem. The method of maximum simulated likelihood (MSL) is used for estimation. We find that the average dictator exhibits a strong degree of selfishness in the sense of having a high subsistence level for own payoff. However, once this basic need is met, dictators appear willing to share the remaining endowment equally. Above all, we find that selfishness is lower in taking tasks than in giving tasks, and we attribute this difference to the "cold prickle of taking".
    Keywords: Dictator games; Taking games; Kuhn-Tucker conditions; Experimetrics.
    JEL: C57 C91 D64 D91
    Date: 2020–03
  10. By: Masaaki Fujii; Akihiko Takahashi
    Abstract: In this work, we study an equilibrium-based continuous asset pricing problem which seeks to form a price process endogenously by requiring it to balance the flow of sales-and-purchase orders in the exchange market, where a large number of agents are interacting through the market price. Adopting a mean field game (MFG) approach, we find a special form of forward-backward stochastic differential equations of McKean-Vlasov type with common noise whose solution provides a good approximate of the market price. We show the convergence of the net order flow to zero in the large N-limit and get the order of convergence in N under some conditions. We also extend the model to a setup with multiple populations where the agents within each population share the same cost and coefficient functions but they can be different population by population.
    Date: 2020–03
  11. By: Yeon-Koo Che; Kyungmin Kim; Konrad Mierendorff
    Abstract: We consider a dynamic model of Bayesian persuasion. Over time, a sender performs a series of experiments to persuade a receiver to take a desired action. Due to constraints on the information flow, the sender must take real time to persuade, and the receiver may stop listening and take a final action at any time. In addition, persuasion is costly for both players. To incentivize the receiver to listen, the sender must leave rents that compensate his listening costs, but neither player can commit to her/his future actions. Persuasion may totally collapse in Markov perfect equilibrium (MPE) of this game. However, for persuasion costs sufficiently small, a version of a folk theorem holds: outcomes that approximate Kamenica and Gentzkow (2011)'s sender-optimal persuasion as well as full revelation (which is most preferred by the receiver) and everything in between are obtained in MPE, as the cost vanishes.
    Date: 2020–03
  12. By: P. Pramanik; A. M. Polansky
    Abstract: A Euclidean path integral is used to find an optimal strategy for a firm under a Walrasian system, Pareto optimality and a non-cooperative feedback Nash Equilibrium. We define dynamic optimal strategies and develop a Feynman type path integration method to capture all non-additive convex strategies. We also show that the method can solve the non-linear case, for example Merton-Garman-Hamiltonian system, which the traditional Pontryagin maximum principle cannot solve in closed form. Furthermore, under Walrasian system we are able to solve for the optimal strategy under a linear constraint with a linear objective function with respect to strategy.
    Date: 2020–02
  13. By: Yannis Bakos; Hanna Halaburda
    Abstract: A major result in the study of two-sided platforms is the strategic interdependence between the two sides of the same platform, leading to the implication that a platform can maximize its total profits by subsidizing one of its sides. We show that this result largely depends on assuming that at least one side of the market single-homes. As technology makes joining multiple platforms easier, we increasingly observe that participants on both sides of two-sided platforms multi-home. The case of multi-homing on both sides is mostly ignored in the literature on competition between two-sided platforms. We help fill this gap by developing a model for platform competition in a differentiated setting (a Hoteling line), which is similar to other models in the literature but focuses on the case where at least some agents on each side multi-home. We show that when both sides in a platform market multi-home, the strategic interdependence between the two sides of the same platform will diminish or even disappear. Our analysis suggests that the common strategic advice to subsidize one side in order to maximize total profits may be limited or even incorrect when both sides multi-home, which is an important caveat given the increasing prevalence of multi-homing in platform markets.
    Keywords: multi-homing, platforms, two-sided platforms, network effects, platform subsidies
    JEL: O33 L11
    Date: 2020
  14. By: Moshe Babaioff; Michal Feldman; Yannai A. Gonczarowski; Brendan Lucier; Inbal Talgam-Cohen
    Abstract: A single seller wishes to sell $n$ items to a single unit-demand buyer. We consider a robust version of this revenue-maximization pricing problem, where the seller knows the buyer's marginal distributions of values for each item, but not the joint distribution, and wishes to maximize worst-case revenue over all possible correlation structures. We devise a computationally efficient (polynomial in the support size of the marginals) algorithm that computes the worst-case joint distribution for any choice of item prices. And yet, in sharp contrast to the additive buyer case (Carroll, 2017), we show that it is NP-hard to approximate the optimal choice of prices to within any factor better than $n^{1/2-\epsilon}$. For the special case of marginal distributions that satisfy the monotone hazard rate property, we show how to guarantee a constant fraction of the optimal worst-case revenue using item pricing; this pricing equates revenue across all possible correlations and can be computed efficiently.
