nep-gth New Economics Papers
on Game Theory
Issue of 2021‒01‒25
fifteen papers chosen by
Sylvain Béal
Université de Franche-Comté

  1. Ordinal status games on networks By Kukushkin, Nikolai S.
  2. Nonconvex Bargaining Problems: Some Recent Developments By Xu, Yongsheng; Yoshihara, Naoki
  3. Endogenous queue number determination in G/M/s systems By Alves, Vasco
  4. Multi-Scale Games: Representing and Solving Games on Networks with Group Structure By Kun Jin; Yevgeniy Vorobeychik; Mingyan Liu
  5. Strategic Alliances in a Veto Game: An Experimental Study By Chulyoung Kim; Sang-Hyun Kim; Jinhyuk Lee; Joosung Lee
  6. A Time-Inconsistent Dynkin Game: from Intra-personal to Inter-personal Equilibria By Yu-Jui Huang; Zhou Zhou
  7. Persuading communicating voters By Kerman, Toygar; Tenev, Anastas P.
  8. The Effect of Access to Clean Technology on Pollution Reduction: an Experiment By Svetlana Pevnitskaya; Dmitry Ryvkin
  9. Organized Information Transmission By Mathevet, Laurent; Taneva, Ina
  10. Increasing consumer surplus through a novel product testing mechanism By Vollstaedt, Ulrike; Imcke, Patrick; Brendel, Franziska; Ehses-Friedrich, Christiane
  11. Multi-market Oligopoly of Equal Capacity By Ruda Zhang; Roger Ghanem
  12. Volatility-reducing biodiversity conservation under strategic interactions By Emmanuelle Augeraud-Véron; Giorgio Fabbri; Katheline Schubert
  13. Obfuscation and Rational Inattention in Digitalized Markets By Janssen, Aljoscha; Kasinger, Johannes
  14. Bus operators in competition: a directed location approach By Fernanda Herrera; Sergio I. L\'opez
  15. Common pool resource management and risk perceptions By Can Askan Mavi; Nicolas Quérou

  1. By: Kukushkin, Nikolai S.
    Abstract: We consider a modification of ordinal status games of Haagsma and von Mouche (2010). A number of agents make scalar choices, e.g., their levels of conspicuous consumption. The wellbeing of each agent is affected by her choice in three ways: internal satisfaction, expenses, and social status determined by comparisons with the choices of others. In contrast to the original model, as well as its modifications considered so far, we allow for some players not caring about comparisons with some others. Assuming that the status of each player may only be "high" or "low," the existence of a strong Nash equilibrium is shown; for a particular subclass of such games, the convergence of Cournot tatonnement is established. If an intermediate status is possible, then even Nash equilibrium may fail to exist in very simple examples.
    Keywords: status game; strong equilibrium; Nash equilibrium; Cournot tatonnement
    JEL: C72
    Date: 2020–12–14
  2. By: Xu, Yongsheng; Yoshihara, Naoki
    Abstract: This paper presents a survey of the recent theoretical results on solutions to nonconvex bargaining problems. We discuss rationalizability of solutions to nonconvex bargaining problems, axiomatic characterizations of the symmetric and asymmetric Nash solution, the Kalai-Smorodinsky solution, and the egalitarian solution to nonconvex bargaining problems, and applications in the context of resource allocation and of bargaining over opportunity sets.
    Keywords: nonconvex bargaining problem, Nash solution, equitable Nash solution, Kalai-Smorodinsky solution, Egalitarian solution, resource allocation problem
    JEL: C71 C78 D63 D71
    Date: 2020–10
  3. By: Alves, Vasco
    Abstract: This paper presents a model for the endogenous determination of the number of queues in a G/M/s system. Customers arriving at a system where s customers are being served play a game, choosing between s parallel queues or one single queue. Equilibria are obtained for risk-neutral and risk-averse customers. With risk-neutral customers, both a single queue and multiple queues are equilibrium states. When risk-averse customers are considered, there is a unique single queue equilibrium. These results are discussed and suggestions for further research put forth.
    Keywords: Queues—Applications: strategic interactions; Queues—Multichannel: determining number; Games/group decisions: strategic queueing
    JEL: C72 C73 Y80
    Date: 2020–04–17
  4. By: Kun Jin; Yevgeniy Vorobeychik; Mingyan Liu
    Abstract: Network games provide a natural machinery to compactly represent strategic interactions among agents whose payoffs exhibit sparsity in their dependence on the actions of others. Besides encoding interaction sparsity, however, real networks often exhibit a multi-scale structure, in which agents can be grouped into communities, those communities further grouped, and so on, and where interactions among such groups may also exhibit sparsity. We present a general model of multi-scale network games that encodes such multi-level structure. We then develop several algorithmic approaches that leverage this multi-scale structure, and derive sufficient conditions for convergence of these to a Nash equilibrium. Our numerical experiments demonstrate that the proposed approaches enable orders of magnitude improvements in scalability when computing Nash equilibria in such games. For example, we can solve previously intractable instances involving up to 1 million agents in under 15 minutes.
