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on Game Theory |
| By: | Sam Babichenko |
| Abstract: | In strategic environments with private information, evaluating a change in policy requires predicting how the equilibrium responds -- but when actions reshape opponents' signals, each agent's optimal response depends on an infinite hierarchy of beliefs about beliefs that has resisted exact analysis for four decades. We provide the first exact equilibrium characterization of finite-player continuous-time LQG games with endogenous signals. Conditioning on primitive Brownian shocks rather than the physical state -- a dynamic analogue of Harsanyi's common-prior construction -- collapses the belief hierarchy onto deterministic two-time kernels, reducing Nash equilibrium to a deterministic fixed point with no truncation and no large-population limit. The characterization yields an explicit information wedge $\mathcal{V}^i_t$ -- a deterministic Volterra process -- that prices the marginal value of shifting opponents' posteriors. The wedge vanishes precisely when signals are exogenous to controls, formally delineating the boundary where strategic belief manipulation matters, and provides a closed-form mapping from information primitives to equilibrium outcomes. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2603.12140 |
| By: | Ashfaq, M.; Toxvaerd, F.; Wei, Y. |
| Abstract: | We study collusive agreements in an infinite-horizon model in which firms invest in inventories of intermediate goods and compete in quantities of final goods. Stocks of inventories act as capacity constraints at the time of production but can be replenished for future use through investment. Input stocks simultaneously impact firms' ability to deviate from collusive agreements and their ability to punish such deviations and therefore have ambiguous effects on the sustainability of collusion. We characterize subgame perfect equilibria in grim trigger strategies in which firms potentially hold asymmetric excess inventories on the collusive path. We show that the sustainability of collusive agreements is non-monotone in inventory stocks. While holding excess capacity is costly and unproductive, the practice can improve firms' ability to sustain anticompetitive agreements. |
| Keywords: | Collusion, Cartels, Inventories, Capacity Constraints |
| JEL: | L13 L41 D25 |
| Date: | 2026–02–27 |
| URL: | https://d.repec.org/n?u=RePEc:cam:camdae:2612 |
| By: | Jeong, Kyungcheol |
| Abstract: | This paper discusses a model where mutation occurs in the population due to "collision", such as immigration, the introduction of new technology, and environmental changes. The proportion of mutations in the population is determined by a parameter called "plasticity", and the population goes to a long-run equilibrium through Darwinian adjustment after the collision. This paper shows that having plasticity can be better than maintaining the existing convention in the long-run equilibrium even when the existing convention is more successful than the average mutation. |
| Keywords: | Learning, evolution, convention, social choice |
| JEL: | C73 D71 D83 |
| Date: | 2026–02–21 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:128254 |
| By: | Banerjee, Sreoshi; Trudeau, Christian |
| Abstract: | We examine the implications of extending the queueing and scheduling problems from the single-server to the multiple-server cases. In particular, we discuss three assumptions on job divisibility: jobs can be assumed to be indivisible (must be processed continuously on a single server), discretely divisible (a job can be divided in a series of unit-length tasks that can be processed simultaneously on multiple servers) or continuously divisible (a job can be divided in intervals as small as desired). We examine if the corresponding optimistic and pessimistic cost functions (in which we assume that a group is served first and last, respectively) satisfy the properties of convexity/concavity and 2-additivity. Our results show that with multiple servers, while all properties hold under continuous divisibility, they largely fail otherwise. In particular, 2-additivity does not carry over, and pessimistic functions are no longer concave. Optimistic functions retain the convexity property in most cases. These negative results indicate that multi-server problems require fundamentally new analytical approaches, as single-server techniques do not generalize. We also establish that the anticore of the optimistic function is always a non-empty subset of the core of the pessimistic function, providing bounds even when classical properties fail. |
| Keywords: | waiting line, scheduling, queueing, (in)divisible jobs, multi-server, cooperative game, cost sharing |
| JEL: | C7 C71 D3 D6 |
| Date: | 2026–02–14 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:128053 |
| By: | Christopher P. Chambers; Maxime Cugnon de S\'evricourt; Christopher Turansick |
