nep-gth New Economics Papers
on Game Theory
Issue of 2022‒03‒14
ten papers chosen by
Sylvain Béal
Université de Franche-Comté

  1. Strategic Communication with a Small Conflict of Interest By Francesc Dilmé
  2. A Category for Extensive-Form Games By Peter A. Streufert
  3. Coalition Formation Under Dominance Invariance By Kimya, Mert
  4. Renegotiation and Dynamic Inconsistency: Contracting with Non-Exponential Discounting By Doruk Cetemen; Felix Zhiyu Feng; Can Urgun
  5. Unknottedness of the Graph of Pairwise Stable Networks & Network Dynamics By Julien Fixary
  6. Conditions for efficient entry and clustering By Smirnov, Vladimir; Waity, Andrew
  7. Spedifying A Game-Theoretic Extensive Form as an Abstract 4-Ary Relation By Peter A. Streufert
  8. Financial Sustainability - Game Theory Analysis of Options Approach for a Czech Bank By Janda, Karel; Marek, Petr
  9. The smell of cooperativeness: Do human body odours advertise cooperative behaviours? By Arnaud Tognetti; Valerie Durand; Dimitri Dubois; Melissa Barkat‐defradas; Astrid Hopfensitz; Camille Ferdenzi
  10. Norms, gender, and payment method affect extraction behavior in a framed field experiment on community forestry in India By Zhang, Wei; Meinzen-Dick, Ruth Suseela; Valappanandi, Sanoop; Balakrishna, Raksha; Reddy, Hemalatha; Janssen, Marco A.; Thomas, Liya; Priyadarshini, Pratiti; Kandikuppa, Sandeep; Chaturvedi, Rahul; Ghate, Rucha

  1. By: Francesc Dilmé (University of Bonn)
    Abstract: This paper analyzes strategic information transmission between a sender and a receiver with similar objectives. We provide a first-order approximation of the equilibrium behavior in the general version of the Crawford and Sobel’s (1982) model with a small bias. Our analysis goes beyond the usual uniform-quadratic setting: we uncover how the state-dependent bias and the non-uniform state distribution influence the precision with which each state of the world is communicated. We illustrate the approach by providing novel comparative statics results in different applications.
    Keywords: Strategic Communication, Small Bias
    JEL: C72 D82 D83
    Date: 2022–02
  2. By: Peter A. Streufert (University of Western Ontario)
    Abstract: This paper introduces Gm, which is a category for extensive-form games. It also provides some applications. The category’s objects are games, which are understood to be sets of nodes which have been endowed with edges, information sets, actions, players, and utility functions. Its arrows are functions from source nodes to target nodes that preserve the additional structure. For instance, a game’s information-set collection is newly regarded as a topological basis for the game’s decision-node set, and thus a morphism’s continuity serves to preserve information sets. Given these definitions, a game monomorphism is characterized by the property of not mapping two source runs (plays) to the same target run. Further, a game isomorphism is characterized as a bijection whose restriction to decision nodes is a homeomorphism, whose induced player transformation is injective, and which strictly preserves the ordinal content of the utility functions. The category is then applied to some game-theoretic concepts beyond the definition of a game. A Selten subgame is characterized as a special kind of categorical subgame, and game isomorphisms are shown to preserve strategy sets, Nash equilibria, Selten subgames, subgame-perfect equilibria, perfect-information, and no-absentmindedness. Further, it is shown that the full sub-category for distinguished-action sequence games is essentially wide in the category of all games, and that the full subcategory of action-set games is essentially wide in the full subcategory for games with no-absentmindedness.
    Date: 2021
  3. By: Kimya, Mert
    Abstract: An abstract game satisfies Dominance Invariance if the indirect and the direct dominance relations, or myopic and farsighted dominance, are equivalent. Mauleon, Molis, Vannetelbosch, and Vergote (2014) study Dominance Invariance in match- ing problems as an attractive condition that eliminates the differences between a farsighted solution concept and its myopic counterpart. We show that Dominance Invariance can also be used to eliminate the differences between various farsighted solution concepts in any abstract game. Together with an additional condition called No Infinite Chains, Dominance Invariance implies the existence and unique- ness of the farsighted stable set, its equivalence to the largest consistent set and its equivalence to the (strong) rational expectations farsighted stable set when the latter exists. This also implies that both the farsighted stable set and the largest consistent set do not su er from the problem of maximality under these conditions.
