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on Game Theory |
| By: | Fatima Khanchouche (Department of Mathematics, Laboratory of Fundamental and Numerical Mathematics, Faculty of Sciences, University of Ferhat Abbas, Setif-1, Algeria); Samir Sbabou (CNRS, CREM - UNICAEN - University of Caen Normandy - NU - Normandy University, France); Hatem Smaoui (Center of Economics and Management of the Indian Ocean, University of La Réunion); Ziad Abderrahmane (CNRS, CREM - UNICAEN - University of Caen Normandy - NU - Normandy University, France and Laboratory of Computer Science and Mathematics, Ferhat Abbas University of Setif 1, Setif, Algeria) |
| Abstract: | We study the class of congestion games with player-specic payoff functions Milchtaich (1996). Focusing on a case where the number of resources is equal to two, we give a short and simple method for identifying the exact number of Nash equilibria in pure strategies. We propose an algorithmic method, first to find one or more Nash equilibria; second, to compare the optimal Nash equilibrium, in which the social cost is minimized, with the worst Nash equilibrium, in which the converse is true; third, to identify the time associated to the computations when the number of players increases. |
| Keywords: | Congestions games, Nash equilibria computations, price of anarchy, price of stability. |
| Date: | 2023–07 |
| URL: | http://d.repec.org/n?u=RePEc:tut:cremwp:2023-08&r=gth |
| By: | Hörner, Johannes; Renault, Jérôme |
| Abstract: | We adapt the methods from Abreu, Pearce and Stacchetti (1990) to finitely repeated games with imperfect public monitoring. Under a combination of (a slight strengthening of) the assumptions of Benoıˆt and Krishna (1985) and those of Fudenberg, Levine and Maskin (1994), a folk theorem follows. Three counterexamples show that our assumptions are tight. |
| Keywords: | Repeated games |
| JEL: | C72 C73 |
| Date: | 2023–09 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:128536&r=gth |
| By: | Nunzio Lor\`e; Babak Heydari |
| Abstract: | This paper investigates the strategic decision-making capabilities of three Large Language Models (LLMs): GPT-3.5, GPT-4, and LLaMa-2, within the framework of game theory. Utilizing four canonical two-player games -- Prisoner's Dilemma, Stag Hunt, Snowdrift, and Prisoner's Delight -- we explore how these models navigate social dilemmas, situations where players can either cooperate for a collective benefit or defect for individual gain. Crucially, we extend our analysis to examine the role of contextual framing, such as diplomatic relations or casual friendships, in shaping the models' decisions. Our findings reveal a complex landscape: while GPT-3.5 is highly sensitive to contextual framing, it shows limited ability to engage in abstract strategic reasoning. Both GPT-4 and LLaMa-2 adjust their strategies based on game structure and context, but LLaMa-2 exhibits a more nuanced understanding of the games' underlying mechanics. These results highlight the current limitations and varied proficiencies of LLMs in strategic decision-making, cautioning against their unqualified use in tasks requiring complex strategic reasoning. |
| Date: | 2023–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2309.05898&r=gth |
| By: | Chloe Tergiman; Marie Claire Villeval (GATE Lyon Saint-Étienne - Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne - UL2 - Université Lumière - Lyon 2 - UJM - Université Jean Monnet - Saint-Étienne - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | In a finitely repeated game with asymmetric information, we experimentally study how individuals adapt the nature of their lies when settings allow for reputation building. Although some lies can be detected ex post by the uninformed party, others remain deniable. We find that traditional market mechanisms, such as reputation, generate strong changes in the way people lie and lead to strategies in which individuals can maintain plausible deniability; people simply hide their lies better by substituting deniable lies for detectable lies. Our results highlight the limitations of reputation to root out fraud when a deniable lie strategy is available. |
| Keywords: | Lying, Deniability, Reputation, Financial Markets |
| Date: | 2023–06 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04199035&r=gth |
| By: | Ohnishi, Kazuhiro |
| Abstract: | This paper considers an international mixed duopoly model in which a state-owned public firm competes against a foreign labor-managed firm. The paper investigates endogenous roles of the firms by adopting the observable delay game and shows that the state-owned public firm should never play the role of Staclkelberg leader. |
| Keywords: | Endogenous timing; Foreign labor-managed firm; International mixed duopoly; Stackelberg |
| JEL: | C72 D21 F23 L30 |
| Date: | 2023–09–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:118561&r=gth |
