nep-gth New Economics Papers
on Game Theory
Issue of 2022‒06‒20
thirty-one papers chosen by
Sylvain Béal
Université de Franche-Comté

  1. Beliefs in Repeated Games By Masaki Aoyagi; Guillaume Frechette; Sevgi Yuksel
  2. Efficient Entry in Cournot (Global) games By Harrison, Rodrigo; Jara-Moroni, Pedro
  3. Endogenous stackelberg leadership: the symmetric case By Jara-Moroni, Pedro
  4. Nash equilibria of COVID-19 vaccination By Saccal, Alessandro
  5. Strategic Complexity and the Value of Thinking By Gill, David; Prowse, Victoria L.
  6. On Efficiency and Stability in Two-way Flow Network with Small Decay: A Note By Banchongsan Charoensook
  7. An experiment on the Nash program: Comparing two strategic mechanisms implementing the Shapley value By Michela Chessa; Nobuyuki Hanaki; Aymeric Lardon; Takashi Yamada
  8. Stable Outcomes and Information in Games: An Empirical Framework By Paul S. Koh
  9. The Irreversible Pollution Game By Raouf Boucekkine; Weihua Ruan; Benteng Zou
  10. Estimating Discrete Games of Complete Information: Bringing Logit Back in the Game By Paul S. Koh
  11. Estimating Dynamic Games with Unknown Information Structure By Paul S. Koh
  12. Overcoming Free-Riding in Bandit Games By Johannes Hörner; Nicolas Klein; Sven Rady
  13. Why and when coalitions split? An alternative analytical approach with an application to environmental agreements By Raouf Boucekkine; Carmen Camacho; Weihua Ruan; Benteng Zou
  14. Motivating Public Sector Employees: Public Good Contributions in Addis Ababa Water and Sewerage Authority By Miquel-Florensa, Josepa; Joseph, George
  15. Cost of complexity in implementing the Shapley value by choosing a proposer through a bidding procedure By Michela Chessa; Nobuyuki Hanaki; Aymeric Lardon; Takashi Yamada
  16. Transient impact from the Nash equilibrium of a permanent market impact game By Francesco Cordoni; Fabrizio Lillo
  17. Leveraging the Honor Code: Public Goods Contributions under Oath By Jérôme Hergueux; Nicolas Jacquemet; Stéphane Luchini; Jason Shogren
  18. A Game Theory-based Verification of Social Norms:An Example from Accounting Rules By Eiko Arata; Takuhei Shimogawa; Takehiro Inohara
  19. Strategic Behavior under Context Misalignment By Pierfrancesco Guarino; Gabriel Ziegler
  20. Network Externalities, Dominant Value Margins, and Equilibrium Uniqueness By Jay Pil Choi; Christodoulos Stefanadis
  21. Preferences and Perceptions in Provision and Maintenance Public Goods By Gächter, Simon; Kölle, Felix; Quercia, Simone
  22. Optimal screening contests By Sumit Goel
  23. A Model of Financial Market Control By Yoshihiro Ohashi
  24. Robust Contracts in Common Agency By Keeler Marku; Sergio Ocampo; Jean-Baptiste Tondji
  25. Overwhelmed by Routine Tasks: A Multi-Tasking Principle Agent Perspective By Dominique Demougin; Carsten Helm
  26. Pricing with algorithms By Rohit Lamba; Sergey Zhuk
  27. Credible Persuasion By Xiao Lin; Ce Liu
  28. International cooperation and competition in orbit-use management By Aditya Jain; Akhil Rao
  29. Rational social distancing policy during epidemics with limited healthcare capacity By Simon K. Schnyder; John J. Molina; Ryoichi Yamamoto; Matthew S. Turner
