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on Game Theory |
| By: | Brandl, Florian; Brandt, Felix |
| Abstract: | Schroeder (2025) claims that the solution concept, which, for each n-player game, returns the set of all strategy profiles where each player's strategy has full support, constitutes a counter-example to the characterization by Brandl and Brandt (2024). We show that this is not true because this solution concept violates consequentialism. |
| Keywords: | Nash equilibrium, axiomatic characterization |
| JEL: | C72 |
| Date: | 2025–01–14 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123333 |
| By: | S. Nageeb Ali; Andreas Kleiner; Kun Zhang |
| Abstract: | This paper studies games of voluntary disclosure in which a sender discloses evidence to a receiver who then offers an allocation and transfers. We characterize the set of equilibrium payoffs in this setting. Our main result establishes that any payoff profile that can be achieved through information design can also be supported by an equilibrium of the disclosure game. Hence, our analysis suggests an equivalence between disclosure and design in these settings. We apply our results to monopoly pricing, bargaining over policies, and insurance markets. |
| Keywords: | voluntary disclosure, evidence games |
| JEL: | D82 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_632 |
| By: | Jeongbin Kim; Thomas R. Palfrey; Jeffrey Zeidel |
| Abstract: | Crisis bargaining games are widely used to analyze bilateral conflicts, featuring strategic bluffing akin to poker. Players risk substantial losses from overplaying their hand but can secure significant gains if their opponent concedes. Since decisions in crises typically emerge from collective decision processes within organizations composed of diverse individual members, we use the team equilibrium solution concept to analyze these games, providing a framework for group strategic decision-making under collective choice rules (Kim, et al. 2022). In a team equilibrium, group members have rational expectations about opponents' strategies and share common average payoffs, with private payoff perturbations. Voting rules determine group decisions, assuming optimal voting behavior. Depending on the payoff structure, collective choice rules can lead to more or less bluffing and varying aggression compared to Perfect Bayesian Equilibrium. Our experiment varies game payoffs, group size, and voting rules. Behavior is inconsistent with Perfect Bayesian Equilibrium but broadly consistent with team equilibrium predictions. |
| JEL: | C72 C91 D74 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33392 |
| By: | Saglam, Ismail |
| Abstract: | In this paper, we study price stickiness in a dual-channel supply chain where a single manufacturer sells its product through an online channel and a retailer. We construct a noncooperative game where the manufacturer and the retailer decide on whether or not to costlessly adjust their prices after a demand shock. If the demand shock is positive, then the Nash equilibrium is always unique and non-sticky. If the demand shock is negative, then there exist Nash equilibria where some prices are sticky. Moreover, no Nash equilibrium is always Pareto optimal, pointing to the possibility of the Prisoner's Dilemma. |
| Keywords: | Supply chain; price adjustment; price stickiness. |
| JEL: | D43 L11 L13 |
| Date: | 2023–09 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123409 |
| By: | Albertazzi, Andrea (IMT School for Advanced Studies Lucca); Stringhi, Alessandro; Gil-Gallen, Sara |
| Abstract: | This paper studies how competition between groups affects cooperation. In the control condition, pairs of subjects play an indefinitely repeated Prisoner’s Dilemma game without external competition. In the treatment, two pairs compete against each other. No monetary rewards are tied to winning, isolating the bare impact of competition. In the treatment, cooperation increases by 16 percentage points. Strategies estimation shows a shift from selfish strategies (Always Defect) to cooperative ones (Grim Trigger). A theoretical model provides a rationale for the experimental results. |
| Date: | 2025–01–22 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:xf43q |
| By: | Wenqian Wang; Zhiwen Zheng |
| Abstract: | Recent literature highlights the advantages of implementing social rules via dynamic game forms. We characterize when truth-telling remains a dominant strategy in gradual mechanisms implementing strategy-proof social rules, where agents gradually reveal their private information while acquiring information about others in the process. Our first characterization hinges on the incentive-preservation of a basic transformation on gradual mechanisms called illuminating that partitions information sets. The second relies on a single reaction-proofness condition. We demonstrate the usefulness of both characterizations through applications to second-price auctions and the top-trading cycles algorithm. |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2501.08802 |
| By: | Ludovico Crippa; Yonatan Gur; Bar Light |
| Abstract: | We formulate and study a general time-varying multi-agent system where players repeatedly compete under incomplete information. Our work is motivated by scenarios commonly observed in online advertising and retail marketplaces, where agents and platform designers optimize algorithmic decision-making in dynamic competitive settings. In these systems, no-regret algorithms that provide guarantees relative to \emph{static} benchmarks can perform poorly and the distributions of play that emerge from their interaction do not correspond anymore to static solution concepts such as coarse correlated equilibria. Instead, we analyze the interaction of \textit{dynamic benchmark} consistent policies that have performance guarantees relative to \emph{dynamic} sequences of actions, and through a novel \textit{tracking error} notion we delineate when their empirical joint distribution of play can approximate an evolving sequence of static equilibria. In systems that change sufficiently slowly (sub-linearly in the horizon length), we show that the resulting distributions of play approximate the sequence of coarse correlated equilibria, and apply this result to establish improved welfare bounds for smooth games. On a similar vein, we formulate internal dynamic benchmark consistent policies and establish that they approximate sequences of correlated equilibria. Our findings therefore suggest that, in a broad range of multi-agent systems where non-stationarity is prevalent, algorithms designed to compete with dynamic benchmarks can improve both individual and welfare guarantees, and their emerging dynamics approximate a sequence of static equilibrium outcomes. |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2501.11897 |