| By: | Fakhrabadi, Mahnaz (Dept. of Business and Management Science, Norwegian School of Economics); Sandal, Leif K. (Dept. of Business and Management Science, Norwegian School of Economics) |
| Abstract: | The paper investigates a multi-period supply channel facing uncertain and price-history dependent demands and environmental regulations. The knowledge about the demands is limited to its mean and standard deviation in each period, .e., there is incomplete information on the actual distribution. A distributional robust approach is conducted to address incompleteness. The chain is incorporating environmental policies such as pollution constraints and (optimal) corrective taxes. A single contract covers all periods. Numerical examples highlight the benefits of a single contract. |
| Keywords: | Dynamic Games; Single Contract; Distributional-Robust Demand; Price-History-Dependent Demand; Pollution Reduction; Sustainability |
| JEL: | C61 C62 C63 C72 C73 D81 Q52 |
| Date: | 2023–09–22 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhhfms:2023_013&r=gth |
| By: | Ben Dhaou Bourheneddine (CNRS, CREM - UNICAEN - University of Caen Normandy - NU - Normandy University, France, Esplanade de Paix 14032 Caen FRANCE.); Ziad Abderrahmane (CNRS, CREM - UNICAEN - University of Caen Normandy - NU - Normandy University, France and Laboratory of Computer Science and Mathematics, Ferhat Abbas University of Setif 1, Setif, Algeria) |
| Abstract: | The paper proposes a solution for TU cooperative games in which solidary and non-solidary players coexist. The distinction between the two groups is that solidary players are able to support by consent at least one of their weaker partners, without disadvantaging non-solidary players. A value for games which takes into account the types of the players and satisfies some usual axioms is presented: Efficiency, Additivity, Symmetry among players who have the same type, Conditional null player, and a new axiom, the Unaffected Allocation of non-solidary players – (UA) – which is defined as follows: when players have the possibility of deciding freely in favor of solidarity, this should affect neither the allocations of non-solidary players nor the outcome of the game. |
| Keywords: | Shapley Value, Nowak and Radzik value, the Free solidarity value, TU cooperative games. |
| JEL: | C71 D60 |
| Date: | 2023–06 |
| URL: | http://d.repec.org/n?u=RePEc:tut:cremwp:2023-07&r=gth |
| By: | Panpan Zhang; Zuo Quan Xu |
| Abstract: | This paper is concerned with two-player zero-sum linear-quadratic stochastic differential games in a regime switching model. The controlled inhomogeneous system coefficients depend on the underlying noises, so it is a non-Markovian regime switching model. Based on a new kind of multidimensional indefinite stochastic Riccati equation (SRE) and a multidimensional linear backward stochastic differential equation (BSDE) with unbounded coefficients, we can provide optimal feedback control-strategy pairs for the two players in a closed-loop form. The main contribution of this paper, which is important in its own right from the BSDE theory point of view, is to prove the existence and uniqueness of the new kind of multidimensional indefinite SRE. Interestingly, the components of the solution can take positive, zero and negative values simultaneously. We also obtain the corresponding optimal feedback control-strategy pairs for homogeneous systems under closed convex cone control constraints. Finally, these results are applied to portfolio selection problems with different short-selling prohibition constraints in a regime switching market with random coefficients. |
| Date: | 2023–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2309.05003&r=gth |
| By: | Detemple, Julian; Kosfeld, Michael |
| Abstract: | A key solution for public good provision is the voluntary formation of institutions that commit players to cooperate. Such institutions generate inequality if some players decide not to participate but cannot be excluded from cooperation benefits. Prior research with small groups emphasizes the role of fairness concerns with positive effects on cooperation. We show that effects do not generalize to larger groups: if group size increases, groups are less willing to form institutions generating inequality. In contrast to smaller groups, however, this does not increase the number of participating players, thereby limiting the positive impact of institution formation on cooperation. |
| Keywords: | Institution formation, group size, social dilemma, social preferences |
| JEL: | C92 D02 D63 H41 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:safewp:402&r=gth |
| By: | Demuynck, Thomas; Herings, Jean-Jacques (Tilburg University, Center For Economic Research); Seel, Christian |
| Keywords: | potential games; social environments |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiucen:b85126ad-f158-41e9-a480-e5c3aa9a801c&r=gth |
| By: | Goeschl, Timo; Haberl, Beatrix; Soldà, Alice |