  30. Prosocial motivation for vaccination By Reddinger, J. Lucas; Charness, Gary; Levine, David
  31. Third-Party Sale of Information By Evans, R., Park, I-U.; Park, I-U.

  1. By: Masaki Aoyagi; Guillaume Frechette; Sevgi Yuksel
    Abstract: This paper uses a laboratory experiment to study beliefs and their relationship to action and strategy choices in finitely and indefinitely repeated prisoners' dilemma games. We find subjects' beliefs about the other player's action are accurate despite some systematic deviations corresponding to early pessimism in the indefinitely repeated game and late optimism in the finitely repeated game. The data reveals a close link between beliefs and actions that differs between the two games. In particular, the same history of play leads to different beliefs, and the same belief leads to different action choices in each game. Moreover, we find beliefs anticipate the evolution of behavior within a supergame, changing in response to the history of play (in both games) and the number of rounds played (in the finitely repeated game). We then use the subjects' beliefs over actions in each round to identify their beliefs over supergame strategies played by the other player. We find these beliefs correctly capture the different classes of strategies used in each game. Importantly, subjects using different strategies have different beliefs, and for the most part, strategies are subjectively rational given beliefs. The results also suggest subjects tend to overestimate the likelihood that others use the same strategy as them, while underestimating the likelihood that others use less cooperative strategies.
    Date: 2021–02
  2. By: Harrison, Rodrigo; Jara-Moroni, Pedro (Universidad de Santiago de Chile. Departamento de Economía; Universidad Adolfo Ibáñez. Facultad de Ingeniería y Ciencias)
    Abstract: IWe present a two stage entry game in which a large number of firms choose simultaneouslywhether to enter a market or not. Firms that decide to enter the market produce a homogeneousgood facing Cournot competition under a parametrized demand. Using a global game approach, weshow that there exist selection of a unique equilibrium in the first stage entry game, in which thereis efficient entry, i.e. firms that enter are the ones with the lowest entry cost, providing theoreticalfoundation for the equilibrium selection assumption utilized in entry models in the empirical entryliterature. We explore as well efficiency properties of the selected equilibrium and provide examplesthat do not fit our general framework, but where similar results may be obtained.
    Keywords: Cournot, Global game, Equilibrium selection, Strategic substitutes
    JEL: L13 D82 C72
    Date: 2021–04
  3. By: Jara-Moroni, Pedro (Universidad de Santiago de Chile. Departamento de Economía)
    Abstract: In this article we prove that, when firms are identical, there are no non-degenerate mixed strategy equilibria in the linear quantity setting duopoly game studied by van Damme and Hurkens (1999) , in which firms engage in the “Action Commitment Game” proposed by Hamilton and Slutsky (1990). The consequence of this is that in the symmetric case, there can not be equilibrium selection through risk dominance in such game
    Keywords: Stackelberg, Cournot, Endogenous Timing, Mixed Strategies
    JEL: C72 D43
    Date: 2021–07
  4. By: Saccal, Alessandro
    Abstract: The present research conducts a formal analysis of the interactive decisions concerning the enterprise of COVID-19 vaccination on the part of governments and citizens. It specifically constructs a non-cooperative static game with complete information between the citizen and the government encompassing the strategies of vaccination and no vaccination with regard to the former and the strategies of direct imposition, subsistence restrictions, luxury restrictions and no imposition with regard to the latter. On account of its payoff structure the present analysis finds that the game in question presents one sole and strict pure strategy Nash equilibrium, being that of strategies no vaccination and no imposition, respectively. The core rationale is that the citizen accepts COVID-19 vaccination only if his survival is placed at risk, because of the inherent unlawfulness presented by COVID-19 vaccination, itself due to foetal exploitation and potentially adverse effects, thereby prompting the government not to impose it, lest individual integrity and societal rights be violated as well. It furthermore shows that the exogenous elimination of the no imposition strategy on the part of the government transforms the Nash equilibrium into that of strategies vaccination and direct imposition, respectively, as materially come to pass. It finally determines that the unlikely addition of the revolution strategy on the part of the citizen in the presence of the elimination of the no imposition strategy on the part of the government likewise admits one sole and strict pure strategy Nash equilibrium, either in strategies vaccination and direct imposition or in strategies revolution and direct imposition, respectively.
    Keywords: citizen; COVID-19; equilibrium; game; government; imposition; pandemic; payoff; vaccination.