| By: | Emeline Bezin (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Bastien Chabé-Ferret (Middlesex University); David de la Croix (UCL - Université Catholique de Louvain = Catholic University of Louvain) |
| Abstract: | Fertility becomes a strategic choice for minorities when having a larger share of the population helps to increase power. If parents invest resources to educate their children, then raising fertility for strategic reasons might be at the cost of future human capital. We dispel this view using census data from several developing countries. We show that religious and ethnic minorities in Indonesia, China, and Malaysia tend to invest more in both education and fertility compared to larger groups. Solving for the Nash equilibrium of an appropriation game between two groups with education and fertility being prescribed as group-specific behavioral norms, we offer a rationale for the observed patterns provided that human capital is an important input to appropriation. |
| Keywords: | Human Capital, Nash equilibrium, Indonesia, Fertility, Quality-quantity trade-off, Minorities, Conflict, Population engineering |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04877862 |
| By: | Thibaut Mastrolia; Tianrui Xu |
| Abstract: | This study explores the design of an efficient rebate policy in auction markets, focusing on a continuous-time setting with competition among market participants. In this model, a stock exchange collects transaction fees from auction investors executing block trades to buy or sell a risky asset, then redistributes these fees as rebates to competing market makers submitting limit orders. Market makers influence both the price at which the asset trades and their arrival intensity in the auction. We frame this problem as a principal-multi-agent problem and provide necessary and sufficient conditions to characterize the Nash equilibrium among market makers. The exchange's optimization problem is formulated as a high-dimensional Hamilton-Jacobi-Bellman equation with Poisson jump processes, which is solved using a verification result. To numerically compute the optimal rebate and transaction fee policies, we apply the Deep BSDE method. Our results show that optimal transaction fees and rebate structures improve market efficiency by narrowing the spread between the auction clearing price and the asset's fundamental value, while ensuring a minimal gain for both market makers indexed on the price of the asset on a coexisting limit order book. |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2501.12591 |
| By: | Wataru Tamura |
| Abstract: | This paper examines the optimal design of information sharing in organizations. Organizational performance depends on agents adapting to uncertain external environments while coordinating their actions, where coordination incentives and synergies are modeled as graphs (networks). The equilibrium strategies and the principal's objective function are summarized using Laplacian matrices of these graphs. I formulate a Bayesian persuasion problem to determine the optimal public signal and show that it comprises a set of statistics on local states, necessarily including their average, which serves as the organizational goal. When the principal benefits equally from the coordination of any two agents, the choice of disclosed statistics is based on the Laplacian eigenvectors and eigenvalues of the incentive graph. The algebraic connectivity (the second smallest Laplacian eigenvalue) determines the condition for full revelation, while the Laplacian spectral radius (the largest Laplacian eigenvalue) establishes the condition for minimum transparency, where only the average state is disclosed. |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2501.12669 |
| By: | Florian Mudekereza |
| Abstract: | This paper proposes a simple framework to study the effect of correlation neglect on social learning and welfare in games with social incentives. It examines statistical learners (frequentists, Bayesians, etc.) who make decisions based on their peers' actions but overlook the correlation between the actions they observe. A novel solution concept called correlated sampling equilibrium with statistical inference (CoSESI) reveals that correlation neglect affects strategic behavior through persistent overprecision, which leads to polarization and information cascades. CoSESI always exists and differs from existing concepts. It captures the fact that naive beliefs are overly sensitive to correlations, which causes failures of social learning. Applications of CoSESI in matching markets, monopoly pricing, and financial markets demonstrate that correlation neglect bears significant economic consequences. |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2501.13019 |
| By: | Ziv Hellman; Mikl\'os Pint\'er |
| Abstract: | Type spaces are analysed, and we identify three types of consistency of the players' beliefs in a type space: consistency, universal consistency, and strong consistency. Furthermore, we propose a new interpretation of a type space, defining it as a collection of the players' beliefs. This new interpretation introduces a radically different perspective on key theoretic notions, such as the prior, common prior, and posterior. In this framework: the terms of prior, common prior, and posterior are replaced by and interpreted as adequate aggregation of beliefs, consistency of the players' beliefs, and beliefs respectively. Through examples, we demonstrate that, under the proposed approach to type spaces, the ex-ante stage is not only meaningless but nonsensical. This is because, strong consistency of the players' beliefs cannot be witnessed by any probability distribution over the state space (i.e., a concrete common prior). |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2501.09835 |