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on Game Theory |
| By: | Corchón, Luis C.; Correa-Lopera, Guadalupe; Moreno, Bernardo |
| Abstract: | Traditional collusion models typically assume that players coordinatetheir actions actively during the competition process to influence the outcomes.In contrast, we consider a repeated interaction setting betweentwo players where collusion occurs through well-defined strategies: theplayers take turns, with one holding monopoly power while the other eitherrefrains from participating or behaves as if absent. We provide afull characterization of when taking turns constitutes a subgame perfectNash equilibrium in repeated games. By allowing players to discount timedifferently, we uncover a novel, non-monotonic condition on the discountfactor that sustains collusion. We apply our findings to three specificcontexts: contests, duopoly, and political competition. |
| Keywords: | Collusion; Political competition; Repeated games; Subgame perfect Nash equilibrium; Take-turns |
| JEL: | D43 C62 C73 D72 |
| Date: | 2025–03–25 |
| URL: | https://d.repec.org/n?u=RePEc:cte:werepe:46355 |
| By: | Satoru Fujishige; Zaifu Yang |
| Abstract: | We propose a novel strategy-proof dynamic auction for efficiently allocating heterogeneous indivisible commodities. The auction applies to all unimodular demand types of Baldwin and Klemperer’s necessary and sufficient condition for the existence of competitive equilibrium which accommodate a variety of complements, substitutes, gross substitutes and complements, and any other kinds. Although bidders are not assumed to be price-takers so they can act strategically, this auction induces bidders to bid truthfully, yielding efficient outcomes. Sincere bidding is shown to be an ex post perfect Nash equilibrium of the auction. The trading rules are simple, detail-free, privacy-preserving, error-tolerant, and independent of any probability distribution assumption. |
| Keywords: | Dynamic Auction Design, Equilibrium, Incentive Compatibility, Unimodular Demand Types, Indivisibility, Incomplete Information. |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:yor:yorken:25/02 |
| By: | Ying Xue Li; Burkhard Schipper (Department of Economics, University of California Davis) |
| Abstract: | We consider a disclosure game between a seller and a buyer. The seller knows the quality of a good, while the buyer does not. Before the buyer decides how many units to purchase, the seller can disclose verifiable information about the good. The better the information, the more the buyer is inclined to buy. The information about the good is two-dimensional. We design two experimental treatments: In the unawareness treatment, the buyer is uncertain about the first dimension, but unaware of the second. Here, unawareness refers to a lack of conception rather than lack of information. In the control treatment, the buyer is aware of both dimensions, but uncertain about them. The theory predicts unraveling of information in the control treatment but not in the unawareness treatment. Our experimental findings are consistent with this prediction. However, a closer examination reveals that this outcome is driven by buyers becoming confused when sellers naively raise awareness of the second dimension. |
| Keywords: | disclosure of information, disclosure games, verifiable information, unawareness, unknown unknowns, unraveling, rationalizability, experimental games |
| JEL: | D83 C72 C92 |
| Date: | 2025–03–31 |
| URL: | https://d.repec.org/n?u=RePEc:cda:wpaper:370 |
| By: | Konovalov, Arkady (University of Birmingham); Luzyanin, Daniil (University of Birmingham); Popov, Sergey V. (Cardiff Business School, Cardiff University) |
| Abstract: | Experiment participants in a social dilemma game choose cooperation over defection, even though neither is more beneficial. High levels of cooperation cannot be explained by favorable labels for actions, collusion, k-level reasoning, quantal response behavior, or misplaced optimism about others’ actions, but can be rationalized by the Charness and Rabin (2002) preference model. However, cooperation rates fall with changes in payoffs, which cannot be explained by the standard formulation; to account for these results, we introduce a generalization of the model. |
| Keywords: | cooperation; coordination; social preferences |
| JEL: | C7 C9 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:cdf:wpaper:2025/10 |
| By: | Christian Trudeau (Department of Economics, University of Windsor); Edward C. Rosenthal (Department of Statistics, Operations, and Data Science, Fox School of Business, Temple University) |
| Abstract: | We consider a set of users who are located along a pipeline with a single source. These users consume a good that is extracted from the source and flows downstream, with diminishing marginal returns for each user. In addition, flows along each edge in the pipeline create negative externalities, which are nondecreasing as a function of flow. The users cooperate toward obtaining group welfare maximization. In both the continuous and discrete cases, we obtain the group optimal solutions, and we then use cooperative game theory to determine how best to allocate the damages, using optimistic and pessimistic formulations for the characteristic function. Using core stability as our guiding principle, we provide a set of stable allocations that apportions the damages at a location among the set of downstream users, notably an average damage allocation and a marginal damage allocation. Given that the joint optimization forces agents to reduce (unequally) their consumption, we also examine the Shapley value of the optimistic game, also in the core, that allows to compensate agents who have sacrificed their consumption for the benefit of the group. Finally, we show that our pipeline externalities model generalizes some well-known problems from the literature, including the river sharing problem of Ambec and Sprumont 2002 and the joint production problem of Moulin and Shenker 1992. |
| Keywords: | game theory; network flows; pipeline externalities; core; redistribution. |
| JEL: | C71 D63 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:wis:wpaper:2502 |
