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on Game Theory |
| By: | Daniele De luca |
| Abstract: | This paper introduces a geometric framework for analyzing power relations in games, independent of their strategic form. We define a canonical preference space where each player's relational stance is a normalized vector. This model eliminates the arbitrariness of selecting utility functions, a limitation of recent approaches. We show how classical concepts-bargaining power, dependence, reciprocity-are recovered and generalized within this space. The analysis proceeds in two steps: projecting a game's payoffs and outcomes onto the space, and then reducing the resulting landscape using key metrics. These include a Center of Mass (CoM) and structural indices for Hierarchy (H) and Reciprocity (R). Applications to canonical games (Prisoner's Dilemma, Battle of the Sexes) and economic models (Cournot duopoly) demonstrate that the framework reveals underlying structural similarities across different strategic settings and provides a quantitative characterization of relational dynamics. It thus bridges cooperative and non-cooperative game theory by conceptualizing power as a structural property of the mapping from preferences to equilibria. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.07287 |
| By: | Itai Maimon |
| Abstract: | We construct several definitions of imbalance and playability, both of which are related to the existence of dominated strategies. Specifically, a maximally balanced game and a playable game cannot have dominated strategies for any player. In this context, imbalance acts as a measure of inequality in strategy, similar to measures of inequality in wealth or population dynamics. Conversely, playability is a slight strengthening of the condition that a game has no dominated strategies. It is more accurately aligned with the intuition that all strategies should see play. We show that these balance definitions are natural by exhibiting a (2n+1)-RPS that maximizes all proposed imbalance definitions among playable RPS games. We demonstrate here that this form of imbalance aligns with the prevailing notion that different definitions of inequality for economic and game-theoretic distributions must agree on both the maximal and minimal cases. In the sequel paper, we utilize these definitions for multiplayer games to demonstrate that a generalization of this imbalanced RPS is at least nearly maximally imbalanced while remaining playable for under 50 players. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.00374 |
| By: | Haoyuan Zeng |
| Abstract: | This paper introduces a novel criterion, persuasiveness, to select equilibria in signaling games. In response to the Stiglitz critique, persuasiveness focuses on the comparison across equilibria. An equilibrium is more persuasive than an alternative if the set of types of the sender who prefer the alternative would sequentially deviate to the former once other types have done so -- that is, if an unraveling occurs. Persuasiveness has strong selective power: it uniquely selects an equilibrium outcome in monotone signaling games. Moreover, in non-monotone signaling games, persuasiveness refines predictions beyond existing selection criteria. Notably, it can also select equilibria in cheap-talk games, where standard equilibrium refinements for signaling games have no selective power. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.00718 |
| By: | Guojiang Shao; Zuo Quan Xu; Qi Zhang |
| Abstract: | We investigate a portfolio selection problem involving multi competitive agents, each exhibiting mean-variance preferences. Unlike classical models, each agent's utility is determined by their relative wealth compared to the average wealth of all agents, introducing a competitive dynamic into the optimization framework. To address this game-theoretic problem, we first reformulate the mean-variance criterion as a constrained, non-homogeneous stochastic linear-quadratic control problem and derive the corresponding optimal feedback strategies. The existence of Nash equilibria is shown to depend on the well-posedness of a complex, coupled system of equations. Employing decoupling techniques, we reduce the well-posedness analysis to the solvability of a novel class of multi-dimensional linear backward stochastic differential equations (BSDEs). We solve a new type of nonlinear BSDEs (including the above linear one as a special case) using fixed-point theory. Depending on the interplay between market and competition parameters, three distinct scenarios arise: (i) the existence of a unique Nash equilibrium, (ii) the absence of any Nash equilibrium, and (iii) the existence of infinitely many Nash equilibria. These scenarios are rigorously characterized and discussed in detail. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.05270 |
| By: | Yukihiko Funaki; Yukio Koriyama; Satoshi Nakada; Yuki Tamura |
| Abstract: | We study the proportional division value in TU-games, which distributes the worth of the grand coalition in proportion to each player's stand-alone worth. Focusing on fixed-population consistency, we characterize the proportional division value through three types of axioms: a homogeneity axiom, composition axioms, and a nullified-game consistency axiom. The homogeneity axiom captures scale invariance with respect to the grand coalition's worth. The composition axioms ensure that payoffs remain consistent when the game is decomposed and recomposed. The nullified-game consistency axiom requires that when some players' payoffs are fixed, the solution for the remaining players, computed in the game adjusted to account for these fixed payoffs, coincides with their original payoffs. Together with efficiency and a fairness-related axiom, these axioms characterize the proportional division value. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.05001 |
