|
on Game Theory |
| By: | Frédéric Koessler (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - 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); Marie Laclau (GREGHEC - Groupement de Recherche et d'Etudes en Gestion - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique); Jerôme Renault (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); Tristan Tomala (Unknown) |
| Abstract: | We analyze information design games between two designers with opposite preferences and a single agent. Before the agent makes a decision, designers repeatedly disclose public information about persistent state parameters. Disclosure continues until no designer wishes to reveal further information. We consider environments with general constraints on feasible information disclosure policies. Our main results characterize equilibrium payoffs and strategies of this long information design game and compare them with the equilibrium outcomes of games where designers move only at a single predetermined period. When information disclosure policies are unconstrained, we show that at equilibrium in the long game, information is revealed right away in a single period; otherwise, the number of periods in which information is disclosed might be unbounded. As an application, we study a competition in product demonstration and show that more information is revealed if each designer could disclose information at a pre-determined period. The format that provides the buyer with most information is the sequential game where the last mover is the ex-ante favorite seller. |
| Keywords: | Bayesian persuasion,concavification,convexification,information,design,Mertens–Zamir solution,product demonstration,splitting games,Statistical experiments,stochastic games. |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03700394&r= |
| By: | Guillaume Sekli (CRESE EA3190, Univ. Bourgogne Franche-Comté, F-25000 Besançon, France) |
| Abstract: | This article focuses on the sharing of a bundled payment for integrated healthcare. We model this problem by means of cooperative game theory. Various approaches are considered, each of which gives rise to a particular cooperative game, and make it possible to take the chronology of medical events into account. The Shapley value, a priority rule and a proportional allocation rule are used to (partially) refund the healthcare professionals on the basis of the fee paid by the patient and we establish some properties. We also show that the core of some of these aformentioned games is non-empty and can contain these allocation rules. |
| Keywords: | Integrated Healthcare, Healthcare chain, Chronic diseases, Shapley value |
| JEL: | C71 I11 |
| Date: | 2022–06 |
| URL: | http://d.repec.org/n?u=RePEc:crb:wpaper:2022-06&r= |
| By: | Alexandre Skoda (Université Paris 1 Panthéon-Sorbonne, Centre d'Economie de la Sorbonne); Xavier Venel (LUISS - Dipartimento di Economia e Finanza) |
| Abstract: | We generalize the notion of convexity and average-convexity to the notion of weighted average-convexity. We show several results on the relation between weighted average-convexity and cooperative games. First, we prove that if a game is weighted average-convex, then the corresponding weighted Shapley value is in the core. Second, we exhibit necessary conditions for a communication TU-game to preserve the weighted average-convexity. Finally, we provide a complete characterization when the underlying graph is a priority decreasing tree |
| Keywords: | TU-games; convexity; average-convexity; weighted Shapley value; communication |
| Date: | 2022–06 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:22016&r= |
| By: | Vladimir Smirnov; Andrew Wait |
| Abstract: | We examine innovation in an n-player market-entry timing game with complete information and observable actions. In our novel multi-player setup, we allow for heterogeneous payoffs between players and for a leader's payoff functions to be multi-peaked an non-monotonic, only requiring that followers' payoffs are non-increasing with the time of the leader's entry. We provide conditions for when equilibrium actions do not depend on historic payoffs, showing in this case that the n-player asymmetric game generates standard leader-maximized or preemption equilibria. In the two-player game we provide a complete characterization of the pure-strategy equilibria for when historic payoffs affects equilibrium actions (including the possibility of no equilibria in pure strategies). Finally, we relate our results to three applications from the literature. |
| Keywords: | timing games; preempting entry, innovation; |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:syd:wpaper:2022-02&r= |
| By: | Bingyan Han |
