nep-gth New Economics Papers
on Game Theory
Issue of 2023‒01‒09
28 papers chosen by
Sylvain Béal
Université de Franche-Comté

  1. Folk Theorems in Repeated Games with Switching Costs By Yevgeny Tsodikovich; Xavier Venel; Anna Zseleva
  2. A Theory of Pledge-and-Review Bargaining By Harstad, Bård
  3. Competition in Signaling By Federico Vaccari
  4. Learning and Strategic Delay in a Dynamic Coordination Game By Dengwei Qi
  5. International Environmental Agreements When Countries Behave Morally By Thomas Eichner; Rüdiger Pethig
  6. Welfare in Experimental News Markets By Andrea Albertazzi; Matteo Ploner; Federico Vaccari
  7. Regret Minimization with Dynamic Benchmarks in Repeated Games By Ludovico Crippa; Yonatan Gur; Bar Light
  8. Subsidy and Taxation in All-Pay Auctions under Incomplete By Aner Sela; Yizhaq Minchuk
  9. Collective minimum contributions to counteract the ratchet effect in the voluntary provision of public goods By Alt, Marius; Gallier, Carlo; Kesternich, Martin; Sturm, Bodo
  10. DSGE Nash: solving Nash Games in Macro Models With an application to optimal monetary policy under monopolistic commodity pricing By Massimo Ferrari Minesso; Maria Sole Pagliari
  11. Collusion and Predation Under Cournot Competition By Emilie Dargaud; Maxime Menuet; Petros G. Sekeris
  12. Congestion management games in electricity markets By Ehrhart, Karl-Martin; Eicke, Anselm; Hirth, Lion; Ocker, Fabian; Ott, Marion; Schlecht, Ingmar; Wang, Runxi
  13. On competition for spatially distributed resources in networks: an extended version By Giorgio Fabbri; Silvia Faggian; Giuseppe Freni
  14. Super-Additive Cooperation By Charles Efferson; Helen Bernhard; Urs Fischbacher; Ernst Fehr
  15. Behavioral bargaining theory: Equality bias, risk attitude, and reference-dependent utility By Yoshio Kamijo; Koji Yokote
  16. Comparing Crowdfunding Mechanisms: Introducing the Generalized Moulin-Shenker Mechanism By Andrej Woerner; Sander Onderstal; Arthur Schram
  17. Decentralized Matching at Senior-Level: Stability and Incentives By AyÅŸe Yazici
  18. On the Emergence of Cooperation in the Repeated Prisoner's Dilemma By Maximilian Schaefer
  19. Trust towards Migrants By Gandelman, Néstor; Lamé, Diego
  20. Efficient Communication in Organizations By Federico Vaccari
  21. Dynamic Equilibrium with Insider Information and General Uninformed Agent Utility By Jerome Detemple; Scott Robertson
  22. The network structure of global tax evasion Evidence from the Panama Papers By Garcia Alvarado Fernando; Mandel Antoine
  23. By Object or by Effect? The Collusive Potential of First Refusal Contracts By Patrick Van Cayseele; Andreas Bovin
  24. Evolutionary Game-theoretical Rationality, Rejection of Relative Deprivation, Social Intelligence, Inequality in Transaction-role Opportunities, and Social Discrimination: A construction of macro-social and economic theory from a micro-behavioral moder through thought experiments based on the ultimatum game (Japanese) By YAMAGUCHI Kazuo
  25. On the foundations of ex post incentive compatible mechanisms By Takuro Yamashita; Shuguang Zhu
  26. Communication via Third Parties By Jacopo Bizzotto; Eduardo Perez-Richet; Adrien Vigier
  27. The value of decentralization using the blockchain By Reuter, Marco
  28. Are Some Athletes More Cognitive Skilled than Others when Choosing their Opponents in Skiing-Sprint Elimination Tournaments? By Karlsson, Niklas; Lunander, Anders

  1. By: Yevgeny Tsodikovich (Bar-Ilan University [Israël]); Xavier Venel (LUISS - Libera Università Internazionale degli Studi Sociali Guido Carli [Roma]); Anna Zseleva (Maastricht University [Maastricht])
    Abstract: We study how switching costs affect the sub-game perfect equilibria in repeated games. We show that (i) the Folk Theorem holds whenever the players are patient enough; (ii) the set of equilibrium payoffs is obtained by considering the payoffs of a simple one-shot auxiliary game; and (iii) the switching costs have a negative impact on a player in the infinitely undiscounted repeated game but can be beneficial for him in a finitely repeated game or in a discounted game.