| By: | Yukihiko Funaki; Yukio Koriyama; Satoshi Nakada; Yuki Tamura |
| Abstract: | We study efficient, linear, and symmetric (ELS) values, a central family of allocation rules for cooperative games with transferable-utility (TU-games) that includes the Shapley value, the CIS value, and the ENSC value. We first show that every ELS value can be written as the Shapley value of a suitably transformed TU-game. We then introduce three types of invariance axioms for fixed player populations. The first type consists of composition axioms, and the second type is active-player consistency. Each of these two types yields a characterization of a subclass of the ELS values that contains the family of least-square values. Finally, the third type is nullified-game consistency: we define three such axioms, and each axiom yields a characterization of one of the Shapley, CIS, and ENSC values. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.04996 |
| By: | Haoyuan Zeng |
| Abstract: | This paper studies the incentives of the seller and buyers to shill bid in a single-item auction. An auction is seller identity-compatible if the seller cannot profit from pretending to be one or more bidders via fake identities. It is buyer identity-compatible if no buyer profits from posing as more than one bidder. Lit auctions reveal the number of bidders, whereas dark auctions conceal the information. We characterize three classic selling mechanisms -- first-price, second-price, and posted-price -- based on identity compatibility. We show the importance of concealing the number of bidders, which enables the implementation of a broader range of outcome rules. In particular, no optimal lit auction is ex-post seller identity-compatible, while the dark first-price auction (with reserve) achieves the goal. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.00723 |
| By: | Arrora. Falak (University of Warwick) |
| Abstract: | How does the presence of fake news affect incentives to acquire legitimate information? I study a model of costly information acquisition where either an honest or a fake sender communicates with a receiver through a platform. The honest sender sends a true but noisy signal, whereas the fake sender sends a false and uninformative signal. The platform can verify the signal’s authenticity; however, it faces a tradeoff. Fake news, although harmful for the receiver, makes her more skeptical and increases the honest sender’s incentives for acquiring more precise information. The platform commits to a policy that indicates the screening probability and a disclosure rule. My central finding is that the screening policy that maximizes the receiver’s welfare often requires tolerating fake news, even when such screening is costless. Moreover, not informing the receiver even when a message has been screened and found to be true is sometimes better than full transparency because it keeps the receiver skeptical.These findings suggest that complete moderation and fact-checking of content may inadvertently leave the receiver worse off. |
| Keywords: | Information acquisition ; communication game ; fake news ; platforms ; fact-checking JEL Codes: C72 ; D82 ; D83 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:wrk:warwec:1586 |
| By: | Zerong Chen |
| Abstract: | Evolutionary Finance explores the "survival and extinction" questions of investment strategies (portfolio rules) in the market selection process. It models the stochastic dynamics of financial markets based on behavioral and evolutionary principles, where asset prices are determined endogenously by short-run equilibrium between supply and demand, arising from the interaction of competing portfolio rules. This paper presents a survey of developments in Evolutionary Finance with a focus on long-lived, dividend-paying risky securities, where the budget of each investor comes from asset dividends and capital gains. We review several key models in this area addressing the following problems in order: 1) the most general results under the most general assumptions; 2) global evolutionary stability under restrictive assumptions; 3) viewing the model from a different, game-theoretic, perspective and examining almost sure Nash equilibrium strategies under restrictive assumptions. A central goal of the study is to identify an investment strategy that allows an investor to survive in the market selection process, i.e., to keep with probability one, a strictly positive, bounded away from zero share of market wealth over an infinite time horizon, irrespective of the strategies used by other investors. The main results are under general assumptions, such a survival strategy -- an analogue of the famous Kelly rule of "betting one's beliefs" exists -- and is asymptotically unique (within a specific class of strategies called basic). Moreover, under the required stronger assumptions, the Kelly rule is globally evolutionarily stable and is the unique investment strategy that forms a symmetric Nash equilibrium almost surely. |
| JEL: | C73 D53 G11 D58 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:man:sespap:2501 |
| By: | Mariagiovanna Baccara; Gilat Levy; Ronny Razin |
| Abstract: | Competing research waves start and grow as scientists choose their specialization driven by career incentives. We build a strategic experimentation framework where agents irreversibly choose between two risky fields, and information arrives faster as more agents specialize in a field. In the "bad news" case, if no news arrives, all agents join a bandwagon wave into one field. In the "good news"' case, both fields are explored in two sequential surges, followed by slow entry into the initially inferior field. We describe how the equilibrium depends on the information-production technology, and assess the impact of first-mover advantages, congestion, and deadlines. |
