nep-gth New Economics Papers
on Game Theory
Issue of 2023‒03‒27
thirteen papers chosen by
Sylvain Béal
Université de Franche-Comté

  1. Coordination via Selling Information By Alessandro Bonatti; Munther Dahleh; Thibaut Horel; Amir Nouripour
  2. Guilt Aversion in (New) Games: Does Partners' Payoff Vulnerability Matter? By Attanasi, Giuseppe; Rimbaud, Claire; Villeval, Marie Claire
  3. Improving Quantal Cognitive Hierarchy Model Through Iterative Population Learning By Yuhong Xu; Shih-Fen Cheng; Xinyu Chen
  4. Fixation of inequality and emergence of the equal split norm: Approach from behavioral bargaining theory By Yoshio Kamijo
  5. Motivated Skepticism By Jeanne Hagenbach; Charlotte Saucet
  6. A Theoretical Approach to Evaluating Global Vaccination Plans By Park, Youngseok; Yea, Sangjun
  7. Industrial Policy for Advanced AI: Compute Pricing and the Safety Tax By Mckay Jensen; Nicholas Emery-Xu; Robert Trager
  8. Recommending to Strategic Users By Andreas Haupt; Dylan Hadfield-Menell; Chara Podimata
  9. Management of common pool resources in a nation-wide experiment By Jean-Christian Tisserand; Astrid Hopfensitz; Serge Blondel; Youenn Loheac; César Mantilla; Guillermo Mateu; Julie Rosaz; Anne Rozan; Marc Willinger; Angela Sutan
  10. Levels of uncertainty and charitable giving By Maria José Montoya Villalobos; Noémi Berlin
  11. Optimal Mix Among PAYGO, EET and Individual Savings By Lin He; Zongxia Liang; Zhaojie Ren; Yilun Song
  12. Collective dominance and oligopoly markets: industrial organization theory approaches By A. N. Morozov; K. A. Ionkina
  13. Imperfect competition, emissions tax and the Porter hypothesis By Flavio M. Menezes; Jorge Pereira

  1. By: Alessandro Bonatti; Munther Dahleh; Thibaut Horel; Amir Nouripour
    Abstract: We consider games of incomplete information in which the players' payoffs depend both on a privately observed type and an unknown but common "state of nature". External to the game, a data provider knows the state of nature and sells information to the players, thus solving a joint information and mechanism design problem: deciding which information to sell while eliciting the player' types and collecting payments. We restrict ourselves to a general class of symmetric games with quadratic payoffs that includes games of both strategic substitutes (e.g. Cournot competition) and strategic complements (e.g. Bertrand competition, Keynesian beauty contest). By to the Revelation Principle, the sellers' problem reduces to designing a mechanism that truthfully elicits the player' types and sends action recommendations that constitute a Bayes Correlated Equilibrium of the game. We fully characterize the class of all such Gaussian mechanisms (where the joint distribution of actions and private signals is a multivariate normal distribution) as well as the welfare- and revenue- optimal mechanisms within this class. For games of strategic complements, the optimal mechanisms maximally correlate the players' actions, and conversely maximally anticorrelate them for games of strategic substitutes. In both cases, for sufficiently large uncertainty over the players' types, the recommendations are deterministic (and linear) conditional on the state and the type reports, but they are not fully revealing.
    Date: 2023–02
  2. By: Attanasi, Giuseppe (University of Nice Sophia-Antipolis); Rimbaud, Claire (University of Lyon 2); Villeval, Marie Claire (CNRS, GATE)
    Abstract: We investigate whether a player's guilt aversion is modulated by the co-players' vulnerability. To this goal, we introduce new variations of a three-player Trust game in which we manipulate payoff vulnerability and endowment vulnerability. The former is the traditional vulnerability which arises when a player's material payoff depends on another player's action (e.g., recipient's payoff in a Dictator game). The latter arises when a player's initial endowment is entrusted to another player (e.g., trustor's endowment in a Trust game). Treatments vary whether trustees can condition their decision on the belief of a co-player who is payoff-vulnerable and/or endowment-vulnerable, or not vulnerable at all, and the decision rights of the vulnerable player. We find that trustees' guilt aversion is insensitive to the dimension of the co-player's vulnerability and to the decision rights of the co-player. Guilt is activated even absent vulnerability of the co-player whose beliefs are disappointed. It is triggered by the willingness to respond to the co-player's beliefs on his strategy, regardless of whether this strategy concerns this player or a third player's vulnerability, that is, indirect vulnerability.