    Keywords: Farsighted stability; Coalitional games; Farsighted stable set; Largest Consistent Set
    Date: 2021–06
  4. By: Doruk Cetemen (Collegio Carlo Alberto); Felix Zhiyu Feng (University of Washington); Can Urgun (Princeton University)
    Abstract: This paper studies a continuous-time, finite-horizon contracting problem with renegotiation and dynamic inconsistency arising from non-exponential discounting. The problem is formulated as a dynamic game played among the agent, the principal and their respective future "selves", each with their own discount function. We identify the principal optimal renegotiation-proof contract as a Markov Perfect Equilibrium (MPE) of the game, prove such a MPE exists, and characterize the optimal contract via an extended Hamilton-Jacobi-Bellman system. We solve the optimal contract in closed-form when the discount functions of the selves are related by time difference, a property that is satisfied by common forms of non-exponential discounting such as quasi-hyperbolic discounting and anticipatory utility. In particular, quasi-hyperbolic discounting leads to a U-shaped action path and anticipatory utility leads to a humshaped path, both are qualitatively different from the monotonic action path that would arise under exponential discounting.
    Keywords: continuous-time contracting, dynamic inconsistency, renegotiation, extended HJB system, non-atomic games
    JEL: D82 D86 D91
    Date: 2021–02
  5. By: Julien Fixary (UP1 - Université Paris 1 Panthéon-Sorbonne, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: We extend Bich-Fixary's theorem ([2]) about the topological structure of the graph of pairwise stable networks. Namely, we show that the graph of pairwise stable networks is not only homeomorphic to the space of societies, but that it is ambient isotopic to a trivial copy of this space (a result in the line of Demichelis-Germano's unknottedness theorem ([7])). Furthermore, we introduce the notion of (extended) network dynamics which refers to families of vector fields on the set of weighted networks whose zeros correspond to pairwise stable networks. We use our version of the unknottedness theorem to show that most of network dynamics can be continuously connected to each other, without adding additional zeros. Finally, we prove that this result has an important consequence on the indices of these network dynamics at any pairwise stable network, a concept that we link to genericity using Bich-Fixary's oddness theorem ([2]).
    Keywords: Pairwise Stability,Unknottedness Theorem,Network Dynamics,Genericity
    Date: 2022–01
  6. By: Smirnov, Vladimir; Waity, Andrew
    Abstract: We outline the conditions for efficient entry order and clustering in a triopoly preemption game in which firms differ in their sunk costs of entry. The critical factor turns out to be how symmetric the potential entrants are. If the cost asymmetry between the firms is sufficiently large, entry is always in the efficient order. On the other hand, if firms are relatively symmetric, entry order can be inefficient in that the firm with the second-lowest entry cost enters first. Furthermore, if there is any difference in entry costs between the two most efficient firms, there is never clustering (which is when firms enter the market at the same time). Lastly, in contrast to the case with relatively symmetric firms, when the cost asymmetry between firms is large, the leader's entry time in the triopoly is always earlier than it is in a duopoly.
    Keywords: timing games; asymmetric firms; clustering; inefficient entry
    Date: 2021–11
  7. By: Peter A. Streufert (University of Western Ontario)
    Abstract: This paper specifies an extensive form as a 5-ary relation (i.e. set of quintuples) which satisfies certain abstract axioms. Each quintuple is understood to list a player, a situation (e.g. information set), a decision node, an action, and a successor node. Accordingly, the axioms are understood to specify abstract relationships between players, situations, nodes, and actions. Such an extensive form is called a "5-form", and a "5-form game" is defined to be a 5-form together with utility functions. The paper's main result is to construct a bijection between (a) those 5-form games with information-set situations and (b) Gm games (Streufert 2021). In this sense, 5-form games equivalently formulate almost all extensive-form games. An application weakens the tree axiom in the presence of the other axioms, which leads to a convenient decomposition of 5-forms.
    Date: 2021
  8. By: Janda, Karel; Marek, Petr
    Abstract: This paper applies a model of bank run based on game theory analysis of options to the real world case of the Czech retail bank Air Bank a. s. We discuss the main factors affecting the susceptibility of Czech banks to bank run. We estimate the equity value which triggers bank run for Air Bank´s a. s. clients. We also simulate a possible bank run, using a liquidity stress test, which is similar to stress tests used by some European supervisory authorities. We provide alternative estimates of critical value of bank’s equity after the attainment of which depositors withdraw their deposits and by doing so trigger a bank run.