    Keywords: Switching Costs, Repeated Games, Folk Theorem, Stochastic Games, Non-Zero-sum games
    Date: 2022–12–07
  2. By: Harstad, Bård (Dept. of Economics, University of Oslo)
    Abstract: Inspired by the negotiations leading up to the Paris Agreement on climate change, I study a bargaining game where every party is proposing only its own contribution, before the set of pledges must be unanimously approved. I show that, with uncertain tolerance for delay, each equilibrium pledge maximizes an asymmetric Nash product. The weights on others' payoffs increase in the uncertainty, but decrease in the correlation of the shocks. The weights vary pledge to pledge, and this implies that the outcome is generically inefficient. The Nash demand game and its mapping to the Nash bargaining solution follow as a limiting case. The model sheds light on the Paris climate change agreement, but it also applies to negotiations between policymakers or business partners that have differentiated responsibilities or expertise.
    Keywords: Bargaining games; the Nash program.
    JEL: C78 D78
    Date: 2021–06–18
  3. By: Federico Vaccari (Department of Economics and Management, University of Trento)
    Abstract: I study a multi-sender signaling game between an uninformed decision maker and two senders with common private information and conflicting interests. Senders can misreport information at a cost that is tied to the size of the misrepresentation. The main results concern the amount of information that is transmitted in equilibrium and the language used by senders to convey such information. Fully revealing and pure-strategy equilibria exist but are not plausible. I first identify sufficient conditions under which equilibria are essentially unique, robust, and always exist, and then deliver a complete characterization of these equilibria. As an application, I study the informative value of different judicial procedures.
    Keywords: Signaling, Multi-sender, Competition, Misreporting, Communication
    JEL: C72 D72 D82
    Date: 2022–12
  4. By: Dengwei Qi
    Abstract: Heterogeneously informed agents decide their optimal action timings while observing past activities over time. We construct such a dynamic global coordination game to investigate the impact of learning and delay options on coordination behaviors and outcomes. A unique monotone equilibrium is characterized, which is analytically convenient for all ranges of learning efficiencies, and we demonstrate that learning improves coordination success, while the delay options alone have no impact, relative to the one-shot game. Dynamics of agents’ behaviors and welfare implications are then presented. In addition, we show that full learning about the state achieves in the limit, and find the condition on which observing actions reveals more accurate information about the state than directly observing it.
    Keywords: Learning; Strategic delay; Global games; Dynamics
    JEL: D82 D83
    Date: 2022–12
  5. By: Thomas Eichner; Rüdiger Pethig
    Abstract: In the standard theoretical literature on forming international environmental agreements (IEAs) countries use to be self-interested materialists and stable coalitions are small. This paper analyzes IEA games with countries that exhibit Kantian moral behavior. Countries may behave morally with respect to both emissions (reduction) and membership in an IEA. If countries are emissions Kantians or membership Kantians the outcome of the corresponding IEA games is socially optimal. To model more realistic Kantian behavior, we define an emissions [membership] moralist as a country whose welfare is the weighted average of the welfare of an emissions [membership] Kantian and a materialist. The game with emissions moralists produces stable coalitions not larger than those in the standard game with materialists. The game with membership moralists yields stable coalitions that are increasing in the membership morality. Finally, we consider countries who are moderate moralists with respect to both emissions and membership. In that encompassing IEA game the size of the coalition is increasing in the emissions morality, the membership morality, and in the weight of the membership moralist’s welfare. Depending on parameter values, the grand coalition may or may not be attained if one of the moral parameter increases and tends towards one.