    Keywords: guilt aversion, vulnerability, psychological game theory, Dictator game, Trust game, experiment
    JEL: C72 C91 D91
    Date: 2023–02
  3. By: Yuhong Xu; Shih-Fen Cheng; Xinyu Chen
    Abstract: In domains where agents interact strategically, game theory is applied widely to predict how agents would behave. However, game-theoretic predictions are based on the assumption that agents are fully rational and believe in equilibrium plays, which unfortunately are mostly not true when human decision makers are involved. To address this limitation, a number of behavioral game-theoretic models are defined to account for the limited rationality of human decision makers. The "quantal cognitive hierarchy" (QCH) model, which is one of the more recent models, is demonstrated to be the state-of-art model for predicting human behaviors in normal-form games. The QCH model assumes that agents in games can be both non-strategic (level-0) and strategic (level-$k$). For level-0 agents, they choose their strategies irrespective of other agents. For level-$k$ agents, they assume that other agents would be behaving at levels less than $k$ and best respond against them. However, an important assumption of the QCH model is that the distribution of agents' levels follows a Poisson distribution. In this paper, we relax this assumption and design a learning-based method at the population level to iteratively estimate the empirical distribution of agents' reasoning levels. By using a real-world dataset from the Swedish lowest unique positive integer game, we demonstrate how our refined QCH model and the iterative solution-seeking process can be used in providing a more accurate behavioral model for agents. This leads to better performance in fitting the real data and allows us to track an agent's progress in learning to play strategically over multiple rounds.
    Date: 2023–02
  4. By: Yoshio Kamijo (Waseda University)
    Abstract: Negotiation is at the hear of communication, social exchange, and economic transactions. Using the bargaing model as the unit of analysis, this study aims to deepen our under-standing of negotiation and economic behavior based on the behavioral bargaining theory (BBT) developed by Kamijo and Yokote (2022). We introduce a key concept to analyze a bargaining situation: the stability of entitlements (people's expectations of distribution or sense of ownership) for a bargaining pie. When a pair of entitlements initially formed is stable, negotiations are expected to end immediately; when unstable, negotiations are more likely to end in delay or failure. We show the boundary condition for stable entitlements and find that some unequal distribution between two players can be stable even for a symmetric bargaining problem. By seeking stable entitlements for all members of society, it is possible to define a distribution norm mathematically. We show that the distribution norm that arises in a symmetric situation is the golden rule of distribution: 50–50 split of the pie. Finally, by examining the dynamic process of the formation of entitlements, we clarify the sufficient conditions under which the equal split norm emerges.
    Keywords: Behavioral bargaining theory, Nash solution, Reference dependent utility, Stable entitlement, Inequality cap theorem, Distribution norm, Equal split norm
    Date: 2023–01
  5. By: Jeanne Hagenbach (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique); Charlotte Saucet (UP1 UFR02 - Université Paris 1 Panthéon-Sorbonne - École d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    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
    Date: 2022–07–15
    Abstract: We study a game-theoretic model in which there are two periods of time in each of which agents (players) make a vaccination decision, and they choose the level of economic activities. In addition, we consider two kinds of policy measures 1) a vaccination passport policy and 2) a subsidy policy to promote vaccination, and compare the social welfare in each case. We find that introducing a vaccine passport policy or subsidizing to mitigate the expected costs from vaccination may decrease the social welfare when a vaccine is effective to reducing the extent of severeness of illness from virus infection but not successful in curbing the transmissibility of virus.
    Keywords: Pandemic; Vaccination policy
    JEL: D62 I18
    Date: 2021–03–31
  7. By: Mckay Jensen; Nicholas Emery-Xu; Robert Trager
    Abstract: Using a model in which agents compete to develop a potentially dangerous new technology (AI), we study how changes in the pricing of factors of production (computational resources) affect agents' strategies, particularly their spending on safety meant to reduce the danger from the new technology. In the model, agents split spending between safety and performance, with safety determining the probability of a ``disaster" outcome, and performance determining the agents' competitiveness relative to their peers. For given parameterizations, we determine the theoretically optimal spending strategies by numerically computing Nash equilibria. Using this approach we find that (1) in symmetric scenarios, compute price increases are safety-promoting if and only if the production of performance scales faster than the production of safety; (2) the probability of a disaster can be made arbitrarily low by providing a sufficiently large subsidy to a single agent; (3) when agents differ in productivity, providing a subsidy to the more productive agent is often better for aggregate safety than providing the same subsidy to other agent(s) (with some qualifications, which we discuss); (4) when one agent is much more safety-conscious, in the sense of believing that safety is more difficult to achieve, relative to his competitors, subsidizing that agent is typically better for aggregate safety than subsidizing its competitors; however, subsidizing an agent that is only somewhat more safety-conscious often decreases safety. Thus, although subsidizing a much more safety-conscious, or productive, agent often improves safety as intuition suggests, subsidizing a somewhat more safety-conscious or productive agent can often be harmful.