    Date: 2020–03
  15. By: Raphael Galvao; Felipe Shalders
    Abstract: We study Central Bank communication in a coordination environment. We show that anything goes when the Central Bank cannot commit to a communication policy: both its most and least preferred allocations can be supported in equilibrium, and so can anything in between. We find that the ability to commit to a policy does not eliminate multiplicity and, in particular, does not necessarily implement the Central Bank's most preferred allocation. Under commitment, however, the Central Bank can avoid the least desirable outcomes and assure an intermediate payoff. We show that the Central Bank chooses an information structure with only two messages that leads to perfect coordination among private agents.
    Keywords: Central Bank communication; commitment; coordination
    JEL: D83 D84 E58
    Date: 2020–03–19
  16. By: Onur A. Koska (University of Canterbury); Frank Stähler
    Abstract: We consider a standard private value ascending-bid auction and show that subsequent negotiations make a seller worse off. The reason is that the seller’s optimal strategy does not change if she can make a take-it-or-leave-it offer to the highest bidder after the auction. Consequently, her expected revenues do not increase with subsequent negotiations, but decrease if the highest bidder has some bargaining power.
    Keywords: English auction; negotiations; reserve prices
    JEL: D44
    Date: 2020–03–01
  17. By: Loertscher, Simon; Mezzetti, Claudio (University of Queensland & University of Warwick)
    Abstract: The price mechanism is fundamental to economics but difficult to reconcile with incentive compatibility and individual rationality. We introduce a double clock auction for a homogeneous good market with multi-dimensional private information and multi-unit traders that is deficit-free, ex post individually rational, constrained efficient, and makes sincere bidding a dominant strategy equilibrium. Under a weak dependence and an identifiability condition, our double clock auction is also asymptotically efficient. Asymptotic efficiency is achieved by estimating demand and supply using information from the bids of traders that have dropped out and following a tatonnement process that adjusts the clock prices based on the estimates.
    Keywords: Deficit free ; dominant strategy mechanisms ; double clock auctions ; individual rationality ; multi-dimensional types ; privacy preservation ; reserve prices ; VCG mechanism JEL codes: C72 ; D44 ; D47 ; D82
    Date: 2020
  18. By: Chulyoung Kim (Yonsei Univ); Sang-Hyun Kim (Yonsei Univ); Myunghwan Lee (Yonsei Univ)
    Abstract: Recent studies in experimental economics have documented that communication encourages individuals' altruism and charitable giving in various contexts. Building upon these findings, this paper incorporates and studies the influence of power differences in communication on giving behavior. We conducted a variant of dictator game experiments where a dictator is explicitly allowed to ignore a recipient's message before deciding the split. Power differences between players varied across different treatments on provision of information regarding the dictator’s reception of the message and framing on the property right of the endowment. We find evidence that dictators tend to be more generous toward recipients' messages when recipients cannot verify whether dictators have read the message. We interpret these behaviors as a demonstration of psychological mechanisms of individuals being more generous to less powerful counterparts. However, recipient behaviors imply that they have failed at anticipating dictators behaviors, as they asked for more when they had more power and asked less otherwise.
    Keywords: Dictator game; Communication; Power; Empathy gap
    JEL: C91 D91
    Date: 2020–03
  19. By: Anand, Kartik; Gai, Prasanna; König, Philipp Johann
    Abstract: Why do politicians sometimes pursue policies with uncertain outcomes? We present a model in which politicians are unable to pre-commit to a status quo policy, and where investors and voters face a conflict over the division of output. Politicians may deviate from the status quo and pursue risky policy gambles in order to raise aggregate output to satisfy voters. These policy gambles may have a "populist" and self-fulfilling flavour: they can command electoral support despite being against voters' best interests. We analyse how consensus-building institutions eliminate the gamble equilibrium and enhance voter welfare. We interpret the United Kingdom's decision to leave the European Union through the lens of the model.
    Keywords: policy gambles,policy uncertainty,multiple equilibria,economic populism,Brexit
    JEL: D72 D78 P16
    Date: 2020
  20. By: Hubert J. Kiss (Department of Economics, Eotvos Lorand University.); Ismael Rodriguez-Lara (Department of Economic Theory and Economic History, University of Granada.); Alfonso Rosa-Garcia (Department of Economics, University of Murcia.)
    Abstract: We study how lines form in front of banks. In our model, depositors choose first the level of effort to arrive early at the bank and then whether or not to withdraw their deposit. We argue that the informational environment (i.e. the possibility of observing the action of others) affects the emergence of bank runs and should, therefore, influence the line formation. We test it experimentally and find that the informational environment has no effect on the line formation, while expectations on the occurrence of bank runs, irrationality of depositors and their loss aversion are important factors to explain it.