| Abstract: | With the digitalization of the financial market, dealers are increasingly handling market-making activities by algorithms. Recent antitrust literature raises concerns on collusion caused by artificial intelligence. This paper studies the possibility of cooperation between market makers via independent Q-learning. Market making with inventory risk is formulated as a repeated general-sum game. Under a stag-hunt type payoff, we find that market makers can learn cooperative strategies without communication. In general, high spreads can have the largest probability even when the lowest spread is the unique Nash equilibrium. Moreover, introducing more agents into the game does not necessarily eliminate the presence of supra-competitive spreads. |
| Date: | 2022–06 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2206.05410&r= |
| By: | Stéphan Sémirat (GAEL - Laboratoire d'Economie Appliquée de Grenoble - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes); Françoise Forges (CEREMADE - CEntre de REcherches en MAthématiques de la DEcision - CNRS - Centre National de la Recherche Scientifique - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres) |
| Abstract: | We consider a sender-receiver game, in which the sender has finitely many types and the receiver's decision is a real number. We assume that utility functions are concave, single-peaked and single-crossing. After the cheap talk phase, the receiver makes a decision, which requires the sender's approval to be implemented. Otherwise, the sender "exits". At a perfect Bayesian equilibrium without exit, the receiver must maximize his expected utility subject to the participation constraints of all positive probability types. This necessary condition may not hold at the receiver's prior belief, so that a non-revealing equilibrium may fail to exist. Similarly, a fully revealing equilibrium may not exist either due to the sender's incentive compatibility conditions.We propose a constructive algorithm that always achieves a perfect Bayesian equilibrium without exit. |
| Keywords: | Participation constraints,Discrete Cheap talk,Single-crossing |
| Date: | 2022–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03231673&r= |
| By: | Guanxing Fu |
| Abstract: | We study mean field portfolio games with consumption. For general market parameters, we establish a one-to-one correspondence between the Nash equilibrium of the game and the solution to some FBSDE, which is proved to be equivalent to some BSDE. Our approach, which is general enough to cover power, exponential and log utilities, relies on martingale optimality principle in [3,9] and dynamic programming principle in [6,7]. When the market parameters do not depend on the Brownian paths, we get the unique Nash equilibrium in closed form. As a byproduct, when all market parameters are time-independent, we answer the question proposed in [12]: the strong equilibrium obtained in [12] is unique in the essentially bounded space. |
| Date: | 2022–06 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2206.05425&r= |
| By: | Ezzat Elokda; Saverio Bolognani; Andrea Censi; Florian D\"orfler; Emilio Frazzoli |
| Abstract: | This paper presents karma mechanisms, a novel approach to the repeated allocation of a scarce resource among competing agents over an infinite time. Examples of such resource allocation problems include deciding which trip requests to serve in a ride-hailing platform during peak demand, granting the right of way in intersections, or admitting internet content to a fast channel for improved quality of service. We study a simplified yet insightful formulation of these problems where at every time two agents from a large population get randomly matched to compete over the resource. The intuitive interpretation of a karma mechanism is "If I give in now, I will be rewarded in the future." Agents compete in an auction-like setting where they bid units of karma, which circulates directly among them and is self-contained in the system. We demonstrate that this allows a society of self-interested agents to achieve high levels of efficiency without resorting to a (possibly problematic) monetary pricing of the resource. We model karma mechanisms as dynamic population games, in which agents have private states - their urgency to acquire the resource and how much karma they have - that vary in time based on their strategic decisions. We adopt the stationary Nash equilibrium as the solution concept and prove its existence. We then analyze the performance at the stationary Nash equilibrium numerically. For the case where the agents have homogeneous preferences, we compare different mechanism design choices which allow to strike trade-offs between efficiency and fairness metrics, showing how it is possible to achieve an efficient and ex-post fair allocation when the agents are future aware. Finally, we test the robustness of the mechanisms against heterogeneity in the urgency processes and the future awareness of the agents and propose remedies to some of the observed phenomena via karma redistribution. |
