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on Game Theory |
| By: | Kyoung-Kuk Kim; Donghwa Seo |
| Abstract: | We analyze intentional block delays (mining gaps) in Proof-of-Work blockchain systems, where miners strategically balance mining rewards against operational costs. Using a game-theoretic model, we derive a Nash equilibrium with optimal mining strategies and establish necessary and sufficient conditions for mining gap existence. We demonstrate that mining gaps, when combined with difficulty adjustment algorithms, can destabilize the system. We propose conditions to address sustainability concerns as block rewards decrease and reliance on transaction fees increases. Our findings are illustrated through a two-player game simulation and an analysis of the Bitcoin network, providing insights for blockchain design and policy. This work contributes to understanding strategic mining behavior and its impact on blockchain stability and efficiency. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2606.03153 |
| By: | Tai-Wei Hu (Department of Economics, University of Bristol, UK); Mamoru Kaneko (Waseda University, Tokyo, and University of Tsukuba, Tsukuba, Japan) |
| Abstract: | We explore the conceptual bases of the Nash (noncooperative) theory. To emphasize the conceptual issues, we compare it to the rationalizability theory. Both theories target individual ex ante prediction/decision making in a game. We pinpoint their difference in the treatment of an inside player’s prediction-making, with respect to the quantifiers “for all” and “for some”, about the other’s prediction/decision. We argue that the Nash theory follows the fundamental postulate that each player respects the other as an independent decision-maker, and that this independence is captured in the corresponding prediction/decision criterion. The rationalizability theory is based on a different conceptual base; the quantifier “for some” is highly speculative. We will discuss other conceptual bases of the Nash theory from various points of view, which suggest further developments along the line of the Nash theory. |
| Keywords: | Nash equilibrium, Nash solution, Subsolution, Rationalizable Strategy, Prediction/decision Making, Theory of Mind |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:wap:wpaper:2603 |
| By: | Gabriele Camera (ESI, Chapman University); Gary Charness (UC Santa Barbara); Nir Chemeya (Ben-Gurion University of the Negev); Ro'i Zultan (Ben-Gurion University of the Negev) |
| Abstract: | We propose a novel game, the Dictatorial Public Goods Game, to study the interplay between collective resource generation and centralized provision of public goods. After making choices in a standard VoluntaryContribution Mechanism (VCM), one player is selected from the group to administrate the contributions: either provide the public good or expropriate the collected resources for personal gain. We find that adding this centralized mechanism reduces efficiency compared to the standard VCM. Although higher contributions increase the material incentive to expropriate, they lead to more provision. Thus, pro-social choices in the contribution and in the provision stages act as complements, reflecting the generation of social capital in the group. Administrators tend to provide more when the statutory default is expropriation rather than provision. This counter status-quo effect is in line with the standard provision-maintenance gap in the literature, but is not explained by the theoretical arguments typically invoked to explain such framing effects. |
| Keywords: | group decision-making, public goods, repeated games, institutions, framing |
| JEL: | C92 H41 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:chu:wpaper:26-05 |
| By: | Zhicheng Du; Hu Fu; Ying Qin; Zihe Wang |
| Abstract: | Advertisements often strategically disclose information to consumers who make decisions on further information acquisition and eventual purchase. Anderson and Renault (2006) model this problem using an information design framework, where the advertiser acts as a sender and the consumer as a receiver. We extend this model to a competitive setting with horizontally differentiated senders competing for a unit-demand receiver. Under costly inspection, the receiver's optimal sequential search action is given by Weitzman's Index Algorithm. We give a method, based on duality arguments, to verify whether a sender's given information strategy constitutes a best response against his competitors (other senders). We establish the existence of an equilibrium in the game among senders when the prior distributions have no mass; we also illustrate that such equilibria may exhibit intricate behaviors. Finally, we meticulously characterize symmetric equilibria played by the senders for cases when the prior distributions have monotone increasing densities, while offering economic intuitions behind the insightful equilibrium structure. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2606.03527 |
| By: | Irene Aldridge |
