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on Game Theory |
| By: | Sumit Goel; Jeffrey Zeidel |
| Abstract: | We study $k$-price auctions in a complete information environment and characterize all pure-strategy Nash equilibrium outcomes. In a setting with $n$ agents having ordered valuations, we show that any agent, except those with the lowest $k-2$ valuations, can win in equilibrium. As a consequence, worst-case welfare increases monotonically as we go from $k=2$ (second-price auction) to $k=n$ (lowest-price auction), with the first-price auction achieving the highest worst-case welfare. |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2507.05738 |
| By: | Dylan Laplace Mermoud; Victor Roca i Lucio |
| Abstract: | The main goal of this paper is to settle a conceptual framework for cooperative game theory in which the notion of composition/aggregation of games is the defining structure. This is done via the mathematical theory of algebraic operads: we start by endowing the collection of all cooperative games with any number of players with an operad structure, and we show that it generalises all the previous notions of sums, products and compositions of games considered by Owen, Shapley, von Neumann and Morgenstern, and many others. Furthermore, we explicitly compute this operad in terms of generators and relations, showing that the M\"obius transform map induces a canonical isomorphism between the operad of cooperative games and the operad that encodes commutative triassociative algebras. In other words, we prove that any cooperative game is a linear combination of iterated compositions of the 2-player bargaining game and the 2-player dictator games. We show that many interesting classes of games (simple, balanced, capacities a.k.a fuzzy measures and convex functions, totally monotone, etc) are stable under compositions, and thus form suboperads. In the convex case, this gives by the submodularity theorem a new operad structure on the family of all generalized permutahedra. Finally, we focus on how solution concepts in cooperative game theory behave under composition: we study the core of a composite and describe it in terms of the core of its components, and we give explicit formulas for the Shapley value and the Banzhaf index of a compound game. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2507.01969 |
| By: | Rabah Amir; Igor V. Evstigneev; Mikhail V. Zhitlukhin |
| Abstract: | The paper compares two types of industrial organization in the Cournot duopoly: (a) the classical one, where the market players maximize profits and the outcome of the game is a Cournot-Nash equilibrium; (b) a contest in which players strive to win a fixed prize/bonus employing unbeatable strategies. Passing from (a) to (b) leads to a perfect competition with zero profits of the players (Schaffer's paradox). Transition from (b) to (a) results in a substantial decline in the production output, which also seems paradoxical, as it is commonly accepted that competition increases efficiency. We examine these phenomena in two versions of the Cournot model: with a homogeneous good and with differentiated goods. |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.00960 |
| By: | Jehiel, Philippe (Paris School of Economics and University College London); Mohlin, Erik (Department of Economics, Lund University) |
| Abstract: | We develop a framework for categorization in games, applicable both to multi-stage games of complete information and static games of incomplete information. Players use categories to form coarse beliefs about their opponents' behavior. Players best-respond given these beliefs, as in analogy-based expectations equilibria. Categories are related to strategies via the requirements that categories contain a sufficient amount of observations and exhibit sufficient within-category similarity, in line with the bias-variance trade-off. We apply our framework to classic games including the chainstore game and adverse selection games, thereby suggesting novel predictions for these applications. |
| Keywords: | Bounded rationality; Categorization; Bias-variance trade-off; Adverse selection; Chainstore parado |
| JEL: | C70 C73 D82 D83 D91 |
| Date: | 2025–09–09 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:lunewp:2025_007 |
| By: | Sam Ganzfried |
| Abstract: | The goal of agents in multi-agent environments is to maximize total reward against the opposing agents that are encountered. Following a game-theoretic solution concept, such as Nash equilibrium, may obtain a strong performance in some settings; however, such approaches fail to capitalize on historical and observed data from repeated interactions against our opponents. Opponent modeling algorithms integrate machine learning techniques to exploit suboptimal opponents utilizing available data; however, the effectiveness of such approaches in imperfect-information games to date is quite limited. We show that existing opponent modeling approaches fail to satisfy a simple desirable property even against static opponents drawn from a known prior distribution; namely, they do not guarantee that the model approaches the opponent's true strategy even in the limit as the number of game iterations approaches infinity. We develop a new algorithm that is able to achieve this property and runs efficiently by solving a convex minimization problem based on the sequence-form game representation using projected gradient descent. The algorithm is guaranteed to efficiently converge to the opponent's true strategy given observations from gameplay and possibly additional historical data if it is available. |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2508.17671 |