    Date: 2023–02
  8. By: Andreas Haupt; Dylan Hadfield-Menell; Chara Podimata
    Abstract: Recommendation systems are pervasive in the digital economy. An important assumption in many deployed systems is that user consumption reflects user preferences in a static sense: users consume the content they like with no other considerations in mind. However, as we document in a large-scale online survey, users do choose content strategically to influence the types of content they get recommended in the future. We model this user behavior as a two-stage noisy signalling game between the recommendation system and users: the recommendation system initially commits to a recommendation policy, presents content to the users during a cold start phase which the users choose to strategically consume in order to affect the types of content they will be recommended in a recommendation phase. We show that in equilibrium, users engage in behaviors that accentuate their differences to users of different preference profiles. In addition, (statistical) minorities out of fear of losing their minority content exposition may not consume content that is liked by mainstream users. We next propose three interventions that may improve recommendation quality (both on average and for minorities) when taking into account strategic consumption: (1) Adopting a recommendation system policy that uses preferences from a prior, (2) Communicating to users that universally liked ("mainstream") content will not be used as basis of recommendation, and (3) Serving content that is personalized-enough yet expected to be liked in the beginning. Finally, we describe a methodology to inform applied theory modeling with survey results.
    Date: 2023–02
  9. By: Jean-Christian Tisserand (BSB - Burgundy School of Business (BSB) - Ecole Supérieure de Commerce de Dijon Bourgogne (ESC), CEREN - Centre de Recherche sur l'ENtreprise [Dijon] - BSB - Burgundy School of Business (BSB) - Ecole Supérieure de Commerce de Dijon Bourgogne (ESC)); Astrid Hopfensitz (EM - emlyon business school, GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet - Saint-Étienne - Université de Lyon - CNRS - Centre National de la Recherche Scientifique); Serge Blondel (GRANEM - Groupe de Recherche Angevin en Economie et Management - UA - Université d'Angers - Institut Agro Rennes Angers - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement); Youenn Loheac (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique, ESC Rennes School of Business - ESC [Rennes] - ESC Rennes School of Business); César Mantilla (Universidad del Rosario [Bogota]); Guillermo Mateu (BSB - Burgundy School of Business (BSB) - Ecole Supérieure de Commerce de Dijon Bourgogne (ESC)); Julie Rosaz (BSB - Burgundy School of Business (BSB) - Ecole Supérieure de Commerce de Dijon Bourgogne (ESC)); Anne Rozan (UMR GESTE - Gestion Territoriale de l'Eau et de l'environnement - ENGEES - École Nationale du Génie de l'Eau et de l'Environnement de Strasbourg - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Marc Willinger (CEE-M - Centre d'Economie de l'Environnement - Montpellier - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - UM - Université de Montpellier); Angela Sutan (BSB - Burgundy School of Business (BSB) - Ecole Supérieure de Commerce de Dijon Bourgogne (ESC), CEREN - Centre de Recherche sur l'ENtreprise [Dijon] - BSB - Burgundy School of Business (BSB) - Ecole Supérieure de Commerce de Dijon Bourgogne (ESC))
    Abstract: Dilemmas related to the use of environmental resources concern diverse populations at local or global scales. Frequently, individuals are unable to visualize the consequences of their actions, where they belong in the decision-making line, and have no information about past choices or the time horizon. We design a new one-shot extraction game to capture these dynamic decisions. We present results from a nationwide common pool resource experiment, conducted simultaneously in eleven French cities, involving a total of 2813 participants. We examine, for the first time, the simultaneous impact of several variables on the amount of resource extracted: the local vs. the national scale of the resource, the size of the group (small vs. big), the low vs. high recovery rate of the resource, and the available information. We show that individuals significantly reduce extraction levels in local as compared to national level dilemmas and that providing recommendations on sustainable extraction amounts significantly improves the sustainability of the resource. Overall, women extract significantly less, but care more about preserving the local resource; older participants extract significantly more resources but extract less from the national resource. Our experiment also fulfills a science popularization pedagogical aim, which we discuss..
