nep-gth New Economics Papers
on Game Theory
Issue of 2020‒09‒14
28 papers chosen by
Sylvain Béal
Université de Franche-Comté

  1. Lindahl Equilibrium as a Collective Choice Rule By Faruk Gul; Wolfgang Pesendorfer
  2. Compromising between the proportional and equal division values: axiomatization, consistency and implementation By Zhengxing Zou; Rene van den Brink; Yukihiko Funaki
  3. The Nash Bargaining Solution in Labor Market Analysis By Gilbert L. Skillman
  4. Parametrized Inexact-ADMM to Span the Set of Generalized Nash Equilibria: A Normalized Equilibrium Approach By Hélène Le Cadre; Yuting Mou; Hanspeter Höschle
  5. Finding Core Members of Cooperative Games using Agent-Based Modeling By Daniele Vernon-Bido; Andrew J. Collins
  6. Existence of structured perfect Bayesian equilibrium in dynamic games of asymmetric information By Deepanshu Vasal
  7. Convergence of Deep Fictitious Play for Stochastic Differential Games By Jiequn Han; Ruimeng Hu; Jihao Long
  8. Competing Persuaders in Zero-Sum Games By Dilip Ravindran; Zhihan Cui
  9. Stochastic Stackelberg games By Deepanshu Vasal
  10. Transaction Costs: Economies of Scale, Optimum, Equilibrium and Efficiency By L\'aszl\'o K\'allay; Tibor Tak\'acs; L\'aszl\'o Trautmann
  11. Coordination on networks with farsighted and myopic agents By MAULEON Ana,; SCHOPOHL Simon,; TAALAIBEKOVA Akylai,; VANNETELBOSCH Vincent,
  12. Secret and publicly observable contribution intentions in a public goods experiment By Werner Gueth; Anastasios Koukoumelis; Maria Vittoria Levati; Vincenzo Prete
  13. The Coordinating Power of Social Norms By Francesco Fallucchi; Daniele Nosenzo
  14. Minimum coloring problem: the core and beyond By Eric Bahel; Christian Trudeau
  15. The Differential Impact of Friendship on Cooperative and Competitive Coordination By Gabriele Chierchia; Fabio Tufano; Giorgio Coricelli
  16. Price Transparency and Market Screening By Ayca Kaya; Santanu Roy
  17. Asymptotic minimization of expected time to reach a large wealth level in an asset market game By Mikhail Zhitlukhin
  18. Communication with Partially Verifiable Information: An Experiment By Valeria Burdea; Maria Montero; Martin Sefton
  19. The tension between market shares and profi t under platform competition By Paul Belleflamme; Martin Peitz; Eric Toulemonde
  20. Pricing group membership By Bandyopadhyay, Siddhartha; Cabrales, Antonio
  21. Stability in Repeated Matching Markets By Ce Liu
  22. A competitive search game with a moving target By Benoit Duvocelle; J\'anos Flesch; Mathias Staudigl; Dries Vermeulen
  23. Licensing with capacity constraint By Colombo, Stefano; Filippini, Luigi; Sen, Debapriya
  24. Seeds of Learning: Uncertainty and Technology Adoption in an Ecosystem-Based Adaptation Game By Babatunde Abidoye; Sahan T. M. Dissanayake; Sarah Jacobson
  25. Network goods, price discrimination, and two-sided platforms By BELLEFLAMME, Paul,; PEITZ, Martin,
  26. Persuasion on Networks By Georgy Egorov; Konstantin Sonin
  27. Costs and information leakages on asset-borrowing markets By Andrey Pankratov
  28. The Microeconomics of Cryptocurrencies By Hanna Halaburda; Guillaume Haeringer; Joshua S. Gans; Neil Gandal

  1. By: Faruk Gul (Princeton University); Wolfgang Pesendorfer (Princeton University)
    Abstract: A collective choice problem is a finite set of social alternatives and a finite set of economic agents with vNM utility functions. We associate a public goods economy with each collective choice problem and establish the existence and efficiency of (equal income) Lindahl equilibrium allocations. We interpret collective choice problems as cooperative bargaining problems and define a set-valued solution concept, {\it the equitable solution} (ES). We provide axioms that characterize ES and show that ES contains the Nash bargaining solution. Our main result shows that the set of ES payoffs is the same a the set of Lindahl equilibrium payoffs. We consider two applications: in the first, we show that in a large class of matching problems without transfers the set of Lindahl equilibrium payoffs is the same as the set of (equal income) Walrasian equilibrium payoffs. In our second application, we show that in any discrete exchange economy without transfers every Walrasian equilibrium payoff is a Lindahl equilibrium payoff of the corresponding collective choice market. Moreover, for any cooperative bargaining problem, it is possible to define a set of commodities so that the resulting economy's utility possibility set is that bargaining problem {\it and} the resulting economy's set of Walrasian equilibrium payoffs is the same as the set of Lindahl equilibrium payoffs of the corresponding collective choice market.
