nep-gth New Economics Papers
on Game Theory
Issue of 2023‒11‒06
twelve papers chosen by
Sylvain Béal, Université de Franche-Comté

  1. Stability and fairness in sequencing games: optimistic approach and pessimistic scenarios By Banerjee, Sreoshi
  2. Degree Centrality, von Neumann-Morgenstern Expected Utility and Externalities in Networks By Rene’ van den Brink; Agnieszka Rusinowska
  3. Bayesian Doublespeak By Ing-Haw Cheng; Alice Hsiaw
  4. A Model of Online Misinformation with Endogenous Reputation By Lau, Andy
  5. Determinants of Agricultural Fires: An Aggregative Games Approach By Wilfredo L. Maldonado; Jessica A. Barbosa
  6. A Comment on The Common-Probability Auction Puzzle (2023) By Eissa, Yasmine; Rosmer, Paul; Yap, Luther
  7. Fairness and Inequality in Institution Formation By Detemple, Julian; Kosfeld, Michael
  8. Spoiling the party. Experimental evidence on the willingness to transmit inconvenient ethical information By Jantsje M. Mol; Ivan Soraperra; Joël J. van der Weele
  9. Do Larger Committees make Better Majority Decisions with Costly Expert By Newman, Jonathan
  10. Mistrust, Misperception, and Misunderstanding: Imperfect Information and Conflict Dynamics By Daron Acemoglu; Alexander Wolitzky
  11. Complementarity Effect of Corporate Advertising in a Multimedia World: A Comparison of Online Advertising and Mass Media Advertising By Fujisawa, Chieko; Kasuga, Norihiro
  12. The Effects of Sin Taxes and Advertising Restrictions in a Dynamic Equilibrium By Dubois, Pierre; Abi Rafeh, Rossi; Griffith, Rachel; O'Connell, Martin

