|
on Game Theory |
| By: | Sang-Hyun Kim (Yonsei University); Chulyoung Kim (Yonsei University); Jinhyuk Lee (Korea University); Joosung Lee (University of Edinburgh) |
| Abstract: | In a veto game, we investigate the effects of “buyout” which allows non-veto players strategically form an intermediate coalition. First, our experimental findings show that the proportion of intermediate coalition formation is much lower than predicted by theory, regardless of the relative negotiation power between veto and non-veto players. Second, allowing coalition formation among non-veto players does not affect the surplus distribution between veto and nonveto players, which diverges from core allocations. These findings contrast to the literature, which views the ability to form an intermediate coalition as a valuable asset for non-veto players in increasing their bargaining power. |
| Keywords: | game theory; coalition bargaining; veto game; experiment; non-core allocation; intermediate coalition formation. |
| JEL: | C72 C78 C92 D72 D74 |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:yon:wpaper:2022rwp-198&r= |
| By: | Frédéric Koessler (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, 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 (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, 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); Tristan Tomala (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique, HEC Paris - Ecole des Hautes Etudes Commerciales) |
| Abstract: | We study the interaction between multiple information designers who try to influence the behavior of a set of agents. When each designer can choose information policies from a compact set of statistical experiments with countable support, such games always admit subgame perfect equilibria. When designers produce public information, every equilibrium of the simple game in which the set of messages coincides with the set of states is robust in the sense that it is an equilibrium with larger and possibly infinite and uncountable message sets. The converse is true for a class of Markovian equilibria only. When designers produce information for their own corporation of agents, robust pure strategy equilibria exist and are characterized via an auxiliary normal form game in which the set of strategies of each designer is the set of outcomes induced by Bayes correlated equilibria in her corporation. |
| Keywords: | Statistical experiments,Splitting games,Sharing rules,Information design,Bayesian persuasion |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-01791918&r= |
| 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, 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); Marie Laclau (HEC Paris - Ecole des Hautes Etudes Commerciales, GREGHEC - Groupement de Recherche et d'Etudes en Gestion - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique, CNRS - Centre National de la Recherche Scientifique); Jérôme Renault (TSE-R - 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 (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique, HEC Paris - Ecole des Hautes Etudes Commerciales) |
| 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 predetermined 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 |
| URL: | http://d.repec.org/n?u=RePEc:hal:pseptp:halshs-02400053&r= |
| By: | Sang-Hyun Kim (Yonsei University); Chulyoung Kim (Yonsei University); Jaeok Park (Yonsei University); Jinhyuk Lee (Korea University) |
| Abstract: | We consider a scenario where a single indivisible object is auctioned off to three bidders and among the three bidders there is one bidder whose winning imposes a positive or negative externality on the other two bidders. We theoretically and experimentally compare two standard sealed-bid auction formats, first-price and second-price auctions, under complete information. Using a refinement of undominated Nash equilibria, we analyze equilibrium bids and outcomes in the two auction formats. Our experimental results show that overbidding relative to equilibrium bids is prevalent, especially in second-price auctions, and this leads to higher revenue and lower efficiency in secondprice auctions than in first-price auctions, especially under negative externalities. Our results are consistent with previous experimental findings that bidders tend to overbid more in second-price auctions than in first-price auctions, and they suggest that such a tendency is robust to the introduction of externalities. |
| Keywords: | auctions; externalities; experiments; overbidding; efficiency. |
| JEL: | C91 D44 D62 |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:yon:wpaper:2022rwp-199&r= |
| By: | Raouf Boucekkine (ESC Rennes School of Business - ESC [Rennes] - ESC Rennes School of Business); Carmen Camacho (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); Weihua Ruan (Purdue University Northwest); Benteng Zou (University of Luxembourg [Luxembourg]) |
