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on Game Theory |
| By: | Mitra, Manipushpak (Economic Research Unit, Indian Statistical Institute); Ray, Indrajit (Cardiff Business School, Cardiff University); Roy, Souvik (Applied Statistics Unit, Indian Statistical Institute) |
| Abstract: | For a strategic market game (as introduced by Shapley and Shubik), following Dubey and Rogawski (1990), we provide a full explicit characterisation of the set of trading equilibria (in which all goods are traded at a positive price), for both the “buy and sell†and the “buy or sell†versions of this model under standard assumptions on the utility functions. We interpret and illustrate our equilibrium-characterising conditions; we also provide simple examples of trading equilibria, including those of non-interior strategy profiles (in which at least one trader is using the whole endowment in at least one good or money). |
| Keywords: | strategic market game ; trading equilibrium ; interior profile ; buy and sell ; buy or sell JEL codes: C72 ; D44 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:wcreta:83&r=gth |
| By: | David Echeverry Pérez, Sandra Polanía-Reyes |
| Keywords: | Coordination, conditional cash transfer, quantal response equilibrium, level-k. |
| JEL: | C92 D91 D78 D83 Z13 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:nva:unnvaa:wp03-2023&r=gth |
| By: | Rashad Ahmed; Iñaki Aldasoro; Chanelle Duley |
| Abstract: | We provide a global games framework to study how the promise of par convertibility by various types of stablecoins breaks down. Public information disclosure has an ambiguous effect on run risk: greater transparency can lead to increased (reduced) run risk for sufficiently low (high) stablecoin holders' priors about reserve quality or transaction costs of conversion to fiat. If the distribution of reserve assets is fat-tailed (i.e. reserves are volatile), par convertibility is resilient to small shocks but fails with large negative public shocks, even for high initial reserve values. We find empirical support for the testable implications of the model. |
| Keywords: | stablecoins, crypto, global games, bank runs |
| JEL: | C70 D83 D84 E42 G01 G20 |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:1164&r=gth |
| By: | Fabian Dvorak; Regina Stumpf; Sebastian Fehrler; Urs Fischbacher |
| Abstract: | Generative artificial intelligence (AI) is poised to reshape the way individuals communicate and interact. While this form of AI has the potential to efficiently make numerous human decisions, there is limited understanding of how individuals respond to its use in social interaction. In particular, it remains unclear how individuals engage with algorithms when the interaction entails consequences for other people. Here, we report the results of a large-scale pre-registered online experiment (N = 3, 552) indicating diminished fairness, trust, trustworthiness, cooperation, and coordination by human players in economic twoplayer games, when the decision of the interaction partner is taken over by ChatGPT. On the contrary, we observe no adverse welfare effects when individuals are uncertain about whether they are interacting with a human or generative AI. Therefore, the promotion of AI transparency, often suggested as a solution to mitigate the negative impacts of generative AI on society, shows a detrimental effect on welfare in our study. Concurrently, participants frequently delegate decisions to ChatGPT, particularly when the AI's involvement is undisclosed, and individuals struggle to discern between AI and human decisions. |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2401.12773&r=gth |
| By: | Wayne Passmore; Roger Sparks |
| Abstract: | This paper analyzes a model of the mortgage market, considering scenarios with and without government-sponsored mortgage securitization. Conventional wisdom says that securitization, by fostering diversification and creating a “safe†asset in the form of mortgage-backed security (MBS), will reduce risk and enhance liquidity, thereby mitigating financial crises. We construct a strategic-game framework to model the interaction between the securitizer and banks. In this framework, the securitizer initiates the process by setting the MBS contract terms, which includes the guaranteed rate and the criterion that qualifies a mortgage for securitization. The bank then selects which qualifying mortgages to exchange for the MBS. Our investigation leads to a key result: government-sponsored securitization, somewhat counterintuitively, is more likely to exacerbate the severity and frequency of financial crises. |
| Keywords: | Financial Crises; Government Sponsored; Mortgage Market; Mortgage-backed securities (MBS); Securitization |
| Date: | 2024–01–19 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2024-02&r=gth |