    Keywords: international environmental agreement, stable coalitions, moral behavior, Kantian ethics
    JEL: C72 Q50 Q58
    Date: 2022
  6. By: Andrea Albertazzi (Department of Economics and Statistics, University of Siena); Matteo Ploner (Department of Economics and Management, Cognitive and Experimental Economics Lab, CEEL, University of Trento); Federico Vaccari (Laboratory for the Analysis of Complex Economic Systems, IMT School of Advanced Studies)
    Abstract: We perform a controlled experiment to study the welfare effects of competition in a strategic communication environment. Two equally informed senders with conflicting interests can misreport information at a cost. We compare a treatment where only one sender communicates to a treatment where both senders privately communicate with a decision-maker. Data show that competition between senders does not increase the amount of information decision-makers obtain. We find evidence of under-communication, as the information transmitted is lower than what theory predicts in the most informative equilibrium. Senders are worse off under competition because their relative gains from persuasion are more than offset by their expenditures in misreporting costs. As a result, competition between senders reduces the total welfare.
    Keywords: Experiment, Welfare, Multiple senders, Competition, Sender-receiver games
    JEL: C72 C92 D60
    Date: 2022–12
  7. By: Ludovico Crippa; Yonatan Gur; Bar Light
    Abstract: In repeated games, strategies are often evaluated by their ability to guarantee the performance of the single best action that is selected in hindsight (a property referred to as \emph{Hannan consistency}, or \emph{no-regret}). However, the effectiveness of the single best action as a yardstick to evaluate strategies is limited, as any static action may perform poorly in common dynamic settings. We propose the notion of \emph{dynamic benchmark consistency}, which requires a strategy to asymptotically guarantee the performance of the best \emph{dynamic} sequence of actions selected in hindsight subject to a constraint on the number of action changes the corresponding dynamic benchmark admits. We show that dynamic benchmark consistent strategies exist if and only if the number of changes in the benchmark scales sublinearly with the horizon length. Further, our main result establishes that the set of empirical joint distributions of play that may emerge, when all players deploy such strategies, asymptotically coincides with the set of \emph{Hannan equilibria} (also referred to as \emph{coarse correlated equilibria}) of the stage game. This general characterization allows one to leverage analyses developed for frameworks that consider static benchmarks, which we demonstrate by bounding the social efficiency of the possible outcomes in our~setting. Together, our results imply that dynamic benchmark consistent strategies introduce the following \emph{Pareto-type} improvement over no-regret strategies: They enable stronger individual guarantees against arbitrary strategies of the other players, while maintaining the same worst-case guarantees on the social welfare, when all players adopt these strategies.
    Date: 2022–12
  8. By: Aner Sela (BGU); Yizhaq Minchuk (Shamoon College of Engineering)
    Keywords: All-pay auctions, subsidy, taxation
    JEL: C72 D44 H25
    Date: 2022
  9. By: Alt, Marius; Gallier, Carlo; Kesternich, Martin; Sturm, Bodo
    Abstract: We experimentally test a theoretically promising amendment to the ratchet-up mechanism of the Paris Agreement. The ratchet-up mechanism prescribes that parties' commitments to the global response to climate change cannot decrease over time and our results confirm that its effect is detrimental. We design a public goods game to study whether an amendment to the mechanism that stipulates all agents to contribute at least a collective minimum to the public good which is based on the principle of the lowest common denominator promotes cooperation. We find that binding collective minimum contributions improve the effectiveness of the ratchet-up mechanism. Non-binding minimum contributions, in contrast, do not foster cooperation. Our data reveal conditional cooperative dynamics to explain the difference. If other participants contribute less than the collective minimum contributions, even initially cooperative participants start to negatively reciprocate such a form of non-compliance by contributing less.
