nep-gth New Economics Papers
on Game Theory
Issue of 2023‒01‒02
fifteen papers chosen by
Sylvain Béal
Université de Franche-Comté

  2. Zero-Sum Stochastic Stackelberg Games By Denizalp Goktas; Jiayi Zhao; Amy Greenwald
  3. Asymmetric majority pillage games By Kerber, Manfred; Rowat, Colin; Yoshihara, Naoki
  4. Mixed-strategy equilibrium of the symmetric production in advance game: the missing case By Tasnádi, Attila
  5. The Good of Rules: An experimental study on prosocial behavior By Caserta, Maurizio; Distefano, Rosaria; Ferrante, Livio
  6. Honesty in the City By Martin Dufwenberg; Paul Feldman; Maros Servatka; Jorge Tarraso; Radovan Vadovic
  7. Nash implementation by stochastic mechanisms: a simple full characterization By Siyang Xiong
  8. Strategies in deterministic totally-ordered-time games By Tomohiko Kawamori
  9. "A New Folk Theorem in OLG Games" By Chihiro Morooka
  10. Capacity coordination and strategic underproduction under cap-and-trade By Guo, Xinyu
  11. The Limit of Targeting in Networks By Li, Jian; Zhou, Junjie; Chen, Ying-Ju
  12. Efficient Communication in Organizations By Federico Vaccari
  13. When can lotteries improve public procurement processes? By Antonio Estache; Renaud Foucart; Tomas Serebrisky
  14. The Limits of Commitment By Jacopo Bizzotto; Toomas Hinnosaar; Adrien Vigier
  15. Epictetusian Rationality By Ponthiere, Gregory

  1. By: Ezra Einy (BGU); Ori Haimanko (BGU)
    Keywords: Bayesian games, Bayesian potential, pure-strategy equilibrium, continuous payoffs, absolute continuity of information
    JEL: C62 C72 D82
    Date: 2022
  2. By: Denizalp Goktas; Jiayi Zhao; Amy Greenwald
    Abstract: Zero-sum stochastic games have found important applications in a variety of fields, from machine learning to economics. Work on this model has primarily focused on the computation of Nash equilibrium due to its effectiveness in solving adversarial board and video games. Unfortunately, a Nash equilibrium is not guaranteed to exist in zero-sum stochastic games when the payoffs at each state are not convex-concave in the players' actions. A Stackelberg equilibrium, however, is guaranteed to exist. Consequently, in this paper, we study zero-sum stochastic Stackelberg games. Going beyond known existence results for (non-stationary) Stackelberg equilibria, we prove the existence of recursive (i.e., Markov perfect) Stackelberg equilibria (recSE) in these games, provide necessary and sufficient conditions for a policy profile to be a recSE, and show that recSE can be computed in (weakly) polynomial time via value iteration. Finally, we show that zero-sum stochastic Stackelberg games can model the problem of pricing and allocating goods across agents and time. More specifically, we propose a zero-sum stochastic Stackelberg game whose recSE correspond to the recursive competitive equilibria of a large class of stochastic Fisher markets. We close with a series of experiments that showcase how our methodology can be used to solve the consumption-savings problem in stochastic Fisher markets.
    Date: 2022–11
  3. By: Kerber, Manfred; Rowat, Colin; Yoshihara, Naoki
    Abstract: We study pillage games (Jordan in J Econ Theory 131.1:26-44, 2006, “Pillage and property”), which model unstructured power contests. To enable empirical tests of pillage game theory, we relax a symmetry assumption that agents’ intrinsic contributions to a coalition’s power is identical. We characterise the core for all n. In the three-agent game: (i) only eight configurations are possible for the core, which contains at most six allocations; (ii) for each core configuration, the stable set is either unique or fails to exist; (iii) the linear power function creates a tension between a stable set’s existence and the interiority of its allocations, so that only special cases contain strictly interior allocations. Our analysis suggests that non-linear power functions may offer better empirical tests of pillage game theory.
    Keywords: power contests, core, stable sets
    JEL: C71 D51 P14
    Date: 2022–10
  4. By: Tasnádi, Attila
    Abstract: The mixed-strategy equilibrium of the symmetric production-in-advance type capacity-constrained Bertrand-Edgeworth duopoly game has not been derived analytically over the entire range of intermediate capacities in the literature. Tasnádi (2020) constructed a symmetric mixed-strategy equilibrium for the production-in-advance game for a large range of intermediate capacities. In this paper we derive for the missing region a symmetric mixed-strategy equilibrium analytically.