| By: | Martin, Julien; Pesendorfer, Martin; Shannon, Jack |
| Abstract: | Common values auction models, where bidder decisions depend on noisy signals of common values, provide predictions about Bayesian Nash equilibrium (BNE) outcomes. In settings where these common values can be estimated, these predictions can be tested. We propose a series of tests, robust to assumptions about the signal structure, to determine whether the observed data could have been generated by a Bayesian Nash equilibrium. In the setting of oil and gas lease auctions in New Mexico, we nd evidence that participation decisions are correlated and that participants system- atically underbid in light of ex post outcomes. |
| Keywords: | testing; collusion; auctions |
| JEL: | D44 L10 L40 |
| Date: | 2025–08–31 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:128285 |
| By: | Noemí Navarro (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique); Róbert F. Veszteg (Waseda University [Tokyo, Japan]) |
| Abstract: | This paper investigates the robustness of equal-split outcomes in unstructured bargaining environments, expanding on classic two-person settings to include payoff transfers and multi-party bargaining. Drawing from experimental data, we find that equal splits persist as a focal solution in two-person bargaining with payoff transfers, even when some potential efficiency gains are left unexploited, likely due to limitations in participants' cognitive and strategic sophistication. In three-person settings (without payoff transfers), while agreements align closely with equality, they tend to do so only as long as efficiency and stability criteria are met. Our results suggest that bargaining parties prioritize equality when efficient solutions are complicated to find, but prioritize efficiency when efficient solutions are easily accessible. Also, in multilateral bargaining, coalitional stability becomes a primary concern, whereas it remains a softer constraint in simpler, bilateral negotiations. |
| Keywords: | Economics, Multilateral bargaining, Experiments, Nash bargaining solution, Equal-split solution, Individual rationality, Microeconomics, Robustness (evolution), Sophistication, Stochastic game, Negotiation, Bilateral bargaining |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05240606 |
| By: | Xiaoyu Cheng |
| Abstract: | Cheng (2025) establishes that in a persuasion game where both the sender and the receiver have Maxmin Expected Utility (MEU) preferences, the sender never strictly benefits from using ambiguous communication strategies over standard (non-ambiguous) ones. This note extends the analysis to environments with prior ambiguity, i.e., pre-existing ambiguity about the payoff-relevant state, and shows that, in the binary state and binary action case, the same no-gain result continues to hold. |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2508.18603 |
| By: | Georgy Lukyanov |
| Abstract: | We study a repeated sender-receiver game where inspections are public but the sender's action is hidden unless inspected. A detected deception ends the relationship or triggers a finite punishment. We show the public state is one dimensional and prove existence of a stationary equilibrium with cutoff inspection and monotone deception. The sender's mixing pins down a closed-form total inspection probability at the cutoff, and a finite punishment phase implements the same cutoffs as termination. We extend to noisy checks, silent audits, and rare public alarms, preserving the Markov structure and continuity as transparency vanishes or becomes full. The model yields testable implications for auditing, certification, and platform governance: tapering inspections with reputation, bunching of terminations after inspection spurts, and sharper cutoffs as temptation rises relative to costs. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.04035 |
| By: | Taubman, Dmitriy |
| Abstract: | We introduce a new collection auction mechanism for selling multiple identical items to a single winner—the Prefix-Based Collection Auction. The auction restricts the winner to a prefix of their bids and imposes a payment rule based on both an internal prefix sum and an external second price. This dual structure offers strong protection against both market power and bidder collusion, while maintaining intuitive and truthful bidding behavior. The mechanism is robust, simple to implement, and has potential applications in art-collection markets, online advertising, and other environments where bundle demand is critical. |
| Keywords: | auctions; mechanism design; game theory; collusion resistance; market power; prefix structure |
| JEL: | A10 A11 |
| Date: | 2025–08–21 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:125907 |
| By: | Masanori Kobayashi |