    JEL: C72 D74 I12 I18
    Date: 2022–05–09
  5. By: Gill, David (Purdue University); Prowse, Victoria L. (Purdue University)
    Abstract: Response times are a simple low-cost indicator of the process of reasoning in strategic games. In this paper, we leverage the dynamic nature of response-time data from repeated strategic interactions to measure the strategic complexity of a situation by how long people think on average when they face that situation (where we categorize situations according to the characteristics of play in the previous round). We find that strategic complexity varies significantly across situations, and we find considerable heterogeneity in how responsive subjects' thinking times are to complexity. We also study how variation in response times at the individual level across rounds affects strategic behavior and success: when a subject thinks for longer than she would normally do in a particular situation, she wins less frequently and earns less. The behavioral mechanism that drives the reduction in performance is a tendency to move away from Nash equilibrium behavior. Finally, cognitive ability and personality have no effect on average response times.
    Keywords: response time, decision time, deliberation time, thinking time, complexity, level-k, game theory, strategic game, repeated games, beauty contest, cognitive ability, personality
    JEL: C72 C91
    Date: 2022–05
  6. By: Banchongsan Charoensook (Department of International Business, Keimyung Adams College, Keimyung University)
    Abstract: Most literature in strategic network formation shows that there is a substantial tension between stability and efficiency. In this note, I show that such is not the case in the twoway flow model with small decay studied by Bala and Goyal (2000a) and De Jaegher and Kamphorst (2015). Specifically, I show that every link receiver in a Nash network serves as an efficient trans-mitter of information. I also generalize this result to the case of player hetero-geneity and then provide a fine-detail characterization of effiicient networks.
    Keywords: Network Formation, Nash Network, Two-way Flow Network, Agent Heterogeneity, Efficient Network
    JEL: C72 D85
    Date: 2022–05
  7. By: Michela Chessa; Nobuyuki Hanaki; Aymeric Lardon; Takashi Yamada
    Abstract: We experimentally compare two well-known mechanisms inducing the Shapley value as an ex ante equilibrium outcome of a noncooperative bargaining procedure: the demand-based Winter's demand commitment bargaining mechanism and the offer-based Hart and Mas-Colell procedure. Our results suggest that the offer-based Hart and Mas-Colell mechanism better induces players to cooperate and to agree on an efficient outcome, whereas the demand-based Winter mechanism better implements allocations that reflect players' effective power.
    Date: 2022–05
  8. By: Paul S. Koh
    Abstract: Empirically, many strategic settings are characterized by stable outcomes in which players' decisions are publicly observed, yet no player takes the opportunity to deviate. To analyze such situations in the presence of incomplete information, we build an empirical framework by introducing a novel solution concept that we call Bayes stable equilibrium. Our framework allows the researcher to be agnostic about players' information and the equilibrium selection rule. The Bayes stable equilibrium identified set collapses to the complete information pure strategy Nash equilibrium identified set under strong assumptions on players' information. Furthermore, all else equal, it is weakly tighter than the Bayes correlated equilibrium identified set. We also propose computationally tractable approaches for estimation and inference. In an application, we study the strategic entry decisions of McDonald's and Burger King in the US. Our results highlight the identifying power of informational assumptions and show that the Bayes stable equilibrium identified set can be substantially tighter than the Bayes correlated equilibrium identified set. In a counterfactual experiment, we examine the impact of increasing access to healthy food on the market structures in Mississippi food deserts.
    Date: 2022–05
  9. By: Raouf Boucekkine (Rennes School of Business, France); Weihua Ruan (Purdue University Northwest, USA); Benteng Zou (DEM, University of Luxembourg)
    Abstract: We study a 2-country differential game with irreversible pollution. Irreversibility is of a hard type: above a certain threshold level of pollution, the self-cleaning capacity of Nature drops to zero. Accordingly, the game includes a non-concave feature, and we characterize both the cooperative and non-cooperative versions with this general non-LQ property. We deliver full analytical results for the existence of Markov Perfect Equilibria. We first demonstrate that when pollution costs are equal across players (symmetry), irreversible pollution regimes are more frequently reached than under cooperation. Second, we study the implications of asymmetry in the pollution cost. We find far nontrivial results on the reachability of the irreversible regime. However, we unambiguously prove that, for the same total cost of pollution, provided the irreversible regime is reached in both the symmetric and asymmetric cases, long-term pollution is larger in the symmetric case, reflecting more intensive free-riding under symmetry.