| Date: | 2022–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2207.00495&r= |
| By: | Ehrhart, Karl-Martin; Schlecht, Ingmar |
| Keywords: | gas market,Russia,European Union,game theory,external price cap |
| JEL: | F13 Q40 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:261345&r= |
| By: | Luciana C. Fiorini; Wilfredo L. Maldonado |
| Abstract: | We analyze the effects that pandemic processes have on labor supply decisions using an aggregative game framework. The individual payoff depends on her labor supply and on the probability of being infected, which in turn, depends on the aggregate labor supply. We show the effects of social and sanitary public policies on the Nash equilibrium and analyze its expectational stability. The results indicate that compensating policies and sanitary policies can attenuate the damaging effect of pandemic and stabilize expectations regarding the aggregate decision of labor supply. We also find a set of parameters where two-period cycles for the expectations revision map may arise, implying the oscillating behavior of the probability of contagion in this class of models. |
| Keywords: | Labor supply; pandemic; aggregative games |
| JEL: | C72 J28 J38 |
| Date: | 2022–08–02 |
| URL: | http://d.repec.org/n?u=RePEc:spa:wpaper:2022wpecon18&r= |
| By: | Berliant, Marcus |
| Abstract: | We examine the fine microstructure of commuting in a game-theoretic setting with a continuum of commuters. Commuters' home and work locations can be heterogeneous. A commuter transport network is exogenous. Traffic speed is determined by link capacity and by local congestion at a time and place along a link, where local congestion at a time and place is endogenous. The model can be reinterpreted to apply to congestion on the internet. We find sufficient conditions for existence of equilibrium, that multiple equilibria are ubiquitous, and that the welfare properties of morning and evening commute equilibria differ on a generalization of a directed tree. |
| Keywords: | Commuting; Internet traffic; Congestion externality; Efficient Nash equilibrium |
| JEL: | L86 R41 |
| Date: | 2022–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:113616&r= |
| By: | Fernando E. Alvarez; Francesco Lippi; Takis Souganidis |
| Abstract: | We study the propagation of monetary shocks in a sticky-price general-equilibrium economy where the firms’ pricing strategy feature a complementarity with the decisions of other firms. In a dynamic equilibrium the firm’s price-setting decisions depend on aggregates, which in turn depend on firms’ decisions. We cast this fixed-point problem as a Mean Field Game and establish several analytic results. We study existence and uniqueness of the equilibrium and characterize the impulse response function (IRF) of output following an aggregate “MIT” shock. We prove that strategic complementarities make the IRF larger at each horizon, in a convex fashion. We establish that complementarities may give rise to an IRF with a hump-shaped profile. As the complementarity becomes large enough the IRF diverges and at a critical point there is no equilibrium. Finally, we show that the amplification effect of the strategic interactions is similar across models. For instance, the Calvo model and the Golosov-Lucas model display a comparable amplification, in spite of the fact that the non-neutrality in Calvo is much larger. |
| JEL: | E3 |
| Date: | 2022–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30193&r= |
| By: | Minesso, Massimo Ferrari; Pagliari, Maria Sole |
| Abstract: | This paper presents DSGE Nash, a toolkit to solve for pure strategy Nash equilibria of global games in macro models. Although primarily designed to solve for Nash equilibria in DSGE models, the toolkit encompasses a broad range of options including solutions up to the third order, multiple players/strategies, the use of user-de_ned objective functions and the possibility of matching empirical moments and IRFs. When only one player is selected, the problem is re-framed as a standard optimal policy problem. We apply the algorithm to an open-economy model where a commodity importing country and a monopolistic commodity producer compete on the commodities market with limits to entrance. If the commodity price becomes relevant in production, the central bank in the commodity importing economy deviates from the _rst best policy to act strategically. In particular, the monetary authority tolerates relatively higher commodity price volatility to ease barriers to entry in commodity production and to limit the market power of the dominant exporter. JEL Classification: C63, E32, E61 |
| Keywords: | computational economics, DSGE model, optimal policies |
| Date: | 2022–07 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20222678&r= |