| Abstract: | We develop a game-theoretic framework that compares welfare efficiency across three market mechanisms: continuous double auctions with transparent order books (lit exchanges), opaque order books (dark pools), and periodic batch auctions. Each mechanism is modeled as a queuing system where heterogeneous traders face trade-offs between the execution price, waiting costs, and transaction costs. Our main result establishes that under moderate arrival rates and bounded adverse selection, dark pools dominate both alternatives in aggregate ex-ante welfare. Observable order books create costly strategic timing games in which traders delay or rush submissions to optimize their position in the queue, generating wasteful social waiting costs. Opaque order books eliminate these timing games through information design. We formally characterize the equilibrium strategies in each mechanism and prove the welfare ranking $W^{DARK} > W^{LIT} > W^{BATCH}$. Extensions incorporate asymmetric information and endogenous venue choice. The results demonstrate how the information structure and the discipline of the service jointly determine efficiency in strategic matching environments. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.31072 |
| By: | Rommin Adl; Peyton Williams |
| Abstract: | What happens when the strongest alliance member pressures a weaker member over territory and strategic control? We examine the Greenland sovereignty crisis as a stress test for LLM geopolitics, centered on the 2019-2026 U.S. push to acquire Greenland from the Kingdom of Denmark. The crisis nests two collective-action problems: Arctic strategic control and whether NATO can enforce alliance norms against the dominant member. We develop three games (asymmetric coercion; a NATO assurance game with a critical-mass tipping point; a triadic extensive-form game with social preferences) and test them with a multi-agent simulation in which eight frontier LLMs play six geopolitical roles (United States, Denmark, Greenland, NATO, Russia, Canada) across 3, 604 completed games and 108, 120 action observations. Using inverse game theory, we recover each model's structural utility parameters (alpha, beta, gamma, delta, eta) for material self-interest, reciprocity, inequality aversion, norm respect, and commitment consistency. Three findings stand out. First, all eight models become more escalatory under coercion framing (four-action escalation rises from 10.7% to 28.6%). Second, Chinese-origin models show systematically different power-weight profiles from Western-origin models when playing the U.S. role. Third, peaceful US acquisition emerges in only 1.9% of clean games and only 3 of 8 frontier models ever achieve it, most prominently DeepSeek V3.2, which executes a stable five-round playbook through the metropole. Prompts emphasizing jus cogens and self-determination reduce escalation back near baseline in the English-only confirmatory sample; multilingual contrasts are reported as exploratory sensitivity checks. We position this as a structural benchmark for LLM geopolitical behavior, complementing action-frequency benchmarks. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.22841 |
| By: | Ronen Gradwohl; Fengming Hu; Rann Smorodinsky |
| Abstract: | We study the robustness of Bayesian persuasion to uncertainty about the receiver's preferences. We analyze two conceptually distinct notions: continuity, in which only the modeler lacks precise knowledge, but where the model's predictions are nonetheless accurate; and robustness, in which the sender also lacks precise knowledge, but where the outcome is insensitive to this ignorance. We model preference uncertainty as infinitesimally small, non-probabilistic (Knightian) uncertainty, and the sender's behavior as either minimizing the regret or maximizing the minimum utility. We show that continuity holds if and only if robustness holds, and that both notions are generic. Thus, while some instances of Bayesian persuasion are fragile, typical instances are both continuous and robust with respect to a small amount of ignorance. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.28265 |
| By: | Frank M. V. Feys |
| Abstract: | The space L of linear value maps on a finite-player cooperative game G^N is finite-dimensional, and admits a canonical inner product induced by the Harsanyi-dividend decomposition of G^N. We show that this inner product is intrinsic: the same value arises from any orthonormal basis of G^N with respect to the Harsanyi inner product. Within this geometry, the subspace L^{ESL} of efficient, symmetric, linear value maps admits a clean structure theorem. The induced orthogonal stratification of L by coalition size yields a canonical linear isomorphism L^{ESL} = R^{n-1}, under which every efficient symmetric linear value map decomposes uniquely into n-1 stratified epsilons, one per coalition size. The classical egalitarian Shapley family of Joosten (1996) is precisely the diagonal slice of this R^{n-1}. The orthogonal projection of any Psi in L^{ESL} onto this diagonal yields an optimal parameter eps*(Psi) equal to the weighted mean of the stratified epsilons under an explicit probability distribution {w_a} over coalition sizes, and the goodness-of-fit R^2(Psi) equals one minus the relative weighted variance of those epsilons. The framework is a literal regression-statistics analogue of the coefficient of determination. At n=4 it produces a clean three-way classification of the standard alternatives to the Shapley value: the Banzhaf value is nearly orthogonal to the egalitarian Shapley axis (R^2 ~ 1%); the equal-surplus-division value is moderately aligned (R^2 ~ 38%); the solidarity value is almost entirely aligned (R^2 ~ 99.6%). Asymptotically R^2(ESD) -> 1, R^2(So) -> 1, and R^2(Bz) -> 1/2, the last reflecting a structural identity between the efficiency defect and the egalitarian-Shapley deviation of the Banzhaf value at every coalition size. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.22847 |