    Keywords: Common Pool Resource, Experiment, Large Sample, Science Popularization
    Date: 2022–11
  10. By: Maria José Montoya Villalobos; Noémi Berlin
    Abstract: This experiment seeks to study the impact of uncertainty and attitudes towards uncertainty on charity donations. We use a modified dictator game, where the donations received by the beneficiaries (environmental NGOs) are exposed to different levels of uncertainty. We study the level of donations and elicit risk aversion, ambiguity aversion, likelihood insensitivity, and pessimism. We aim to test if different levels of uncertainty at the receiver level (risk and ambiguity) impact donations. We do not find any differences between levels of uncertainty compared to no uncertainty. We find that a ``high" level of ambiguity has a significant and negative effect on altruistic behavior compared to a risk or a``low" ambiguity environment. We also find that the effect of pessimism depends on the level of ambiguity. We find no effect of ambiguity aversion, likelihood insensitivity, and pessimism under ``low" ambiguity on altruistic behavior. Meanwhile, under ``high" ambiguity, we find a negative effect of pessimism on charitable giving. These results suggest that there is a threshold for which ambiguity and ambiguity attitudes have a negative impact on donations.
    Keywords: Charitable giving, uncertainty, pro-social behavior, ambiguity attitudes
    JEL: C91 D64 D81
    Date: 2023
  11. By: Lin He; Zongxia Liang; Zhaojie Ren; Yilun Song
    Abstract: In order to deal with the aging problem, pension system is actively transformed into the funded scheme. However, the funded scheme does not completely replace PAYGO (Pay as You Go) scheme and there exist heterogeneous mixes among PAYGO, EET (Exempt, Exempt, Taxed) and individual savings in different countries. In this paper, we establish the optimal mix by solving a Nash equilibrium between the pension participants and the government. Given the obligatory PAYGO and EET contribution rates, the participants choose the optimal asset allocation of the individual savings and the consumption policies to achieve the objective. The results extend the ``Samuelson-Aaron" criterion to age-dependent preference orderings. And we identify three critical ages to distinguish the multiple outcomes of preference orderings based on heterogeneous characteristic parameters. The government is fully aware of the optimal feedback of the participants. It chooses the optimal PAYGO and EET contribution rates to maximize the overall utility of the participants weighted by each cohort's population. As such, the negative population growth rate leads to the decline of the PAYGO attractiveness as well as the increase of the older cohorts' weight in the government decision-making. The optimal mix is the comprehensive result of the two effects.
    Date: 2023–02
  12. By: A. N. Morozov (The Russian Presidential Academy Of National Economy And Public Administration); K. A. Ionkina (The Russian Presidential Academy Of National Economy And Public Administration)
    Abstract: This paper studies the prerequisites for the emergence of a firm’s market power using basic models of oligopoly. The significance of the study is related to identifying theoretical prerequisites that are essential for modifying the collective dominance institution, which can be considered a legal analogue of the economic concept of oligopoly. The objective of the paper is to identify the elements associated with the emergence of market power under the oligopoly model, allowing to shape theoretical basis for the collective dominance concept application. Multiple objectives have to be met before the said objective can be achieved: 1) highlighting the relevant signs of interaction between oligopolistic firms; 2) identifying limitations for the application of collective dominance concept in practice. The scientific novelty of the research lies in the formation of theoretical basis for the legal concept of collective dominance in Russia. The subject of the paper is the relationship between the concept of collective dominance in Russia and the basic oligopoly models. The study is part of a complex project which represents a RANEPA state research assignment and aims at exploring the effects of the collective dominance concept application in Russia. The study is based on industrial organization methods. The main findings of the study consist of the following: highlighting the aspects associated with market power emergence in oligopoly models (small number of participants, high entry costs, significant goods differentiation, high switching costs, full information for competitors and low availability of information for consumers); reflecting the prerequisites for the market power emergence under oligopoly in the Russian version of the collective dominance concept; stating the importance of a comprehensive application of the prerequisites under consideration through the analysis of oligopoly models. The conclusions of the research will used to design the roadmap for further reforms of the Russian collective dominance concept.
    Keywords: Market power, oligopoly, collective dominance, Bertrand model, Cournot model, Chamberlin's oligopoly model, Stackelberg model, cartel
  13. By: Flavio M. Menezes (Australian Institute for Business and Economics, University of Queensland, Brisbane, Australia); Jorge Pereira (School of Economics, University of Queensland, Brisbane, Australia)
    Abstract: This paper investigates the conditions under which the design of an emissions tax can align social and private interests. Our contribution is to determine the general conditions for firms' profits and social welfare to be higher under the implementation of an emissions tax than under no tax. We consider n firms producing an homogeneous product and competing over supply schedules, which covers a continuum of imperfect competition equilibria from Bertrand to Cournot. We show that, as competition intensifies, the pass-through of the tax to consumers increases, to a point where the price rises more than offsets the net result of the investment outlay. Our analysis provides new insights into the trade-off between environmental policy, market competition and the so-called "win-win" outcome for firms and society.
    Keywords: Technology; R&D; Environment; Policy; Emission tax; Subsidy; Porter Hypothesis
    JEL: H23 O32 O38 Q55 Q58
    Date: 2023–02–28

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