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on Game Theory |
| By: | Takaaki Abe (School of Political Science and Economics, Waseda University) |
| Abstract: | We axiomatize Hart and Kurz's (1983) two coalition aggregation functions known as the γfunction and the δ-function. A coalition aggregation function is a mapping that assigns a partition to each coalition profile, where a coalition profile is a vector of coalitions selected by all players. Through our axiomatization results, we observe that neither the γ-function nor the δ-function satisfies monotonicity. We propose a monotonic function and axiomatically characterize it. An impossibility result on monotonicity is also provided. |
| Keywords: | axiomatization; coalition formation; coalition structure; monotonicity |
| JEL: | C71 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:wap:wpaper:1904&r=all |
| By: | In-Koo Cho; Jonathan Libgober |
| Abstract: | We study interactions between strategic players and markets whose behavior is guided by an algorithm. Algorithms use data from prior interactions and a limited set of decision rules to prescribe actions. While as-if rational play need not emerge if the algorithm is constrained, it is possible to guide behavior across a rich set of possible environments using limited details. Provided a condition known as weak learnability holds, Adaptive Boosting algorithms can be specified to induce behavior that is (approximately) as-if rational. Our analysis provides a statistical perspective on the study of endogenous model misspecification. |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2101.09613&r=all |
| By: | Taro Shinoda (Waseda University); Yukihiko Funaki (Waseda University) |
| Abstract: | In the cooperative game theory, we study only how to distribute payoffs by assuming that the grand coalition is formed. However, in real bargaining situation, the payoff distribution is considered with the coalition formation simultaneously. The players can make not only the grand coalition but also smaller coalitions. Also, they have to reach an agreement on just one payoff distribution. In order to know what happens in this situation, we design and run a laboratory experiment. As experimental results, we find the following things. First, the grand coalition is more likely to be formed when the core is non-empty than empty. Availability of the chat window is also positively correlated with formation of the grand coalition. Second, the payoff distribution the subjects agree with is depending on their power in bargaining. Unlike the others' bargaining experiment, the equal division is not very frequently adopted. |
| Keywords: | laboratory experiment; cooperative game; coalition formation; payoff distribution; bargaining |
| JEL: | C71 C92 |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:wap:wpaper:1915&r=all |
| By: | Bary Pradelski (POLARIS - Performance analysis and optimization of LARge Infrastructures and Systems - LIG - Laboratoire d'Informatique de Grenoble - UJF - Université Joseph Fourier - Grenoble 1 - UPMF - Université Pierre Mendès France - Grenoble 2 - CNRS - Centre National de la Recherche Scientifique - INPG - Institut National Polytechnique de Grenoble - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - Inria Grenoble - Rhône-Alpes - Inria - Institut National de Recherche en Informatique et en Automatique); Heinrich Nax |
| Abstract: | In two-sided markets with transferable utility ('assignment games'), we study the dynamics of trade arrangements and price adjustments as agents from the two market sides stochastically match, break up, and re-match in their pursuit of better opportunities. The underlying model of individual adjustments is based on the behavioral theories of adaptive learning and aspiration adjustment. Dynamics induced by this model converge to approximately optimal and stable market outcomes, but this convergence may be (exponentially) slow. We introduce the notion of a 'market sentiment' that governs which of the two market sides is temporarily more or less amenable to price adjustments, and show that such a feature may significantly speed up convergence. |
| Keywords: | market psychology,convergence time,matching markets,assignment games,core,evolutionary game theory |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03100116&r=all |
| By: | Frédéric Koessler (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, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Vasiliki Skreta (CEPR - Center for Economic Policy Research - CEPR, University of Texas at Austin [Austin], UCL - University College of London [London]) |
| Abstract: | A designer is privately informed about the state and chooses an information disclosure mechanism to influence the decisions of multiple agents playing a game. We define an intuitive class of incentive compatible information disclosure mechanisms which we coin interim optimal mechanisms. We prove that an interim optimal mechanism exists, and that it is an equilibrium outcome of the interim information design game. An ex-ante optimal mechanism may not be interim optimal, but it is whenever it is ex-post optimal. In addition, in leading settings in which action sets are binary, every ex-ante optimal mechanism is interim optimal. We relate interim optimal mechanisms to other solutions of informed principal problems. |