    Keywords: global public goods,climate change,institutions,ratchet-up mechanism,minimum contributions,laboratory experiment
    JEL: C72 C92 H41
    Date: 2022
  10. By: Massimo Ferrari Minesso; Maria Sole Pagliari
    Abstract: This paper presents DSGE Nash, a toolkit to solve for pure strategy Nash equilibria of global games in general equilibrium macroeconomic 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-defined 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 barriers to entry. If the commodity price becomes relevant in production, the central bank in the commodity importing economy deviates from the first 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.
    Keywords: DSGE Model, Optimal Policies, Computational Economics
    JEL: C63 E32 E61
    Date: 2022
  11. By: Emilie Dargaud (Univ Lyon, Université Lumière Lyon 2, GATE, UMR 5824, F-69130 Ecully, France); Maxime Menuet (LEO, University of Orleans, Orleans, France. e-mail:; Petros G. Sekeris (Corresponding author: TBS Business School, 1 Place A. Jourdain, 31000 Toulouse, France)
    Abstract: This paper studies how predation strategies can affect the sustainability of collusion. We demonstrate that in the presence of few competitors collusion may be sustained at equilibrium for intermediate discount factors. In such instances predation implies that punishment strategies will yield low subgame perfect payoffs, thereby making collusion easier to sustain. For low discount factors collusion is not sustainable because of the high incentives to deviate to Cournot-Nash strategies. Moreover, for high discount factors it is always optimal to predate colluding firms, thus contrasting with much of the earlier literature showing that collusion is only achievable by sufficiently patient firms.
    Keywords: Collusion, Predation, Cournot competition
    JEL: D43 L13 L41
    Date: 2022
  12. By: Ehrhart, Karl-Martin; Eicke, Anselm; Hirth, Lion; Ocker, Fabian; Ott, Marion; Schlecht, Ingmar; Wang, Runxi
    Abstract: This paper proposes a game-theoretic model to analyze the strategic behavior of inc-dec gaming in market-based congestion management (redispatch). We extend existing models by considering incomplete information about competitors' costs and a finite set of providers. We find that these extensions do not dissolve inc-dec gaming, which already occurs in our setup of two regions. We also benchmark market-based redispatch against grid investment, cost-based redispatch, and the Vickrey-Clarke-Groves mechanism. The comparison highlights a significant inefficiency of market-based redispatch and inflated redispatch payments. Finally, we study seven variations of our basic model to assess whether different market fundamentals or market design changes mitigate inc-dec gaming. None of these variations eliminate inc-dec gaming entirely.
    Keywords: Energy market,Game theory,Auctions/bidding,Congestion management,Inc-dec gaming
    JEL: D43 D44 L13 Q41 Q48
    Date: 2022
  13. By: Giorgio Fabbri (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); Silvia Faggian (Université de Venise Ca’ Foscari | Università Ca’ Foscari di Venezia); Giuseppe Freni (PARTHENOPE - Università degli Studi di Napoli “Parthenope” = University of Naples)
    Abstract: We study the dynamics of the exploitation of a natural resource distributed among and flowing between several nodes connected via a weighted, directed network. The network represents both the locations and the interactions of the resource nodes. A regulator decides to designate some of the nodes as natural reserves where no exploitation is allowed. The remaining nodes are assigned (one-to-one) to players, who will exploit the resource at the node. We show how the equilibrium exploitation and the resource stocks depend on the productivity of the resource sites, on the structure of the connections between the sites, and on the number and the preferences of the agents. The best locations to host nature reserves are identified according to the model's parameters, and we find that they correspond to the most central (in the sense of eigenvector centrality) nodes of a suitably redefined network that considers the nodes' productivity.
