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

  1. Stable agreements through liability rules: a multi-choice games approach to the social cost problem By Kevin Techer
  2. Implementation with foresighted agents By Korpela, Ville; Lombardi, Michele; Vartiainen, Hannu
  3. Discontinuous and Continuous Stochastic Choice and Coordination in the Lab By Goryunov , Maxim; Rigos , Alexandros
  4. Price-setting mixed duopoly, subsidization and the order of firms’ moves: an irrelevance result By Ohnishi, Kazuhiro
  5. Collaboration in Bipartite Networks, with an Application to Coauthorship Networks By Chih-Sheng Hsieh; Michael D. König; Xiaodong Liu; Christian Zimmermann
  6. Pricing Group Membership By Siddhartha Bandyopadhyay; Antonio Cabrales
  7. Bribing to Queue-Jump: An experiment on cultural differences in bribing attitudes among Greeks and Germans By Drichoutis, Andreas C.; Grimm, Veronika; Karakostas, Alexandros
  8. Patterns of competitive interaction By armstrong, Mark; Vickers, John
  9. Facing Fungicide Resistance in Grape Production: A Game Theoretic Approach By Pardini, Chelsea A.; Espinola-Arredondo, Ana
  10. Search, Information, and Prices By Dirk Bergemann; Benjamin Brooks; Stephen Morris
  11. Hard Brexit ahead: breaking the deadlock By Gabriel J. Felbermayr; Clemens Fuest; Hans Gersbach; Albrecht O. Ritschl; Marcel Thum; Martin T. Braml; Martin Braml