    Keywords: Differential games, Irreversible pollution, Non-concave pollution decay, Asymmetric pollution cost, Markov Perfect Equilibria
    JEL: C72 C61 Q53
    Date: 2022–05–13
  10. By: Paul S. Koh
    Abstract: This paper considers the estimation of static discrete games of complete information under pure strategy Nash equilibrium and no assumptions on the equilibrium selection rule, which is often viewed as computationally difficult due to the need for simulation of latent variables and repeated point-wise testing over a large number of candidate points in the parameter space. We propose computationally attractive approaches that avoid simulation and grid search by characterizing identifying restrictions in closed forms and formulating the identification problem as mathematical programming problems. We show that, under standard assumptions, the inequality restrictions proposed by Andrews, Berry, and Jia (2004) can be expressed in terms of closed-form multinomial logit probabilities, and the corresponding identified set is convex. When actions are binary, the sharp identified set can be characterized using a finite number of closed-form inequalities. We also propose a simple approach to constructing confidence sets for the identified sets. Two real-data experiments are used to illustrate that our methodology can be several orders of magnitude faster than existing approaches.
    Date: 2022–05
  11. By: Paul S. Koh
    Abstract: This paper studies identification and estimation of dynamic games when the underlying information structure is unknown to the researcher. To tractably characterize the set of model predictions while maintaining weak assumptions on players' information, we introduce Markov correlated equilibrium, a dynamic analog of Bayes correlated equilibrium. The set of Markov correlated equilibrium predictions coincides with the set of Markov perfect equilibrium predictions that can arise when the players might observe more signals than assumed by the analyst. We characterize the sharp identified sets under varying assumptions on what the players minimally observe. We also propose computational strategies for dealing with the non-convexities that arise in dynamic environments.
    Date: 2022–05
  12. By: Johannes Hörner (Yale University [New Haven], TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CNRS - Centre National de la Recherche Scientifique); Nicolas Klein (UdeM - Université de Montréal); Sven Rady (Department of Mathematics - University of Bonn - Rheinische Friedrich-Wilhelms-Universität Bonn)
    Abstract: This paper considers a class of experimentation games with L´evy bandits encompassing those of Bolton and Harris (1999) and Keller, Rady and Cripps (2005). Its main result is that efficient (perfect Bayesian) equilibria exist whenever players' payoffs have a diffusion component. Hence, the trade-offs emphasized in the literature do not rely on the intrinsic nature of bandit models but on the commonly adopted solution concept (MPE). This is not an artifact of continuous time: we prove that such equilibria arise as limits of equilibria in the discretetime game. Furthermore, it suffices to relax the solution concept to strongly symmetric equilibrium.
    Keywords: Two-Armed Bandit,Bayesian Learning,Strategic Experimentation,Strongly Symmetric Equilibrium.
    Date: 2021–04–01
  13. By: Raouf Boucekkine (Rennes School of Business, France); Carmen Camacho (Paris School of Economics and CNRS, France); Weihua Ruan (Purdue University Northwest, USA); Benteng Zou (DEM, University of Luxembourg, Luxembourg)
    Abstract: We use a parsimonious two-stage differential game setting where the duration of the first stage, the coalition stage, depends on the will of a particular player to leave the coalition through an explicit timing variable. By specializing in a standard linear-quadratic environmental model augmented with a minimal constitutional setting for the coalition (payoff share parameter), we are able to analytically extract several nontrival findings. Three key aspects drive the results: the technological gap as an indicator of heterogeneity across players, the constitution of the coalition and the intensity of the public bad (here, the pollution damage). We provide with a full analytical solution to the two-stage differential game. In particular, we characterize the intermediate parametric cases leading to optimal finite time splitting. A key characteristic of these finite-time-lived coalitions is the requirement of the payoff share accruing to the splitting country to be large enough. Incidentally, our two-stage differential game setting reaches the conclusion that splitting countries are precisely those which use to benefit the most from the coalition. Constraining the payoff share to be low by Constitution may lead to optimal everlasting coalitions only provided initial pollution is high enough, which may cover the emergency cases we are witnessing nowadays.