    Keywords: Harvesting, Spatial models, Differential games, Nature reserve
    Date: 2022–12–07
  14. By: Charles Efferson; Helen Bernhard; Urs Fischbacher; Ernst Fehr
    Abstract: Repeated interactions provide a prominent but paradoxical hypothesis for human cooperation in one-shot interactions. Intergroup competitions provide a different hypothesis that is intuitively appealing but heterodox. We show that neither mechanism reliably supports the evolution of cooperation when actions vary continuously. Ambiguous reciprocity, a strategy generally ruled out in models of reciprocal altruism, completely undermines cooperation under repeated interactions, which challenges repeated interactions as a stand-alone explanation for cooperation in both repeated and one-shot settings. Intergroup competitions do not reliably support cooperation because groups tend to be similar under relevant conditions. Moreover, even if groups vary, cooperative groups may lose competitions for several reasons. Although repeated interactions and group competitions do not support cooperation by themselves, combining them often triggers powerful synergies because group competitions can stabilise cooperative strategies against the corrosive effect of ambiguous reciprocity. Evolved strategies often consist of cooperative reciprocity with ingroup partners and uncooperative reciprocity with outgroup partners. Results from a one-shot behavioural experiment in Papua New Guinea fit exactly this pattern. They thus indicate neither an evolutionary history of repeated interactions without group competition nor a history of group competition without repeated interactions. Our results are only consistent with social motives that evolved under the joint influence of both mechanisms together.
    Keywords: evolution of cooperation, reciprocity, intergroup competition, social dilemma
    JEL: C60 C70 C90
    Date: 2022
  15. By: Yoshio Kamijo (Waseda University); Koji Yokote (JSPS Research Fellow, Graduate School of Economics, the University of Tokyo)
    Abstract: We develop a new theory, termed the behavioral bargaining theory (henceforth, BBT), that explains various observed behaviors in bargaining experiments in a unified manner. The key idea is to modify Nash’s (1950) model by endowing the players’ utility functions with a new concept, named entitlement, that represents the amount of money the player feels entitled to receive. We first apply BBT to explain the equality bias that is widely observed in the laboratory. We argue that our explanation of the bias in terms of entitlements is more easily interpretable than the extant explanation in terms of risk attitudes. Then, we demonstrate that BBT can also explain other behavioral patterns beyond the equality bias by suitably setting entitlements. Finally, we provide empirical support to BBT by using experimental data from Takeuchi et al. (2022), where entitlements of players can be inferred from the experimental design.
    Keywords: Behavioral bargaining theory, Nash bargaining solution, Reference dependent utility, Equality bias, Equal-split norm
    Date: 2022–12
  16. By: Andrej Woerner; Sander Onderstal; Arthur Schram
    Abstract: For reward-based crowdfunding, we introduce the strategy-proof Generalized Moulin-Shenker mechanism (GMS) and compare its performance to the prevailing All-Or-Nothing mechanism (AON). Theoretically, GMS outperforms AON in equilibrium profit and funding success. We test these predictions experimentally, distinguishing between a sealed-bid and a dynamic version of GMS. We find that the dynamic GMS outperforms the sealed-bid GMS. It performs better than AON when the producer aims at maximizing funding success. For crowdfunding in practice, this implies that the current standard of financing projects could be improved upon by implementing a crowdfunding mechanism that is similar to the dynamic GMS.
    Keywords: crowdfunding, market design, strategy-proofness, laboratory experiment
    JEL: C92 D82 G29
    Date: 2022
  17. By: AyÅŸe Yazici (Department of Economics, University of Durham)
    Abstract: We consider senior-level labor markets and study a decentralized game where firms can fire a worker whenever they wish to make an offer to another worker. The game starts with initial matching of firms and workers and proceeds with a random sequence of job offers. The outcome of the game depends on the ran- dom sequence according to which firms make offers and therefore is a probability distribution over the set of matchings. We provide theoretical support for the successful functioning of decentralized matching markets in a setup with myopic workers. We then identify a lower bound on outcomes that are achievable through strategic behavior. We find that in equilibrium either any sequence of offers leads to the same matching or workers (firms) do not agree on what matching is the worst (best) among all possible realizations of the outcome. This implies that workers can always act to avoid a possible realization that they unanimously find undesirable. Hence, a well-known result for centralized matching at the entry- level carries over to matching at the senior-level albeit without the intervention of a mediator.