    Date: 2020–08
  2. By: Zhengxing Zou (Beijing Jiaotong University); Rene van den Brink (Vrije Universiteit Amsterdam); Yukihiko Funaki (Waseda University Tokyo)
    Abstract: We introduce a family of values for TU-games that offers a compromise between the proportional and equal division values. Each value, called an alpha-mollified value, is obtained in two steps. First, a linear function with respect to the worths of all coalitions is defined which associates a real number to every TU-game. Second, the weight assigned by this function is used to weigh proportionality and equality principles in allocating the worth of the grand coalition. We provide an axiomatic characterization of this family, and show that this family contains the affine combinations of the equal division value and the equal surplus division value as the only linear values. Further, we identify the proportional division value and the affine combinations of the equal division value and the equal surplus division value as those members of this family, that satisfy projection consistency. Besides, we provide a procedural implementation of each single value in this family.
    Keywords: Cooperative game, consistency, equal division value, proportional division value
    JEL: C71
    Date: 2020–09–01
  3. By: Gilbert L. Skillman (Department of Economics, Wesleyan University)
    Abstract: The non-symmetric Nash bargaining solution is frequently applied in the study of labor market outcomes, but the axiomatic approach in which it is grounded offers little guidance as to the determinants of agents’ threat points and relative bargaining power. This paper modifies the Rubinstein-Wolinsky (1985) sequential matching and bargaining model to study the role of individual bargaining costs, status quo payoffs, and outside options in determining bargaining power weights and threat points in Nash bargaining solution. Key results differentiate the strategic implications of fixed and time discount-based bargaining costs and demonstrate the general validity of the Nash bargaining solution in characterizing steady-state market outcomes in which outside options are endogenously determined. In this scenario, agents’ relative bargaining weights depend on their matching probabilities.
    Keywords: Nash bargaining solution, strategic bargaining, outside options, status quo payoffs, labor markets, matching and bargaining
    JEL: C78 J31 J52
    Date: 2020–04
  4. By: Hélène Le Cadre (VITO - Flemish Institute for Technological Research); Yuting Mou; Hanspeter Höschle
    Abstract: Generalized Nash equilibrium problems are noncooperative games in which each player's feasible strategy space depends on the other players' actions. Such games are generally challenging to solve as they might give rise to a very large number of solutions. In this context, automatically spanning the full set of equilibria solutions of a noncooperative game can be interesting to provide meaningful interpretations. Generalized Nash equilibrium problems can be reformulated as a variational inequality that can be solved using asymmetric gradient projection algorithms. However, such an approach enables to compute a variational equilibrium but not to span the full set of generalized Nash equilibria. Relying on normalized Nash equilibrium as solution concept, we provide a parametrized distributed optimization algorithm inspired by the Inexact-ADMM to span the set of solutions while enabling generalized Nash equilibrium selection by tuning the algorithm parameters, thereby capturing the power relationships among the players. Convergence and robustness to noise in the coupling constraint, resulting from information asymmetry, of the algorithm are formally analyzed. The scope of applicability of our results is illustrated on a stylized economic dispatch optimization problem and on the analysis of peer-to-peer energy trading equilibrium. Finally, the algorithm is applied to a cellular resource allocation problem, exhibiting better convergence speed and scalability to the network size than classical ADMM.