| By: | Sylvain Béal (CRESE EA3190, Univ. Bourgogne Franche-Comté, F-25000 Besançon, France); Marc Deschamps (CRESE EA3190, Univ. Bourgogne Franche-Comté, F-25000 Besançon, France); Catherine Refait-Alexandre (CRESE EA3190, Univ. Bourgogne Franche-Comté, F-25000 Besançon, France); Guillaume Sekli (CRESE EA3190, Univ. Bourgogne Franche-Comté, F-25000 Besançon, France) |
| Abstract: | We address the issue of rewarding fairly contributors participating in a funded crowdfunding project. We develop a theoretical non-strategic model of crowdfunding and introduce on a new reward rule, which specifies the individual rewards obtained by the contributors as a function of both their financial contributions and the timing of these contributions. Our model share some similarities with other models of ressource sharing in which the axiomatic method is frequently used. Taking this approach, we characterize this new reward rule by a pair of natural axioms, and it turns out that the resulting rewards coincide with the Shapley value of a suitable cooperative game built from the crowdfunding project. This allocation rule conveys what we call the signaling effect: if two contributors make the same financial contribution, then the earlier of the two obtains a greater reward. In specific but relevant cases, we provide extra properties of this reward rule. |
| Keywords: | Crowdfunding, signaling, early contributions, fairness, cooperative games, Shapley value, core |
| JEL: | C71 G32 |
| Date: | 2022–07 |
| URL: | http://d.repec.org/n?u=RePEc:crb:wpaper:2022-07&r= |
| By: | Mira Frick (Cowles Foundation, Yale University); Ryota Iijima (Cowles Foundation, Yale University); Yuhta Ishii (Department of Economics at Pennsylvania State University) |
| Abstract: | We study which multi-agent information structures are more effective at eliminating both first-order and higher-order uncertainty, and hence at facilitating efficient play in incomplete-information coordination games. We consider a learning setting à la Cripps, Ely, Mailath, and Samuelson (2008) where players have access to many private signal draws from an information structure. First, we characterize the rate at which players achieve approximate common knowledge of the state, based on a simple learning efficiency index. Notably, this coincides with the rate at which players’ first-order uncertainty vanishes, as higher-order uncertainty becomes negligible relative to first-order uncertainty after enough signal draws. Based on this, we show that information structures with higher learning efficiency induce more efficient equilibrium outcomes in coordination games that are played after sufficiently many signal draws. We highlight some robust implications for information design in games played in data-rich environments. |
| Keywords: | higher-order beliefs, common learning, coordination, speed of learning, comparison of information structures. |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:2299r2&r= |
| By: | Michele Aleandri; Marco Dall'Aglio |
| Abstract: | We analyze two independent efforts to extend the notion of criticality in simple games that measure the influence of a player in conjunction with others: the notion of rank of d-criticality given by Beisbart (2010) and the order of criticality in Dall'Aglio et al. (2016) and Aleandri et al. (2021). The aim is to get elements from both works and define measures of group criticality that take the best of both approaches. |
| Date: | 2022–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2207.03565&r= |
| By: | Chien-Hsiang Yeh |
| Abstract: | This paper extends the unified network model, proposed by Acemoglu et al. (2016b), such that interaction functions can be heterogeneous, and the sensitivity matrix has less than or equal to one spectral radius. We show the existence and (almost surely) uniqueness of equilibrium under both eventually contracting and noncontracting assumptions. Applying the equilibrium in the study of systemic risk, we provide a measure to determine the key player who causes the most significant impact if removed from the network. |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2206.00158&r= |
| By: | Dirk Bergemann (Cowles Foundation, Yale University); Tibor Heumann (Pontificia Universidad Católica de Chile); Stephen Morris (Dept. of Economics, MIT) |
| Abstract: | We consider a general nonlinear pricing environment with private information. We characterize the information structure that maximizes the seller’s profits. The seller who cannot observe the buyer’s willingness to pay can control both the signal that a buyer receives about his value and the selling mechanism. The optimal screening mechanism has finitely many items even with a continuum of types. We identify sufficient conditions under which the optimal mechanism has a single item. Thus, the socially efficient variety of items is decreased drastically at the expense of higher revenue and lower information rents. |
