|
on Game Theory |
| By: | Ata Atay (Department of Mathematical Economics, Finance and Actuarial Sciences, and Barcelona Economic Analysis Team (BEAT), University of Barcelona, Spain); Christian Trudeau (Department of Economics, University of Windsor) |
| Abstract: | This paper studies queueing problems with an endogenous number of machines with and without an initial queue, the novelty being that coalitions not only choose how to queue, but also on how many machines. For a given problem, agents can (de)activate as many machines as they want, at a cost. After minimizing the total cost (processing costs and machine costs), we use a game theoretical approach to share to proceeds of this cooperation, and study the existence of stable allocations. First, we study queueing problems with an endogenous number of machines, and examine how to share the total cost. We provide an upper bound and a lower bound on the cost of a machine to guarantee the non-emptiness of the core (the set of stable allocations). Next, we study requeueing problems with an endogenous number of machines, where there is an existing queue. We examine how to share the cost savings compared to the initial situation, when optimally requeueing/changing the number of machines. Although, in general, stable allocation may not exist, we guarantee the existence of stable allocations when all machines are considered public goods, and we start with an initial schedule that might not have the optimal number of machines, but in which agents with large waiting costs are processed first. |
| Keywords: | queueing problems, convexity, cost sharing, allocation problems. |
| JEL: | C44 C71 D61 D63 |
| Date: | 2022–07 |
| URL: | http://d.repec.org/n?u=RePEc:wis:wpaper:2202&r= |
| By: | John Higgins (Department of Economics, University of Wisconsin, Madison, WI 53706, USA); Tarun Sabarwal (Department of Economics, University of Kansas, Lawrence, KS 66045, USA) |
| Abstract: | We study proliferation of an action in binary action network coordination games that are generalized to include global effects. This captures important aspects of proliferation of a particular action or narrative in online social networks, providing a basis to understand their impact on societal outcomes. Our model naturally captures complementarities among starting sets, network resilience, and global effects, and highlights interdependence in channels through which contagion spreads. We present new, natural, computationally tractable, and efficient algorithms to define and compute equilibrium objects that facilitate the general study of contagion in networks and prove their theoretical properties. Our algorithms are easy to implement and help to quantify relationships previously inaccessible due to computational intractability. Using these algorithms, we study the spread of contagion in scale-free networks with 1,000 players using millions of Monte Carlo simulations. Our analysis provides quantitative and qualitative insight into the design of policies to control or spread contagion in networks. The scope of application is enlarged given the many other situations across different fields that may be modeled using this framework. |
| Keywords: | Network games, coordination games, contagion, algorithmic computation |
| JEL: | C62 C72 |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:kan:wpaper:202213&r= |
| By: | Nicolas Quérou (CEE-M - Centre d'Economie de l'Environnement - Montpellier - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - UM - Université de Montpellier); Agnes Tomini (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); Christopher Costello (UCSB - University of California [Santa Barbara] - University of California) |
| Abstract: | We analyze theoretically an institution called a "limited-tenure concession" for its ability to induce efficient public goods contribution and common-pool resource extraction. The basic idea is that by limiting the tenure over which an agent can enjoy the public good, but offering the possibility of renewal contingent on ample private provision of that good, efficient provision may be induced. We first show in a simple repeated game setting that limited-tenure concessions can incentivize socially-efficient provision of public goods. We then analyze the ability of this instrument to incentivize the first best provision for common-pool natural resources such as fish and water, thus accounting for spatial connectivity and growth dynamics of the resource. The duration of tenure and the dispersal of the resource play pivotal roles in whether this limitedtenure concession induces the socially optimal private provision. Finally, in a setting with costly monitoring, we discuss the features of a concession contract that ensure first-best behavior, but at least cost to the implementing agency. |
| Keywords: | Concessions,public goods,cooperation,natural resources,spatial externalities,dynamic games |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03722912&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:wpaper:halshs-03735747&r= |
| By: | Qianjun Lyu; Wing Suen |