| Abstract: | We study a multi-step persuasion problem involving a Bayesian sender and a non-Bayesian receiver. When the receiver deviates from Bayesian updating, the sender may benefit from -- or be harmed by -- gradually revealing information over time. We show that under divisible updating rules (Cripps, 2018), delaying information provision does not affect the sender's ex-ante value. Focusing on the $\alpha$--$\beta$ rule of Grether (1980), we derive the necessary and sufficient conditions under which the sender is strictly better or worse off under a two-step persuasion scheme. |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2508.12328 |
| By: | Kenju Kamei (Faculty of Economics, Keio University); Katy Tabero (Department of Economics, University of Southampton) |
| Abstract: | It is well-known that efficiency often fails to improve in public goods games with peer-to-peer punishment when counter-punishment is possible. This paper experimentally demonstrates, for the first time, that the effects of sanctioning institutions are modest, regardless of the decision-making format (individual or team). In the “team†conditions, subjects are randomly assigned to teams of three, and make joint decisions through communication. Their dialogue provides valuable insights into the motivations behind (counter-)punishment, as well as the resulting behavioral effects. A coding exercise reveals that first-order punishments (and counter-punishments) are primarily emotional responses to peers’ low contributions (and first order punishments, respectively). |
| Keywords: | experiment, public goods game, punishment, counter-punishment |
| JEL: | C92 D01 H49 |
| Date: | 2025–08–26 |
| URL: | https://d.repec.org/n?u=RePEc:keo:dpaper:dp2025-019 |
| By: | Wei He; Yeneng Sun; Hanping Xu |
| Abstract: | This paper introduces the concept of perfect monotone equilibrium in Bayesian games, which refines the standard monotone equilibrium by accounting for the possibility of unintended moves (trembling hand) and thereby enhancing robustness to small mistakes. We construct two counterexamples to demonstrate that the commonly used conditions in Athey (2001), McAdams (2003) and Reny (2011) - specifically, the single crossing condition and quasi-supermodularity - are insufficient to guarantee the existence of a perfect monotone equilibrium. Instead, we establish that the stronger conditions of increasing differences and supermodularity are required to ensure equilibrium existence. To illustrate the practical relevance of our findings, we apply our main results to multiunit auctions and further extend the analysis to first-price auctions, all-pay auctions, and Bertrand competitions. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.01358 |
| By: | Shiladitya Kumar |
| Abstract: | How can voters induce politicians to put forth more proximate (in terms of preference) as well as credible platforms (in terms of promise fulfillment) under repeated elections? Building on the work of Aragones et al. (2007), I study how reputation and re-election concerns affect candidate behavior and its resultant effect on voters' beliefs and their consequent electoral decisions. I present a formal model where, instead of assuming voters to be naive, I tackle the question by completely characterizing a set of subgame-perfect equilibria by introducing non-naive (or strategic) voting behavior into the mix. I find that non-naive voting behavior, by using the candidate's reputation as an instrument of policy discipline after the election, aids in successfully inducing candidates to put forth their maximal incentive-compatible promise (among a range of such credible promises) in equilibrium. Through the credible threat of punishment in the form of loss of reputation for all future elections, non-naive voters gain a unanimous increase in expected utility relative to when they behave naively. In fact, comparative statics show that candidates who are more likely to win are more likely to keep their promises. In this framework, voters are not only able to bargain for more credible promises but also end up raising their expected future payoffs in equilibrium. Including such forms of strategic behavior thus reduces cheap talk by creating a credible electoral system where candidates do as they say once elected. Later, I present an analysis that includes limited punishment as a political accountability mechanism. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.08249 |
| By: | Mehdi Davoudi; Junjie Qin; Xiaojun Lin |
| Abstract: | This study investigates market-driven long-term investment decisions in distributed solar panels by individual investors. We consider a setting where investment decisions are driven by expected revenue from participating in short-term electricity markets over the panel's lifespan. These revenues depend on short-term markets equilibria, i.e., prices and allocations, which are influenced by aggregate invested panel capacity participating in the markets. We model the interactions among investors by a non-atomic game and develop a framework that links short-term markets equilibria to the resulting long-term investment equilibrium. Then, within this framework, we analyze three market mechanisms: (a) a single-product real-time energy market, (b) a product-differentiated real-time energy market that treats solar energy and grid energy as different products, and (c) a contract-based panel market that trades claims or rights to the production of certain panel capacity ex-ante, rather than the realized solar production ex-post. For each, we derive expressions for short-term equilibria and the associated expected revenues, and analytically characterize the corresponding long-term Nash equilibrium aggregate capacity. We compare the solutions of these characterizing equations under different conditions and theoretically establish that the product-differentiated market always supports socially optimal investment, while the single-product market consistently results in under-investment. We also establish that the contract-based market leads to over-investment when the extra valuations of users for solar energy are small. Finally, we validate our theoretical findings through numerical experiments. