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on Game Theory |
| By: | Luca Colombo (Rennes School of Business, Rennes); Paola Labrecciosa (ESSCA School of Management (Paris Campus)); Agnieszka Rusinowska (CNRS, Paris School of Economics, Centre d'Economie de la Sorbonne) |
| Abstract: | We take a novel approach based on differential games to the study of criminal networks. We extend the static crime network game (Ballester et al., 2006, 2010) to a dynamic setting where criminal activities negatively impact the accumulation of total wealth in the economy. We derive a Markov Perfect Equilibrium (MPE), which is unique within the class of strategies considered, and show that, unlike in the static crime network game, the vector of equilibrium crime efforts is not necessarily proportional to the vector of Bonacich centralities. Next, we conduct a comparative dynamic analysis with respect to the network size, the network density, and the marginal expected punishment, finding results in contrast with those arising in the static crime network game. We also shed light on a novel issue in the network theory literature, i.e., the existence of a voracity effect. Finally, we study the problem of identifying the optimal target in the population of criminals when the planner's objective is to minimize aggregate crime at each point in time. Our analysis shows that the key player in the dynamic and the static setting may differ, and that the key player in the dynamic setting may change over time |
| Keywords: | differential games; Markov Perfect Equilibrium; criminal networks; Bonacich centrality; key player |
| JEL: | C73 D85 K42 |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:22006r&r=gth |
| By: | Chenghong Luo; David Pérez-Castrillo; Chaoran Sun |
| Abstract: | We study the multiple-partners game (Sotomayor, 1992), the simplest many-to- many generalization of the assignment game. Our main result is that the Shapley value of a replicated multiple-partners game converges to a competitive equilibrium payoff when the number of replicas tends to infinity. Furthermore, the result also holds for a large subclass of semivalues since we prove that they converge to the same value as the replica becomes large. In the proof of our theorem, we use properties of the “multiple-partners game with types, ” where several agents are of each type. We show, in particular, that every competitive equilibrium outcome of a “large” game with types satisfies equal treatment of equals and equal treatment of partnerships. |
| Keywords: | assignment game, shapley value, replica, semivalues |
| JEL: | C78 C71 D78 |
| Date: | 2023–07 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:1400&r=gth |
| By: | Ayse Gül Mermer (Tilburg University); Sander Onderstal (University of Amsterdam); Joep Sonnemans (University of Amsterdam) |
| Abstract: | In economic environments, decision-makers can strategically delay irreversible investments to learn from the actions of others. This creates free-riding incentives and can lead to socially suboptimal outcomes. We experimentally examine if and how communication mitigates this free-riding problem in an investment-timing game. In our baseline investment-timing game, participants choose when to invest in a nonrival project with uncertain returns, in groups of two or four players. The earliest investor of the group bears the costs of investment while everyone in the group benefits if the project reveals high returns. If more investors invest at the same time, they share the costs. In the communication treatment, subjects can freely communicate before choosing the investment time. We find that in groups of two players, communication increases cooperation and leads to significantly earlier investments. In groups of four players, however, communication significantly reduces delay only in the first period of interaction, but not in the aggregate over all periods |
| Keywords: | stochastic volatility, social cost of carbon, climate damage, Duffie-Epstein preference |
| JEL: | C72 C92 D83 H41 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20230033&r=gth |
| By: | Philippe Jehiel (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, UCL - University College of London [London]); Giacomo Weber (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) |
| Abstract: | Families of normal-form two-player games are categorized by players into K analogy classes applying the K-means clustering technique to the data generated by the distributions of opponent's behavior. This results in Calibrated Analogy-Based Expectation Equilibria in which strategies are analogy-based expectation equilibria given the analogy partitions and analogy partitions are derived from the strategies by the K-means clustering algorithm. We discuss various concepts formalizing this, and observe that distributions over analogy partitions are sometimes required to guarantee existence. Applications to games with linear best-responses are discussed highlighting the differences between strategic complements and strategic substitutes. |
| Keywords: | K-mean clustering, Analogy-based Expectation Equilibrium K-mean clustering |
| Date: | 2023–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:psewpa:halshs-04154234&r=gth |
| By: | Erkut, Hande; Reuben, Ernesto |
| Abstract: | This paper studies the causal impact of social ties and network structure on helping behavior in organizations. We introduce and experimentally study a game called the 'helping game, ' where individuals unilaterally decide whether to incur a cost to help other team members when helping is a rivalrous good. We find that social ties have a strong positive effect on helping behavior. Individuals are more likely to help those with whom they are connected, but the likelihood of helping decreases as the social distance between individuals increases. Additionally, individuals who are randomly assigned to be more central in the network are more likely to help others. |
| Keywords: | helping, social ties, social networks, communication, organizations |
| JEL: | D23 D91 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbmbh:spii2023203&r=gth |
| By: | Ennio Bilancini; Leonardo Boncinelli; Rossana Mastrandrea |
| Abstract: | We study the evolution of behavior under reinforcement learning in a Prisoner's Dilemma where agents interact in a regular network and can learn about whether they play one-shot or repeatedly by incurring a cost of deliberation. With respect to other behavioral rules used in the literature, (i) we confirm the existence of a threshold value of the probability of repeated interaction, switching the emergent behavior from intuitive defector to dual-process cooperator; (ii) we find a different role of the node degree, with smaller degrees reducing the evolutionary success of dual-process cooperators; (iii) we observe a higher frequency of deliberation. |