| Abstract: | In this paper, we study which data can be induced by a correlated equilibrium given a known finite simultaneous move game. We assume that an analyst has access to the frequency of each agent's actions but does not have access to the distribution over joint action profiles. We characterize which sets of marginal distributions over actions arise from some correlated equilibria via a type of no arbitrage condition. An outside observer is unable to make a profit in expectation by independently contracting with each agent and collecting a portion of the total utility gained via unilateral deviation. This characterization naturally extends to Nash equilibria. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2603.02113 |
| By: | M. Beatrice Lignola (University of Naples Federico II); Jacqueline Morgan (University of Naples Federico II and CSEF) |
| Keywords: | Multi-Leader-Multi-Follower game - Pessimistic behavior - Variational inequality -Minty variational inequality - Approximate solution - Viscosity solution |
| Date: | 2026–03–05 |
| URL: | https://d.repec.org/n?u=RePEc:sef:csefwp:772 |
| By: | Haruvy, Ernan; Heinrich, Timo; Walker, Matthew J. |
| Abstract: | This paper studies hold-ups in markets where sellers may impose undisclosed surcharges. While prior work has examined price transparency’s role in market outcomes, the distinct effect of a transparency norm—separate from a fairness norm—remains unestablished. We formulate a simple model that separates these norms and characterizes their equilibrium implications across different market settings. The model shows that price competition yields higher buyer surplus than ultimatum bargaining and that this surplus increases with transparency concerns but decreases with fairness concerns because of softened competition. Compulsory surcharges cannot be higher in bargaining, as sellers prefer a higher price to a higher surcharge as long as it does not change the buyer’s probability of acceptance. Experimental results confirm the transparency norm’s influence: Total prices are lower with price competition, and surcharges are lower with ultimatum bargaining. Additionally, surcharges rise when pricing is outside of the seller’s control. Estimates of the behavioral parameters reveal that sellers weigh transparency at least as heavily as fairness. The results imply that firms fearing hold-ups should still procure goods and services in competitive market structures. |
| Keywords: | surcharge, transparent pricing, fairness, social norm, hold-up, procurement |
| JEL: | C91 D47 D82 L14 M55 |
| Date: | 2026–01–05 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127601 |
| By: | Dohmen, Thomas (University of Bonn); Meyer, Frauke (Eilert-Academy, Berlin, Germany); Walkowitz, Gari (Department of Business and Economics, Technical University Bergakademie Freiberg; Department of Management, Technical University of Munich) |
| Abstract: | This paper provides clear evidence that concerns for basic needs satisfaction (BNS) represent a distinct distributional motive. Using a unified theoretical and experimental framework across five dictator-game experiments in Germany and Georgia (N=446), we disentangle BNS from motives such as maximin, selfishness, efficiency, generosity, and envy. A substantial share of participants displayed BNS-driven choices and were willing to forgo income and efficiency to satisfy others’ basic needs. BNS remained robust across contexts, incentive schemes, and countries, and increased when needs satisfaction had strategic relevance. The results highlight the importance of BNS for understanding distributional preferences and policy design. |
| Keywords: | basic needs, redistribution, distributional motives, maximin, public policy, field experiment, laboratory experiment |
| JEL: | D31 D63 H23 C93 C91 D01 D91 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18409 |
| By: | Shoji Haruna; Rajeev K. Goel; Kenta Yoshioka |
| Abstract: | Firms’ efforts to reduce pollution emissions in their production processes are induced by market forces as well as governmental regulatory instruments. The market forces, which might induce firms to increase production to maximize profits, work at cross-purposes. One of the common solutions is that firms resort to R&D investment, which lowers production costs with greater pollution being an unwelcome by-product (the tax burden effect). Pollution abatement (PA) investment, which is another solution, focuses on reducing emissions, with no direct impacts on production costs. We evaluate whether R&D investment effectively plays a role in profit maximization depends on the tax burden effect. Besides, judging from a socio-economic perspective, the PA strategy is significantly superior to the R&D strategy when (pollution) damage cost parameters are medium or high. However, the reverse result holds when they are small. Our findings thus formally flesh out the implications of choosing R&D versus PA strategies in response to pollution control regulations. |
| Keywords: | R&D, cost-reduction, pollution abatement, emissions taxes, Nash equilibrium |
| JEL: | Q58 H23 O33 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12528 |