    Keywords: Senior-level markets; Stability; Random matching
    JEL: C78 J44
    Date: 2022–01
  18. By: Maximilian Schaefer
    Abstract: This article explores which parameters of the repeated Prisoner's Dilemma lead to cooperation. Using simulations, I demonstrate that the potential function of the stochastic evolutionary dynamics of the Grim Trigger strategy is useful to predict cooperation between Q-learners. The frontier separating the parameter spaces that induce either cooperation or defection can be determined based on the kinetic energy exerted by the respective basins of attraction. When the incentive compatibility constraint of the Grim Trigger strategy is slack, a sudden increase in the observed cooperation rates occurs when the ratio of the kinetic energies approaches a critical value, which itself is a function of the discount factor, multiplied by a correction factor to account for the effect of the algorithms' exploration probability. Using metadata from laboratory experiments, I provide evidence that the insights obtained from the simulations are also useful to explain the emergence of cooperation between humans. The observed cooperation rates show a positive gradient at the frontier characterized by an exploration probability of approximately five percent. In the context of human-to-human interaction, the exploration probability can be viewed as the belief about the opponent's probability to deviate from the equilibrium action.
    Date: 2022–11
  19. By: Gandelman, Néstor; Lamé, Diego
    Abstract: Using a standard trust game, we elicit trust and reciprocity measures in a representative sample of adult players in Montevideo, the capital city of Uruguay, a country that exhibits relatively better levels of tolerance towards migrants than other Latin American countries. We find no statistically significant differences in trust levels of Uruguayans towards countrymen versus migrants. In reciprocity, we find only marginally significant differences attributable to the nationality of the players.
    Keywords: Trust;Reciprocity;Experimental games;Migrations
    JEL: C9 J15
    Date: 2021–09
  20. By: Federico Vaccari (Laboratory for the Analysis of Complex Economic Systems, IMT School of Advanced Studies)
    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.
    Keywords: Information, Communication, Organizations, Efficiency, Costly Talk
    JEL: D23 D82 D83
    Date: 2022–12
  21. By: Jerome Detemple; Scott Robertson
    Abstract: We study a continuous time economy where agents have asymmetric information. The informed agent (``$I$''), at time zero, receives a private signal about the risky assets' terminal payoff $\Psi(X_T)$, while the uninformed agent (``$U$'') has no private signal. $\Psi$ is an arbitrary payoff function, and $X$ follows a time-homogeneous diffusion. Crucially, we allow $U$ to have von Neumann-Morgenstern preferences with a general utility function on $(0,\infty)$ satisfying the standard conditions. We prove existence of a partial communication equilibrium (PCE), where at time $0$, $U$ receives a less-informative signal than $I$. In the single asset case, this signal is recoverable by viewing the equilibrium price process over an arbitrarily short period of time, and hence the PCE is a dynamic noisy rational expectations equilibrium. Lastly, when $U$ has power (constant relative risk aversion) utility, we identify the equilibrium price in the small and large risk aversion limit.