    Keywords: Price-quantity games; Bertrand-Edgeworth competition; inventories
    JEL: D43 L13
    Date: 2022–11–28
  5. By: Caserta, Maurizio; Distefano, Rosaria; Ferrante, Livio
    Abstract: In everyday life, individuals interact with relatives, friends and colleagues, share ideas and passions and cooperate with others to pursue common goals. Within each social domain, individuals recognize themselves as a group member with rights and duties to observe. Understanding the importance of social norms and encouraging mutually beneficial cooperation is crucial for societal and economic development. This paper presents an experimental study of an educational program for early adolescents of 11 years old from South Italy. The program introduces participants to institutions, civic engagement, sense of duty, and decision-making. Among other didactic activities, it includes guided tours and a role-taking game. Our results suggest that the program attendance positively affects cooperation in a one-shot Prisoner’s Dilemma and altruistic behavior in a Dictator Game. Our findings contribute to the nature-nurture debate, showing that promoting prosocial behavior can be effective in pursing the common good.
    Keywords: Experimental game theory; Group Decision Making; Cooperation; Prisoner’s Dilemma; Dictator Game.
    JEL: C72 C93 I20
    Date: 2022–02–07
  6. By: Martin Dufwenberg (University of Arizona); Paul Feldman (Texas A&M University); Maros Servatka (Macquarie Business School, University of Alaska Anchorage); Jorge Tarraso (Libretto); Radovan Vadovic (Carleton University)
    Abstract: Lab evidence on trust games involves more cooperation than conventional economic theory predicts. We explore whether this pattern extends to a field setting where we are able to control for (lack of) repeat-play and reputation: the taxi market in Mexico City. We find a remarkable degree of trustworthiness, even with price-haggling which was predicted to reduce trustworthiness.
    Keywords: trustworthiness, honesty, reciprocity, field experiment, haggling, taxis, Mexico City
    JEL: C72 C90 C93 D91
    Date: 2022–11
  7. By: Siyang Xiong
    Abstract: We study Nash implementation by stochastic mechanisms, and provide a surprisingly simple full characterization, which is in sharp contrast to the classical, albeit complicated, full characterization in Moore and Repullo (1990).
    Date: 2022–11
  8. By: Tomohiko Kawamori
    Abstract: We consider deterministic totally-ordered-time games. We present three axioms for strategies. We show that for any tuple of strategies that satisfy the axioms, there exists a unique complete history that is consistent with the strategy tuple.
    Date: 2022–11
  9. By: Chihiro Morooka (School of Science and Engineering, Tokyo Denki University)
    Abstract: We study payoffs in the subgame perfect equilibria of general n-player discounted overlapping generations games. Without a public randomization device and the observability of mixed actions, we show that patient players can approximately obtain any payoffs in the smallest cube containing the feasible and individually rational one-shot payoffs in the sense of effective minimax values with pure actions. This result is obtained when we first choose the discount rate and then choose the players’ lifespan. When mixed actions are observable, the analogous result holds true for mixed minimaxing. We also show that players cannot obtain better payoffs outside this cube defined by mixed minimaxing.
    Date: 2022–11
  10. By: Guo, Xinyu
    Abstract: This paper presents a two-stage game of cap-and-trade (CAT) regulated production. We show how quantity-based regulation, in the form of individual production or pollution emissions permits, can function as a credible commitment device allowing firms to coordinate their own-production levels and underproduce the quantity cap set by the regulator. Under strategic underproduction equilibria, consumer surplus and production cost efficiency declines, but industry profits increase. This channel for exercising market power under CAT has been overlooked and requires new regulatory countermeasures. Limiting permit accumulation by individual firms can restore first best efficiency but only under specific industry and cost conditions. We show that a poorly designed ownership limit policy can reduce welfare below levels attained without limits. A case study of the U.S. west coast groundfish fishery which is currently regulated under CAT with strict limits on ownership of fishing permits is presented. Evidence of strategic underproduction is inconclusive. We find current ownership restrictions likely prevent firms from realizing economies of scale in production. Alternate policies to counter strategic underproduction forces are recommended.