| Abstract: | We consider a group of players initially members of a coalition managing cooperatively a public bad, in this case, the stock of pollution. Countries are technologically heterogeneous but the pollution damage is uniform. We essentially attempt to characterize the conditions under which a country may eventually split and when it splits within an infinite horizon multi-stage differential game. In contrast to the existing literature, we do not assume that after splitting, the splitting player and the remaining coalition will adopt Markovian strategies. Instead, we assume that the latter will remain committed to the collective control of pollution and play open-loop, while the splitting player plays Markovian. Within a full linear-quadratic model, we characterize the optimal strategies. We later compare with the outcomes of the case where the splitting player and the "remaining" coalition play both Markovian. We highlight several interesting results in terms of the implications for longterm pollution levels and the duration of coalitions with heterogenous strategies. |
| Keywords: | Coalition splitting,environmental agreements,differential games,multistage optimal control,precommitment vs Markovian |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-03770401&r= |
| By: | Philippe De Donder; Humberto Llavador; Stefan Penczynski; John E. Roemer; Roberto Vélez |
| Abstract: | Whether or not to vaccinate one's child is a decision that a parent may approach in several ways. The vaccination game, in which parents must choose whether to vaccinate a child against a disease, is one with positive externalities (herd immunity). In some societies, not vaccinating is an increasingly prevalent behavior, due to deleterious side effects that parents believe may accompany vaccination. The standard game-theoretic approach assumes that parents make decisions according to the Nash behavioral protocol, which is individualistic and non-cooperative. Because of the positive externality that each child’s vaccination generates for others, the Nash equilibrium suffers from a free-rider problem. However, in more solidaristic societies, parents may behave cooperatively –they may optimize according to the Kantian protocol, in which the equilibrium is efficient. We test, on a sample of six countries, whether childhood vaccination behavior conforms better to the individualistic or cooperative protocol. In order to do so, we conduct surveys of parents in these countries, to ascertain the distribution of beliefs concerning the subjective probability and severity of deleterious side effects of vaccination. We show that in all the countries of our sample the Kant model dominates the Nash model. We conjecture that, due to the free-rider problem inherent in the Nash equilibrium, a social norm has evolved, quite generally, inducing parents to vaccinate with higher probability than they would in the non-cooperative solution. Kantian equilibrium offers one precise version of such a social norm. |
| Keywords: | Kantian equilibrium, Nash equilibrium, vaccination, social norm |
| JEL: | C72 D62 D63 I12 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:1305&r= |
| By: | Olivier Bos; Tom Truyts |
| Abstract: | We study the optimal entry fee in a symmetric private value first-price auction with signaling, in which the participation decisions and the auction outcome are used by an outside observer to infer the bidders’ types. We show that this auction has a unique fully separating equilibrium bidding function. When the bidders’ sensibility for the signaling concern is sufficiently strong, the expected revenue maximizing entry fee is the maximal fee that guarantees full participation. The larger is the bidder's sensibility, the higher is the optimal participation. |
| Keywords: | first-price auction, entry, monotonic signalling, social status |
| JEL: | D44 D82 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9900&r= |
| By: | Julia de Frutos Cachorro (Universitat de Barcelona and BEAT); Guiomar Martín-Herrán (IMUVA and Universidad de Valladolid); Mabel Tidball (CEE-M and University of Montpellier) |
| Abstract: | We study a problem of exploitation of a groundwater resource, mainly used for irrigation, in which a water agency is needed in order to manage an exceptional and priority extraction of water for an alternative/new use (e.g. domestic water). To this goal, we build a two-stage discrete Stackelberg game in which the leader (the water agency) just intervenes when the new use takes place (in the second stage) and the follower is a representative agent of the regular users of the aquifer, i.e. the agricultural users. We study two types of Stackelberg equilibrium, which can arise depending on the agents' commitment behavior, namely openloop (commitment) equilibrium and feedback (non-commitment) equilibrium. We analyze and compare extraction behaviors of the different agents for the different equilibria and the consequences of these extraction behaviors for the final state of the resource and the agents' profits. For some hypotheses on the parameters, theoretical results show that commitment strategies lead to higher stock levels than non-commitment strategies when the leader's weight assigned to the profits from the agricultural use is lower or equal than the one assigned to the profits from the non-agricultural use. However, performing numerical simulations relaxing previous economic assumptions, we show that there are situations in which non-commitment strategies could be more favorable than commitment strategies not only in terms of final stock of the resource but also in terms of users' profits. |
