|
on Game Theory |
| By: | Argyrios Deligkas; Gregory Gutin; Mark Jones; Philip R. Neary; Anders Yeo |
| Abstract: | In a public goods game, every player chooses whether or not to buy a good that all neighboring players will have access to. We consider a setting in which the good is indivisible, neighboring players are out-neighbors in a directed graph, and there is a capacity constraint on their number, k, that can benefit from the good. This means that each player makes a two-pronged decision: decide whether or not to buy and, conditional on buying, choose which k out-neighbors to share access. We examine both pure and mixed Nash equilibria in the model from the perspective of existence, computation, and efficiency. We perform a comprehensive study for these three dimensions with respect to both sharing capacity (k) and the network structure (the underlying directed graph), and establish sharp complexity dichotomies for each. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.11475 |
| By: | Marcin Dziubi\'nski |
| Abstract: | We study equilibrium strategies and the value of the asymmetric variant of the discrete Colonel Blotto game with $K \geq 2$ battlefields, $B \geq 1$ resources of the weaker player and $A > B$ resources of the stronger player. We derive equilibrium strategies and the formulas for the value of the game for the cases where the number of resources of the weaker player, $B$, is at least $2(\lceil A/K \rceil - 1)$ as well as for the cases where this number is at most $\lfloor A/K \rfloor$. In particular, we solve all the cases of the game which can be solved using the discrete General Lotto game of~\cite{Hart08}. We propose a constrained variant of the discrete General Lotto game and use it to derive equilibrium strategies in the discrete Colonel Blotto game, that go beyond the General Lotto solvable cases game. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.10827 |
| By: | Itai Arieli; Colin Stewart |
| Abstract: | We introduce a model of persuasion in which a sender without any commitment power privately gathers information about an unknown state of the world and then chooses what to verifiably disclose to a receiver. The receiver does not know how many experiments the sender is able to run, and may therefore be uncertain as to whether the sender disclosed all of her information. Despite this challenge, we show that, under general conditions, the sender is able to achieve the same payoff as in the full-commitment Bayesian persuasion case. |
| Keywords: | Persuasion, information design, disclosure, verifiable information |
| JEL: | D82 D83 |
| Date: | 2025–11–25 |
| URL: | https://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-808 |
| By: | Bohan Li; Wenyuan Li; Kenneth Tsz Hin Ng; Sheung Chi Phillip Yam |
| Abstract: | A mutual insurance company (MIC) is a type of consumer cooperative owned by its policyholders. By purchasing insurance from an MIC, policyholders effectively become member-owners of the company and are entitled to a share of the surplus, which is determined by their own collective claims and premium contributions. This sharing mechanism creates an interactive environment in which individual insurance strategies are influenced by the actions of others. Given that mutual insurers account for nearly one-third of the global insurance market, the analysis of members' behavior under such a sharing mechanism is of both practical and theoretical importance. This article presents a first dynamic study of members' behavior in the prevalent mutual insurance market under the large-population limit. With members' wealth processes depending on the law of the insurance strategies, we model the surplus-sharing mechanism using an extended mean field game (MFG) framework and address the fundamental question of how strategic interactions in this setting influence individual decisions. Mathematically, we establish the global-in-time existence and uniqueness of the mean field forward-backward stochastic differential equation (MF-FBSDE) characterizing the Nash equilibrium strategy, employing techniques to accommodate realistic insurance constraints. Computationally, we develop a modified deep BSDE algorithm capable of solving the extended MFG problem with an additional fixed-point structure on the control. Utilizing this scheme, we examine how structural features of the MIC's design, such as the composition of risk classes and surplus-sharing proportions, reshape members' decisions and wealth through collective interactions, underscoring the central role of these mechanisms in MICs. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.12292 |
| By: | Bukur, Tamás |