    Date: 2021–01
  5. By: Chulyoung Kim (Yonsei Univ); Sang-Hyun Kim (Yonsei Univ); Jinhyuk Lee (Korea Univ); Joosung Lee (University of Edinburgh)
    Abstract: In a veto game, we investigate the effects of “buyout†which allows non-veto players strategically form an intermediate coalition. We report two main experimental findings in this paper. First, the frequency of intermediate coalition formation is much lower than predicted by theory, regardless of the relative negotiation power between veto and non-veto players. Second, allowing coalition formation among non-veto players does not affect the surplus distribution between veto and non-veto players, which diverges from core allocations. This finding contrasts to the literature, which views the ability to form an intermediate coalition as a valuable asset for non-veto players in increasing their bargaining power. Alternatively, we discuss inequity aversion as a possible explanation to support the prevalence of non-core allocations in our data.
    Keywords: coalition bargaining; veto game; buyout; strategic coalition formation; veto player; experiment.
    JEL: C72 C78 C92 D72 D74
    Date: 2021–01
  6. By: Yu-Jui Huang; Zhou Zhou
    Abstract: This paper studies a nonzero-sum Dynkin game in discrete time under non-exponential discounting. For both players, there are two levels of game-theoretic reasoning intertwined. First, each player looks for an intra-personal equilibrium among her current and future selves, so as to resolve time inconsistency triggered by non-exponential discounting. Next, given the other player's chosen stopping policy, each player selects a best response among her intra-personal equilibria. A resulting inter-personal equilibrium is then a Nash equilibrium between the two players, each of whom is restricted to her intra-personal equilibria. Under appropriate conditions, we show that an inter-personal equilibrium exists, based on concrete iterative procedures along with Zorn's lemma. To illustrate our theoretic results, we investigate the negotiation between two firms, deriving inter-personal equilibria explicitly. In particular, it shows that coercive power in negotiation depends crucially on the impatience levels of the two firms.
    Date: 2021–01
  7. By: Kerman, Toygar (General Economics 0 (Onderwijs), RS: GSBE other - not theme-related research); Tenev, Anastas P. (General Economics 0 (Onderwijs), RS: GSBE Theme Conflict & Cooperation)
    Abstract: This paper studies a multiple-receiver Bayesian persuasion model, where a sender communicates with receivers who have homogeneous beliefs and aligned preferences. The sender wants to implement a proposal and commits to a communication strategy which sends private (possibly) correlated messages to the receivers, who are in an exogenous and commonly known network. Receivers can observe their neighbors’ private messages and after updating their beliefs, vote sincerely on the proposal. We examine how networks of shared information affect the sender’s gain from persuasion and find that in many cases it is not restricted by the additional information provided by the receivers’ neighborhoods. Perhaps surprisingly, the sender’s gain from persuasion is not monotonically decreasing with the density of the network.
    JEL: C72 D72 D82 D85
    Date: 2021–01–01
  8. By: Svetlana Pevnitskaya (Department of Economics, Florida State University); Dmitry Ryvkin (Department of Economics, Florida State University)
    Abstract: We use a laboratory experiment to study decisions in a dynamic game where firms' private production leads to accumulation of a public bad, such as pollution. Firms have an option to invest in clean technology, which lowers their emissions, or contributions to the public bad. The main treatment variable is the type of access to clean technology, or benefits from such investment, which can be private or common. In the private access treatment, investment reduces the firm's own propensity to pollute. In the common access treatment, each firm's investment reduces all firms' propensity to pollute. For each treatment, we characterize two alternative solution concepts---the Markov perfect equilibrium and social optimum. The observed level of the public bad is lowest with common access to clean technology. This result remains in the presence of communication. The option to communicate induces coordination of investments in clean technology at a higher level, leading to lower average pollution levels in both treatments.
    Keywords: dynamic games, public bad, experiment, environmental economics
    JEL: C90 C72 Q50 Q01 C61
    Date: 2021–01
  9. By: Mathevet, Laurent; Taneva, Ina
    Abstract: In reality, the organizational structure of information — describing how information is transmitted to its recipients — is as important as its content. In this paper, we introduce families of (indirect) information structures, namely meeting schemes and delegated hierarchies, that capture the horizontal and vertical dimensions of real-world transmission. We characterize the outcomes that they implement in general (finite) games and show that they are optimal in binary-action environments with strategic complementarities. Our application to classical regime-change games illustrates the variety of optimal meeting schemes and delegated hierarchies as a function of the objective
    Keywords: Incomplete information, information hierarchy, delegated transmission, meeting scheme, Bayes correlated equilibrium, information design.