    Keywords: Coalition splitting; environmental agreements; constitutional vs technological heterogeneity; differential games; multistage optimal control
    JEL: C61 C73 D71
    Date: 2022–05–16
  14. By: Miquel-Florensa, Josepa; Joseph, George
    Abstract: We present a lab-in-the-field experiment with employees of the Addis Ababa Water and Sanitation Authority with the aim to understand how to improve coordination and collaboration in their daily crew work. Par-ticipants play a series of public good games under different rules: standard game, with identifiable set of partners, game with threshold, and game with a randomly selected anonymous leader with the power to punish. We show that a common goal, in the form of a threshold to be attained for the group success, is significantly more effective than a potentially pun-ishing leader to increase individual effort and ultimately group outcomes. This result advocates for the introduction of team goals as coordination and motivation devices in settings where tasks are performed by groups and are subject to free-riding and coordination challenges.
    JEL: J45 M50 O12
    Date: 2022–05–20
  15. By: Michela Chessa; Nobuyuki Hanaki; Aymeric Lardon; Takashi Yamada
    Abstract: We experimentally compare a simplified version of two mechanisms that implement the Shapley value as an (ex ante) equilibrium outcome of a noncooperative bargaining procedure: one proposed by Hart and Mas-Colell (1996, H-MC) and the other by Pérez-Castrillo and Wettstein (2001, PC-W). While H-MC induces the Shapley value only on average, PC-W does so as a unique equilibrium outcome by introducing an additional bidding stage on top of H-MC. We investigate the effect of this additional complexity that PC-W introduces on the resulting outcomes such as the frequency of grand coalition formation, efficiency, and the distance between the realized allocation and the Shapley value. Our experiment shows that H-MC not only results in significantly greater efficiency than PC-W, but also the average allocation is closer to the Shapley value for those groups that formed the grand coalition.
    Date: 2022–05
  16. By: Francesco Cordoni; Fabrizio Lillo
    Abstract: A large body of empirical literature has shown that market impact of financial prices is transient. However, from a theoretical standpoint, the origin of this temporary nature is still unclear. We show that an implied transient impact arises from the Nash equilibrium between a directional trader and one arbitrageur in a market impact game with fixed and permanent impact. The implied impact is the one that can be empirically inferred from the directional trader's trading profile and price reaction to order flow. Specifically, we propose two approaches to derive the functional form of the decay kernel of the Transient Impact Model, one of the most popular empirical models for transient impact, from the behaviour of the directional trader at the Nash equilibrium. The first is based on the relationship between past order flow and future price change, while in the second we solve an inverse optimal execution problem. We show that in the first approach the implied kernel is unique, while in the second case infinite solutions exist and a linear kernel can always be inferred.
    Date: 2022–05
  17. By: Jérôme Hergueux (BETA - Bureau d'Économie Théorique et Appliquée - AgroParisTech - UNISTRA - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Nicolas Jacquemet (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 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, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Stéphane Luchini (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Jason Shogren (UW - University of Wyoming)
    Abstract: Public good games are at the core of many environmental challenges. In such social dilemmas, a large share of people endorse the norm of reciprocity. A growing literature complements this finding with the observation that many players exhibit a self-serving bias in reciprocation: "weak reciprocators" increase their contributions as a function of the effort level of the other players, but less than proportionally. In this paper, we build upon a growing literature on truth-telling to argue that weak reciprocity might be best conceived not as a preference, but rather as a symptom of an internal trade-off at the player level between (i) the truthful revelation of their private reciprocal preference, and (ii) the economic incentives they face (which foster free-riding). In truth-telling experiments, many players misrepresent private information when this is to their material benefit, but to a significantly lesser extent than what would be expected based on the profit-maximizing strategy. We apply this behavioral insight to strategic situations, and test whether the preference revelation properties of the classic voluntary contribution game can be improved by offering players the possibility to sign a classic truth-telling oath. Our results suggest that the honesty oath helps increase cooperation (by 33% in our experiment). Subjects under oath contribute in a way which is more consistent with (i) the contribution they expect from the other players and (ii) their normative views about the right contribution level. As a result, the distribution of social types elicited under oath differs from the one observed in the baseline: some free-riders, and many weak reciprocators, now behave as pure reciprocators.