| Abstract: | In the European Union, a heated debate has emerged about whether the current practice of network neutrality regulation might endanger the development of very high-capacity networks and thus threaten the competitiveness of the European telecommunications sector. Operators insist that large content providers, who are effectively free riding on operator infrastructure, should be required to contribute a "fair share" of the costs of delivering their content; they believe new policies should facilitate this. Yet in most policy discussions, "fairness" appears as a purely rhetorical concept, seldom accompanied by concrete methods of quantification. Many policy recommendations suggest that cost shares should be bargained by operators and content providers, and regulators should step in if negotiations are not successful. Although this paper does not take a position on either side of the debate, by employing a cooperative game-theoretic framework it seeks to clarify what "fair share" could mean in rigorous economic terms. My theoretical model builds on the externality created by content providers originating large volumes of internet traffic, who do not pay for and have no incentive to limit the resulting infrastructure costs. Central to our cooperative framework is the hypothetical "grand coalition, " in which all players (operators, content providers, and consumers) cooperate to maximize a joint surplus, thereby fully internalizing this externality. Hypothetical coalitions, including only part of the players, might also partially reduce it. Each coalition's value is defined in its ability to mitigate the externality, and each player's contribution to that mitigation provides a basis for allocating costs. I rely on the Shapley value to examine how operators, content providers, and consumers should share trafficgenerated costs under this widely used conception of fairness. My results suggest that, according to the Shapley value, operators and content providers should split costs equally, leaving no direct burden on consumers. In the case of multiple competing operators, their half of the cost should be further split between them equally. The model aims for ease of practical implementation; hence, the suggested share measures depend only on observable cost parameters. With such a cost-sharing regulation in place, and taken into account by players in their optimization, the market equilibrium shifts closer to the social optimum, infrastructure deployment rises, and at high infrastructure cost levels, both consumer surplus and total welfare improve. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:itse25:331254 |
| By: | Sukanya Kudva; Anil Aswani |
| Abstract: | We study the problem of auction design in the presence of bidder collusion. Specifically, we consider a multi-unit auction of identical items with single-minded bidders, where a subset of bidders may collude by coordinating bids and transferring payments and items among themselves. While the classical Vickrey-Clarke-Groves (VCG) mechanism achieves efficient and truthful outcomes, it is highly vulnerable to collusion. In contrast, fully collusion-proof mechanisms are limited to posted-price formats, which fail to guarantee even approximate efficiency. This paper aims to bridge this gap by designing auctions that achieve good welfare and revenue guarantees even when some bidders collude. We first characterize the strategic behavior of colluding bidders under VCG and prove that such bidders optimally bid shade: they never overbid or take additional items, but instead reduce the auction price. This characterization enables a Bulow-Klemperer type result: adding colluding bidders can only improve welfare and revenue relative to running VCG on the non-colluding group alone. We then propose a Hybrid VCG (H-VCG) mechanism that combines VCG applied to non-colluding bidders with a posted-price mechanism for colluding bidders, assuming access to a black-box collusion detection algorithm. We show that H-VCG is ex-post dominant-strategy incentive compatible (DSIC) and derive probabilistic guarantees on expected welfare and revenue under both known and unknown valuation distributions. Numerical experiments across several distributions demonstrate that H-VCG consistently outperforms VCG restricted to non-colluding bidders and approaches the performance of the ideal VCG mechanism assuming universal truthfulness. Our results provide a principled framework for incorporating collusion detection into mechanism design, offering a step toward collusion-resistant auctions. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.12456 |
| By: | Preyas S. Desai; Jessie Liu |
| Abstract: | Businesses often react to external events by sending pro-social messages on social media that show the sender's alignment with the underlying prosocial cause and enhance their brand image. Consumers are uncertain about the authenticity of such messages because a company can choose to send prosocial messages even when their alignment with the social cause is not genuine. We study the sender's incentives to send (in)authentic messages and the consumer's reactions when an external investigator can verify the sender's message. We find that the sender's equilibrium strategy depends on the receiver's emphasis on external investigation versus their self-signaling incentives. When the receiver is more internally focused, the sender chooses self-sufficiency strategy, building credibility independent of external investigation. When the receiver is more externally focused, the sender can either use self-sufficiency or complementarity, the latter relying on validation by the external investigator. Thus, authenticity is coproduced by the sender, the receiver, and the investigator. Importantly, self-sufficiency results in more authenticity in reactive marketing messages than complementarity. We extend the model to incorporate confirmation bias of the receiver. We show that confirmation bias can act a doubled-edged sword, sometimes making the sender's persuasion task easier and other times making it more difficult. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.16793 |