    Keywords: bank run, beliefs, experimental economics, line formation, loss aversion, observability.
    JEL: C91 D90 G21 J16
    Date: 2020–03–15
  21. By: Gabrielle Demange (PSE - Paris School of Economics)
    Abstract: The reimbursement abilities of firms holding liabilities on each other are intertwined, potentially generating coordination failures and defaults through uncontrolled contagion. In stress episodes, these linkages thus call for an orderly resolution, as implemented by a regulatory authority assigning the amount each firm within the system reimburses to each other one. The paper studies such resolution by considering 'rules', assuming their primary goal is to avoid default on external debts, say, banks' defaults on deposits. The main objective is to investigate what proportionality means for a rule, taking into account various legal and informational constraints.
    Keywords: bankruptcy,entropy,cross-liabilities,defaults,central counter-party
    Date: 2020–03–09
  22. By: Akerlof, Robert (University of Warwick); Li, Hongyi (UNSW Business School); Yeo, Jonathan (University of Warwick)
    Abstract: This paper uses a laboratory experiment to study competitions for power — and the role of patronage in such competitions. We construct and analyze a new game — the “chicken-and-egg game” — in which chickens correspond to positions of power and eggs are the game’s currency. We find that power tends to accumulate, through a “power begets power” dynamic, in the hands of “lords.” Other subjects behave like their vassals in the sense that they take lords’ handouts rather than compete against them. We observe substantial wealth inequality as well as power inequality. There are also striking gender differences in outcomes — particularly in rates of lordship. In a second treatment, where we eliminate patronage by knocking out the ability to transfer eggs, inequality is vastly reduced and the “power begets power” dynamic disappears
    Date: 2020
  23. By: Gottardi, Piero (University of Essex); Mezzetti, Claudio (University of Queensland & University of Warwick)
    Abstract: We propose a mechanism design approach to study the role of a mediator in dispute resolution and bargaining. The mediator provides a buyer and a seller with “reality checks” by controlling the information each party has about her own value for a transaction, and proposes a price at which trade can occur if parties agree. We first consider the class of static information disclosure and trading mechanisms, in which the mediator simultaneously selects the information disclosed to the parties and posts the price at which they can trade. We characterize the mechanism that maximizes the ex-ante gains from trade. We show it is optimal to restrict agents’ information, as this allows to increase the volume of trade and complete some of the most valuable trades that are lost in the welfare maximizing mechanism under full information. We then study the value of the mediator engaging in “shuttle diplomacy” by considering a class of dynamic information disclosure and trading mechanisms, and show that it is possible to design a dynamic mechanism that achieves ex-post efficiency. Shuttle diplomacy facilitates trade by allowing the mediator to condition information releases and prices posted on the history of feedbacks she receives from the parties during her meetings with them.
    Keywords: Bargaining ; Information design ; Mechanism Design ; Mediation ; Persuasion JEL codes: C72 ; D47 ; D82 ; D86
    Date: 2020
  24. By: Quentin Cavalan (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne, UP1 - Université Panthéon-Sorbonne, PSE - Paris School of Economics); Vincent Gardelle (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne, CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Jean-Christophe Vergnaud (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne, CNRS - Centre National de la Recherche Scientifique)
    Abstract: Although conflicts in bargaining have attracted a lot of attention in the literature, situations in which bargainers have to share the product of their performance have been rarely investigated theoretically and empirically. Here, by decomposing the well-known overplacement effect, we show that two types of biases can lead to conflict in these situations: players might be overconfident in their own production (overconfidence bias) and / or underestimate the production of others (other-underestimation bias). To quantify these biases, we develop a novel experimental setting using a psychophysically controlled production task within a bargaining game. In comparison to Bayesian agents, participants tend to disagree too often, partly because they exhibit both cognitive biases. We test interventions to mitigate these biases, and are able to increase settlements mainly by reducing the other-underestimation bias. Our approach illustrates how combining psychophysical methods and economic analyses could prove helpful to identify the impact of cognitive biases on individuals' behavior.
    Keywords: overconfidence,bargaining,joint production,belief updating
    Date: 2020–02
  25. By: Serkan Kucuksenel; Osman Gulseven
    Abstract: We develop a simple theoretic game a model to analyze the relationship between electoral sys tems and governments' choice in trade policies. We show that existence of international pressure or foreign lobby changes a government's final decision on trade policy, and trade policy in countries with proportional electoral system is more protectionist than in countries with majoritarian electoral system. Moreover, lobbies pay more to affect the trade policy outcomes in countries with proportional representation systems.
    Date: 2020–03

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