    Keywords: Cooperation,Reciprocity,Social preferences,Public goods,Truth-telling oath
    Date: 2022–03
  18. By: Eiko Arata (Faculty of Business and Commerce, Keio University); Takuhei Shimogawa (Faculty of Economics, Musashi University); Takehiro Inohara (Institute for Liberal Arts, Tokyo Institute Technology)
    Abstract: This study develops a model that explains why accounting standards, known as Generally Accepted Accounting Principles, are "generally accepted". We focus on depreciation, for which multiple accounting procedures are permitted, and examine the reasons and conditions for acceptance of these procedures with cooperative game theory. Cost allocations given by the straight-line method, which is conventionally used all over the world, are always in the core. On the other hand, cost allocations given by the fair value measurement, which has been recently supported by the International Accounting Standards Board (IASB), are in the core if the market value of the asset predicted by the lease company realizes and the firm (lessee) can obtain the information of the realized value. Furthermore, we examined the relationship between methods adopted in practice and solution concepts that give unique solutions, such as the Shapley value and the nucleolus. Seeking the original solution concept of accounting standards is our next step.
    Keywords: Depreciation;Cooperative game theory;Accounting
    JEL: C71 M41
    Date: 2022–05–10
  19. By: Pierfrancesco Guarino; Gabriel Ziegler
    Abstract: We study the behavioral implications of Rationality and Common Strong Belief in Rationality (RCSBR) with contextual assumptions allowing players to entertain misaligned beliefs, i.e., players can hold beliefs concerning their opponents' beliefs where there is no opponent holding those very beliefs. Taking the analysts' perspective, we distinguish the infinite hierarchies of beliefs actually held by players ("real types") from those that are a byproduct of players' hierarchies ("imaginary types") by introducing the notion of separating type structure. We characterize the behavioral implications of RCSBR for the real types across all separating type structures via a family of subsets of Full Strong Best-Reply Sets of Battigalli & Friedenberg (2012). By allowing misalignment, in dynamic games we can obtain behavioral predictions inconsistent with RCSBR (in the standard framework), contrary to the case of belief-based analyses for static games--a difference due to the dichotomy "non-monotonic vs. monotonic" reasoning.
    Date: 2022–05
  20. By: Jay Pil Choi; Christodoulos Stefanadis
    Abstract: We examine tippy network markets that accommodate price discrimination. The analysis shows that when a mild equilibrium refinement, the monotonicity criterion, is adopted, network competition may have a unique subgame-perfect equilibrium regarding the winner’s identity; the prevailing brand may be fully determined by its product features. We bring out the concept of the dominant value margin, which is a metric of the effectiveness of divide-and-conquer strategies. The supplier with the larger dominant value margin may always sell to all customers in equilibrium. Such a market outcome is not always socially efficient since a socially inferior supplier may prevail if has a stand-alone-benefit advantage and only a modest network-benefit disadvantage.
    Keywords: network externalities, equilibrium uniqueness, price discrimination, monotonicity criterion, dominant value margin, divide and conquer
    JEL: L13 L40 D43
    Date: 2022
  21. By: Gächter, Simon (University of Nottingham); Kölle, Felix (University of Cologne); Quercia, Simone (University of Verona)
    Abstract: We study two generic versions of public goods problems: in Provision problems, the public good does not exist initially and needs to be provided; in Maintenance problems, the public good already exists and needs to be maintained. In five lab and online experiments (n=2,584), we document a robust asymmetry in preferences and perceptions in two incentive-equivalent versions of these public good problems. We find fewer conditional cooperators and more free riders in Maintenance than Provision, a difference that is replicable, stable, and reflected in perceptions of kindness. Incentivized control questions administered before gameplay reveal dilemma-specific misperceptions but controlling for them neither eliminates game-dependent conditional cooperation, nor differences in perceived kindness of others' cooperation. Thus, even when sharing the same game form, Maintenance and Provision are different social dilemmas that require separate behavioral analyses. Despite some inconsistencies, a theory of revealed altruism comes closest to explaining our results.