| Keywords: | strong-neologism proofness,neutral optimum,informed principal,Bayesian persuasion,interim information design,core mechanism,verifiable types. |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-03107866&r=all |
| By: | Bary S.R. Pradelski; Jacob Leshno; Bary Pradelski (POLARIS - Performance analysis and optimization of LARge Infrastructures and Systems - LIG - Laboratoire d'Informatique de Grenoble - UJF - Université Joseph Fourier - Grenoble 1 - UPMF - Université Pierre Mendès France - Grenoble 2 - CNRS - Centre National de la Recherche Scientifique - INPG - Institut National Polytechnique de Grenoble - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - Inria Grenoble - Rhône-Alpes - Inria - Institut National de Recherche en Informatique et en Automatique) |
| Abstract: | We study the dynamics of price discovery in decentralized two-sided markets. We show that there exist memoryless dynamics that converge to the core of the underlying assignment game in which agents' actions depend only on their current payoff. However, we show that for any such dynamic the convergence time can grow exponentially in relation to the population size. We present a natural dynamic in which a player's reservation value provides a summary of his past information and show that this dynamic converges to the core in polynomial time in homogeneous markets. |
| Keywords: | assignment game,price discovery,information,convergence time |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03100097&r=all |
| By: | Takaaki Abe (School of Political Science and Economics, Waseda University) |
| Abstract: | We study stable strategy profiles in a pure exchange game of bads, where each player dumps his/her bads such as garbage onto someone else. Hirai et al. (2006) show that cycle dumping, in which each player follows an ordering and dumps his/her bads onto the next player, is a strong Nash equilibrium and that self-disposal is α-stable for some initial distributions of bads. In this paper, we show that a strategy profile of bullying, in which all players dump their bads onto a single player, becomes α-stable for every exchange game of bads. We also provide a necessary and sufficient condition for a strategy profile to be α-stable in an exchange game of bads. Moreover, we show that cycle dumping is the only dumping behavior that generates a strong Nash equilibrium. In addition, we show that repeating an exchange after the first exchange makes self-disposal stationary. |
| Keywords: | bads; dumping; exchange; stability |
| JEL: | C72 C71 |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:wap:wpaper:1918&r=all |
| By: | Marina Agranov; Ahrash Dianat; Larry Samuelson; Leeat Yariv |
| Abstract: | We experimentally study decentralized one-to-one matching markets with transfers. We vary the information available to participants, complete or incomplete, and the surplus structure, supermodular or submodular. Several insights emerge. First, while markets often culminate in efficient matchings, stability is more elusive, reflecting the difficulty of arranging attendant transfers. Second, incomplete information and submodularity present hurdles to efficiency and especially stability; their combination drastically diminishes stability’s likelihood. Third, matchings form “from the top down” in complete-information supermodular markets, but exhibit many more and less-obviously ordered offers otherwise. Last, participants’ market positions matter far more than their dynamic bargaining styles for outcomes. |
| Keywords: | matching, incomplete information, stability, experiments |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8820&r=all |
| By: | Antonio Gabrales; Francesco Feri; Piero Gottardi; Miguel A. Meléndez-Jiménez; Antonio Cabrales |
| Abstract: | This paper reports on experiments regarding cheap talk games where senders attempt deception when their interests are not in conflict with those of the receiver. The amount of miscommunication is higher than in previous experimental findings on cheap talk games in situations where senders’ and receivers’ interests are not in conflict. We obtain this even though, as in previous literature, some participants appear to feature a cost of lying. We argue our findings could be attributed to distributional preferences of senders who lie to avoid the receiver getting a higher payoff than herself. |
| Keywords: | experiments, cheap talk, deception, conflicts of interest, social preferences |
| JEL: | D83 C72 G14 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8850&r=all |
| By: | Francesco De Sinopoli (University of Verona); Leo Ferraris (DEF, University of Rome "Tor Vergata"); Claudia Meroni (University of Milan) |
| Abstract: | This paper presents a model of the jobmarket in which the number of workers and companies is a Poisson random variable, as in Poisson games. The model has undominated equilibria that share some properties with directed search, while preserving some erratic elements typical of random search. |
| Keywords: | Labor Search, Poisson Games |
| JEL: | C72 J64 |
| Date: | 2020–06–22 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceisrp:499&r=all |
| By: | Claudius Gros |