| By: | Jamie Tucker-Foltz; Richard Zeckhauser |
| Abstract: | A single seller offers one or more goods to a single buyer. The buyer's values and the seller's costs are private information. Each player has a commonly known prior over the other player's value or cost, supported on a finite set. What is the optimal selling mechanism? We argue that, despite this question's importance and apparent simplicity, prior work offers no satisfactory answer. If the seller simply chooses an optimal menu given her realized costs, she fails to exploit her informational advantage. At the other extreme, the optimal trade mechanism that satisfies IC/IR constraints for both parties fails in practice, as it conditions prices on the seller's unknown costs in an unenforceable way. The seller's realistic capabilities lie somewhere in between: she may leverage private information but lacks unlimited commitment power. To bridge this gap, we consider a solution concept built on the realistic assumption that the seller can commit to prices but nothing more. Similar -- albeit technically distinct -- solution concepts have been studied in the context of auctions with multiple buyers. Our concept proves surprisingly rich even with a single buyer. In our model, the buyer and seller engage in multiple rounds of cheap talk before the seller posts a menu of priced bundles. The buyer then purchases. We measure value as profit for the seller and consumer surplus for the buyer. We prove that with a single good cheap talk cannot help either party, but show that it creates value in any extension of this canonical setting: multiple goods, multiple units, interdependent values, or repeated play. We also show that multiple rounds of communication can yield strictly higher expected profit than a single round. Finally, we discuss how realistic factors beyond our stripped-down model combine with cheap talk to enhance this value even further. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2606.01250 |
| By: | Christopher Blier-Wong; Jean-Gabriel Lauzier |
| Abstract: | While risk pooling lowers the total cost of risk, efficiency alone does not make a pool viable. Participants need terms that ensure their participation, that are immune to subgroups breaking away, and that allow new members to join. Under cash-additive risk measures, the minimum cost of a coalition's risk determines the value created by that coalition, and deterministic side payments redistribute that value among participants. Institutional risk sharing is thus a transferable-utility cooperative game. We prove that the game is totally balanced whenever the risk measures are convex (agents are risk averse), so every coalition has a nonempty core and stable allocations always exist. We then analyze entry monotonicity through Population-Monotonic Allocation Schemes (Sprumont, 1990), a strong requirement that is notoriously difficult to construct and has received limited attention in risk sharing. We find several structural conditions that ensure that either the Arrow--Debreu pricing surplus allocation rule or the proportional-cost surplus allocation rule satisfies this entry-monotonicity property, the latter being a novel cooperative notion we propose. These verifiable structural conditions naturally arise in pooled (re)insurance and credit portfolios, providing pool designers with a practical toolkit for building risk pools that remain stable and attractive as they expand. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2606.00972 |
| By: | Yong Zhang; Xinxiao Wu; Yunde Jia; Che Sun |
| Abstract: | Accurate stock price forecasting has consistently remained a pivotal yet challenging FinTech task that underpins quantitative trading and investment decision making. Recent efforts have been dedicated to modeling various complex relationships among stocks in the stock market toward more reliable stock price forecasting.These methods depend heavily on strong static prior assumptions by modeling either temporal dependencies within individual stocks or spatial dependencies across different stocks based on predefined structures, while the complex market dynamics that drive stock price movements remain unexplored. To alleviate this issue, we propose a novel game-theoretic modeling method that captures heterogeneous investor interactions for stock price forecasting. The core idea is to embed game-theoretic mechanisms into the heterogeneous graph structure to finely model the dynamic strategic interactions among heterogeneous investors with respect to target stocks. Additionally, temporal positional encoding is adopted to reflect the differentiated influences of each game event at different time steps within the time window on future stock price movements. Leveraging heterogeneous graph networks, we proxy the intricate dynamics of the stock market through investor games and enable real-time information propagation and node updates among all nodes. Extensive experiments conducted on two real-world benchmark dataset demonstrate that our method effectively outperforms state-of-the-art stock price forecasting methods. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.23953 |
| By: | Ilia Shilov; Heinrich H. Nax; Saverio Bolognani |