| Abstract: | Punishment institutions for curtailing free-riding in social dilemmas rely on information about individuals’ behavior collected through monitoring. We contribute to the experimental study of cooperation-enhancing institutions by examining how cooperation and efficiency in a social dilemma change in response to varying how monitoring and punishment are jointly organized. Specifically, we evaluate - against a no-monitoring baseline - combinations of two imperfect monitoring regimes (cen-tralized vs. decentralized) and three punishment regimes (self- vs. peer- vs. del-egated punishment) in a repeated public goods game. As hypothesized, we find that delegated punishment outperforms other punishment regimes, irrespective of the monitoring regime, both in terms of cooperation and efficiency. Monitoring, both centralized and decentralized, cannot raise cooperation relative to the baseline unless accompanied by a credible punishment. When combined with a punishment institution, both monitoring regime outperforms the baseline. |
| Keywords: | compliance; monitoring; punishment; experiment |
| Date: | 2023–09–22 |
| URL: | http://d.repec.org/n?u=RePEc:awi:wpaper:0737&r=gth |
| By: | Martimort, David; Arve, Malin |
| Abstract: | We consider a procurement auction for the provision of a basic service to which an add-on must later be appended. Potential providers are symmetric, have private information on their cost for the basic service and the winning firm must also implement the add-on. To finance cost-reducing activities related to the add-on, this firm may need extra funding by outside financiers. Non-verifiable effort in reducing these costs creates a moral hazard problem which makes the firm’s payoff function for the second period concave in returns over the relevant range. This concavity has two effects: It makes it more attractive to backload payments to facilitate information revelation and uncertainty on the cost of the add-on introduces a background risk which requires a risk premium. In this context, we characterize the optimal intertemporal structure of payments to the winning firm, equilibrium bidding behavior and reserve prices in the first-price auction with bidders. |
| Keywords: | Auctions; procurement; financial constraints; dynamic mechanism design, asymmetric information; uncertainty; endogenous risk aversion. |
| Date: | 2023–09–18 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:128474&r=gth |
| By: | Ketelaars, Martijn (Tilburg University, School of Economics and Management); Borm, Peter (Tilburg University, School of Economics and Management); Kort, Peter (Tilburg University, School of Economics and Management) |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiutis:64e99402-3217-4efa-a759-0f592e82dc32&r=gth |
| By: | Jain, Satish |
| Abstract: | This paper is concerned with the derivation of conditions for efficiency for liability rules for successive joint torts. In a successive joint tort, in the first instance the victim suffers harm on account of interaction with a tortfeasor, which subsequently is aggravated because of interaction with another tortfeasor. There can of course be no aggravation if there is no accident in the first instance. A liability rule for successive joint torts is a rule that determines (i) in case of first accident, the liability shares of the victim and the first injurer on the basis of the extents of negligence of the victim and the first injurer; and (ii) in case of second accident, the liability shares of the victim and the two injurers on the basis of the extents of negligence of the victim and the two injurers. It is shown in the paper that a liability rule for successive joint torts is efficient if the following condition is satisfied: if one of the victim and the first injurer is negligent and the other nonnegligent, then the entire accident loss resulting from interaction between the victim and the first injurer is to be borne by the negligent individual; and if one of the victim and the two injurers is negligent then no nonnegligent individual is to bear any part of the accident loss resulting from interaction between the victim and the second injurer. This condition has been termed in the paper as negligence liability for successive joint torts (NL-SJT). A subclass of the class of all liability rules for successive joint torts is that of simple liability rules for successive joint torts. A simple liability rule for successive joint torts apportions the accident losses solely on the basis of negligence or otherwise of individuals; the extents of negligence are not taken into account. It turns out that a simple liability rule for successive joint torts is efficient if and only if it satisfies NL-SJT. Whether NL-SJT is necessary for efficiency of any liability rule for successive joint torts remains an open question. |
| Keywords: | Liability Rules for Successive Joint Torts; Simple Liability Rules for Successive Joint Torts; Negligence Liability for Successive Joint Torts; Efficiency Conditions |
| JEL: | K13 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:118440&r=gth |