| Keywords: | Groundwater resource, multiple uses, Stackelberg dynamic game, information structures. |
| JEL: | Q25 C72 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ewp:wpaper:431web&r= |
| By: | Jeong Yin Park |
| Abstract: | We study the optimal portfolio selection problem under relative performance criteria in the market model with random coefficients from the perspective of many players game theory. We consider five random coefficients which consist of three market parameters which are used in the risky asset price modeling and two preference parameters which are related to risk attitude and impact of relative performance. We focus on two cases; either all agents have Constant Absolute Risk Aversion (CARA) risk preferences or all agents have Constant Relative Risk Aversion (CRRA) risk preferences for their investment optimization problem. For each case, we show that the forward Nash equilibrium and the mean field equilibrium exist for the n-agent game and the corresponding mean field stochastic optimal control problem, respectively. To extend the n-agent game to the continuum of players game, we introduce a measure dependent forward relative performance process and apply an optimization over controlled dynamics of McKean-Vlasov type. We conclude that our optimal portfolio formulas extend the corresponding results of the market model with constant coefficients. |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2209.07411&r= |
| By: | Sebastian Schweighofer-Kodritsch |
| Abstract: | I revisit the Rubinstein (1982) model for the classic problem of price haggling and show that bargaining can become a “trap,” where equilibrium leaves one party strictly worse off than if no transaction took place (e.g., the equilibrium price exceeds a buyer’s valuation). This arises when one party is impatient about capturing zero surplus (e.g., Rubinstein’s example of fixed bargaining costs). Augmenting the protocol with unilateral exit options for responding bargainers generally removes the trap. |
| Keywords: | alternating offers, bargaining, time preferences, haggling costs, outside options |
| JEL: | C78 D03 D74 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9903&r= |
| By: | Antinyan, Armenak (Cardiff Business School, Cardiff University.); Corazzini, Luca; Fišar, Miloš; Reggiani, Tommaso (Cardiff Business School) |
| Abstract: | There has been an increasing interest in altruistic behaviour in the domain of losses recently. Nevertheless, there is no consensus in whether the monetary losses make individuals more generous or more selfish. Although almost all relevant studies rely on a dictator game to study altruistic behaviour, the experimental designs of these studies differ in how the losses are framed, which may explain the diverging findings. Utilizing a dictator game, this paper studies the impact of loss framing on altruism. The main methodological result is that the dictators’ prosocial behaviour is sensitive to the loss frame they are embedded in. More specifically, in a dictator game in which the dictators have to share a loss between themselves and a recipient, the monetary allocations of the dictators are more benevolent than in a standard setting without a loss and in a dictator game in which the dictators have to share what remains of their endowments after a loss. These differences are explained by the different social norms that the respective loss frames invoke. |
| Keywords: | loss; framing; altruism; dictator game; experiment; social norms. |
| JEL: | C91 D02 D64 |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:cdf:wpaper:2022/16&r= |
| By: | Alexander Usvitskiy (School of Advanced Studies); Dmitry Ryvkin (Department of Economics, Florida State University) |
| Abstract: | We consider competition for market shares between two firms that make costly investments to attract and retain customers. The value customers bring to the firms in the next period is higher if these customers are loyal, i.e., they remained with the firm. Based on the retention value and on the prior allocation of market shares, the firms' equilibrium investments either preserve the status quo or redistribute customers so that one of the firms gains and the other firm loses its market share. We conduct a laboratory experiment to test the theory and investigate the effects of the relative retention value and the initial state of the market on competition. The initial state of the market is either randomly assigned or endogenously generated through a preliminary contest between the firms. We find that competitors invest more as the customer retention value rises, but only when it is sufficiently high. Investment also rises with initial market share when it is low, but not when it is high. Somewhat surprisingly, we find that, for a given initial market share, investment is lower when this market share is endogenously won than when it is randomly assigned, which we attribute to within-match learning about the competitor's type. |