    Keywords: Generalized Nash games,Normalized Nash equilibrium,Potential games,I-ADMM
    Date: 2020–08–28
  5. By: Daniele Vernon-Bido; Andrew J. Collins
    Abstract: Agent-based modeling (ABM) is a powerful paradigm to gain insight into social phenomena. One area that ABM has rarely been applied is coalition formation. Traditionally, coalition formation is modeled using cooperative game theory. In this paper, a heuristic algorithm is developed that can be embedded into an ABM to allow the agents to find coalition. The resultant coalition structures are comparable to those found by cooperative game theory solution approaches, specifically, the core. A heuristic approach is required due to the computational complexity of finding a cooperative game theory solution which limits its application to about only a score of agents. The ABM paradigm provides a platform in which simple rules and interactions between agents can produce a macro-level effect without the large computational requirements. As such, it can be an effective means for approximating cooperative game solutions for large numbers of agents. Our heuristic algorithm combines agent-based modeling and cooperative game theory to help find agent partitions that are members of a games' core solution. The accuracy of our heuristic algorithm can be determined by comparing its outcomes to the actual core solutions. This comparison achieved by developing an experiment that uses a specific example of a cooperative game called the glove game. The glove game is a type of exchange economy game. Finding the traditional cooperative game theory solutions is computationally intensive for large numbers of players because each possible partition must be compared to each possible coalition to determine the core set; hence our experiment only considers games of up to nine players. The results indicate that our heuristic approach achieves a core solution over 90% of the time for the games considered in our experiment.
    Date: 2020–08
  6. By: Deepanshu Vasal
    Abstract: In~[1],authors considered a general finite horizon model of dynamic game of asymmetric information, where N players have types evolving as independent Markovian process, where each player observes its own type perfectly and actions of all players. The authors present a sequential decomposition algorithm to find all structured perfect Bayesian equilibria of the game. The algorithm consists of solving a class of fixed-point of equations for each time $t,\pi_t$, whose existence was left as an open question. In this paper, we prove existence of these fixed-point equations for compact metric spaces.
    Date: 2020–05
  7. By: Jiequn Han; Ruimeng Hu; Jihao Long
    Abstract: Stochastic differential games have been used extensively to model agents' competitions in Finance, for instance, in P2P lending platforms from the Fintech industry, the banking system for systemic risk, and insurance markets. The recently proposed machine learning algorithm, deep fictitious play, provides a novel efficient tool for finding Markovian Nash equilibrium of large $N$-player asymmetric stochastic differential games [J. Han and R. Hu, Mathematical and Scientific Machine Learning Conference, 2020]. By incorporating the idea of fictitious play, the algorithm decouples the game into $N$ sub-optimization problems, and identifies each player's optimal strategy with the deep backward stochastic differential equation (BSDE) method parallelly and repeatedly. In this paper, under appropriate conditions, we prove the convergence of deep fictitious play (DFP) to the true Nash equilibrium. We can also show that the strategy based on DFP forms an $\epsilon$-Nash equilibrium. We generalize the algorithm by proposing a new approach to decouple the games, and present numerical results of large population games showing the empirical convergence of the algorithm beyond the technical assumptions in the theorems.
    Date: 2020–08
  8. By: Dilip Ravindran; Zhihan Cui
    Abstract: We study a Bayesian Persuasion game with multiple senders employing conditionally independent experiments. Senders have zero-sum preferences over what information is revealed. We characterize when a set of states cannot be pooled in any equilibrium, and in particular, when the state is (fully) revealed in every equilibrium. The state must be fully revealed in every equilibrium if and only if sender utility functions are sufficiently nonlinear. In the binary-state case, the state is fully revealed in every equilibrium if and only if some sender has nontrivial preferences. Our takeaway is that `most' zero-sum sender preferences result in full revelation.
    Date: 2020–08
  9. By: Deepanshu Vasal
    Abstract: In this paper, we consider a discrete-time stochastic Stackelberg game where there is a defender (also called leader) who has to defend a target and an attacker (also called follower). Both attacker and defender have conditionally independent private types, conditioned on action and previous state, that evolve as controlled Markov processes. The objective is to compute the stochastic Stackelberg equilibrium of the game where defender commits to a strategy. The attacker's strategy is the best response to the defender strategy and defender's strategy is optimum given the attacker plays the best response. In general, computing such equilibrium involves solving a fixed-point equation for the whole game. In this paper, we present an algorithm that computes such strategies by solving smaller fixed-point equations for each time $t$. This reduces the computational complexity of the problem from double exponential in time to linear in time. Based on this algorithm, we compute stochastic Stackelberg equilibrium of a security example.