    Date: 2022–11
  22. By: Garcia Alvarado Fernando; Mandel Antoine (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper builds on recent insights from network theory and on the rich dataset made available by the Panama Papers in order to investigate the micro-economic dynamics of tax-evasion. We model offshore financial entities documented in the Panama Papers as links between jurisdictions in the global network of tax evasion. A quantitative analysis shows that the resulting network, far from being a random collection of bilateral links, has key features of complex networks such as a core-periphery structure and a fat-tail degree distribution. We argue that these structural features imply that policy must adopt a systemic perspective to mitigate tax evasion. We offer three sets of insights from this perspective. First, we identify through centrality measures tax havens that ought to be priority policy targets. Second, we show that efficient tax treaties must contain exchange information clauses and link tax-havens to non-haven jurisdictions. Third, we show that the optimal deterrence strategies for a social-planner facing a strategic tax-evader in a Stackelberg competition can be characterized using the notion of Bonacich centrality.
    Keywords: H26 H87 D85 C54 Tax Evasion Socio-economic Networks Game Theory,H26,H87,D85,C54 Tax Evasion,Socio-economic Networks,Game Theory
    Date: 2022–05
  23. By: Patrick Van Cayseele; Andreas Bovin
    Abstract: This article examines the collusive potential of first refusal contracts, which are contracts that grant one party, the buyer, a right of first refusal on the output of another party, the seller. When two parties enter into this type of contract, the seller is obligated to offer any output she wishes to sell to the buyer first. It is only after a 'first refusal' by the buyer that output can be offered to third parties. We compare the outcomes which arise under first refusal contracts with those resulting from explicit cooperation. Our findings suggest that these contracts can result in an identical distortion of competition, while remaining under the radar of antitrust authorities.
    Keywords: Right of first refusal, contract, theory of harm, abuse of bargaining power
    JEL: L4 L40 L41 L42
    Date: 2022
  24. By: YAMAGUCHI Kazuo
    Abstract: This paper presents an example for a macro-social and economic theory derived from the evolutionary game-theoretical micro-behavioral model. The theory introduced in this paper is based on thought experiments and simulations of the ultimatum game and leads to the following findings. (1) From the evolutionary game-theoretical viewpoint, a rejection of relative deprivation based on a certain threshold of rejection becomes more rational under a broad range of initial conditionals than the rational choice in the sense of the neoclassical economic theory. (2) Under the equality of opportunity in the role of transactions, a development of social intelligence that enables the cognition of heterogeneous others’ strategies (which imply the patterns of choices) reinforces the tendency described in (1). As the proportion of people who acquired social intelligence increases, the choice of a threshold of rejection which is closer to a choice of egalitarian actors becomes more rational and evolutionarily stable. The development of social intelligence makes people obtain higher benefits, on average, because it increases the rate of attaining agreements among heterogeneous actors and thereby reduces the transaction costs. (3) Under the inequality of opportunity in the role of transactions where “proposers†are price setters and “responders†are price takers, rational actors in the neoclassical economic sense obtain the largest benefits as responders when no social intelligence exists among proposers. However, a development of social intelligence among proposers makes responders who reject relative deprivation below an uncertain threshold obtain more benefits than rational actors, and thereby makes the former actors more evolutionarily stable than the latter actors. (4) Acquisition of social intelligence among proposers under the inequality of opportunity in the role of transactions makes the rate of agreement between proposers and responders higher, and thereby make people wealthier on average by reducing the transaction costs. (5) When responders who acquired social intelligence use their knowledge of proposers’ strategies to select proposers for whom responders can expect a smaller extent of relative deprivation in transactions, it generates a transfer of benefits from proposers to responders without changing the average benefits for the population of proposers and responders, by increasing the proportion of agreements which have a smaller extent of relative deprivation for responders, and therefore makes society attain more equality between proposers and responders without changing the average wealth among people. (6) When proposers who acquired social intelligence use their knowledge of responders’ strategies to discriminate against responders who seek a smaller extent of relative deprivation, it generates a reduction in the average benefits not only among responders but also among proposers. This occurs because when proposers with social intelligence avoid responders with a higher threshold of rejection, proposers without social intelligence are matched with those responders and are likely to fail to attain agreements with the responders, and the average gain of benefits that proposers with social intelligence obtain is smaller in amount than the average loss of benefits that proposers without social intelligence obtain. Thus, the selective choice of more “exploitable†responders by proposers with social intelligence has a significant negative externality in making society less wealthy by increasing the average transaction costs. The paper also discusses implications of these findings with respect to the labor market issues in Japan.