| Keywords: | Competition, Loyalty, Market shares, Dynamic game, Laboratory experiment |
| JEL: | C72 C92 D21 L21 |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:fsu:wpaper:wp2022_10_01&r= |
| By: | Robert A. Pollak |
| Abstract: | Despite extensive use of bargaining models in economics and despite Becker's insistence on the importance of altruism in families, the theoretical literature on bargaining ignores altruism and assumes that everyone is an egoist. This paper shows that incorporating altruism into cooperative bargaining models shrinks the set potential cooperative bargaining solutions. The analysis depends on the implications of altruism for Pareto efficiency and the implications of Pareto efficiency for potential cooperative bargaining solutions. For noncooperative bargaining, the analysis implies that any noncooperative solution that lies outside the shrunken set of potential cooperative bargaining solutions is not Pareto efficient. |
| JEL: | C7 C72 C78 D1 D64 |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30499&r= |
| By: | Ingela Alger (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) |
| Abstract: | The 50-year old definition of an evolutionarily stable strategy provided a key tool for theorists to model ultimate drivers of behavior in social interactions. For decades economists ignored ultimate drivers and used models in which individuals choose strate-gies based on their preferences. This article summarizes some key findings in the literature on evolutionarily stable preferences, which in the past three decades has proposed models that combine the two approaches: Nature equips individuals with preferences, which deter-mine their strategy choices, which in turn determines evolutionary success. The objective is to highlight complementarities and potential avenues for future collaboration between biologists and economists. |
| Date: | 2022–09–06 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03770354&r= |
| By: | Rod Falvey (Bond University); Tom Lane (University of Nottingham Ningbo China); Shravan Luckraz (Zhejiang University) |
| Abstract: | We consider the class of linear voluntary contribution games under the general assumption of heterogeneous endowments. In this context, we assess the performance of the Galbraith Mechanism (GM) relative to a fixed equal sharing allocation in both theory and experiments. Three main empirical results emerge. First, the GM raises average contributions significantly above those under an equal-shares allocation. Second, the GM simultaneously reduces income inequality as it improves efficiency. Third, a player's contribution and allocation behaviour is sensitive to her position in the endowment distribution. In all their decision-making, agents consistently place greater emphasis on contribution levels when they are rich, and on contribution ratios (contributions relative to endowments) when they are poor. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcdx:2022-15&r= |
| By: | Jeanne Hagenbach (Sciences Po - Sciences Po); Charlotte Saucet (UP1 UFR02 - Université Paris 1 Panthéon-Sorbonne - École d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne) |
| Abstract: | We experimentally study how individuals read strategically-transmitted information when they have preferences over what they will learn. Subjects play disclosure games in which Receivers should interpret messages skeptically. We vary whether the state that Senders communicate about is ego-relevant or neutral for Receivers, and whether skeptical beliefs are aligned or not with what Receivers prefer believing. Skepticism is lower when skeptical beliefs are self-threatening than in neutral settings. When skeptical beliefs are self-serving, skepticism is not enhanced compared to neutral settings. These results demonstrate that individuals' exercise of skepticism depends on the conclusions of skeptical inferences. |
| Keywords: | Disclosure games,hard information,unraveling result,skepticism,Motivated beliefs,C91,D82,D91 |
| Date: | 2022–09–06 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03770685&r= |
| By: | Kai Barron; Robert Stüber; Roel van Veldhuizen |
| Abstract: | An extensive literature documents that people are willing to sacrifice personal material gain to adhere to a moral motive. Yet, less is known about what happens when moral motives are in conflict. We hypothesize that individuals engage in what we term “motive selection,” namely adhering to the moral motive that aligns with their self-interest. We test this hypothesis using a laboratory experiment that induces a conflict between two of the most-studied moral motives: fairness and truth-telling. In line with our hypothesis, our results show that individuals prefer to adhere to the moral motive that is more aligned with their self-interest. |
| Keywords: | motivated reasoning, dictator game, lying game, motives, moral dilemmas |
| JEL: | C91 D01 D63 D90 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9911&r= |
| By: | Xu, Lili; Zhang, Yidan; Matsumura, Toshihiro |