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.07203 |
| By: | Georgy Lukyanov; Konstantin Shamruk; Ekaterina Logina |
| Abstract: | We study a dynamic reputation model with a fixed posted price where only purchases are public. A long-lived seller chooses costly quality; each buyer observes the purchase history and a private signal. Under a Markov selection, beliefs split into two cascades - where actions are unresponsive and investment is zero - and an interior region where the seller invests. The policy is inverse-U in reputation and produces two patterns: Early Resolution (rapid absorption at the optimistic cascade) and Double Hump (two investment episodes). Higher signal precision at fixed prices enlarges cascades and can reduce investment. We compare welfare and analyze two design levers: flexible pricing, which can keep actions informative and remove cascades for patient sellers, and public outcome disclosure, which makes purchases more informative and expands investment. |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2508.20539 |
| By: | Ponthiere, Gregory |
| Abstract: | This paper analyzes the mechanisms by which Stoic ethics can produce coordination. We study how agents satisfying the Stoic discipline of desires (that is, one should wish for nothing that is out of control, including other players'acts) behave in 2-player simultaneous symmetric coordination games. It is shown that the extent to which the Stoic discipline of desires produces coordination depends on the particular way in which this is translated into the language of microeconomics. Under the I1 account of the Stoic discipline of desires (requiring indifference between outcomes that differ only on other players'acts), it is the case either that coordination is achieved or that coordination is valueless. Hence adopting the I1 account suffices to coordinate agents, without any need for a shared idea of the 'Common Good'. On the contrary, the I2 account of the Stoic discipline of desires (requiring indifference between outcomes that are the best given other players'acts) does not always suffice to coordinate agents. |
| Keywords: | Stoicism, games, coordination, rationality, discipline of desires |
| JEL: | C70 D01 D60 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1661 |
| By: | Georgy Lukyanov; Mark Izgarshev |
| Abstract: | A benevolent advisor observes a project's complexity and posts a pass - fail threshold before the agent chooses effort. The project succeeds only if ability and effort together clear complexity. We compare two informational regimes. In the naive regime, the threshold is treated as non-informative; in the sophisticated regime, the threshold is a signal and the agent updates beliefs. We characterize equilibrium threshold policies and show that the optimal threshold rises with complexity under mild regularity. We then give primitives-based sufficient conditions that guarantee separating, pooling, or semi-separating outcomes. In a benchmark with uniform ability, exponential complexity, and power costs, we provide explicit parameter regions that partition the space by equilibrium type; a standard refinement eliminates most pooling. The results yield transparent comparative statics and welfare comparisons across regimes. |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2508.20540 |
| By: | Grzegorz Jamr\'oz; Rafa{\l} Kucharski |
| Abstract: | Detection of collectively routing fleets of vehicles in future urban systems may become important for the management of traffic, as such routing may destabilize urban networks leading to deterioration of driving conditions. Accordingly, in this paper we discuss the question whether it is possible to determine the flow of fleet vehicles on all routes given the fleet size and behaviour as well as the combined total flow of fleet and non-fleet vehicles on every route. We prove that the answer to this Inverse Fleet Assignment Problem is 'yes' for myopic fleet strategies which are more 'selfish' than 'altruistic', and 'no' otherwise, under mild assumptions on route/link performance functions. To reach these conclusions we introduce the forward fleet assignment operator and study its properties, proving that it is invertible for 'bad' objectives of fleet controllers. We also discuss the challenges of implementing myopic fleet routing in the real world and compare it to Stackelberg and Nash routing. Finally, we show that optimal Stackelberg fleet routing could involve highly variable mixed strategies in some scenarios, which would likely cause chaos in the traffic network. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.22966 |