    Date: 2020–05
  10. By: L\'aszl\'o K\'allay; Tibor Tak\'acs; L\'aszl\'o Trautmann
    Abstract: The aim of this article is to propose a core game theory model of transaction costs wherein it is indicated how direct costs determine the probability of loss and subsequent transaction costs. The existence of optimum is proven, and the way in which exposure influences the location of the optimum is demonstrated. The decisions are described as a two-player game and it is discussed how the transaction cost sharing rule determines whether the optimum point of transaction costs is the same as the equilibrium of the game. A game modelling dispute between actors regarding changing the share of transaction costs to be paid by each party is also presented. Requirements of efficient transaction cost sharing rules are defined, and it is posited that a solution exists which is not unique. Policy conclusions are also devised based on principles of design of institutions to influence the nature of transaction costs.
    Date: 2020–08
  11. By: MAULEON Ana, (Université Saint Louis, Bruxelles); SCHOPOHL Simon, (Université Saint-Louis and CORE); TAALAIBEKOVA Akylai, (CORE, UCLouvain and Université Pars 1); VANNETELBOSCH Vincent, (CORE, UCLouvain)
    Abstract: We study a coordination game on a fixed connected network where players have to choose between two projects. Some players are moderate (i.e. they are ex-ante indifferent between both project) while others are stubborn (i.e. They always choose the same project). Benefits for moderaote players are increasing in the number of neighbors who choose the same project. In addition, players are either farsighted or myopic. Farsighted players anticipate the reactions of others while myopic players do not. We show that, when all players are farsighted, full coordination among the moderate players is reached except if there are stubborn players for both projects. When the population is mixed, the set of stable strategy profiles is a refinement of the set of Nash equilibrium strategy profiles. In fact, turning myopic players into farsighted ones eliminates little by little in the inefficient Nash equilibria. Finally, we consider a social planner who can improve coordination by means of two policy instruments: Adding links to the network (socialization) and/or turning myopic players into farsighted ones (education).
    Keywords: networks; coordination problems; stubborn players; farsighted players; stability
    JEL: A14 C70 D20
    Date: 2020–02–11
  12. By: Werner Gueth (Max Planck Institute of Economics); Anastasios Koukoumelis (Department of Economics (University of Verona)); Maria Vittoria Levati (Department of Economics (University of Verona)); Vincenzo Prete (Department of Economics (University of Verona))
    Abstract: In a public goods experiment, subjects can vary, over a period of stochastic length, two contribution levels: one is publicly observable (their cheap talk stated intention), while the other is not seen by the other subjects (their secret intention). When the period suddenly stops, participants are restricted to choose as actual contribution either current alternative. Based on the two types of choice data for a partners and a perfect strangers condition, we confirm that final outcomes strongly depend on the matching protocol. As to choice dynamics, we find that they are affected by player types.
    Keywords: Public goods game, Cheap talk communication, Real-time protocol
    JEL: C72 H41 D82 D83
    Date: 2019–06
  13. By: Francesco Fallucchi (Luxembourg Institute of Socio-Economic Research (LISER)); Daniele Nosenzo (University of Nottingham and Aarhus University)
    Abstract: A popular empirical technique to measure norms uses coordination games to elicit what subjects in an experiment consider appropriate behavior in a given situation (Krupka and Weber, 2013). The Krupka-Weber method works under the assumption that subjects use their normative expectations to solve the coordination game. However, subjects might use alternative focal points to coordinate, in which case the method may deliver distorted measurements of the social norm. We test the vulnerability of the Krupka-Weber method to the presence of alternative salient focal points. We find that the method is robust as long as there are clear normative expectations about what constitutes appropriate behavior. In settings where there is a less clear consensus about the social norm, the method is more vulnerable.
    Keywords: Social Norms; Krupka-Weber method; Coordination; Focal Point; Saliency; Dictator Game.