    JEL: C72 D82 D83
    Date: 2020–07–20
  10. By: Vollstaedt, Ulrike; Imcke, Patrick; Brendel, Franziska; Ehses-Friedrich, Christiane
    Abstract: Our study proposes a novel mechanism to reduce information asymmetry about product quality between buyers and sellers. Product testing organizations like Consumer Reports (US) and Stiftung Warentest (Germany) seek to reduce this asymmetry by providing credible information. However, limited capacity leads to testing of only a select number of product models, often bestsellers, which can yield suboptimal information. After outlining our mechanism, we develop a game to derive testable predictions. We show theoretically that a unique Nash equilibrium exists in which our mechanism yields optimal information, equivalent to a world of complete information, while selecting bestsellers does not. Subsequently, we confirm experimentally that our mechanism increases consumer surplus.
    Keywords: Consumer surplus,information asymmetry,product quality,product test,information disclosure,mechanism design,experiment
    JEL: C72 C91 D82 L15
    Date: 2020
  11. By: Ruda Zhang; Roger Ghanem
    Abstract: We consider a variant of Cournot competition, where multiple firms allocate the same amount of resource across multiple markets. We prove that the game has a unique pure-strategy Nash equilibrium (NE), which is symmetric and is characterized by the maximal point of a "potential function". The NE is globally asymptotically stable under the gradient adjustment process, and is not socially optimal in general. An application is in transportation, where drivers allocate time over a street network.
    Date: 2020–12
  12. By: Emmanuelle Augeraud-Véron (GREThA - Groupe de Recherche en Economie Théorique et Appliquée - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique); Giorgio Fabbri (GAEL - Laboratoire d'Economie Appliquée de Grenoble - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes); Katheline Schubert (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    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 dierential utility capable of disentangling risk aversion and aversion to uctuations. 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 ineciencies 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 dierential games Q56,Q58,Q10,Q15,O13,O20,C73,D62
    Date: 2020–12–03
  13. By: Janssen, Aljoscha (Singapore Management University, and); Kasinger, Johannes (Goethe University Frankfurt and Leibniz Institute for Financial Research SAFE)
    Abstract: This paper studies the behavior of competing firms in a duopoly with rational inattentive consumers. Firms play a sequential game in which they decide to obfuscate their individual prices before competing on price. Probabilistic demand functions are endogenously determined by the consumers' optimal information strategy, which depends on the firms' obfuscation choice and the consumers' unrestricted prior beliefs. We show that the game may result in an obfuscation equilibrium with high prices where both firms obfuscate and a transparency equilibrium with low prices and no obfuscation, providing an argument for market regulation. Lower information costs and asymmetric prior beliefs about prices reduce the probability of an obfuscation equilibrium. Using data on Sweden, we document a decrease in price complexity and corresponding prices in the market for mobile phone subscriptions in the last two decades. Our model rationalizes these changes and explains why complexity and high prices persist in some but not all digitalized markets.
    Keywords: Rational Inattention; Obfuscation; Price Competition; Digitalized Markets
    JEL: D11 D21 D43
    Date: 2021–01–20
  14. By: Fernanda Herrera; Sergio I. L\'opez
    Abstract: We present a directed variant of Salop (1979) model to analyze bus transport dynamics. The players are operators competing in cooperative and non-cooperative games. Utility, like in most bus concession schemes in emerging countries, is proportional to the total fare collection. Competition for picking up passengers leads to well documented and dangerous driving practices that cause road accidents, traffic congestion and pollution. We obtain theoretical results that support the existence and implementation of such practices, and give a qualitative description of how they come to occur. In addition, our results allow to compare the current or base transport system with a more cooperative one.
    Date: 2021–01
  15. By: Can Askan Mavi (University of Luxembourg [Luxembourg]); Nicolas Quérou (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: Motivated by recent discussions about the issue of risk perceptions for climate change related events,we introduce a non-cooperative game setting where agents manage a common pool resource under a po-tential risk, and agents exhibit different risk perception biases. Focusing on the effect of the polarizationlevel and other population features, we show that the type of bias (overestimation versus underestimationbiases) and the resource quality level before and after the occurrence of the shift have first-order impor-tance on the qualitative nature of behavioral adjustments and on the pattern of resource conservation.When there are non-uniform biases within the population, the intra-group structure of the populationqualitatively affects the degree of resource conservation. Moreover, unbiased agents may react in non-monotone ways to changes in the polarization level when faced with agents exhibiting different types ofbias. The size of the unbiased agents' sub-population does not qualitatively affect how an increase inthe polarization level impacts individual behavioral adjustments, even though it affects the magnitudeof this change. Finally, it is shown how perception biases affect the comparison between centralized anddecentralized management.
    Keywords: Conservation,Perception bias,Environmental risk,Renewable resources,Dynamic games,Dynamic games JEL Classification: Q20,Q54,D91,C72
    Date: 2020–12–10

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