  1. By: Banerjee, Sreoshi
    Abstract: Sequencing deals with the problem of assigning slots to agents who are waiting for a service. We study sequencing problems as coalition form games defined in optimistic and pessimistic scenarios. Each agent's level of utility is his Shapley value payoff from the corresponding coalition form game. First, we show that while the core of the optimistic game is always empty, the Shapley value of the pessimistic game is an allocation in its core. Second, we impose the "generalized welfare lower bound" (GWLB) that ex-ante guarantees each agent a minimum level of utility. One of many application of GWLB is the "expected costs bound". It guarantees each agent his expected cost when all arrival orders are equally likely. We prove that the Shapley value payoffs (in both optimistic and pessimistic scenarios) satisfy GWLB if and only if it satisfies the expected costs bound (ECB).
    Keywords: Sequencing, welfare lower bounds, core, cooperative game, Shapley value
    JEL: C71 C72 D0 D3 D30 D6 D63
    Date: 2023–09–24
  2. By: Rene’ van den Brink (Vrije Universiteit Amsterdam); Agnieszka Rusinowska (University Paris 1 Pantheon-Sorbonne)
    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: 2023–10–12
  3. By: Ing-Haw Cheng (University of Toronto); Alice Hsiaw (Brandeis University)
    Abstract: We show that misinformation distorts long-run beliefs in “doublespeak’’ equilibria of a cheap talk game where receivers are uncertain of a state and the sender’s type. A sender type who prefers receivers take wrong actions sends messages that plausibly come from a good type under a different state. Even after observing infinite messages, receivers disagree about the state and take different ex-post actions. A policymaker who believes that doublespeak would mislead receivers may restrict the sender to finite messages. An option for receivers to fact-check messages does not limit doublespeak, but sender concerns about reputation can.
    Date: 2023–07
  4. By: Lau, Andy (University of Warwick)
    Abstract: Misinformation dissemination in social media has emerged as a critical contemporary issue. This paper augments existing models of online misinformation by incorporating endogenous reputation dynamics. In contrast to prior research, reputation plays a pivotal role in shaping agents Bayesian-Nash equilibrium strategy through two key avenues : (i) the sharer’s reputation positively impacts the likelihood of sharing, and (ii) agents with higher initial reputations are less willing to share compared to their counterparts with lower initial reputations. Furthermore, this paper provides insights into the formation of individuals’ networks on social media. Surprisingly, individuals with high reputations are not universally favoured as network connections. Additionally, the paper examines relevant comparative statics, including the importance of interactions, and the implications of homophily. This research establishes a foundation for understanding the dynamics of reputation-based information sharing and network structure.
    Keywords: Information sharing ; misinformation ; reputation ; network ; social media JEL classifications: C72 ; D83 ; D85
    Date: 2023
  5. By: Wilfredo L. Maldonado; Jessica A. Barbosa
    Abstract: The effects of deforestation through land fires used by farmers (specially, smallholders) are twofold. From the individual point of view, they prepare the land improving its fertility. On the other side, the aggregate decision has a negative impact on air and water quality, degrading the environment, and this is reverted as a negative impact of the productivity of the land. In this work we present an aggregative game framework which includes those effects and allows us to analyze the impact of cost fires variations and number of farmers. Finally, using data from Brazilian research institutes, we test the sign and the size of the impacts of those determinants on the aggregate deforestation in Brazil for the period 2009 to 2018.
    Keywords: aggregative games, land use, deforestation
    JEL: C72 D62 Q5
    Date: 2023–10
  6. By: Eissa, Yasmine; Rosmer, Paul; Yap, Luther
    Abstract: Ngangoué and Schotter (2023) investigate common-probability auctions. By running an experiment, they find that, in contrast to the substantial overbidding found in common-value auctions, bidding in strategically equivalent common-probability auctions is consistent with the Nash equilibrium. We reproduce their results in R, conduct robustness checks on how their sample was constructed, and consider possible heterogeneity. We confirm their documented qualitative results.
    Date: 2023
  7. By: Detemple, Julian (Goethe University Frankfurt); Kosfeld, Michael (Goethe University Frankfurt)
    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: 2023–09
  8. By: Jantsje M. Mol (University of Amsterdam); Ivan Soraperra (Max Planck Institute for Human Development); Joël J. van der Weele (University of Amsterdam)
    Abstract: Information about the consequences of our consumption choices can be unwelcome, and people sometimes avoid it. We investigate a situation where one person possesses information that is inconvenient for another, and study why and when they decide to transmit that information. We introduce a simple and portable experimental game to analyze transmission of inconvenient information. In this game, a Sender can inform a Receiver at a small cost about a negative externality associated with a tempting and profitable action for the Receiver. The results from our online experiment (N = 1, 512) show that Senders transmit more information for large negative externalities. Sender’s decisions are largely driven by their own preferences for information. However, some Senders take the Receiver’s feelings into account, by transmitting evidence of positive externalities or by suppressing negative information upon the Receiver’s request. Understanding the decision to share inconvenient information matters, as it will affect the personal and political will to address important externalities and can inform strategies to encourage the transmission of inconvenient information within organizations.
    Keywords: willful ignorance, information avoidance, unethical behavior, lab experiment
    JEL: B41 C91 C93
    Date: 2023–10–12
  9. By: Newman, Jonathan (University of Warwick)
    Abstract: I present a two-stage model of committee voting with costly expert information. For every member of the committee to observe and synthesise independent testimony of some fixed and known quality, a majority of the agents must contribute to its acquisition. When testimony is observed with positive probability, I show that adding agents to the committee depresses the probability with which any single agent contributes - due to free-riding - and demonstrate how, with some careful assumptions, the probability of reaching the correct decision should correspondingly fall with the committee size. Moreover, I show individuals will make more accurate decisions than all groups whose aggregated signals are, collectively, inferior to the expert testimony. In keeping with Mukhopadhayas (2003) seminal work on the acquisition of private signals, these findings argue against arbitrarily enlarging committees to improve the quality of majority decisions but instead propose the dichotomous choice between individual decision-makers, and collectives whose aggregated signals are more accurate than the expert signal. Further research might permit agents to choose the amount of information they acquire, or model both private and expert information as costly
    Keywords: Information Aggregation ; Public Goods Game JEL classifications: C72 ; D72
    Date: 2023
  10. By: Daron Acemoglu; Alexander Wolitzky
    Abstract: Building on theories of international relations, we analyze how mistrust (uncertainty about an adversary's preferences or capabilities), misperception (imperfect observation of an adversary's actions), and misunderstanding (non-degenerate higher-order beliefs) can lead to conflict and drive its dynamics. We develop our analysis in the context of three classic models: a one-shot security dilemma or spiral model; a repeated version of the security dilemma that allows for gradual learning about the opponent's type, as well as the possibility of conflict spirals, traps, and cycles; and a deterrence model. We relate these models to the empirical literature and to current and historical episodes of conflict.
    JEL: C73 D74 P00
    Date: 2023–09
  11. By: Fujisawa, Chieko; Kasuga, Norihiro
    Abstract: This study analyzes the type of advertisements firms pursue when they engage in Cournot competition, especially when goods are complementary in a multimedia environment. Advertisements are classified into search-linked advertisements for online advertisements and TV commercials for mass media advertisements. Which one should the firm choose? This study also analyzes how corporate advertising strategies affect social welfare and provides insight into the role of advertising in multimedia. A firm's advertisement selection depends on the degree of complementarity and differentiation between advertisements. This analysis also focuses on the advertising strategies of duopoly firms in an extended model, such as hardware firms that are complementary to software products. In that case, both choose mass media advertising when the differentiation is moderate, and this choice raises both aggregate surplus and producer surplus. When advertising complementarity is high for both mass media and online advertising, firms choose different types of advertisements, but social welfare is low. This result is one of the considerations of a firm's sales strategy, how on using advertisements to increase demand and maximize profits.
    Keywords: Online media advertising, Mass media advertising, Complementary relationship, Advertising Strategy, Duopoly model
    Date: 2023
  12. By: Dubois, Pierre; Abi Rafeh, Rossi; Griffith, Rachel; O'Connell, Martin
    Abstract: We develop a dynamic equilibrium model of rm competition to study the impact of counterfactual policies, such as taxes and advertising restrictions, on pricing, advertising, consumption and welfare. We estimate the model using micro level data on the market for colas. We use consumer level exposure to television commercials to estimate the impact of advertising on product choice, model rms' dynamic competition through their choice of advertising budgets and product prices, and exploit rms' practice of delegating decisions over advertising slots to agencies to link the rich consumer-level advertising variation with rms' strategic choice variables. We show that a sugar- sweetened beverage tax leads to a reduction in advertising and that the incremental eects of implementing advertising restrictions are substantially reduced with a tax in place.
    Keywords: taxation, advertising, discrete choice demand, dynamic oligopoly
    JEL: D12 H22 I18 M37
    Date: 2023–10–16

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