    Date: 2020
  14. By: Eric Bahel (Department of Economics, Virginia Polytechnic Institute and State University); Christian Trudeau (Department of Economics, University of Windsor)
    Abstract: The minimum coloring problem allows to model economic situations where costly and potentially conflicting tasks have to be executed. The primitives of the problem are a graph (describing conflicts between the respective tasks) and a cost function (giving the cost of completing any number of pairwise conflicting tasks). This problem can be modeled as a cooperative game where agents have to split the minimum cost of completing all tasks. The study of the core allows to find a necessary and sufficient condition guaranteeing its non-vacuity; and we describe a subset of allocations that are always in the core (when it is nonempty). These allocations put weights on the largest incompatible groups, called maximal cliques. We then propose two cost sharing rules and their axiomatizations. The first rule assigns shares in proportion to the number of maximal cliques an agent belongs to; and the key property in its axiomatization prevents splitting and merging manipulations. The second rule is an extension of the well-known airport rule; and it requires every agent to pay a minimal fraction of the total cost.
    Keywords: minimum coloring problem; cost sharing; merge-proofness; unanimity lower bound.
    JEL: C71 D63
    Date: 2020–08
  15. By: Gabriele Chierchia (University of Trento, and University College London); Fabio Tufano (University of Nottingham); Giorgio Coricelli (University of Trento, Italy, and University of Southern California)
    Abstract: Friendship is commonly assumed to reduce strategic uncertainty and enhance tacit coordination. However, this assumption has never been tested across two opposite poles of coordination involving either strategic complementarity or substitutability. We had participants interact with friends or strangers in two classic coordination games: the stag hunt game, which exhibits strategic complementarity and may foster “cooperation†, and the entry game, which exhibits strategic substitutability and may foster “competition†. Both games capture a frequent trade-off between a potentially high paying but uncertain option and a low paying but safe alternative. We find that, relative to strangers, friends are more likely to choose options involving uncertainty in stag hunt games but the opposite is true in entry games. Furthermore, in stag hunt games, friends “tremble†less between options, coordinate better and earn more, but these advantages are largely decreased or lost in entry games. We further investigate how these effects are modulated by risk attitudes, friendship qualities and interpersonal similarities.
    Keywords: coordination; entry game; friendship; strategic complementarity; strategic substitutability; stag hunt game; strategic uncertainty
    Date: 2020–07
  16. By: Ayca Kaya (University of Miami); Santanu Roy (Southern Methodist University)
    Abstract: We consider repeated trading by sellers with persistent private information in dynamic lemons markets. We compare the outcomes of a transparent market where past trading prices are public to those of an opaque market, where they are private. We characterize the upper bound of trading surplus in an opaque market and construct a class of equilibria in a transparent market that improves upon this bound. We conclude that price transparency is beneficial in a repeated trading environment. The advantage of price transparency is indirect and operates through the strategic tools it provides the sellers of high quality to sustain high payoffs.
    Keywords: Repeated sales, adverse selection, lemons market, price transparency.
    JEL: D82 C73 D61
    Date: 2020–07
  17. By: Mikhail Zhitlukhin
    Abstract: We consider a stochastic game-theoretic model of a discrete-time asset market with short-lived assets and endogenous asset prices. We prove that the strategy which invests in the assets proportionally to their expected relative payoffs asymptotically minimizes the expected time needed to reach a large wealth level. The result is obtained under the assumption that the relative asset payoffs and the growth rate of the total payoff during each time period are independent and identically distributed.
    Date: 2020–07
  18. By: Valeria Burdea (University of Pittsburgh); Maria Montero (University of Nottingham); Martin Sefton (University of Nottingham)
    Abstract: We use laboratory experiments to study communication games with partially veriï¬ able information. In these games, based on Glazer and Rubinstein (2004, 2006), an informed sender sends a two-dimensional message to a receiver, but only one dimension of the message can be veriï¬ ed. We compare a treatment where the receiver chooses which dimension to verify with one where the sender has this veriï¬ cation control. We ï¬ nd signiï¬ cant differences in outcomes across treatments. However, receivers’ payoffs do not differ signiï¬ cantly across treatments, suggesting they are not hurt by delegating veriï¬ cation control. We also show that in both treatments the receiver’s best reply to senders’ observed behavior is close to the optimal commitment strategy identiï¬ ed by Glazer and Rubinstein.
