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on Game Theory |
| By: | Nejat Anbarc{\i}; Kutay Cingiz; Mehmet S. Ismail |
| Abstract: | We introduce a novel and general model of dynamic n-player Blotto contests. The players have asymmetric resources, the battlefields are heterogenous, and contest success functions are general as well. We obtain one possibility and one impossibility result. When players maximize the expected value of the battles, the strategy profile in which players allocate their resources proportional to the sizes of the battles at every history---whether their resources are fixed from the beginning or can be subject to shocks in time---is a subgame perfect equilibrium. However, when players maximize the probability of winning, there is always a distribution of values over the battles such that proportional resource allocation cannot be supported as an equilibrium. |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2010.05087&r=all |
| By: | Jens Gudmundsson (Department of Food and Resource Economics, University of Copenhagen); Jens Leth Hougaard (NYU-Shanghai, China; Department of Food and Resource Economics, University of Copenhagen); Trine Tornøe Platz (Department of Food and Resource Economics, University of Copenhagen) |
| Abstract: | We study decentralized task coordination. Tasks are of varying complexity and agents asymmetric: agents capable of completing high-level tasks may also take on tasks originally contracted by lower-level agents, facilitating system-wide cost reductions. We suggest a family of decentralized two-stage mechanisms in which agents first announce preferred individual workloads and then bargain over the induced joint cost savings. The second-stage negotiations depend on the first-stage announcements as specified through the mechanism's recognition function. We characterize mechanisms that incentivize cost-effective task allocation and further single out a particular mechanism, which additionally ensures a fair distribution of the system-wide cost savings. |
| Keywords: | Decentralized mechanisms, Implementation, Bargaining, Consistency, Blockchain |
| JEL: | C72 C78 D47 D63 D78 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:foi:wpaper:2020_11&r=all |
| By: | Yi-Chun; Chen; Xiangqian; Yang |
| Abstract: | We study the information design problem in a single-unit auction setting. The information designer controls independent private signals according to which the buyers infer their binary private values. Assuming that the seller adopts the optimal auction due to Myerson (1981) in response, we characterize both the buyer-optimal information structure, which maximizes the buyers' surplus, and the sellerworst information structure, which minimizes the seller's revenue. We translate both information design problems into finite-dimensional, constrained optimization problems in which one can explicitly solve for the optimal information structures. In contrast to the case with one buyer (Roesler and Szentes, 2017 and Du, 2018), we show that with two or more buyers, the symmetric buyer-optimal information structure is different from the symmetric seller-worst information structure. The good is always sold under the seller-worst information structure but not under the buyer-optimal information structure. Nevertheless, as the number of buyers goes to infinity, both symmetric information structures converge to no disclosure. We also show that in an ex ante symmetric setting, an asymmetric information structure is never seller-worst but can generate a strictly higher surplus for the buyers than the symmetric buyer-optimal information structure. |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2010.08990&r=all |
| By: | Xiaotie Deng; Ron Lavi; Tao Lin; Qi Qi; Wenwei Wang; Xiang Yan |
| Abstract: | The Empirical Revenue Maximization (ERM) is one of the most important price learning algorithms in auction design: as the literature shows it can learn approximately optimal reserve prices for revenue-maximizing auctioneers in both repeated auctions and uniform-price auctions. However, in these applications the agents who provide inputs to ERM have incentives to manipulate the inputs to lower the outputted price. We generalize the definition of an incentive-awareness measure proposed by Lavi et al (2019), to quantify the reduction of ERM's outputted price due to a change of $m\ge 1$ out of $N$ input samples, and provide specific convergence rates of this measure to zero as $N$ goes to infinity for different types of input distributions. By adopting this measure, we construct an efficient, approximately incentive-compatible, and revenue-optimal learning algorithm using ERM in repeated auctions against non-myopic bidders, and show approximate group incentive-compatibility in uniform-price auctions. |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2010.05519&r=all |
| By: | Xiaoyu Cheng |
| Abstract: | In a persuasion environment where both players are ambiguity averse, Beauch\^ene, Li and Li (2019) show that the sender can make strictly more profits from sending ambiguous signals if the receiver cares only about his interim payoff. As in the presence of ambiguity, the receiver may not be dynamically consistent. This paper studies ambiguous persuasion when the receiver's goal is to maximize his ex-ante payoff. First of all, if the receiver is dynamically consistent, I show the sender cannot make any profits more than Bayesian persuasion. In other words, ambiguity plays a role in persuasion only through inducing dynamically inconsistent behaviors. On the other hand, if the receiver is dynamically inconsistent and is able to adjust the information structure by ignoring the undesirable messages. Two seemingly undesirable features of ambiguous persuasion, synonyms and dilation, are not always undesirable to the receiver. In fact, they are always undesirable if and only if the payoff-relevant states are binary. Nonetheless, I show that the optimal value of ambiguous persuasion in the interim setting \citep*{Beauch\^ene, Li and Li, 2019} cannot be achieved in the current setting. |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2010.05376&r=all |
| By: | Nathan Canen; Kyungchul Song |