| Abstract: | Price competition is more intense than quantity competition in private oligopolies, wherein all firms are profit maximizers. However, in mixed oligopolies where one state-owned public firm competes with profit-maximizing private firms, price competition may not provide tougher competition than quantity competition. In this study, we introduce common ownership, a distinct feature of recent financial markets, into a mixed oligopoly model and investigate how common ownership affects this ranking. We find that under common ownership, quantity competition is likely to be tougher than price competition. Moreover, we find that common ownership harms welfare regardless of competition mode. Common ownership enhances private firms’ profits under Bertrand competition while these may decline under Cournot competition. |
| Keywords: | Cournot model; Bertrand model; common ownership; mixed oligopoly |
| JEL: | D4 D43 H42 L13 |
| Date: | 2022–09–20 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:114644&r= |
| By: | Malachy James Gavan; Antonio Penta |
| Abstract: | We introduce Safe Implementation, a notion of implementation that adds to the standard requirements the restriction that deviations from the baseline solution concept induce outcomes that are acceptable. The primitives of Safe Implementation therefore include both a Social Choice Correspondence, as standard, and an Acceptability Correspondence, each mapping every state of the world to a subset of allocations. This framework generalizes standard notions of implementation, and can accommodate a variety of considerations, including robustness concerns with respect to mistakes in play, model misspecification, behavioral considerations, state-dependent feasibility restrictions, limited commitment, etc. We provide results both for general solution concepts and for the case in which agents' interaction is modelled by Nash Equilibrium. In the latter case, we identify necessary and sufficient conditions (namely, Comonotonicity and safety-no veto) that restrict the joint behavior of the Social Choice and Acceptability Correspondences. These conditions are more stringent than Maskin's (1978), but coincide with them when the safety requirements are vacuous. We also show that these conditions are quite permissive in important economic applications, such as environments with single-crossing preferences and in problems of efficient allocation of in- divisible goods, but also that Safe Implementation can be very demanding in environments with 'rich' preferences, regardless of the underlying solution concept. |
| Keywords: | comonotonicity, mechanism design, implementation, robustness, resilience, safe implementation, safety no-veto |
| JEL: | C72 D82 |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:1363&r= |
| By: | Jason Milionis; Dean Hirsch; Andy Arditi; Pranav Garimidi |
| Abstract: | Lately, Non-Fungible Tokens (NFTs), i.e., uniquely discernible assets on a blockchain, have skyrocketed in popularity by addressing a broad audience. However, the typical NFT auctioning procedures are conducted in various, ad hoc ways, while mostly ignoring the context that the blockchain provides. One of the main targets of this work is to shed light on the vastly unexplored design space of NFT Auction Mechanisms, especially in those characteristics that fundamentally differ from traditional and more contemporaneous forms of auctions. We focus on the case that bidders have a valuation for the auctioned NFT, i.e., what we term the single-item NFT auction case. In this setting, we formally define an NFT Auction Mechanism, give the properties that we would ideally like a perfect mechanism to satisfy (broadly known as incentive compatibility and collusion resistance) and prove that it is impossible to have such a perfect mechanism. Even though we cannot have an all-powerful protocol like that, we move on to consider relaxed notions of those properties that we may desire the protocol to satisfy, as a trade-off between implementability and economic guarantees. Specifically, we define the notion of an equilibrium-truthful auction, where neither the seller nor the bidders can improve their utility by acting non-truthfully, so long as the counter-party acts truthfully. We also define asymptotically second-price auctions, in which the seller does not lose asymptotically any revenue in comparison to the theoretically-optimal (static) second-price sealed-bid auction, in the case that the bidders' valuations are drawn independently from some distribution. We showcase why these two are very desirable properties for an auction mechanism to enjoy, and construct the first known NFT Auction Mechanism which provably possesses such formal guarantees. |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2209.11293&r= |
| By: | Simon Gaechter; Chris Starmer; Fabio Tufano |
| Abstract: | We introduce “group cohesion” to study the economic relevance of social relationships in team production. We operationalize measurement of group cohesion, adapting the “oneness scale” from psychology. A series of experiments, including a pre-registered replication, reveals strong positive associations between group cohesion and performance assessed in weak-link coordination games, with high-cohesion groups being very likely to achieve superior equilibria. In exploratory analysis, we identify beliefs rather than social preferences as the primary mechanism through which factors proxied by group cohesion influence group performance. Our evidence provides proof-of-concept for group cohesion as a useful tool for economic research and practice. |