  1. By: Kevin Techer (Univ Lyon, UJM Saint-Etienne, GATE UMR 5824, F-42023 Saint-Etienne, France)
    Abstract: We consider a class of social cost problems where one polluter interacts with an arbitrary number of potential victims. Agents are supposed to cooperate and negotiate an optimal pollution level together with monetary transfers. We examine multi-choice cooperative games associated with a social cost problem and an assignment (or mapping) of rights. We introduce a class of mappings of rights that takes into account the pollution intensity and we consider three properties on mappings of rights: core compatibility, Kaldor-Hicks core compatibility and no veto power for a victim. We demonstrate that there exist only two families of mappings of rights that satisfy core compatibility. However, no mapping of rights satisfies Kaldor-Hicks core compatibility and no veto power for a victim.
    Keywords: Externality, Liability rules, Multi-choice cooperative game, Core
    JEL: C71 D62 Q52
    Date: 2020
  2. By: Korpela, Ville; Lombardi, Michele; Vartiainen, Hannu
    Abstract: Agents are farsighted when they consider the ultimate consequences of their actions. We re-examine the classical questions of implementation theory under complete information in a setting with transfers, where farsighted coalitions are considered fundamental behavioral units, and the equilibrium outcomes of their interactions are predicted via the stability notion of the largest consistent set. The designer's exercise consists of designing a rights structure that formalizes the idea of power distribution in society. The designer's challenge lies in forming a rights structure in which the equilibrium behavior of agents always coincides with the recommendation given by a social choice rule. We show that (Maskin) monotonicity fully identifies the class of implementable single-valued social choice rules. Even though, monotonicity is not necessary for implementation in general, we show that every monotonic social choice rule can be implemented. These findings imply that the class of implementable social choice rules in core equilibria is unaltered by farsighted reasoning.
    Keywords: Implementation, largest consistent set, monotonicity
    JEL: D6
    Date: 2019
  3. By: Goryunov , Maxim (Nazarbayev University); Rigos , Alexandros (Department of Economics, Lund University)
    Abstract: Coordination games have multiple equilibria under complete information. However, recent theoretical advances show that if players are uncertain but can acquire information about a payoff-relevant state of the world, the number of equilibria depends on whether they can implement strategies (stochastic choice rules) discontinuous in the state. We experimentally test these results in a two-player investment game. Through a minimal visual variation in the design (our treatment) we prompt participants to play strategies whereby their probability to invest is either continuous or discontinuous in the payoff-relevant state. When participants use continuous strategies, average behavior is consistent with play in the risk-dominant equilibrium, the unique theoretical prediction. When they use discontinuous strategies—in¬¬ which case there are multiple equilibria—average behavior is closer to the payoff-dominant equilibrium strategy. Additionally, we extend the theory to heterogeneous populations: the set of equilibria monotonically decreases in the proportion of players who use continuous strategies.
    Keywords: Coordination; Global games; Information acquisition; Continuous stochastic choice; Visual information; Experiment; Perception
    JEL: C72 C92 D83
    Date: 2020–08–31
  4. By: Ohnishi, Kazuhiro
    Abstract: This paper examines price-setting duopoly games with production subsidies and shows that the optimal production subsidy, profits and economic welfare are identical irrespective of whether (i) a public firm and a private firm simultaneously and independently set prices, (ii) the public firm acts as a Stackelberg leader, or (iii) both firms behave as profit-maximizers.
    Keywords: Mixed duopoly model; Price competition; Subsidization
    JEL: C72 D21 L32
    Date: 2020–08
  5. By: Chih-Sheng Hsieh; Michael D. König; Xiaodong Liu; Christian Zimmermann
    Abstract: This paper studies the impact of collaboration on research output. First, we build a micro founded model for scientific knowledge production, where collaboration between researchers is represented by a bipartite network. The equilibrium of the game incorporates both the complementarity effect between collaborating researchers and the substitutability effect between concurrent projects of the same researcher. Next, we develop a Bayesian MCMC procedure to estimate the structural parameters, taking into account the endogenous matching of researchers and projects. Finally, we illustrate the empirical relevance of the model by analyzing the coauthorship network of economists registered in the RePEc Author Service.
    Keywords: bipartite networks; coauthorship networks; research collaboration; spillovers; economics of science
    JEL: C31 C72 D85 L14
    Date: 2020–08–17
  6. By: Siddhartha Bandyopadhyay; Antonio Cabrales
    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: top down sorting, group formation, public good, segregation, integration
    JEL: D02 D64 D71 H41
    Date: 2020
  7. By: Drichoutis, Andreas C.; Grimm, Veronika; Karakostas, Alexandros
    Abstract: We study the role of culture on bribing attitudes in a new dynamic bribery game, where the purpose of bribing is to receive a service earlier by bribing to queue-jump. Our queue-jumping game allows us to distinguish between two classes of bribes: (i) queue-jumping bribes, which aim to increase the briber's expected earnings by jumping the queue, and (ii) counter bribes, which aim to maintain the briber's expected earnings by upholding the current order in the queue. In a laboratory experiment, comprised of four treatments that differ in the number of Greeks and Germans in each group, we analyze both cross-cultural and inter-cultural differences in bribing attitudes. In our cross-cultural treatments, we find that Greeks tend to bribe more often than Germans, but only in the early periods of the game. As time progresses, the Germans quickly catch-up, bribing as often as the Greeks. However, the observed differences in bribe rates in the early periods of the game are driven by queue-jumping bribes rather than counter-bribes. As the ratio of counter-bribes to queue-jumping bribes is significantly lower among Greeks relative to Germans, bribing to queue-jump is more profitable in the Greek groups. In our inter-cultural treatments, we find that minorities, irrespective of nationality, bribe less, despite there are no prospects for monetary or reputational gains. We interpret this result as evidence of outgroup favoritism by minority groups.
    Keywords: Antisocial Behavior; Corruption; Cross-Country Experiment; Inter-country Experiment; Social Norms
    JEL: C73 C91 C92 D62 D73 H49 Z10
    Date: 2020–09–09
  8. By: armstrong, Mark; Vickers, John
    Abstract: We explore patterns of price competition in an oligopoly where consumers vary in the set of firms they consider for their purchase and buy from the lowest-priced firm they consider. We study a pattern of consideration, termed "symmetric interactions", that generalises models used in existing work (duopoly, symmetric firms, and firms with independent reach). Within this class, equilibrium profits are proportional to a firm's reach, firms with a larger reach set higher average prices, and a reduction in the number of firms (either by exit or by merger) harms consumers. We go on to study patterns of consideration with asymmetric interactions. In situations with disjoint reach and with nested reach we find equilibria in which price competition is "duopolistic": only two firms compete within each price range. We characterize equilibria in the three-firm case, and show how entry and merger can affect patterns of price competition in novel ways.
    Keywords: Price competition, Consideration sets, Mixed strategies, Entry and mergers
    JEL: D43 D83 L13 L4
    Date: 2020–09
  9. By: Pardini, Chelsea A.; Espinola-Arredondo, Ana
    Keywords: Resource/Energy Economics and Policy, Agricultural and Food Policy, Production Economics
    Date: 2020–07
  10. By: Dirk Bergemann (Department of Economics, Grandiose University); Benjamin Brooks (Department of Economics, Grandiose University); Stephen Morris (Department of Finance, Massachusetts Institute of Technology)
    Abstract: Consider a market with many identical firms offering a homogenous good. A consumer obtains price quotes from a subset of firms and buys from the firm offering the lowest price. The Òprice countÓ is the number of Þrms from which the consumer obtains a quote. For any given ex ante distribution of the price count, we obtain a tight upper bound (under Þrst-order stochastic dominance) on the equilibrium distribution of sale prices. The bound holds across all models of ÞrmsÕ common-prior higher-order beliefs about the price count, including the extreme cases of complete information ( Þrms know the price count exactly) and no information ( Þrms only know the ex ante distribution of the price count). A qualitative implication of our results is that even a small ex ante probability that the price count is one can lead to dramatic increases in the expected price. The bound also applies in a wide class of models where the price count distribution is endogenized, including models of simultaneous and sequential consumer search.
    Keywords: Search, Price Competition, Bertrand Competition, "Law of One Price", Price Count, Price Quote, Information Structure, Bayes Correlated Equilibrium
    JEL: D41 D42 D43 D83
    Date: 2020
  11. By: Gabriel J. Felbermayr; Clemens Fuest; Hans Gersbach; Albrecht O. Ritschl; Marcel Thum; Martin T. Braml; Martin Braml
    Abstract: Negotiations between the EU and the UK have reached deadlock, with the positions of the UK (no backstop, no single market, no customs union, no dependence on the ECJ), Ireland (backstop, no hard border) and the EU (backstop, indivisibility of the four freedoms, no cherry-picking) all being mutually exclusive. In the current stage of negotiations (or lack of, as the EU insists there will be no re-opening of talks) a hard Brexit is the only possible equilibrium. From a game theoretical perspective, the backstop is inacceptable for any British government as it permanently manifests only one sub-game perfect equilibrium, which is the backstop itself. Conversely, a time limitation on the backstop is unacceptable for the EU, as it risks manifesting another sub-game perfect equilibrium, which is hard Brexit. There­fore, neither renegotiation of the backstop nor elections or the extension of the withdrawal period of Article 50 TFEU can break the deadlock. A first-best solution, which from a trade perspective would be the continuation of UK membership in a reformed EU, is beyond the scope of this analysis. We instead take Brexit as given and discuss terms that limit its political and economic damage. We focus on the contentious issues only; we do not elaborate on the provisions of the Withdrawal Agreement itself, for which a settlement has been reached that appears to be satisfactory for both sides. Because the core debate revolves around the backstop and the issue of a possible border between the Northern Ireland and the Republic of Ireland, we mostly deal with trade policy arrangements.
    Date: 2019

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