| Keywords: | Nonlinear Pricing, Finite Menu, Second-degree Price Discrimination, Recommender System |
| JEL: | D44 D47 D83 D84 |
| Date: | 2022–07 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:2338&r= |
| By: | Philippe Jehiel (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - 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, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - 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, UCL - University College of London [London]); Konrad Mierendorff (UCL - University College of London [London]) |
| Abstract: | We study the existence of e¢cient auctions in private value settings in which some bidders choose their bids based on the accessible data from past similar auctions consisting of bids and ex post values. We consider steady-states in such environments with a mix of rational and data-driven bidders, and we allow for correlation across bidders in the signal distributions about the ex post values. After reviewing the working of the approach in second-price and first-price auctions, we show our main result that there is no e¢cient auction in such environments. |
| Keywords: | Belief Formation,Auctions,E¢ciency,Analogy-based Expectations Belief Formation |
| Date: | 2022–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:psewpa:halshs-03735747&r= |
| By: | Kim, Jun Sung; Patacchini, Eleonora (Cornell University); Picard, Pierre M. (University of Luxembourg); Zenou, Yves (Monash University) |
| Abstract: | This paper studies how the strength of social ties are affected by the geographical location of other individuals and their social capital. We characterize the equilibrium in terms of both social interactions and social capital. We show that lower travel costs increase not only the interaction frequency but also the social capital for all agents. We also show that the equilibrium frequency of interactions is lower than the efficient one. Using a unique geo-coded dataset of friendship networks among adolescents in the United States, we structurally estimate the model and show that, indeed, agents socially interact less than that at the first best optimum. Our policy analysis suggests that, at the same cost, subsidizing social interactions yields a higher total welfare than subsidizing transportation costs. |
| Keywords: | social networks, location, structural estimation, policies |
| JEL: | D85 R1 Z13 |
| Date: | 2022–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15376&r= |
| By: | Leonard Hoeft (Humboldt University to Berlin); Michael Kurschilgen (Technical University of Munich, the Max Planck Institute for Research on Collective Goods, and the Stanford Graduate School of Business); Wladislaw Mill (University of Mannheim); Simone Vannuccini (Science Policy Research Unit, University of Sussex) |
| Abstract: | Economists model legal compliance as the process of maximizing utility while weighing the consequences from norm violation against other (monetary and non-monetary) considerations. Legal philosophers, on the other hand, believe that norms provide exclusionary reasons, i.e. that people apply the norm precisely to make a choice without weighing up on other issues. We test and compare both models in a controlled online experiment. We conduct a modified dictator game with partially unknown yet ascertainable payoffs, and vary between treatments the presence and content of authoritative norms. Our experimental results show that – in the presence of a norm – participants follow norms without searching for information that they deem important in the absence of a norm. This pattern is independent of the specific content of the norm. Our results are consistent with the legal model of norm compliance. |
| Keywords: | Norms, Information, Authority, Willful Ignorance, Dictator Game, Legal Theory, Experiment |
| JEL: | C91 D63 D81 D83 K10 |
| Date: | 2022–07 |
| URL: | http://d.repec.org/n?u=RePEc:aiw:wpaper:22&r= |
| By: | Victor Ginsburgh (ECARES, Université Libre de Bruxelles, Belgium and CORE, Université catholique de Louvain, Belgium); Juan D. Moreno-Ternero (Department of Economics, Universidad Pablo de Olavide;) |
| Abstract: | We analyze and evaluate the rules and results at the 2021 Eurovision Song Contest. We first concentrate on the various voting procedures, and explore several alternatives (inspired by classical contributions in social choice and game theory) that could make a difference for the results. We also discuss other important issues, such as simplicity, contrast effects and whether experts are better judges than tele-voters. Our findings raise the question of whether the voting procedures used by the Eurovision Song Contest authorities are fail-safe. We endorse instead the use of the so-called Shapley voting procedure for judges as well as tele-voters. |