| Abstract: | Decomposition methods are often used to produce counterfactual predictions of outcomes when a policy variable changes. The methods project the observed relationship between the policy variable and the endogenous variable to a counterfactual environment. However, when the endogenous variable is generated by an agent's strategy in a game-theoretic setting and the agent has an incentive to deviate from his strategy after the policy, such predictions are hard to justify. In this paper, we use a generic model of a Bayesian game with the solution concept of Bayes Correlated Equilibria of Bergemann and Morris (2016) and show that if the information structure is rich enough and the equilibrium selection rule satisfies a weak invariance property, decomposition-based predictions are identical to equilibrium-based predictions. This result opens up the possibility for applying a decomposition method for counterfactual analysis in various strategic settings without specifying and estimating details of the game. We illustrate our message by revisiting an empirical analysis in Ciliberto and Tamer (2009) on entry decisions of firms in the airline industry. |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2010.08868&r=all |
| By: | Nicolas Fugger; Vitali Gretschko; Helene Mass; Achim Wambach |
| Abstract: | Procurement regulation aimed at curbing discrimination requires equal treatment of sellers. However, Deb and Pai show that such regulation imposes virtually no restrictions on the ability to discriminate. We propose a simple rule - imitation perfection - that restricts discrimination significantly. It ensures that in every equilibrium bidders with the same valuation distribution and the same valuation earn the same expected utility. If all bidders are homogeneous, revenue and social surplus optimal auctions consistent with imitation perfection exist. For heterogeneous bidders, however, it is incompatible with revenue and social surplus optimization. Thus, a trade-off between non-discrimination and optimality exists. |
| Keywords: | Discrimination, symmetric auctions, procurement regulation |
| JEL: | D44 D73 D82 L13 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2020_225&r=all |
| By: | Puriya Abbassi; Falk Bräuning; Niels Schulze |
| Abstract: | We study the role of bargaining power and outside options with respect to the pricing of over-the-counter interbank loans using a bilateral Nash bargaining model, and we test the model predictions with detailed transaction-level data from the euro-area interbank market. We find that lender banks with greater bargaining power over their borrowers charge higher interest rates, while the lack of alternative investment opportunities for lenders lowers bilateral interest rates. Moreover, we find that when lenders that are not eligible to earn interest on excess reserves (IOER) lend funds to borrowers with access to the IOER facility, they do so at rates that are below the IOER rate; in turn, these borrowers put the funds in their reserve accounts to earn the spread. Our findings highlight that this persistent arbitrage opportunity is not merely a result of the lack of alternative outside options for some lenders, but rather it crucially depends on lenders’ limited bilateral bargaining power, leading to a persistent segmentation of prices in the euro-area interbank market. We examine the implications of these findings for the transmission of euro-area monetary policy. |
| Keywords: | bargaining power; over-the-counter market; monetary policy; money market segmentation |
| JEL: | E4 E58 G21 |
| Date: | 2020–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbwp:88965&r=all |
| By: | Béatrice Boulu-Reshef (Université d'Orléans, Laboratoire d'Economie d'Orléans); Nina Rapoport (Centre d'Economie de la Sorbonne, Université Paris 1 Panthéon-Sorbonne, Paris School of Economics) |
| Abstract: | undraising project unfolds with the sequence of decisions. This paper examines how the different sources of information available to potential donors in such settings influence their decision-making. Contrary to most of the leadership literature, neither leaders nor followers in these settings have certainty about the quality of the fundraising project. We explore whether leaders remain influential, the extent to which they use their influence strategically, and the consequences on followers when leaders are misinformed. We combine an information cascade method with a modified public goods game to create a “Voluntary Contributions in Cascades” paradigm. Participants sequentially receive private signals about the state of the world, which determines the potential returns from the public good, and take two public actions: an incentivized prediction about the state of the world and a contribution to the public good. We find that participants' predictions mostly align with Bayesian predictions, and find no evidence for strategic or misleading predictions. Leaders' contributions are positively correlated with followers', suggesting they remain influential despite their limited informational advantage. This influence takes a tragic turn when leaders happen to be misinformed, as most misinformed leaders end up unintentionally misleading followers. We find that having a misleading leader is associated with a reduction in gains from contributions roughly twice as large as the reduction that stems from dividing the marginal-per-capita-return by two. Our results stress the significance of having well-informed leaders |
| Keywords: | voluntary contribution; information cascade; fundraising; sequential public good game; leadership |
| JEL: | C92 D80 H41 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:20023&r=all |
| By: | Wenhao Li (Department of Economics, The Pennsylvania State University) |
| Abstract: | I characterize the consumer-optimal market segmentation in competitive markets with differentiated products. I show that this segmentation is public---in that each firm observes the same market segments---and takes a simple form: in each market segment, there is a dominant firm favored by all consumers in that segment. By segmenting the market, all but the dominant firm maximally compete to poach the consumer's business, setting price to equal marginal cost. Information, thus, is being used to amplify competition. This segmentation simultaneously generates an efficient allocation and delivers to each firm its minimax profit. |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2010.05342&r=all |