| Keywords: | team work, group cohesion, social relationships, coordination, weak link games, experiments |
| JEL: | C92 D91 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9936&r= |
| By: | Matthew Ellman; Michele Fabi |
| Abstract: | This paper develops a dynamic model of crowdfunding to characterize success rates and welfare, identify optimal transparency and design policies and explain bidding profiles. Inspection costs have two effects on profiles: (1) decreasing pivotality, driven by reduced scope for strategic complementarity as the deadline nears, pushes the slope downwards; (2) a Jensen effect from bidding news also pushes the slope downwards for concave cost distributions, but upwards for convex costs. Combining can generate a U-shape. Non-disclosure of funding progress always yields higher welfare than full transparency given homogeneous costs. However, cost heterogeneity favours disclosure by enabling early bidders to activate otherwise passive, higher cost bidders. We also optimize pricing and thresholds under success-maximization. |
| Keywords: | crowdfunding dynamics, subscription games, information acquisition, pivotality, strategic complementarity, disclosure rules |
| JEL: | D26 C73 L12 M13 |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:1349&r= |
| By: | Galit Ashkenazi-Golan; Pen\'elope Hern\'andez; Zvika Neeman; Eilon Solan |
| Abstract: | This paper addresses the question of how to best communicate information over time in order to influence an agent's belief and induced actions in a model with a binary state of the world that evolves according to a Markov process, and with a finite number of actions. We characterize the sender's optimal message strategy in the limit, as the length of each period decreases to zero. The optimal strategy is not myopic. Depending on the agent's beliefs, sometimes no information is revealed, and sometimes the agent's belief is split into two well-chosen posterior beliefs. |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2209.06536&r= |
| By: | Daniel W. Derbyshire (European Centre for Environment and Human Health, University of Exeter); Michalis Drouvelis (Department of Economics, University of Birmingham); Brit Grosskopf (Department of Economics, University of Exeter) |
| Abstract: | We present the results of one-shot and repeated public good experiments that seek to understand the interaction between the endowment and marginal return in heterogeneous groups. Our focus is on treatments in which the endowment and the marginal return are either inverse or proportionally related to each other. While two normatively appealing contribution rules are aligned in the proportional treatment, a conflict between the two exists in the inverse treatment. In the one-shot experiments, we do not find significant differences across treatments. Contributions increase when the endowment, the marginal return or both increase. This is observed in all treatments except when the endowment and the marginal return are inversely related. In this case, the 'middle class' participants contribute more than both the high and low endowment types, mirroring real world observations with regards to a 'squeezed middle'. This suggests the presence of a conflict between the highly endowed subjects (but with low marginal return) and those with a high marginal return (but with low endowment). This pattern is similar when we elicit beliefs about others' contributions, whereby the two conflicting types expect others to contribute more than they do for themselves. In the long-run, however, when allowing for repeated interaction, the differences across types vanish in the inverse but not in the proportional treatment. This suggests that over time the conflicting interests arising from the interplay between the endowment and the marginal return can be overcome. Our findings have welfare implications indicating that the inverse treatment reduces inequality measured by the Gini coefficient but this is not the case for the proportional treatment, where inequality remains the same. |
| Keywords: | public goods, heterogeneity, endowment, marginal return, contribution norms |
| JEL: | H41 C92 D60 |
| Date: | 2022–10–10 |
| URL: | http://d.repec.org/n?u=RePEc:exe:wpaper:2206&r= |
| By: | Roland Bénabou; Ania Jaroszewicz; George Loewenstein |