    Keywords: communication, partially verifiable messages, verification control, experiment
    Date: 2020–11
  19. By: Paul Belleflamme; Martin Peitz; Eric Toulemonde
    Abstract: We introduce asymmetries across platforms in the linear model of competing two-sided platforms with singlehoming on both sides and fully characterize the price equilibrium. We identify market environments in which one platform has a larger market share on both sides while obtaining a lower profit than the other platform. This platform enjoys a competitive advantage on one or both sides. Our finding raises further doubts on using market shares as a measure of market power in platform markets.
    Keywords: Two-sided platforms, market share, market power, oligopoly, network effects, antitrust
    JEL: D43 L13 L86
    Date: 2020–08
  20. By: Bandyopadhyay, Siddhartha; Cabrales, Antonio
    Abstract: We consider a model where agents differ in their `types' which determines their voluntary contribution towards a public good. We analyze what the equilibrium composition of groups are under centralized and centralized choice. We show that there exists a top-down sorting equilibrium i.e. an equilibrium where there exists a set of prices which leads to groups that can be ordered by level of types, with the first k types in the group with the highest price and so on. This exists both under decentralized and centralized choosing. We also analyze the model with endogenous group size and examine under what conditions is top-down sorting socially efficient. We illustrate when integration (i.e. mixing types so that each group's average type if the same) is socially better than top-down sorting. Finally, we show that top down sorting is efficient even when groups compete among themselves
    Keywords: D02, D64, D71, H41
    JEL: D02 D64 D71 H41
    Date: 2020–08–05
  21. By: Ce Liu
    Abstract: This paper develops a framework for repeated matching markets. The model departs from the Gale-Shapley matching model by having a fixed set of long-lived hospitals match with a new generation of short-lived residents in every period. I show that there are two kinds of hospitals in this repeated environment: some hospitals can be motivated dynamically to voluntarily reduce their hiring capacity, potentially making more residents available to rural hospitals; the others, however, are untouchable even with repeated interaction and must obtain the same match as they do in a static matching. In large matching markets with correlated preferences, at most a vanishingly small fraction of the hospitals are untouchable. The vast majority of hospitals can be motivated using dynamic incentives.
    Date: 2020–07
  22. By: Benoit Duvocelle; J\'anos Flesch; Mathias Staudigl; Dries Vermeulen
    Abstract: We introduce a discrete-time search game, in which two players compete to find an object first. The object moves according to a time-varying Markov chain on finitely many states. The players know the Markov chain and the initial probability distribution of the object, but do not observe the current state of the object. The players are active in turns. The active player chooses a state, and this choice is observed by the other player. If the object is in the chosen state, this player wins and the game ends. Otherwise, the object moves according to the Markov chain and the game continues at the next period. We show that this game admits a value, and for any error-term $\veps>0$, each player has a pure (subgame-perfect) $\veps$-optimal strategy. Interestingly, a 0-optimal strategy does not always exist. The $\veps$-optimal strategies are robust in the sense that they are $2\veps$-optimal on all finite but sufficiently long horizons, and also $2\veps$-optimal in the discounted version of the game provided that the discount factor is close to 1. We derive results on the analytic and structural properties of the value and the $\veps$-optimal strategies. Moreover, we examine the performance of the finite truncation strategies, which are easy to calculate and to implement. We devote special attention to the important time-homogeneous case, where additional results hold.
    Date: 2020–08
  23. By: Colombo, Stefano; Filippini, Luigi; Sen, Debapriya
    Abstract: We consider a patent licensing game with a capacity constrained innovator. We show that when the constraint is strong (weak), the patentee prefers licensing by means of a fixed fee (unit royalty). In the case of a two-part tariff, the innovator charges a positive fixed fee if and only if the constraint is strong enough.