| Abstract: | Human societies are characterized, besides others, by three constituent features. (A) Options, as for jobs and societal positions, differ with respect to their associated monetary and non-monetary payoffs. (B) Competition leads to reduced payoffs when individuals compete for the same option with others. (C) People care how they are doing relatively to others. The latter trait, the propensity to compare one's own success with that of others, expresses itself as envy. It is shown that the combination of (A)-(C) leads to spontaneous class stratification. Societies of agents split endogenously into two social classes, an upper and a lower class, when envy becomes relevant. A comprehensive analysis of the Nash equilibria characterizing a basic reference game is presented. Class separation is due to the condensation of the strategies of lower-class agents, which play an identical mixed strategy. Upper class agents do not condense, following individualist pure strategies. Model and results are size-consistent, holding for arbitrary large numbers of agents and options. Analytic results are confirmed by extensive numerical simulations. An analogy to interacting confined classical particles is discussed. |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2101.10824&r=all |
| By: | 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); Silvia Faggian (University of Ca’ Foscari [Venice, Italy]); Giuseppe Freni (University Parthenope of Naples) |
| Abstract: | We develop a spatial resource model in continuous time in which two agents/players strategically exploit a mobile resource in a two-region setup. To counteract the overexploitation of the resource (the tragedy of commons) that occurs when players are free to choose where to fish/hunt/extract/harvest, the regulator can establish a series of spatially structured policies. We compare the equilibria in the case of a common resource with those that emerge when the regulator either creates a natural reserve, or assigns Territorial User Rights to the players. We show that, when the discount rate is close to its "critical value", i.e. when technological and preference parameters dictate a low harvesting intensity/effort, the policies are ineffective in promoting the conservation of the resource and, in addition, they lead to a lower payoff for at least one of the players. Conversely, in a context of harsher harvesting intensity, the intervention can help to safeguard the resource, preventing extinction while also improving the welfare of both players. |
| Keywords: | Differential games,Spatial harvesting problems,Markov perfect equilibrium,Environmental protection policies |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-03038871&r=all |
| By: | Takaaki Abe (School of Political Science and Economics, Waseda University) |
| Abstract: | In this paper, we use a partition function form game to analyze cartel formation among firms in Cournot competition. We assume that a firm obtains a certain cost advantage that allows it to produce goods at a lower unit cost. We show that if the level of the cost advantage is “moderate”, then the firm with the cost advantage leads the cartel formation among the firms. Moreover, if the cost advantage satisfies another condition, then the formed cartel can also be stable in the sense of the core of a partition function form game. We also show that if the technology for the low-cost production can be copied, then the cost advantage may prevent a cartel from splitting. |
| Keywords: | cartel formation; Cournot competition; partition function form game; stability |
| JEL: | C71 L13 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:wap:wpaper:1911&r=all |
| By: | Anja Brumme; Wolfgang Buchholz; Dirk Rübbelke |
| Abstract: | In this paper we demonstrate how the impure public good model can be converted into a pure public good model with satiation of private consumption, which can be handled more easily, by using a variation of the aggregative game approach as devised by Cornes and Hartley (2007). We point out the conditions for impure public good utility functions that allow for this conversion through which the analysis of Nash equilibria can be conducted in a unified way for the impure and the pure public good model and which facilitates comparative statics analysis for impure public goods. Our approach also offers new insights on the determinants for becoming a contributor to the public good in the impure case as well as on the non-neutral effects of income transfers on Nash equilibria when the public good is impure. |
| Keywords: | impure public goods, warm-glow giving, Nash equilibria, aggregative game approach |
| JEL: | C72 D64 H41 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8852&r=all |
| By: | Yukihiko Funaki (School of Political Science and Economics, Waseda University); Junnosuke Shino (School of International Liberal Studies, Waseda University); Nobuyuki Uto (Faculty of Economics and Management, Hokuriku University) |
| Abstract: | This paper experimentally investigates overbidding in the fixed-rate funds-supplying operations conducted by central banks. One motivation for this is that while the European Central Bank had experienced severe overbidding in the conduct of its fixed-rate operations, no comparable behavior has been observed for the Bank of Japan. Existing theoretical analyses argue that this is because the currently accommodative financial environment in Japan has made bidders' objective functions locally satiated, and this contributes to the avoidance of overbidding. To investigate this further, we conduct an experiment with fixedrate operations, the results of which are as follows. When participants' initial demands are sufficiently small, they simply play the unique Nash equilibrium strategy to bid their true demand. Further, as demand increases and there is no satiation in their objective functions, participants tend to overbid. However, even as demand becomes larger, an explosion of bids does not arise if the objective functions are sufficiently satiated. We also estimate the subject bid functions from the experimental data affected by the degree of satiation and reveal that a simple calibration points to the vulnerability of fixed-rate operations to overbidding, even when satiation is preserved. |