| By: | Batabyal, Amitrajeet |
| Abstract: | In this note, we provide the first game-theoretic analysis of taxation and tax shifting when tanneries in Kanpur, India, that produce leather and pollute the Ganges River are taxed. We model the n≥2 tanneries as a Cournot oligopoly and a specific tax τ>0 is imposed on each unit of leather produced by the polluting tanneries. We first determine the symmetric Nash equilibrium output of leather and its price with the tax. Second, we show that the rate of tax shifting by the polluting tanneries is constant. Third, we discuss how increasing either the number of tanneries or the price elasticity of demand affects the tax shifting that takes place. Finally, we comment on the policy implications of constant tax shifting such as the predictability of the incidence of the tax burden. |
| Keywords: | Ganges River, Tannery, Specific Tax, Tax Shifting, Water Pollution |
| JEL: | H22 H23 Q25 |
| Date: | 2025–02–09 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:126594 |
| By: | Andrei Gyarmathy; Georgy Lukyanov |
| Abstract: | Costly pre-play messages can deter unnecessary wars - but the same messages can also entrench stalemates once violence begins. We develop an overlapping-generations model of a security dilemma with persistent group types (normal vs bad), one-sided private signaling by the current old to the current young, and noisy private memory of the last encounter. We characterize a stationary equilibrium in which, for an intermediate band of signal costs, normal old agents mix on sending a costly reassurance only after an alarming private history; the signal is kept marginally persuasive by endogenous receiver cutoffs and strategic mimicking by bad types. Signaling strictly reduces the hazard of conflict onset; conditional on onset, duration is unchanged in the private model but increases once a small probability of publicity (leaks) creates a public record of failed reconciliation. With publicity, play generically absorbs in a peace trap or a conflict trap. We discuss welfare and policy: when to prefer back-channels versus public pledges. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.11580 |
| By: | Eric Gao; Eric Tang |
| Abstract: | In many auctions, bidders may be reluctant to reveal private information to the auctioneer and other bidders. Among deterministic bilateral communication protocols, reducing what bidders learn requires increasing what the auctioneer learns. A protocol implementing a given social choice rule is on the privacy Pareto frontier if no alternative protocol reveals less to both bidders and the auctioneer. For first-price auctions, the descending protocol and the sealed-bid protocol are both on the privacy Pareto frontier. For second-price auctions, the ascending protocol and the ascending-join protocol of Haupt and Hitzig (2025) are both on the privacy Pareto frontier, but the sealed-bid protocol is not. A designer can flexibly trade off between what bidders learn and what the auctioneer learns by "stitching" different protocols together. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.10349 |
| By: | Kirtley, A. |
| Abstract: | Sustainable development in agricultural trade requires agents to embrace changes to traditional practises that favour conservation and investing into their communities to incite social change. Recently, there has been a shift to prioritise the sustainability of coffee production in developing countries, with many exports now being subject to voluntary sustainability standards (VSS). These VSS apply pressures to farmers to adopt more environmentally and socially conscious production methods. Unfortunately, the uptake of VSS has remained low. To explore potential motives for this low uptake, we present the results of a lab in the field experiment uncovering the effect of information provision and peer influence on the performance of Vietnamese coffee farmers in a repeated one-shot threshold public good game. The purpose of this experiment was to understand whether cooperation towards the provision of a sustainable public good can be increased through information diffusion. This paper endeavoured to highlight a causal link between being more informed and an individual's valuation of sustainability. Estimates of farmer's willingness to contribute revealed that those who discussed information with peers were more likely to invest in sustainability for their community. These findings suggest peer pressure can nudge farmers toward the more socially optimal outcome. |
| Keywords: | Environmental Economics and Policy, Sustainability |
| URL: | https://d.repec.org/n?u=RePEc:ags:aes025:356628 |
| By: | Alexandre Arnout (Aix-Marseille Univ., CNRS, AMSE, Marseille, France); Gaëtan Fournier (Aix-Marseille Univ., CNRS, AMSE, Marseille, France) |