| Abstract: | An uninformed sender publicly commits to an informative experiment about an uncertain state, privately observes its outcome, and sends a cheap-talk message to a receiver. We provide an algorithm valid for arbitrary state-dependent preferences that will determine the sender's optimal experiment, and give sufficient conditions for information design to be valuable or not under different payoff structures. These conditions depend more on marginal incentives -- how payoffs vary with the state -- than on the alignment of sender's and receiver's rankings over actions within a state. |
| Date: | 2022–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2207.04929&r= |
| By: | Otsu, Taisuke; Pesendorfer, Martin |
| Abstract: | This paper surveys the recent literature on dynamic games estimation when there is a concern of equilibrium multiplicity. We focus on the questions of testing for equilibrium multiplicity and estimation in the presence of multiplicity. |
| Keywords: | equilibrium multiplicity; dynamic game; partial identification; set inference; OUP deal |
| JEL: | J1 |
| Date: | 2022–04–30 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:113588&r= |
| By: | Arnaud Wolff |
| Abstract: | This paper proposes a theory of social identity adoption and expression, which ties the choice of social identity to material and social benefits present in an individual’s social environment. I argue that in an environment in which receivers aim at uncovering the sender’s motives and commitments, the beliefs and values adopted by an individual can serve as a signal of trustworthiness. In such an environment, individuals are expected to adopt the social identity which will provide them with the greatest amount of (social) benefits. I formalize this choice in a game-theoretic framework, embed in a broader niche selection structure. I argue that the main predictions of the model help illuminate several empirical findings, such as the malleability of beliefs and values, the resistance of beliefs and values to evidence, and the existing correlation between beliefs and values and individual-level traits such as personality. |
| Keywords: | Social Identity, Beliefs, Values, Trustworthiness, Social Incentives. |
| JEL: | C72 C73 D83 D91 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2022-15&r= |
| By: | Brendan T. Gould; Philip N. Brown |
| Abstract: | The emerging technology of Vehicle-to-Vehicle (V2V) communication over vehicular ad hoc networks promises to improve road safety by allowing vehicles to autonomously warn each other of road hazards. However, research on other transportation information systems has shown that informing only a subset of drivers of road conditions may have a perverse effect of increasing congestion. In the context of a simple (yet novel) model of V2V hazard information sharing, we ask whether partial adoption of this technology can similarly lead to undesirable outcomes. In our model, drivers individually choose how recklessly to behave as a function of information received from other V2V-enabled cars, and the resulting aggregate behavior influences the likelihood of accidents (and thus the information propagated by the vehicular network). We fully characterize the game-theoretic equilibria of this model using our new equilibrium concept. Our model indicates that for a wide range of the parameter space, V2V information sharing surprisingly increases the equilibrium frequency of accidents relative to no V2V information sharing, and that it may increase equilibrium social cost as well. |
| Date: | 2022–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2207.06411&r= |
| By: | Davies, Clem; Franke, Marcel; Kuang, Lida; Neumärker, Karl Justus Bernhard |
| Abstract: | Homann's method is a sophisticated theoretical model. As a result, it contains a normative foundation upon which Homann bases his endeavor, as well as numerous conclusions following his positive analysis. We propose extensions to both the normative and positive aspects of Homann's theory in this article. On a normative basis, we recommend taking into account our approach of New Ordoliberalism. In addition to the prisoner's dilemma, we consider the moral dilemma of the hawk-dove game on a positive footing. Additionally, we also present an experimental design. |
| Keywords: | constitutional economics,game theory,New Ordoliberalism,social contract experiment,strategy-proofness,renegotiation-proofness,Ordnungsökonomie,Spieltheorie,Neuer Ordoliberalismus,Sozialvertragsexperiment,Manipulationssicherheit,Nachverhandlungsstabilität |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cenwps:012022&r= |
| By: | Eberhard Feess; Gerd Muehlheusser |
| Abstract: | In unavoidable traffic accidents, autonomous vehicles (AVs) face the dilemma of protecting either the passenger(s) or third parties. Recent studies show that most people prefer AVs following a utilitarian approach by minimizing total harm. At the same time, however, they would adopt an AV only if it prioritizes the passenger(s), i.e. themselves. As AVs exhibit a lower accident risk in the first place, a regulator therefore faces a trade-off: the harm-minimizing behavior of AVs (ex post efficiency) hampers the willingness to adopt them (ex ante efficiency). Using a game-theoretic model, we analyze how the second-best optimal level of AV passenger protection depends on (i) the AV safety advantage, (ii) the intensity of drivers’ social preferences, and (iii) their reluctance to adopt AVs. A higher AV safety advantage may either increase or decrease the second best optimal level of passenger protection. |