    Keywords: maintenance and provision social dilemmas, conditional cooperation, kindness, misperceptions, experiments, revealed altruism
    JEL: C92 H41
    Date: 2022–05
  22. By: Sumit Goel
    Abstract: We study the optimal design of contests as screening devices. In an incomplete information environment, contest results reveal information about the quality of the participating agents at the cost of potentially wasteful effort put in by these agents. We are interested in finding contests that maximize the information revealed per unit of expected effort put in by the agents. In a model with linear costs of effort and privately known marginal costs, we find the Bayes-Nash equilibrium strategy for arbitrary prize structures ($1=v_1 \geq v_2 \dots \geq v_n=0$) and show that the equilibrium strategy mapping marginal costs to effort is always a density function. It follows then that the expected effort under the uniform prior on marginal costs is independent of the prize structure. Restricting attention to a simple class of uniform prizes contests (top $k$ agents get $1$ and others get $0$), we find that the optimal screening contest under the uniform prior awards half as many prizes as there are agents. For the power distribution $F(\theta)=\theta^p$ with $p\geq 1$, we conjecture that the number of prizes in the optimal screening contest is decreasing in $p$. In addition, we also show that a uniform prize structure is generally optimal for the standard objectives of maximizing expected effort of an arbitrary agent, most efficient agent and least efficient agent.
    Date: 2022–05
  23. By: Yoshihiro Ohashi
    Abstract: This study investigates the prevention of market manipulation using a price-impact model of financial market trading as a linear system. First, I define a trading game between speculators such that they implement a manipulation trading strategy that exploits momentum traders. Second, I identify market intervention by a controller (e.g., a central bank) with a control of the system. The main result shows that there is a control strategy that prevents market manipulation as a subgame perfect equilibrium outcome of the trading game. On the equilibrium path, no intervention is realized. This study also characterizes the set of manipulation-proof linear pricing rules of the system. The set is very restrictive if there is no control, while the presence of control drastically expands the set.
    Date: 2022–05
  24. By: Keeler Marku; Sergio Ocampo (University of Western Ontario); Jean-Baptiste Tondji (University of Texas Rio Grande Valley)
    Abstract: We consider a game between several principals and a common agent, where principals know only a subset of the agent’s available actions. Principals demand robustness and evaluate contracts on a worst-case basis. This robust approach allows for a crisp characterization of the equilibrium contracts and payoffs and provides a novel proof of equilibrium existence in common agency by constructing a pseudo-potential for the game. Robust contracts make explicit how the efficiency of the equilibrium outcome relative to collusion among principals depends on the principals’ ability to extract payments from the agent.
    Keywords: Common Agency, Robustness, Worst Case, Efficiency
    JEL: C72 D81 D86 H21
    Date: 2022
  25. By: Dominique Demougin; Carsten Helm
    Abstract: We analyze a multitasking model with a verifiable routine task and a skill-dependent activity characterized by moral hazard. Contracts negotiated by firm/employee pairs follow from Nash bargaining. High- and low-skilled employees specialize, intermediate productivity employees perform both tasks. Compared to the efficient solution, more employees exert both tasks and effort in the routine task is inefficiently large. As work overload in the routine task is decoupled from a corresponding increase in remuneration, employees perceive a loss of control to allocate effort between the two tasks. Reductions in employees’ bargaining power and improvements in monitoring technologies aggravate the issue.
    Keywords: multi-tasking, work overload, routine tasks, rent extraction, moral hazard, limited liability, Nash Bargaining
    JEL: D82 D86 J41 M52
    Date: 2022
  26. By: Rohit Lamba; Sergey Zhuk
    Abstract: This paper studies Markov perfect equilibria in a repeated duopoly model where sellers choose algorithms. An algorithm is a mapping from the competitor's price to own price. Once set, algorithms respond quickly. Customers arrive randomly and so do opportunities to revise the algorithm. In the simple game with two possible prices, monopoly outcome is the unique equilibrium for standard functional forms of the profit function. More generally, with multiple prices, exercise of market power is the rule -- in all equilibria, the expected payoff of both sellers is above the competitive outcome, and that of at least one seller is close to or above the monopoly outcome. Sustenance of such collusion seems outside the scope of standard antitrust laws for it does not involve any direct communication.