| Date: | 2023–06 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2306.11376&r=gth |
| By: | Michael S. Michael; Panos Hatzipanayotou; Nikos Tsakiris |
| Abstract: | We develop a model of two small open asymmetric economies with two tradable and one non-tradable goods, capital mobility and consumption generated cross border pollution. We show that the Nash equilibrium calls for a consumption tax and capital tax (subsidy) when the consumption of the tradable (non-tradable) good pollutes. In this model, the consumption tax causes pollution leakages between the two countries which is partly offset by the capital tax or subsidy. Thus, the existence of non-tradable goods and international capital mobility induce the small countries to act strategically. In the absence of capital taxes, consumption taxes are lower to their rates when capital taxes are also present since are used strategically to mitigate the pollution leakage. |
| Keywords: | Pollution Leakage; Non-tradable Goods; Capital Mobility; Capital and Consumption Taxes; Consumption-generated Cross-border Pollution |
| JEL: | F15 F18 F20 H20 H21 |
| Date: | 2023–05–19 |
| URL: | http://d.repec.org/n?u=RePEc:ucy:cypeua:02-2023&r=gth |
| By: | Daher, Wassim; Saleeby, Elias G. |
| Abstract: | We study a generalization of the static model of \cite{K} with two risk neutral insiders to the case where each insider is partially informed about the value of the stock. First, we provide a necessary and sufficient condition for the uniqueness of the linear Bayesian equilibrium. Specifically, we show that, when the covariance matrix of the errors terms of the insiders' signals, is not singular, the linear Bayesian equilibrium is not unique. Then, we carry out a comparative statics analysis. |
| Keywords: | Insider trading, Risk neutrality, Coefficient of Correlation, Partial Correlation, Market structure, Kyle model |
| JEL: | D82 G14 |
| Date: | 2023–06–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:117813&r=gth |
| By: | Shanglyu Deng; Qiyao Zhou |
| Abstract: | Recurring auctions are ubiquitous for selling durable assets, such as land, home, or artwork: When the seller cannot sell the item in the initial auction, she often holds a subsequent auction in the near future. This paper characterizes the design of recurring auctions, both theoretically and empirically. On the theoretical side, we show that recurring auctions outperform single-round auctions in efficiency and revenue when potential buyers face costly entry. This occurs because recurring auctions allow potential buyers with different values to enter at different times, which generates savings in entry costs and increases the overall probability of sale. We further derive the optimal sequence of reserve prices in recurring auctions, depending on whether the seller aims to maximize efficiency or revenue. On the empirical side, we apply the theory to home foreclosure auctions in China, where a foreclosed home is auctioned up to three times in a row. After estimating structural parameters in a recurring auction model, we compare the observed recurring auctions to the counterfactual single-round auctions. We show that the recurring auction design leads to an annual efficiency gain of 3.40 billion USD (16.60\%) and an annual revenue gain of 2.97 billion USD (15.92\%) in China, relative to single-round auctions. Using the optimal reserve price sequences derived from our model can further improve efficiency by 0.80 billion USD (3.35\%) and revenue by 0.66 billion USD (3.06\%), respectively. |
| Date: | 2023–06 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2306.17355&r=gth |
| By: | Ricardo Mart\'inez; Joaqu\'in S\'anchez-Soriano |
| Abstract: | We study the problem of sharing the revenue obtained by selling museum passes from the axiomatic perspective. In this setting, we propose replacing the usual dummy axiom with a milder requirement: order preservation with dummies. This new axiom formalizes the philosophical idea that even null agents/museums may have the right to receive a minimum allocation in a sharing situation. By replacing dummy with order preservation with dummies, we characterize several families of rules, which are convex combinations of the uniform and Shapley approaches. Our findings generalize several existing results in the literature. Also, we consider a domain of problems that is richer than the domain proposed by Ginsburgh and Zang (2003) in their seminal paper on the museum pass problem. |
| Date: | 2023–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2307.00622&r=gth |
| By: | Daron Acemoglu; Alireza Fallah; Ali Makhdoumi; Azarakhsh Malekian; Asuman Ozdaglar |
| Abstract: | Many platforms deploy data collected from users for a multitude of purposes. While some are beneficial to users, others are costly to their privacy. The presence of these privacy costs means that platforms may need to provide guarantees about how and to what extent user data will be harvested for activities such as targeted ads, individualized pricing, and sales to third parties. In this paper, we build a multi-stage model in which users decide whether to share their data based on privacy guarantees. We first introduce a novel mask-shuffle mechanism and prove it is Pareto optimal—meaning that it leaks the least about the users’ data for any given leakage about the underlying common parameter. We then show that under any mask-shuffle mechanism, there exists a unique equilibrium in which privacy guarantees balance privacy costs and utility gains from the pooling of user data for purposes such as assessment of health risks or product development. Paradoxically, we show that as users’ value of pooled data increases, the equilibrium of the game leads to lower user welfare. This is because platforms take advantage of this change to reduce privacy guarantees so much that user utility declines (whereas it would have increased with a given mechanism). Even more strikingly, we show that platforms have incentives to choose data architectures that systematically differ from those that are optimal from the user’s point of view. In particular, we identify a class of pivot mechanisms, linking individual privacy to choices by others, which platforms prefer to implement and which make users significantly worse off. |
| JEL: | D62 D83 L86 |
| Date: | 2023–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:31413&r=gth |