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on Game Theory |
| By: | René Van Den Brink (Department of Economics and Tinbergen Institute, VU University, Amsterdam, The Netherlands); Agnieszka Rusinowska (Centre d'Economie de la Sorbonne, CNRS, Université Paris 1 Panthéon-Sorbonne, Paris School of Economics) |
| Abstract: | This paper aims to connect the social network literature on centrality measures with the economic literature on von Neumann-Morgenstern expected utility functions using cooperative game theory. The social network literature studies various concepts of network centrality, such as degree, betweenness, connectedness, and so on. This resulted in a great number of network centrality measures, each measuring centrality in a different way. In this paper, we aim to explore which centrality measures can be supported as von Neumann-Morgenstern expected utility functions, reflecting preferences over different network positions in different networks. Besides standard axioms on lotteries and preference relations, we consider neutrality to ordinary risk. We show that this leads to a class of centrality measures that is fully determined by the degrees (i.e. the numbers of neighbours) of the positions in a network. Although this allows for externalities, in the sense that the preferences of a position might depend on the way how other positions are connected, these externalities can be taken into account only by considering the degrees of the network positions. Besides bilateral networks, we extend our result to general cooperative TU-games to give a utility foundation of a class of TU-game solutions containing the Shapley value |
| Keywords: | weighted network; degree; centrality measure; externalities; neutrality to ordinary risk; expected utility function |
| JEL: | D85 D81 C02 |
| Date: | 2023–08 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:23012&r=gth |
| By: | Giampaolo Bonomi |
| Abstract: | We study how disagreement influences the productive performance of a group in a simple repeated game with alternative production technologies and positive externalities. Players can disagree, i.e. hold different views about the characteristics and quality of the technologies. This disagreement has two main characteristics. First, different views lead to different technology and effort choices -- "optimistic" views justify higher effort than "skeptical" views. Second, views are resilient -- changed only if falsified by surprising evidence. When only one production technology is available, disagreement over its productivity (i) incentivizes the optimistic agent to work harder than when matched with a like-minded player; (ii) can reduce the effort of the skeptic agent. The first force lies at the core of what we call the "disagreement dividend." We show that if externalities are sufficiently strong, a team of like-minded optimists is outperformed -- in terms of expected output -- by a disagreeing team. Next, we find that when different production technologies are available, disagreement over which technology works best always drives up all players' efforts: each agent believes that their preferred approach is the most successful and tries harder to obtain the early successes that would convince others to adopt it. As a result, average group production always increases if the technologies are similar according to the true production process. Our main results are driven by players' incentives to persuade others to change their minds. |
| Date: | 2023–08 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2308.06607&r=gth |
| By: | Benjamin Heymann; Alexandre Gilotte; R\'emi Chan-Renous |
| Abstract: | We consider a repeated auction where the buyer's utility for an item depends on the time that elapsed since his last purchase. We present an algorithm to build the optimal bidding policy, and then, because optimal might be impractical, we discuss the cost for the buyer of limiting himself to shading policies. |
| Date: | 2023–08 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2308.01755&r=gth |
| By: | B.A. Caparros; Jean-Christophe Pereau (GREThA - Groupe de Recherche en Economie Théorique et Appliquée - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | This article analyses the outcomes of multilateral and sequential negotiation procedures in a Rubinstein alternating-offers model where two polluters and a victim bargain over both, transfers and pollution levels. We show that the Coase Theorem does not hold in a multilateral framework if sequential negotiations are possible (not imposed), although there are no frictions and no delays between stages. Sequential negotiations lead to emission levels which are not socially optimal, but players involved in the first agreement in the sequential path may prefer this path and hence launch it. We also show that when negotiations focus only on transfers, as commonly assumed, the inefficiency vanishes. Finally, we show that the inefficiency can be explained by the player's inside options, which are given by their potential temporary disagreement payoffs, despite the fact that agreements are reached immediately in equilibrium. Results are generalized to a large number of polluters. © 2021 Elsevier B.V. |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03432922&r=gth |
| By: | Surajit Borkotokey; Sujata Gowala; Rajnish Kumar |
| Abstract: | We study a class of probabilistic cooperative games which can be treated as an extension of the classical cooperative games with transferable utilities. The coalitions have an exogenous probability of being realized. This probability distribution is known beforehand and the distribution of the expected worth needs to be done before the realization of the state. We obtain a value for this class of games and present three characterizations of this value using natural extensions of the axioms used in the seminal axiomatization of the Shapley value. The value, which we call the Expected Shapley value, allocates the players their expected worth with respect to a probability distribution. |
| Date: | 2023–08 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2308.03489&r=gth |
| By: | Maarten C.W. Janssen (University of Vienna); Santanu Roy (Southern Methodist University) |
| Abstract: | In a market where buyers and sellers are uncertain about whether others are informed about the quality of an asset, inefficiency in trading arises due to incomplete learning. An uninformed seller will want to learn the asset's quality from the buyers' bids and may be willing to sell at low, but not at intermediate bids. Buyers may have incentives to pool their bids to prevent this type of learning. We outline conditions under which potential gains from trade cannot be realized in states where all traders are symmetrically informed or symmetrically uninformed. |
| Keywords: | Information Uncertainty, Asymmetric Information; Product Quality; Market Breakdown. |
| JEL: | L13 L15 D82 D43 |
| Date: | 2023–08 |
| URL: | http://d.repec.org/n?u=RePEc:smu:ecowpa:2306&r=gth |
| By: | Van Der Straeten, Karine; Yamashita, Takuro |
| Abstract: | Voters’ voting decisions crucially depend on their information. Thus, it is an important question how much / what kind of information they should know, as a normative guidance of the optimal extent of transparency. We consider a simple two-alternative majority voting environment, and study the optimal information disclosure policy by a utilitarian social planner. Although full transparency is sometimes (informally) argued as ideal, we show that full transparency is often strictly suboptimal. This is related to the well-known potential mis-match between what a majority wants and what is socially optimal. Under certain conditions, in order to alleviate this mismatch, the op-timal policy discloses just the “anonymized” information about the value of the alternatives to the voters, placing them effectively behind a partial “veil of ignorance”. |
| Date: | 2023–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:128424&r=gth |
| By: | Ginzburg, Boris (Universidad Carlos III de Madrid); Guerra, Jose Alberto (Universidad de los Andes); Lekfuangfu, Warn N. (Universidad Carlos III de Madrid) |
| Abstract: | Using a laboratory experiment, we study the incentives of individuals to contribute to a public good that is provided if and only if the fraction of contributors reaches a certain threshold. We jointly vary the size of the group, the cost of contributing, the required threshold, and the framing of contributions (giving to the common pool, or not taking from the common pool). We find that a higher threshold makes individuals more likely to contribute. The effect is strong enough that in a small group, raising the required threshold increases the probability that the public good is provided. In larger groups, however, the effect disappears. At the same time, we do not find a consistent effect of framing on the probability of contributing or on the likelihood of success. |
| Keywords: | threshold public goods; critical mass; framing effect; laboratory experiment |
| JEL: | C92 D91 H41 |
| Date: | 2023–08–08 |
| URL: | http://d.repec.org/n?u=RePEc:col:000089:020819&r=gth |