| By: | Marion Davin (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); Dimitri Dubois (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); Katrin Erdlenbruch (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); Marc Willinger (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) |
| Abstract: | Experimenting with dynamic games raises issues about implementing discounting in experiments. Theoretical rational decision-makers evaluate payoff streams by converting them to a reference period, often "time zero." In experiments, subjects can adapt their strategy continuously. We explore individual behavior in a dynamic resource extraction experiment with two treatments: "z-discounting" (evaluating gains at time zero) and "p-discounting" (evaluating gains in present-time equivalents). Contrary to theoretical predictions, our data shows a significant positive treatment effect, indicating more substantial extraction under p-discounting. This challenges the theoretical model and prompts discussion on methodological considerations for discounting in laboratory settings. |
| Keywords: | laboratory experiment, time consistency, continuous time, discounting, dynamic optimization |
| Date: | 2025–08–21 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05234840 |
| By: | Lei Zhu; Zhihao Yan; Hongbo Duan; Yongyang Cai; Xiaobing Zhang |
| Abstract: | Global cooperation is posited as a pivotal solution to address climate change, yet significant barriers, like free-riding, hinder its realization. This paper develops a dynamic game-theoretic model to analyze the stability of coalitions under multiple stochastic climate tippings, and a technology-sharing mechanism is designed in the model to combat free-ridings. Our results reveal that coalitions tend to shrink over time as temperatures rise, owing to potential free-ridings, despite a large size of initial coalition. The threat of climate tipping reduces the size of stable coalitions compared to the case where tipping is ignored. However, at post-tipping period, coalitions temporarily expand as regions respond to the shock, though this cooperation is short-lived and followed by further shrink. Notably, technology-sharing generates greater collective benefits than sanctions, suggesting that the proposed dynamic technology-sharing pathway bolsters coalition resilience against free-riding while limiting the global warming. This framework highlights the critical role of technology-sharing in fostering long-term climate cooperation under climate tipping uncertainties. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.16162 |
| By: | Georgy Lukyanov; Anna Vlasova |
| Abstract: | We study expert recommendations under career concerns in a continuous signal environment. An expert observes a private signal about a binary payoff and recommends risky or safe; recommendations and outcomes are public and affect reputation and implementation. Equilibrium advice follows a cutoff rule. Under a mild relative-diagnosticity condition, the cutoff increases with reputation (reputational conservatism); informativeness and priors lower the cutoff while stronger career concerns raise it. A success-contingent bonus provides a one-to-one mapping to experimentation. The theory predicts fewer risky recommendations but higher conditional hit rates for high-reputation experts and yields implementable levers for committees and monitoring. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.04036 |
| By: | Georgy Lukyanov; Ariza Azova |
| Abstract: | We embed observational learning (BHW) in a symmetric duopoly with random arrivals and search frictions. With fixed posted prices, a mixed-strategy pricing equilibrium exists and yields price dispersion even with ex-ante identical firms. We provide closed-form cascade bands and show wrong cascades occur with positive probability for interior parameters, vanishing as signals become precise or search costs fall; absorption probabilities are invariant to the arrival rate. In equilibrium, the support of mixed prices is connected and overlapping; its width shrinks with signal precision and expands with search costs, and mean prices comove accordingly. Under Calvo price resets (Poisson opportunities), stationary dispersion and mean prices fall; when signals are sufficiently informative, wrong-cascade risk also declines. On welfare, a state-contingent Pigouvian search subsidy implements the planner's cutoff. Prominence (biased first visits) softens competition and depresses welfare; neutral prominence is ex-ante optimal. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.01263 |
| By: | Adrienne W. Sudbury (College of Business and Economics, Longwood University, VA 23909); Christian A. Vossler (Department of Economics, University of Tennessee); Daniel Rondeau (University of Victoria) |