| Abstract: | We analyze the offering, asking, and granting of help or other benefits as a three-stage game with bilateral private information between a person in need of help and a potential help-giver. Asking entails the risk of rejection, which can be painful: since unawareness of the need can no longer be an excuse, a refusal reveals that the person in need, or the relationship, is not valued very much. We show that a failure to ask can occur even when most helpers would help if told about the need, and that even though a greater need makes help both more valuable and more likely to be granted, it can reduce the propensity to ask. When potential helpers concerned about the recipient’s ask-shyness can make spontaneous offers, this can be a double-edged sword: offering reveals a more caring type and helps solve the failure-to-ask problem, but not offering reveals a not-so-caring one, and this itself deters asking. This discouragement effect can also generate a trap where those in need hope for an offer while willing helpers hope for an ask, resulting in significant inefficiencies. |
| JEL: | D03 D23 D64 D82 D83 D91 |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30486&r= |
| By: | Barron, Kai (WZB Berlin Social Science Center); Stüber, Robert (NYU Abu Dhabi); Veldhuizen, Roel van (Department of Economics, Lund University) |
| Abstract: | An extensive literature documents that people are willing to sacrifice personal material gain to adhere to a moral motive. Yet, less is known about what happens when moral motives are in conflict. We hypothesize that individuals engage in what we term “motive selection,” namely adhering to the moral motive that aligns with their self-interest. We test this hypothesis using a laboratory experiment that induces a conflict between two of the most-studied moral motives: fairness and truth-telling. In line with our hypothesis, our results show that individuals prefer to adhere to the moral motive that is more aligned with their self-interest. |
| Keywords: | Motivated reasoning; dictator game; lying game; motives; moral dilemmas |
| JEL: | C91 D01 D63 D90 |
| Date: | 2022–08–19 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lunewp:2022_016&r= |
| By: | Maho Nakagawa (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); Mathieu Lefebvre (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); Anne Stenger (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) |
| Abstract: | This paper addresses the question of the effectiveness and permanence of temporary incentives to contribute to a public good. Using a common experimental framework, we investigate the effects of a recommendation that takes the form of an exhortative message to contribute, a monetary punishment and a non-monetary reward to sustain high levels of contributions. In particular, we shed light on the differential impact these mechanisms have on heterogeneous types of agents. The results show that all three incentives increase contributions compared to a pre-phase where there is no incentive. Monetary sanctions lead to the highest contributions, but a sudden drop in contributions is observed once the incentive to punish is removed. On the contrary, Recommendation leads to the lowest contributions but maintains a long-lasting impact in the Postpolicy phase. In particular, it makes free-riders increase their contribution over time in the post-incentive phase. Finally, non-monetary reward backfires against those who are weakly conditional cooperators. Our findings emphasize the importance of designing and maintaining incentives not only for free-riders, but for strong and weak conditional cooperators as well, depending on characteristics of the incentives. |
| Keywords: | Public goods game,Monetary policy,Game theory,Conservation science,Experimental design,Experimental economics,Social psychology,Test statistics |
| Date: | 2022–08–25 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03777681&r= |
| By: | Pablo Bra\~nas-Garza; Antonio Cabrales; Mar\'ia Paz Espinosa; Diego Jorrat |
| Abstract: | We experimentally study a game in which success requires a sufficient total contribution by members of a group. There are significant uncertainties surrounding the chance and the total effort required for success. A theoretical model with max-min preferences towards ambiguity predicts higher contributions under ambiguity than under risk. However, in a large representative sample of the Spanish population (1,500 participants) we find that the ATE of ambiguity on contributions is zero. The main significant interaction with the personal characteristics of the participants is with risk attitudes, and it increases contributions. This suggests that policymakers concerned with ambiguous problems (like climate change) do not need to worry excessively about ambiguity. |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2209.11079&r= |
| By: | Wanying Huang |
| Abstract: | We study how fads emerge from social learning in a changing environment. We consider a sequential learning model in which rational agents arrive in order, each acting only once, and the underlying unknown state is constantly evolving. Each agent receives a private signal, observes all past actions of others, and chooses an action to match the current state. Since the state changes over time, cascades cannot last forever, and actions fluctuate too. We show that in the long run, actions change more often than the state. This describes many real-life faddish behaviors in which people often change their actions more frequently than what is necessary. |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2208.14570&r= |