    Date: 2022–05
  27. By: Xiao Lin; Ce Liu
    Abstract: We propose a new notion of credibility for Bayesian persuasion problems. A disclosure policy is credible if the sender cannot profit from tampering with her messages while keeping the message distribution unchanged. We show that the credibility of a disclosure policy is equivalent to a cyclical monotonicity condition on its induced distribution over states and actions. We also characterize how credibility restricts the Sender's ability to persuade under different payoff structures. In particular, when the sender's payoff is state-independent, all disclosure policies are credible. We apply our results to the market for lemons, and show that no useful information can be credibly disclosed by the seller, even though a seller who can commit to her disclosure policy would perfectly reveal her private information to maximize profit.
    Date: 2022–05
  28. By: Aditya Jain; Akhil Rao
    Abstract: Orbit-use management efforts can be structured as binding national regulatory policies or as self-enforcing international treaties. New treaties to control space debris growth appear unlikely in the near future. Spacefaring nations can pursue national regulatory policies, though regulatory competition and open access to orbit make their effectiveness unclear. We develop a game-theoretic model of national regulatory policies and self-enforcing international treaties for orbit-use management in the face of open access, regulatory competition, and catastrophe. While open access limits the effectiveness of national policies, market-access control ensures the policies can improve environmental quality. A large enough stock of legacy debris ensures existence of a global regulatory equilibrium where all nations choose to levy environmental regulations on all satellites. The global regulatory equilibrium supports a self-enforcing treaty to avert catastrophe by making it costlier to leave the treaty and free ride.
    Date: 2022–05
  29. By: Simon K. Schnyder; John J. Molina; Ryoichi Yamamoto; Matthew S. Turner
    Abstract: Epidemics of infectious diseases posing a serious risk to human health have occurred throughout history. During the ongoing SARS-CoV-2 epidemic there has been much debate about policy, including how and when to impose restrictions on behavior. Under such circumstances policymakers must balance a complex spectrum of objectives, suggesting a need for quantitative tools. Whether health services might be 'overwhelmed' has emerged as a key consideration yet formal modelling of optimal policy has so far largely ignored this. Here we show how costly interventions, such as taxes or subsidies on behaviour, can be used to exactly align individuals' decision making with government preferences even when these are not aligned. We assume that choices made by individuals give rise to Nash equilibrium behavior. We focus on a situation in which the capacity of the healthcare system to treat patients is limited and identify conditions under which the disease dynamics respect the capacity limit. In particular we find an extremely sharp drop in peak infections as the maximum infection cost in the government's objective function is increased. This is in marked contrast to the gradual reduction without government intervention. The infection costs at which this switch occurs depend on how costly the intervention is to the government. We find optimal interventions that are quite different to the case when interventions are cost-free. Finally, we identify a novel analytic solution for the Nash equilibrium behavior for constant infection cost.
    Date: 2022–05
  30. By: Reddinger, J. Lucas (University of Wisconsin, La Crosse); Charness, Gary; Levine, David
    Abstract: Vaccination has both private and public benefits. We ask whether social preferences—concerns for the well-being of other people—influence one's decision regarding vaccination. We measure these social preferences for 549 online subjects: We give each subject \$4 to play a public-good game and make contributions to public welfare. To the extent that one gets vaccinated out of concern for the health of others, contribution in this game is analogous to an individual's decision to obtain vaccination. We collect COVID-19 vaccination history separately to avoid experimenter-demand effects. We find a strong result: Contribution in the public-good game is associated with greater demand to voluntarily receive a first dose, and thus also to vaccinate earlier. Compared to a subject who contributes nothing, one who contributes the maximum (\$4) is 48% more likely to obtain a first dose voluntarily in the four-month period that we study (April through August 2021). People who are more pro-social are indeed more likely to take a voluntary COVID-19 vaccination.
    Date: 2022–04–23
  31. By: Evans, R., Park, I-U.; Park, I-U.
    Abstract: We study design and pricing of information by a monopoly information provider for a buyer in a trading relationship with a seller. The profit-maximizing information structure has a binary threshold character. This structure is inefficient when seller production cost is low. Compared with a situation of no information, the information provider increases welfare if cost is high but reduces it if cost is low. A monopoly provider creates higher welfare than a competitive market in information if the prior distribution of buyer valuations is not too concentrated. Giving the seller a veto over the information contract generates full efficiency.
    Keywords: Information Sale, Mechanism Design, Information Design
    JEL: D42 D61 D82 D83 L12 L15
    Date: 2022–05–18

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