| Abstract: | This study uses a laboratory experiment to study key aspects of dynamic fundraising campaigns that utilize goals that must be met for a good or service to be provided. We compare campaigns characterized by a final goal only, an intermediate goal and a known final goal, and a third setting where the final goal is unknown at the beginning of the campaign. The design further varies whether an individual’s payoff from reaching a goal is uncertain or certain, which is intended to capture the effects of providing vague or precise information on the good or service to be provided. We find that adding an intermediate goal decreases both the likelihood of reaching the final goal and the amount of money raised. Even for successful campaigns, introducing an intermediate goal slows the timing of contributions and alters contribution strategies. For the one-goal case, value uncertainty decreases the likelihood the goal is reached. |
| Keywords: | fundraising; choice architecture; provision points; goal setting; stretch goals; uncertainty; lab experiment |
| JEL: | H41 H42 C72 C92 D80 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:ten:wpaper:2025-04 |
| By: | Bouvard, Matthieu; Jullien, Bruno |
| Abstract: | We consider the price-cap regulation of a monopolistic network operator when the regulator has limited commitment. Operating the network requires xed investments and the regulator has the opportunity to unilaterally revise the price cap at random times. When the regulator maximizes consumer surplus, he has an incentive to lower the price cap once the operator's xed investments are sunk. This hold-up problem gives rise to two types of ineciencies. In one type of equilibrium, the operator breaks even but strategically under-invests to induce the regulator to maintain the price cap. In another type of equilibrium the operator makes strictly positive prots and periods of high investment and high prices are followed by periods of low prices and capacity decline. Overall, the model suggests that the regulator's lack of commitment limits the deployment of network infrastructures. |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:130871 |
| By: | Georgy Lukyanov; Darina Cheredina |
| Abstract: | We study sequential social learning when agents can sometimes pay to verify a claim and obtain hard, publicly checkable evidence. Each agent observes the public history, receives a private signal, may investigate at a cost (succeeding only when the claim is true), and can disclose or conceal any proof. Actions are binary or continuous, with a conformity pull toward the prevailing consensus. We characterize when false cascades persist and when societies self-correct. In the binary benchmark, we derive an investigation cutoff and show how its location relative to classic cascade bands governs breakability; a simple knife-edge condition guarantees that any wrong cascade at the boundary is overturned with positive probability. With continuous actions, coarse observation and conformity can recreate cascades, yet occasional disclosures collapse them. These forces yield a tractable "resilience frontier" with transparent comparative statics and policy levers. |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2508.20538 |
| By: | Liu, Yi; Matsumura, Toshihiro |
| Abstract: | We develop a duopoly model that incorporates fuel diversification, resulting in ex post cost asymmetry between firms. We theoretically examine how common ownership influences welfare. Our findings indicate that welfare decreases (increases) with the degree of common ownership when ex post cost heterogeneity due to fuel diversification is small (large). Furthermore, we identify a potential U-shaped relationship between the degree of common ownership and welfare, an insight not previously documented in the literature. In addition, we demonstrate that common ownership promotes fuel diversification, which may further enhance welfare. |
| Keywords: | overlapping ownership; welfare-improving production substitution; cost asymmetry; fuel choices |
| JEL: | G23 L13 Q42 |
| Date: | 2025–08–14 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:125747 |
| By: | Dyck, Daniel; Kourouxous, Thomas; Lorenz, Johannes |
| Abstract: | We investigate how tax authorities use joint tax audits as a coordinated enforcement tool in cross-border transactions of a multinational firm. Joint tax audits aim to resolve potential tax disputes early, before such disputes escalate into costly and time-consuming resolution procedures that may not fully eliminate double taxation. Employing a game-theoretic model, we identify settings in which we expect joint audits to occur and investigate their effect on the firm's expected tax payments and tax audit efficiency. We find that the occurrence of joint audits critically depends on the double taxation risk in the absence of joint audits. Unless tax rules are consistently applied, joint audits can occur more often when this risk is higher. The reason is that the firm changes its income-shifting strategy to reduce its expected tax payments, and thereby also enables tax authorities to better target tax disputes via joint audits that would otherwise escalate. However, we identify conditions under which joint audits are then detrimental to tax audit efficiency, particularly when the firm prefers them most. Our results imply that cost-sharing arrangements for joint audits should be tailored to the level of double taxation risk, with firm involvement having the potential to improve efficiency when this risk is high. |
| Keywords: | joint tax audits, double taxation, dispute prevention, income shifting |
| JEL: | H26 H87 F23 M42 C72 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:arqudp:324870 |