| Abstract: | Political campaigns influence how voters prioritize issues, which in turn impacts electoral outcomes. In this paper, we study how candidates’ communication shapes which issues prevail during the campaign, through which mechanisms, and to what extent. We develop an electoral competition model with two candidates, each endowed with exogenous platforms and characteristics. Candidates allocate strategically their communication time across two issues to maximize their expected vote shares. We find that when one candidate holds similar comparative advantages on both issues, the disadvantaged candidate communicate on a single issue to saturate the campaign with one topic and then increases the randomness of the election. The advantaged candidate has the opposite incentive and communicate on both issues, creating an asymmetry in the campaign. We show that in some cases, the campaign can become entirely centered on a single issue. |
| Keywords: | electoral competition, Communication time, Priming |
| JEL: | C72 D72 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:aim:wpaimx:2520 |
| By: | Daniel Fershtman; Kfir Eliaz; Alexander Frug |
| Abstract: | We study optimal dynamic scheduling of workers to tasks when task completion is privately observed —so that workers can delay the release of finished tasks — and idle time is the only available incentive instrument. We characterize a scheduling rule, and its induced equilibrium, that maximizes expected discounted output. Unless workers are inherently slow, production alternates between efficient phases and delays. Our analysis reveals a trade-off between the quality and the size of the workforce. We also present several extensions, illustrating the versatility of the framework. |
| Keywords: | idle time, moral hazard, multi-server systems, non-monetary incentives, optimal scheduling, strategic servers |
| JEL: | D82 J24 C73 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:bge:wpaper:1535 |
| By: | Afiq bin Oslan |
| Abstract: | Developed nations often position themselves as leaders in green movements and legislate protections for their local environment. In some cases, this can have indirect negative consequences as environmentally-harmful behaviours are simply displaced abroad. This paper argues, from a political-economic perspective, that the local environment in developed states may also become neglected as a result of the same policies as new regulations diminish the economic value of local environments. I demonstrate this phenomenon in a series of simple game-theoretical models where stakeholders of environmental resources respond to the policies of two trade partner governments. The models show that environmentally-conscious governments might have their green policies backfire — resulting in environmental neglect if the preferences of those directly managing environmental resources are not in sync. Thus, in their attempt to hide trade behind green rhetoric, developed nations may be promoting environmental neglect at both ends of the trade route. Discussions of the wood industry in post-war Japan and the EU Forest Strategy for 2030 supplement the models. |
| Keywords: | environmental politics, green-washing, renewable resources, political economy, game theory |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:mpi:wpaper:tax-mpg-rps-2024-09 |
| By: | Marco Scaringi; Marco Bianchetti |
| Abstract: | Risk allocation, the decomposition of a portfolio-wide risk measure into component contributions, is a fundamental problem in financial risk management due to the non-additive nature of risk measures, the layered organizational structures of financial institutions and the range of possible allocation strategies characterized by different rationales and properties. In this work, we conduct a systematic review of the major risk allocation strategies typically used in finance, comparing their theoretical properties, practical advantages, and limitations. To this scope we set up a specific testing framework, including both simplified settings, designed to highlight basic intrinsic behaviours, and realistic financial portfolios under different risk regulations, i.e. Basel 2.5 and FRTB. Furthermore, we develop and test novel practical solutions to manage the issue of negative risk allocations and of multi-level risk allocation in the layered organizational structure of financial institutions, while preserving the additivity property. Finally, we devote particular attention to the computational aspects of risk allocation. Our results show that, in this context, the Shapley allocation strategy offers the best compromise between simplicity, mathematical properties, risk representation and computational cost. The latter is still acceptable even in the challenging case of many business units, provided that an efficient Monte Carlo simulation is employed, which offers excellent scaling and convergence properties. While our empirical applications focus on market risk, our methodological framework is fully general and applicable to other financial context such as valuation risk, liquidity risk, credit risk, and counterparty credit risk. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.12391 |