    Date: 2021–12–21
  11. By: Li, Jian; Zhou, Junjie; Chen, Ying-Ju
    Abstract: This paper studies the value of network-based targeting within a class of network games withstrategic complements, where the designer can target a group of seed players as first movers. We define an effectiveness index, called the relative network synergy equivalent (RNSE), to quantify the effect of a network-based targeting intervention relative to across-the-board peereffect enhancement. We show that, regardless of the targeting policies and network structures, a universal and tight upper bound for this index is √2 ≈ 1.414. This upper bound is robustto considerations of revenue maximization, costly seeding, random seeding as the alternative benchmark, and multiple stages of moves. Compared with network-based targeting, peer effect enhancing policy has the advantage of being agnostic to the network structure. In the case of small synergy, we provide comparative statics of the RNSE index concerning the network structures: fixing the targeting policy, increasing network links within the seeded group or the unseeded group will decrease the index; meanwhile, adding links across these two groups will increase the index. Our analysis sheds light on policy choices between network-based targetingand peer effect enhancing policies.
    Date: 2021–12–08
  12. By: Federico Vaccari
    Abstract: Organizations design their communication structures to improve decision-making while limiting wasteful influence activities. An efficient communication protocol grants complete-information payoffs to all organization members, thereby overcoming asymmetric information problems at no cost. This paper characterizes efficient protocols assuming that: (i) some agents within the organization have the knowledge required for optimal decision-making; (ii) both the organization and consulted agents incur losses proportional to the exerted influence activities; and (iii) informed agents can discuss their strategies before being consulted. Under these assumptions, "public advocacy" is the unique efficient communication protocol. This result provides a novel rationale for public advocacy.
    Date: 2022–11
  13. By: Antonio Estache; Renaud Foucart; Tomas Serebrisky
    Abstract: We study the feasibility, challenges, and potential benefits of adding a lottery component to standard negotiated and rule-based procurement procedures. For negotiated procedures, we introduce a “discrete lottery†in which local bureaucrats negotiate with a small number of selected bidders and a lottery decides who is awarded the contract. We show that the discrete lottery performs better than a standard negotiated procedure when the pool of firms to choose from is large and corruption is high. For rule-based auction procedures, we introduce a “third-price lottery†in which the two highest bidders are selected with equal probability and the project is contracted at a price corresponding to the third highest bid. We show that the third-price lottery reduces the risks from limited liability and renegotiation. It performs better than a standard second-price or ascending auction when the suppliers’ pool size, the risk of cost overrun, delays and non-delivery of the project are high. The choice between a second-price auction, a third price lottery and a lottery amongst all bidders also depends on the weight placed on producer surplus, including for instance the desire to increase the participation of local SMEs in public sector services markets.
    Keywords: rules, discretion, procurement, lotteries, corruption, auctions
    JEL: D44 D73 H57
    Date: 2022
  14. By: Jacopo Bizzotto (Oslo Business School, Oslo Metropolitan University); Toomas Hinnosaar (University of Nottingham); Adrien Vigier (University of Oxford)
    Abstract: We study partial commitment in leader-follower games. A collection of subsets covering the leader's action space determines her commitment opportunities. We characterize the outcomes resulting from all possible commitment structures of this kind. If the commitment structure is an interval partition, then the leader's payoff is bounded by the payoffs she obtains under the full and no-commitment benchmarks. We apply our results to study new design problems.
    Date: 2022–05–11
  15. By: Ponthiere, Gregory
    Abstract: According to Epictetus, mental freedom and happiness can be achieved by distinguishing between, on the one hand, things that are upon our con- trol (our acts, opinions and desires), and, on the other hand, things that are not upon our control (our body, property, offi ces and reputation), and by wishing for nothing that is outside our control. This article proposes two accounts of Epictetus's precept: the I account of Epictetus's precept requires indifference between outcomes differing only on circumstances, whereas the IB account requires indifference between outcomes involving the best replies to circumstances. We study the implications of these precepts on the preference relation and on the existence of Epictetusian rationality. The I account implies that the preference relation satisfies in- dependence of circumstances, whereas the IB account implies robustness to dominated alternatives. Unlike the IB account, the I account rules out (counter)adaptive preferences. Finally, when examining game-theoretical implications of Epictetusian rationality, we show that the two accounts of Epictetus's precept exclude the existence of prisoner's dilemmas.
    Keywords: rationality,Epictetus,preferences,indifference,independence,adaptive preferences
    JEL: B11 D01 D10
    Date: 2022

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