    Date: 2022–12
  25. By: Takuro Yamashita (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); Shuguang Zhu (Shanghai University of Finance and Economics)
    Abstract: In private-value auction environments, Chung and Ely (2007) establish maxmin and Bayesian foundations for dominant-strategy mechanisms. We first show that similar foundation results for ex post mechanisms hold true even with interdependent values if the interdependence is only cardinal. This includes, for example, the one-dimensional environments of Dasgupta and Maskin (2000) and Bergemann and Morris (2009b). Conversely, if the environment exhibits ordinal interdependence, which is typically the case with multi-dimensional environments (e.g., a player's private information)
    Date: 2022–11
  26. By: Jacopo Bizzotto (Oslo Business School - OsloMet); Eduardo Perez-Richet (Sciences Po); Adrien Vigier (University of Oxford - Department of Economics)
    Abstract: A principal designs an information structure and chooses transfers to an agent that are contingent on the action of a receiver. The principal faces a trade-off between, on the one hand, designing an information structure maximizing non-monetary payoffs, and on the other hand, minimizing the information rent that must be conceded to the agent in order to implement the information structure which the principal designed. We examine how this trade-off shapes communication. Our model can be applied to study the relationship between, e.g.: political organizations and the public relations companies that campaign on their behalf, firms and the companies marketing their products, consultancies and the analysts they employ.
    Keywords: Information Design, Moral Hazard, Agency Cost, Information Acquisition
    JEL: C72 D82
    Date: 2021–03–05
  27. By: Reuter, Marco
    Abstract: Although blockchain technology and cryptocurrencies have grown in popularity over the past years, there does not seem to be a consensus if they bring any value to economic interactions. In this paper, I argue that a fundamental value the blockchain provides is commitment. I develop a model of an entrepreneur, who can create a network for her users. She can decide to retain control of the network with centralized implementation through a regular company, or surrender control over the network with a decentralized implementation through the blockchain. Users that join the network are subject to a locked-in effect. I show that a decentralized implementation of the network is (i) preferred by the entrepreneur and (ii) a Pareto improvement, if and only if the size of the locked-in effect is sufficiently large.
    Keywords: Blockchain,Smart Contracts,Decentralization,Cryptocurrency,Commitment,Networks
    JEL: C70 D00 D2 D4 L2
    Date: 2022
  28. By: Karlsson, Niklas (Örebro University School of Business); Lunander, Anders (Örebro University School of Business)
    Abstract: In this study we analyze data from world cup cross-country skiing sprint elimination tournaments for men and women in 2015-2020. In these tournaments prequalified athletes sequentially choose in which of five quarterfinal heats they want to compete. Due to a time constraint on the day the tournament is held, the recovery time between the elimination heats varies. This implies a clear advantage for the athlete to race in an early rather than in a late quarterfinal to increase the chances of being successful in a possible final. Given that athletes seek to maximize their expected achieved world cup points when choosing quarterfinal, a simple model predicts that higher ranked athletes prefer to compete in early quarterfinals, despite facing expected harder competition. The result is consistent with our empirical analysis of the data. We also develop two estimation methods to investigate whether some athletes are found to be more tactical skilled in their decision making. Our estimates indicate that twelve out of 115 athletes have made choices having an expected positive effect on their performance in terms of achieved world cup points. For 22 athletes the effect is expected to be negative. The estimated individual effects ranges from -3 points to +4 points.
    Keywords: elimination tournament; game theory; choosing opponents; skiing sprint; tactical skills
    JEL: C51 C72 D91 Z20
    Date: 2022–11–10

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