nep-gth New Economics Papers
on Game Theory
Issue of 2024‒01‒29
nine papers chosen by
Sylvain Béal, Université de Franche-Comté

  1. Synthesis of equilibrium By Zhukovskiy, Vladislav; Zhukovskaya, Lidia; Smirnova, Lidia
  2. Nonparametric Strategy Test By Sam Ganzfried
  3. The role of endogenous payoff over public coordination equilibrium By Jara-Moroni, Pedro; Matta Serrano, Benjamín
  4. Strategic Behavior in Road Cycling Competitions By Jean-François Mignot
  5. Changing Simplistic Worldviews By Maxim Senkov; Toygar T. Kerman
  6. Financial Integration and Monetary Policy Coordination By Javier Bianchi; Louphou Coulibaly
  7. Personal Lies By Gary Charness; Ismael Rodriguez-Lara
  8. Cournot competition in an integerconstrained electricity market model By Devine, Mel; Lynch, Muireann Ã
  9. The Market for Lemons and the Regulator's Signalling Problem By Roy Long

  1. By: Zhukovskiy, Vladislav; Zhukovskaya, Lidia; Smirnova, Lidia
    Abstract: For a noncooperative N-player normal-form game, we introduce the concept of hybrid equilibrium (HE) by combining the concepts of Nash and Berge equilibria and Pareto maximum. Some properties of hybrid equilibria are explored and their existence in mixed strategies is established under standard assumptions of mathematical game theory (convex and compact strategy sets and continuous payoff functions). Similar results are obtained for noncooperative N-player normal-form games under uncertainty.
    Keywords: uncertainty, mixed strategies, equilibrium, saddle point, Pareto optimality
    JEL: C00 C02
    Date: 2023–10–10
  2. By: Sam Ganzfried
    Abstract: We present a nonparametric statistical test for determining whether an agent is following a given mixed strategy in a repeated strategic-form game given samples of the agent's play. This involves two components: determining whether the agent's frequencies of pure strategies are sufficiently close to the target frequencies, and determining whether the pure strategies selected are independent between different game iterations. Our integrated test involves applying a chi-squared goodness of fit test for the first component and a generalized Wald-Wolfowitz runs test for the second component. The results from both tests are combined using Bonferroni correction to produce a complete test for a given significance level $\alpha.$ We applied the test to publicly available data of human rock-paper-scissors play. The data consists of 50 iterations of play for 500 human players. We test with a null hypothesis that the players are following a uniform random strategy independently at each game iteration. Using a significance level of $\alpha = 0.05$, we conclude that 305 (61%) of the subjects are following the target strategy.
    Date: 2023–12
  3. By: Jara-Moroni, Pedro; Matta Serrano, Benjamín (Facultad de Administración y Economía.Universidad de Santiago de Chile)
    Abstract: This paper studies how the threat of a protest influences government spending. The government has to choose a policy to maximize its payoff, which depends on (1) the policy itself and (2) the protest’s outcome. Citizens observe the policy choice and a private signal before deciding simultaneously whether to protest. We provide an equilibrium in which citizens coordinate only in public information, and show that if, in addition to the protest’s outcome, the payoff of the government depends on its size, the set of equilibrium strategies is a proper subset. Classification-JEL D7, D83, C72
    Keywords: Protest game, Global game, Public information, Social Movements
    Date: 2023–12–12
  4. By: Jean-François Mignot (GEMASS - Groupe d'Etude des Méthodes de l'Analyse Sociologique de la Sorbonne - UP4 - Université Paris-Sorbonne - FMSH - Fondation Maison des sciences de l'homme - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Why is there strategy, not just brute force, in cycling competitions? What are the recurring strategic interactions amongst riders? And what can economists learn from riders' behaviors? Cycling may be one of the most strategically interesting sports, hence its nickname "chess on wheels." Professional riders' performances crucially depend on their interactions with other riders, which may not be the case in some athletics, swimming, or skiing events. Most interactions between riders are not pure confrontation, zero-sum games, as is the case in boxing, fencing, martial arts, or tennis. In cycling, two rival riders may lawfully ally against some third rider, while such three-player interactions do not exist in football, basketball, or soccer. And cycling being an individual sport run amongst teams, it opens up opportunities of strategic behavior both within and between teams. This chapter provides an overview on the main reasons why bicycle races are strategic, and it then presents several game theory analyses of strategic interactions between riders: attack timing strategy, cooperation and noncooperation in breakaways and in the peloton, sprint strategy, and three-player interactions. It is founded on examples of strategic interactions between riders that occurred in the Tour de France, the Giro d'Italia, the Vuelta a España, and other races
    Keywords: Game theory, Strategy, Free riding, Attack, Breakaway
    Date: 2022–10–29
  5. By: Maxim Senkov; Toygar T. Kerman
    Abstract: We study a Bayesian persuasion model with two-dimensional states of the world, in which the sender (she) and receiver (he) have heterogeneous prior beliefs and care about different dimensions. The receiver is a naive agent who has a simplistic worldview: he ignores the dependency between the two dimensions of the state. We provide a characterization for the sender's gain from persuasion both when the receiver is naive and when he is rational. We show that the receiver benefits from having a simplistic worldview if and only if it makes him perceive the states in which his interest is aligned with the sender as less likely.
    Date: 2024–01
  6. By: Javier Bianchi; Louphou Coulibaly
    Abstract: Financial integration generates macroeconomic spillovers that may require international monetary policy coordination. We show that individual central banks may set nominal interest rates too low or too high relative to the cooperative outcome. We identify three sufficient statistics that determine whether the Nash equilibrium exhibits under-tightening or over-tightening: the output gap, sectoral differences in labor intensity, and the trade balance response to changes in nominal rates. Independently of the shocks hitting the economy, we find that under-tightening is possible during economic expansions or contractions. For large shocks, the gains from coordination can be substantial.
    Keywords: Macroeconomic and financial spillovers; Monetary policy cooperation
    JEL: E23 E43 E52 E21 E62 E44 F32
    Date: 2024–01–04
  7. By: Gary Charness (University of California, Santa Barbara,); Ismael Rodriguez-Lara (Universidad de Málaga and Chapman University)
    Abstract: Using the mind game, we provide experimental evidence that people are more likely to lie when they disclose non-personal information (e.g., reporting a number they thought of) compared with personal information (e.g., reporting the last digit of their birth year). Our findings suggest that the type of information is an important factor for lying behavior.
    Keywords: Lying behavior, personal information, impersonal information, selfconcept-maintenance, moral costs, motivated beliefs
    Date: 2024
  8. By: Devine, Mel; Lynch, Muireann Ã
    Date: 2023
  9. By: Roy Long
    Abstract: The Market for Lemons is a classic model of asymmetric information first studied by Nobel Prize economist George Akerlof. It shows that information asymmetry between the seller and buyer may result in market collapse or some sellers leaving the market. "Lemons" in the used car market are cars of poor quality. The information asymmetry present is that the buyer is uncertain of the cars' true quality. I first offer a simple baseline model that illustrates the market collapse, and then examine what happens when regulation, ie. a DMV is introduced to reveal (signal) the true car quality to the buyer. The effect on the market varies based on the assumptions about the regulator. The central focus is on the DMV's signal structure, which can have interesting effects on the market and the information asymmetry. I show that surprisingly, when the DMV actually decreases the quality of their signal in a well constructed way, it can substantially increase their profit. On the other hand, this negatively effects overall welfare.
    Date: 2023–12

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