    Keywords: Patent licensing; capacity constraint; Cournot duopoly
    JEL: D43 D45 L24
    Date: 2020–08–28
  24. By: Babatunde Abidoye (United Nations Development Programme); Sahan T. M. Dissanayake (Portland State University); Sarah Jacobson (Williams College)
    Abstract: We introduce an interactive game exploring ecosystem-based adaptation to climate change, with a focus on technology adoption and uncertainty. The game is useful in academic classes and trainings for policymakers and stakeholders. Participants play the role of small-scale farmers in a developing country where their farming practices cause erosion that pollutes waterways, while at the same time climate change is making farmers more vulnerable to natural threats like flooding. The game gives participants a series of opportunities to adopt ecosystem-based adaptation practices: for example, a riparian buffer strip, low-till farming, and agroforestry. The practices differ in the uncertainty surrounding their effects on yields. The game deploys three policies to encourage adoption: a flat payment, a conservation auction, and a flat payment with a pilot bonus for early adoption. Players observe each other’s choices and outcomes, which allows for social learning. Participants get a hands-on understanding of climate change impact and adaptation, ecosystem services, payment for ecosystem service programs, choice under uncertainty, social learning, adoption of new technology, learning spillovers, cost-effective conservation, and conservation auctions. We provide all materials necessary to run the game, plus suggested readings and suggestions for discussions and assignments.
    Keywords: classroom game, climate change adaptation, ecosystem-based adaptation, learning, payment for environmental services, technology adoption, uncertainty
    JEL: A20 D80 Q16 Q54 Q56 Q58
    Date: 2020–08–11
  25. By: BELLEFLAMME, Paul, (CORE, Université catholique de Louvain); PEITZ, Martin, (Universität Mannheim)
    Abstract: A monopolist sells a network good to a set of heterogeneous users who all care about total participation. We show that the provider of the network good effectively becomes a two-sided platform if it can condition prices on some user characteristics. This still holds true if the network operator cannot obsoerve consumer characteristics but induces user self-selection when it offers screening contracts. In our setting, all incentive constraints are slack The use of freemium strategies emerges as a special case of versioning. Here, a base version is offered at zero price and a premium version at a positive price. Overall, the paper illustrates the close link between price discrimination in the presence of a network good and pricing by a two-sided platform.
    Keywords: network goods, two-sided markets, platform pricing, group pricing, menu pricing
    JEL: D62 L12 L82 L86
    Date: 2020–07–01
  26. By: Georgy Egorov; Konstantin Sonin
    Abstract: We analyze persuasion in a model in which each receiver can buy a direct access to the sender's signal or rely on her network connections to get it. For the sender, a higher bias increases the impact per direct receiver, yet diminishes the willingness of agents to receive information. Contrary to naive intuition, the optimal propaganda might target peripheral, rather than centrally-located agents, and is at its maximum levels when the probability that information flows between agents is close to zero or one, but not in-between. The impact of network density depends on this probability as well.
    JEL: D85 L82 P16
    Date: 2020–07
  27. By: Andrey Pankratov (University of Lugano, Swiss Finance Institute)
    Abstract: I study a financial market with asymmetric information. In particular, I study markets with the possibility to sell short, and focus on mechanisms behind short-selling. To establish a short position, agents have to borrow assets from institutions. This creates a disincentive to short-sell coming from two sources. First, the lender charges a commission. Second, the lender can infer private information and front-run the informed trader. An informed short-seller, has an incentive to hide this information from the lender by diminshing the size of the short position. I analyze a Nash equilibrium in a game among informed agent, a lender, and a market maker. The implications of this model will include profit sharing between the agents, market effiency, and volatility.
    Keywords: Lemon markets, Stackelberg equilibrium, Asymmetric information, Information leakages, Market microstructure, Short sale constraints, Market efficiency, Equilibrium
    JEL: G11 G12 G14
    Date: 2020–08
  28. By: Hanna Halaburda; Guillaume Haeringer; Joshua S. Gans; Neil Gandal
    Abstract: Since its launch in 2009 much has been written about Bitcoin, cryptocurrencies and blockchains. While the discussions initially took place mostly on blogs and other popular media, we now are witnessing the emergence of a growing body of rigorous academic research on these topics. By the nature of the phenomenon analyzed, this research spans many academic disciplines including macroeconomics, law and economics and computer science. This survey focuses on the microeconomics of cryptocurrencies themselves. What drives their supply, demand, trading price and competition amongst them. This literature has been emerging over the past decade and the purpose of this paper is to summarize its main findings so as to establish a base upon which future research can be conducted.
    JEL: D01 D4
    Date: 2020–07

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