| Keywords: | strategic experimentation, research specialisation |
| JEL: | D7 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12248 |
| By: | Aaron S. Berman (California Institute of Technology); Saika Cer Askin (Chapman University, Economic Science Institute); Shapeng Jiang (Wuhan University); David Porter (Chapman University, Economic Science Institute); Jason Shachat (Chapman University, Economic Science Institute) |
| Abstract: | This study examines preference-based behavioral biases in social interactions between two distinct communities: students from Chapman University in the United States and Wuhan University in China. Using controlled experiments, participants interacted within or across communities in Dictator games. Two versions of the Dictator game were used: one where decisions were observable by both the experimenter and the recipient, and another where allocators could misreport outcomes with plausible deniability. Results revealed unexpected patterns, including similar allocation distributions across communities in the transparent task, and differing behaviors in the misreporting task, with Chapman allocators being more generous to out-group members and Wuhan allocators choosing more selfishly. The study challenges traditional theories of in-group favoritism and highlights the role of cultural differences and image concerns in decision-making. Findings contribute to understanding cross-cultural interactions, particularly in the context of increasing global connectivity. |
| Keywords: | In-group bias, Dictator game, Lying, Social image |
| JEL: | C92 D63 D91 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:chu:wpaper:25-12 |
| By: | Shaohui Wang |
| Abstract: | This paper develops a unified game-theoretic account of how generative AI reshapes the pre-doctoral "hope-labor" market linking Principal Investigators (PIs), Research Assistants (RAs), and PhD admissions. We integrate (i) a PI-RA relational-contract stage, (ii) a task-based production technology in which AI is both substitute (automation) and complement (augmentation/leveling), and (iii) a capacity-constrained admissions tournament that converts absolute output into relative rank. The model yields four results. First, AI has a dual and thresholded effect on RA demand: when automation dominates, AI substitutes for RA labor; when augmentation dominates, small elite teams become more valuable. Second, heterogeneous PI objectives endogenously segment the RA market: quantity-maximizing PIs adopt automation and scale "project-manager" RAs, whereas quality-maximizing PIs adopt augmentation and cultivate "idea-generator" RAs. Third, a symmetric productivity shock triggers a signaling arms race: more "strong" signals flood a fixed-slot tournament, depressing the admission probability attached to any given signal and potentially lowering RA welfare despite higher productivity. Fourth, AI degrades the informational content of polished routine artifacts, creating a novel moral-hazard channel ("effort laundering") that shifts credible recommendations toward process-visible, non-automatable creative contributions. We discuss welfare and equity implications, including over-recruitment with thin mentoring, selectively misleading letters, and opaque pipelines, and outline light-touch governance (process visibility, AI-use disclosure, and limited viva/replication checks) that preserves efficiency while reducing unethical supervision and screening practices. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.00068 |
| By: | Agbekponoua, Kossi Messanh; Fusacchia, Ilaria |
| Abstract: | Value creation forms the basis for the construction of global value chains (GVCs) and has received significant scholarly attention, yet the issue of value capture or power distribution along supply chains, “within” industries, is still unresolved. A recent property rights framework (Antr`as and Chor, 2013; Alfaro et al., 2019) highlights how final firms exert power over their suppliers to optimally organize their sequential production process. In such an environment, how can suppliers (exporters) act strategically to reduce the power of the buyers (importers)? We contribute, theoretically and empirically, to a better understanding of the extent to which the division of surplus in the agri-food sector is affected by manufacturing exporters’ position in GVCs. We argue that: (1) further upstream specialization along agri-food GVCs increases bargaining power (the “specialization effect”); (2) expansion along GVCs by importing more upstream inputs and exporting more processed goods also increase bargaining (the “expansion effect”); and (3) the “specialization effect” outweighs the “expansion effect” so that the overall effect is similar to the former. These theoretical hypotheses are tested using firm-level data on French agri-food industries (from French customs and the AMADEUS database) over 2002-2017 period. We build on the bilateral stochastic frontier model to measure the bilateral bargaining power of manufacturers. Following recent approaches in the literature, we identify manufacturers that participate in GVCs with those that jointly import and export, and measure their position in value chains through the level of transformation (upstreamness) of goods they use and produce. Hypotheses (1) and (3) are strongly supported and are mainly driven by product mix upgrade and the reduction of the hol-up problem, while hypothesis (2) is weakly supported and is only due to the high-quality production. |
| Keywords: | Agribusiness, Agricultural and Food Policy, Supply Chain |
| URL: | https://d.repec.org/n?u=RePEc:ags:aes024:355332 |