    Keywords: Bank run,liquidity,game theory,option pricing
    JEL: C72 G01 G21
    Date: 2022
  9. By: Arnaud Tognetti (Karolinska Institutet [Stockholm], IAST - Institute for Advanced Study in Toulouse); Valerie Durand (UMR ISEM - Institut des Sciences de l'Evolution de Montpellier - EPHE - École pratique des hautes études - PSL - Université Paris sciences et lettres - UM - Université de Montpellier - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - CNRS - Centre National de la Recherche Scientifique - Institut de recherche pour le développement [IRD] : UR226); Dimitri Dubois (CEE-M - Centre d'Economie de l'Environnement - Montpellier - UMR 5211 - 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); Melissa Barkat‐defradas (UMR ISEM - Institut des Sciences de l'Evolution de Montpellier - EPHE - École pratique des hautes études - PSL - Université Paris sciences et lettres - UM - Université de Montpellier - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - CNRS - Centre National de la Recherche Scientifique - Institut de recherche pour le développement [IRD] : UR226); Astrid Hopfensitz (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS - Centre National de la Recherche Scientifique - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UL2 - Université Lumière - Lyon 2 - ENS Lyon - École normale supérieure - Lyon); Camille Ferdenzi (CRNL - Centre de recherche en neurosciences de Lyon - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - INSERM - Institut National de la Santé et de la Recherche Médicale - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Several physical features influence the perception of how cooperative a potential partner is. While previous work focused on face and voice, it remains unknown whether body odours influence judgements of cooperativeness and if odour-based judgements are accurate. Here, we first collected axillary odours of cooperative and uncooperative male donors through a public good game and used them as olfactory stimuli in a series of tasks examining whether and how they influence cooperative decision-making in an incentivized economic game and ratings of cooperativeness. Our results show that having access to the donor's body odours provided a strategic advantage to women during economic decisions (but not to men): with age, women were more likely to cooperate with cooperative men and to avoid interacting with uncooperative men. Ratings of cooperativeness were nonetheless unrelated to the donors' actual cooperativeness. Finally, while men with masculine and intense body odours were judged less cooperative, we found no evidence that donors' actual cooperativeness was associated with less masculine or less intense body odour. Overall, our findings suggest that, as faces and voices, body odours influence perceived cooperativeness and might be used accurately and in a non-aware manner as olfactory cues of cooperativeness, at least by women..
    Date: 2021–12–09
  10. By: Zhang, Wei; Meinzen-Dick, Ruth Suseela; Valappanandi, Sanoop; Balakrishna, Raksha; Reddy, Hemalatha; Janssen, Marco A.; Thomas, Liya; Priyadarshini, Pratiti; Kandikuppa, Sandeep; Chaturvedi, Rahul; Ghate, Rucha
    Abstract: This paper presents results from a framed field experiment in which participants make decisions about extraction of a common-pool resource, a community forest. The experiment was designed and piloted as both a research activity and an experiential learning intervention during 2017-2018 with 120 groups of resource users (split by gender) from 60 habitations in two Indian states, Andhra Pradesh and Rajasthan. We examine whether local beliefs and norms about community forest, gender of participants, within-experiment treatments (non-communication, communication, and optional election of institutional arrangements (rules)) and remuneration methods affect harvest behaviour and groups’ tendency to cooperate. Furthermore, we explore whether the experiment and subsequent community debriefing had learning effects. Results reveal a “weak†Nash Equilibrium in which participants harvested substantially less than the Nash prediction even in the absence of communication, a phenomenon stronger for male than female participants in both states. For male groups in both states, both communication and optional rule election are associated with lower group harvest per round, as compared to the reference non-communication game. For female groups in both states, however, communication itself did not significantly slow down resource depletion; but the introduction of optional rule election did reduce harvest amounts. For both men and women in Andhra Pradesh and men in Rajasthan, incentivized payments to individual participants significantly lowered group harvest, relative to community flat payment, suggesting a possible “crowding-in†effect on pro-social norms. Despite the generally positive memory of the activity, reported actual changes are limited. This may be due to the lack of follow-up with the communities between the experiment and the revisit. The fact that many of the communities already have a good understanding of the importance of the relationships between (not) cutting trees and the ecosystem services from forests, with rules and strong internal norms against cutting that go beyond the felling of trees in the game, may have also meant that the game did not have as much to add. Findings have methodological and practical implications for designing behavioral intervention programs to improve common-pool resource governance.
    Keywords: INDIA; SOUTH ASIA; ASIA; gender; extraction; community forestry; collective ownership; field experimentation; forests; game; experiential learning; payment methods; common-pool resource; framed field experiments;
    Date: 2021

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