| Keywords: | Eurovision Song Contest, Voting, Borda, Shapley Method, Biases |
| JEL: | I10 I14 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:pab:wpaper:22.09&r= |
| By: | Onur A. Koska (University of Canterbury) |
| Abstract: | In a duopoly model with network externalities, this paper studies Cournot and Bertrand firms’ optimal investments in network strength under passive and responsive consumer expectations, and looks at the welfare implications. The results suggest minimum sufficient threshold levels of initial network strength for which (i) the optimal investment levels by both Cournot and Bertrand firms are greater under responsive expectations; (ii) Cournot firms invest more than Bertrand firms under responsive expectations, whereas Bertrand firms invest more than Cournot firms under passive expectations. These threshold levels are also sufficient in that welfare is (i) greater under responsive expectations than under passive expectations for a given competition mode, and (ii) greater under Bertrand competition than under Cournot competition for a given type of consumer expectations. |
| Keywords: | Network strength, investment, consumer expectations, Cournot duopoly, Bertrand duopoly |
| JEL: | D43 L13 M21 |
| Date: | 2022–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:cbt:econwp:22/09&r= |
| By: | Héloise Cloléry (CREST-Ecole polytechnique, IP Paris); Guillaume Hollard (CREST-Ecole polytechnique, IP Paris and CNRS); Fabien Perez (CREST-Ensae, IP Paris); Inès Picard (CREST-Genes, IP Paris) |
| Abstract: | Trust is an important economic variable that may however be subject to measurement error, leading to econometric issues such as attenuation bias or spurious correlations. We use a test/retest protocol to assess the measurement error in the two main tasks that are used to elicit trust, namely survey questions and experimental games. We find that trust measures based on the trust game entail substantial measurement error (with up to 15% of noise), while there is virtually no noise in stated trust measures. Given the specificity of our subject pool (students in a top Engineering school) and the short period of time between the test and the retest, we consider these percentages of noise as lower bounds. We also provide a sub-group analysis based on measures of cognitive ability and effort. We find substantial heterogeneity across sub-groups in trust-game behavior, but none for the survey questions. We finally discuss which measure of trust should be used, and the estimation strategies that can be applied to limit the effect of measurement error. |
| Keywords: | Trust; Trust Game; Measurement Error; ORIV. |
| JEL: | C18 C26 C91 D91 |
| Date: | 2022–07–08 |
| URL: | http://d.repec.org/n?u=RePEc:crs:wpaper:2022-13&r= |
| By: | Thomas M. Eisenbach; Gregory Phelan |
| Abstract: | We model a safe asset market with investors valuing safety, investors valuing liquidity, and constrained dealers. While safety investors and liquidity investors can interact symbiotically with offsetting trades in times of stress, we show that liquidity investors’ strategic interaction harbors the potential for self-fulfilling fragility. Surprisingly, standard flight to safety in times of stress can have a destabilizing effect and trigger a dash for cash by liquidity investors. This explains how safe asset markets can experience price crashes, as in March 2020. The announcement and execution of policy interventions play important roles for the functioning of safe asset markets. |
| Keywords: | safe assets; liquidity shocks; global games; Treasury securities; COVID-19 |
| JEL: | C7 G01 G1 E4 E5 |
| Date: | 2022–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:94496&r= |
| By: | Michel Grabisch; Agnieszka Rusinowska; Xavier Venel |
| Keywords: | diffusion,countable network,aggregation function,polarization,convergence,bestresponse |
| Date: | 2022–06 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-03688783&r= |
| By: | Choi, S.; Goyal, S.; Moisan, F.; To, Y. Y. T. |
| Abstract: | Subjects observe a private signal and then make an initial guess; they observe their neighbors’ guesses and guess again, and so forth. We study learning dynamics in three networks: Erdös-Rényi, Stochastic Block (reflecting homophily) and Royal Family (that accommodates both highly connected celebrities and local intearctions). We find that the Royal Family network is more likely to sustain incorrect consensus and that the Stochastic Block network is more likely to persist with diverse beliefs. These aggregate patterns are consistent with individuals following DeGroot updating rule. |
| Keywords: | consensus, experimental social science, social learning, social networks |
| JEL: | C91 C92 D83 D85 |
| Date: | 2022–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camjip:2212&r= |