| Keywords: | Fixed-rate funds-supplying operations; Overbidding; Experiments |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:wap:wpaper:1903&r=all |
| By: | Germana Corrado (DMD Università di Roma "Tor Vergata"); Luisa Corrado (DEF and CEIS, Università di Roma "Tor Vergata"); Francesca Marazzi (CEIS, Università di Roma "Tor Vergata") |
| Abstract: | Our study examines whether actual corruption, measured by individuals direct experience of corruption episodes (bribery), matches their perceptions of the phenomenon. Our experimental participants play a repeated public good game with mandatory minimum contribution and are given the possibility to bribe a computerized bureaucrat in order to free-ride. We elicit beliefs about the perceived level of corruptibility of the bureaucrat and others' corruption attempts. We study participants' willingness to corrupt and the gap between perceived and actual corruption under two information conditions. Results show that, although anonymous, spreading news about an attempt of corruption is enough to discourage such attempts, lowering the corruption rate. Consequently, when receiving no information, participants expect others to corrupt more, raising the index of perceived corruption. |
| Keywords: | Perceived and Experienced Corruption, Lab Experiment, Information |
| JEL: | D73 C92 H41 D90 |
| Date: | 2021–01–12 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceisrp:505&r=all |
| By: | Fabio Antoniou; Panos Hatzipanayotou; Nikos Tsakiris |
| Abstract: | We explore the possibility of achieving a cooperative outcome when governments act non-cooperatively in a strategic environmental policy model where emission permit markets are linked. We introduce a specific distribution scheme of the permit revenues between the exporting countries so as to sustain the cooperative outcome as a subgame perfect Nash equilibrium. Participation in the scheme is endogenized and we show that it constitutes a subgame perfect Nash equilibrium as long as the countries are not too asymmetric. Our results are robust once we allow for multiple pollutants, different modes of competition and market power in the permits market. |
| Keywords: | strategic environmental policy, internationally tradable permits, cross-border pollution, imperfect competition, welfare |
| JEL: | Q58 F12 F18 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8847&r=all |
| By: | Rania Mabrouk (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, UGA UFR FEG - Université Grenoble Alpes - Faculté d'Économie de Grenoble - UGA - Université Grenoble Alpes); Oliwia Kurtyka (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, Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes) |
| Abstract: | We analyze firms' choice of abatement technology in vertical chains. A downstream polluting monopoly can buy a license from an upstream supplier with mature end-of-pipe equipment (outsider) or develop an in-house clean technology. Insiders innovation may be undertaken only to increase bargaining power of the polluter. We put the light on the strategic role of environmental regulation to influence this choice. We find that the role of regulator as a technology forcing authority is confirmed in regions of under-investment. However, under certain conditions, an over-investment occurs that forces the regulator to become laxer. Paradoxically, the regulator may oppose innovation even if the resulting technology is used by the innovator. All these results rely upon the creation of total profits from the integrated vertical structure. |
| Keywords: | Environmental innovation,Abatement technology,Clean technology,End-of-pipe equipment,Vertical chain,Regulation,Bargaining,Bargaining. |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03081146&r=all |
| By: | Jorgen Vitting Andersen (Centre d'Economie de la Sorbonne); Andrzej Nowak (Department of Psychology - Warsaw University) |
| Abstract: | It is hard to overstate the importance that the concept of symmetry has had in every field of physics, a fact alluded to by the Nobel Prize winner P.W. Anderson, who once wrote that "physics is the study of symmetry". Whereas the idea of symmetry is widely used in science in general, very few (if not almost no) applications has found its way into the field of finance. Still, the phenomenon appears relevant in terms of for example the symmetry of strategies that can happen in the decision making to buy or sell financial shares. Game theory is therefore one obvious avenue where to look for symmetry, but as will be shown, also technical analysis and long term economic growth could be phenomena which show the hallmark of a symmetry |
| Keywords: | Agent-based modelling; Game theory; Ginzburg-Landau theory; financial symmetry |
| JEL: | G14 C73 |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:20030&r=all |