| Keywords: | autonomous vehicles, ethical dilemma, trolley problem, adoption of new technologies, game theory |
| JEL: | O31 K23 L51 L62 R41 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9825&r= |
| By: | Crampes, Claude; Renault, Jérôme |
| Abstract: | The producers of electricity using dispatchable plants rely on partially flexible technologies to match the variability of both demand and production from renewables. We analyse upward and downward flexibility in a two-stage decision process where firms compete in quantities produced ex ante at low cost and ex post at high cost to supply a random residual demand. We first compute the first best and competitive outcomes, then we determine the subgame perfect equilibria corresponding to two market designs: one where all trade occurs in a spot market with known demand, the other where a day-ahead market with random demand is added to the ex-post market, first in a general setting, then using a quadratic specification. We show that being inflexible can be more profitable than being flexible. We also show that adding a day-ahead market to the spot market increases welfare but transfers risks from firms to consumers. |
| Keywords: | flexibility; electricity; market design; risk transfer |
| JEL: | C72 D24 D47 L23 L94 |
| Date: | 2022–07–28 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:127219&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]) |
| Abstract: | A unified definition of analogy-based expectation equilibrium (ABEE) for strategic environments involving multiple stages and private information is presented. Various alternative interpretations of the concept are proposed as well as a discussion of how to use ABEE in practice. A variety of applications including two new ones related to speculative trading and personnel economics is reviewed. A discussion of a number of alternative equilibrium concepts follows emphasizing the links and differences with ABEE. Finally, a discussion of possible next steps in particular related to the endogeneization of analogy partitions is proposed. |
| Keywords: | Analogy-Based Expectation,bounded rationality,limited learning |
| Date: | 2022–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-03735680&r= |
| By: | Zaifu Yang; Jingsheng Yu |
| Abstract: | This paper proposes an ascending auction for selling multiple heterogeneous indivisible items to several potential bidders. Every bidder demands at most one item and faces a budget constraint. His valuations and budget are private information. Budget constraints may lead to the failure of competitive equilibrium. Bidders are not assumed to behave as price-takers and may therefore act strategically. We prove that the auction always induces bidders to bid truthfully and finds a strongly Pareto efficient core allocation when bidders are budget constrained, otherwise a Walrasian equilibrium with the minimum equilibrium price vector. |
| Keywords: | Ascending auction, core, equilibrium, budget constraint, incentive, assignment market. |
| JEL: | D44 |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:yor:yorken:22/02&r= |
| By: | Luigi Butera; Philip J Grossman; Daniel Houser; John A List; Marie Claire Villeval (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | Recently a credibility crisis has taken hold across the social sciences, arguing that a component of Fischer (1935)'s tripod has not been fully embraced: replication. The importance of replications is not debatable scientifically, but researchers and journals' incentives are not sufficient to encourage replications. We analyze a novel, decentralized approach promoting replications through beneficial gains between scholars and editors. We highlight the trade-offs involved in seeking independent replications before submission to journals, and demonstrate the operation of this method via an investigation of the effects of Knightian uncertainty on cooperation in public goods games, a pervasive feature but largely unexplored in the literature. |
| Keywords: | Replication,science,public goods,uncertainty |
| Date: | 2022–07–17 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03725592&r= |
| By: | Batabyal, Amitrajeet; Beladi, Hamid |
| Abstract: | We study a one-period model of an aggregate economy composed of cities and regions that demand vaccines designed to fight a pandemic such as Covid-19. The supply of vaccines is the outcome of Bertrand competition between two firms A and B. The marginal cost of producing the vaccine for both firms is stochastic and drawn from a uniform distribution. In this setting, we perform three tasks. First, we describe the equilibrium pricing strategies of the two firms and then we compute their mean ex ante profits. Second, we permit both firms to conduct risky R&D and then determine the conditions under which only one firm engages in R&D and conditions under which both do. Finally, we introduce a way of mimicking the effect of increased competition and then analyze the impact of this increased competition on the incentives to conduct R&D faced by the two firms. |
| Keywords: | Bertrand Duopoly, City, Innovation, R&D, Region, Vaccine |
| JEL: | L13 O32 R11 |
| Date: | 2022–01–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:113758&r= |