| By: | Valeria Fanghella (EESC-GEM Grenoble Ecole de Management); Lisette Ibanez (CEE-M - Centre d'Economie de l'Environnement - Montpellier - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - UM - Université de Montpellier); John Thøgersen (Aarhus University [Aarhus]) |
| Abstract: | Recent research suggests that people are willing to pay to avoid requests for prosocial behavior. However, it is unknown whether this applies to private pro-environmental requests. To study this, we conducted a preregistered, incentivized online experiment where participants played two consecutive dictator games with an environmental charity of their choice. In stage 1, we varied the type of dictator game and the information provided in a 2 × 2 factorial between-subject design: (i) a standard dictator game versus one with a costly opt-out option; (ii) with or without social information about the average donation made by participants in a previous session. All participants played a standard dictator game in stage 2, the primary aim of which was to capture temporal spillovers from stage 1. Overall, 9 % of participants opted out, leading to lower donations in the dictator game with the costly opt-out option. Providing social information decreases donations in the standard dictator game and appears to increase opt-outs when the costly opt-out option is available, but not statistically significant. Distinct spillover effects emerged depending on the options available and decisions made in stage 1, indicating that the context and motivation of the initial behavior affect the direction of the temporal spillover. |
| Keywords: | Dictator game, Opt-out option, ENGO, Temporal spillover, Social information |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:hal:gemptp:hal-04982503 |
| By: | Davide Bosco; Mario Gilli; Andrea Sorrentino |
| Abstract: | In this paper we introduce incomplete information `a la global games into a deterministic two-group contest with the best-shot impact function and binary actions and we characterize the set of equilibria. Depending on whether the complete information assumption is relaxed on the value of the prize or on the cost of providing effort, we obtain different results in terms of equilibrium uniqueness: in the first case, there exist an equilibrium in (monotonic) switching strategies which could be not unique, whereas in the second one there exists a unique equilibrium in (monotonic) switching-strategies. Then, we discuss the presence of the group-size paradox for both classes of games.The results are thus extended to the case of M groups, and the properties of Bayes-Nash equilibria for these classes of games are investigated. Finally, we show a limit-uniqueness and a noise independent selection result. |
| Keywords: | Group contests, incomplete information, global games. |
| JEL: | D74 D71 C72 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:mib:wpaper:548 |
| By: | Shuguang Jiang (Centre for Economic Research, Shandong University, Jinan, Shandong, 250100, China); Marie Claire Villeval (CNRS, Université Lumière Lyon 2, Université Jean-Monnet Saint-Etienne, emlyon business school, GATE, 69007 Lyon, France; IZA, Bonn, Germany); Zhengping Zhang (Centre for Economic Research, Shandong University, Jinan, Shandong, 250100, China); Jie Zheng (Centre for Economic Research, Shandong University, Jinan, Shandong, 250100, China) |
| Abstract: | How do future economic prospects influence the likelihood of cooperation or conflict between rising and established powers? Drawing on Thucydides’s Trap, we test power transitions in varying economic conditions experimentally. In a dynamic power rivalry game participants could either maintain the status quo or challenge the rival, under declining, constant, or growing economic prospects. Our results reveal that conflict rates are highest when economic prospects decline and lowest when they grow. An established power is less likely to challenge in the initial periods under growth prospects, which moderates the rising power’s subsequent challenging behavior. A behavioral model with psychological costs for challenging and reciprocity helps rationalize the observed treatment differences. A survey with a representative sample in the U.S. suggests that the dynamics observed in the game hold real-world relevance. |
| Keywords: | Conflict, Economic prospects, Thucydides’s Trap, Power shift, Experiment |
| JEL: | C91 D74 D92 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:gat:wpaper:2506 |
| By: | Francesco Berlingieri (European Commission, Joint Research Centre); Matija Kovacic (European Commission, Joint Research Centre (JRC); Global Labor Organization (GLO); Ca’ Foscari University of Venice); Elena Stepanova (European Commission, Joint Research Centre) |
| Abstract: | Using a large-scale incentivized trust game experiment conducted across all 27 EU member states, we find that sexual minorities exhibit greater prosocial behaviour toward another vulnerable group but not toward an unknown counterpart, compared to heterosexual individuals. The observed effects are both relationship- and context-specific. Specifically, bisexual individuals and those identifying with a sexual orientation other than lesbian, gay, or heterosexual demonstrate higher trusting behaviour toward counterparts who frequently experience loneliness. This effect is not attributable to higher expectations of return, differences in risk preferences, or the individual's own loneliness status. Furthermore, we find evidence that this relationship-specific prosocial behaviour among sexual minorities is more pronounced in countries with lower levels of LGBTIQ+ rights protection, suggesting that it is heightened in contexts where minorities face a greater risk of exclusion or discrimination. We do not find statistically significant differences in overall trustworthiness across sexual orientations. However, the results offer some evidence that bisexual individuals are more trustworthy than heterosexual trustees when they feel a strong connection to their counterpart. |
| Keywords: | trust game; pro-sociality; LGBTIQ+; loneliness |
| JEL: | C91 C71 D64 J15 H80 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ven:wpaper:2025:02 |