| Abstract: | The Price of Anarchy (PoA) is a popular measure of the costs of decentralization in terms of efficiency losses. Almost all PoA analyses operate within a framework assuming both Cardinal Full-Comparability (CFC) and smoothness, in which case any derived bounds conveniently extend beyond pure Nash to coarse correlated equilibria and no-regret learning outcomes. However, interpersonal utility comparability is an additional assumption that generally has to be justified. Without it, cardinal utilities (e.g. defined under classical von Neumann--Morgenstern framework) are unique only up to agent-specific affine transformations, rendering both the utilitarian PoA and the classical smoothness conditions representation-dependent. In this paper, we operate under a more general Cardinal Non-Comparability (CNC) framework, under which the weighted Nash welfare is a canonical admissible aggregator. We introduce multiplicative smoothness, a product-form condition matched to the multiplicative structure of Nash welfare, and obtain PoA bounds that are CNC-invariant and extend to coarse correlated equilibria. We demonstrate applicability of our framework on single-choice welfare games, deriving the bounds through simple proof relying on multiplicative retention envelope and geometric closure. The interpretation of this bound in terms of the true cost of decentralization depends crucially on interpersonal comparability of utilities. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2606.11397 |
| By: | Yoshio Kamijo (Faculty of Political Science and Economics, Waseda University); Daiki Kishishita (Graduate School of Economics, Hitotsubashi University); Satoru Shimokawa (Faculty of Political Science and Economics, Waseda University) |
| Abstract: | This paper identifies a fundamental expert communication dilemma: citizens distrust consistent advice as a signal of bias, yet distrust revision as indicating limited knowledge. We formalize this in a repeated cheap-talk model with bias uncertainty and gradually accumulating evidence. Theoretically, perfect compliance obtains without private information but collapses otherwise. Experiments reveal the dilemma is more severe than predicted, emerging even without private information. Importantly, private signals do not reduce welfare but instead filter incorrect advice. Finally, compliance substantially recovers with algorithmic advisors, suggesting automated advice mitigates communication failures in controversial policy environments. |
| Keywords: | Reputational cheap talk; Expert advice; Informed receiver; Algorithmic advice; Experiment |
| JEL: | D83 C92 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:wap:wpaper:2532 |
| By: | Jean-Marie Baland (Development Finance and Public Policies, University of Namur); Marie Boltz (BETA, University of Strasbourg); Catherine Guirkinger (Development Finance and Public Policies, University of Namur); Anna Jolivet (Development Finance and Public Policies, University of Namur); Roberta Ziparo (AMSE, Aix-Marseille University) |
| Abstract: | Non-participation in household decisions is commonly interpreted as weak empowerment. We challenge this interpretation by showing that non-participation can be a strategic choice — a form of delegation — when a spouse expects the decision outcome to be sufficiently close to her preferences regardless of her involvement. We propose a model of imperfect information and derive conditions under which delegation arises in equilibrium: it occurs when the opportunity cost of participation in the decision is large compared to the preference gap between spouses. A key implication is that the spouse who receives authority may achieve lower welfare than the one who delegates. We test these predictions in two incentivized experiments conducted among couples in Belgium/France and Benin, finding strong support across both contexts. Survey evidence further confirms the external validity of the results. Our findings suggest that standard survey measures of intra-household bargaining, by conflating strategic delegation with disempowerment, may incorrectly reflect the distribution of power within households. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:nam:defipp:2605 |
| By: | David Green; Ben M. Sand; Iain Snoddy; Jeanne Tschopp |
| Abstract: | In this paper, we provide new estimates of the impact of unions on non-union wage setting. We allow the presence of unions to affect non-union wages both through the typically discussed channel of non-union firms emulating union wages in order to fend off the threat of unionisation and through a bargaining channel in which non-union workers use the presence of union jobs as part of their outside option. We specify these channels in a search and bargaining framework that includes union formation and the possibility of non-union firm responses to the threat of unionisation. Our results indicate an important role played by union wage spillovers in lowering wages over the 1980-2010 period. We find that de-unionisation can account for nearly a third of the decline in the mean hourly wage between 1980 and 2010 in the US, with half of that effect being due to spillovers. Both the traditional threat and bargaining channels are operational, with the bargaining channel being more important. |
| Keywords: | union; spillovers |
| JEL: | J31 J51 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:26156 |
| By: | Batabyal, Amitrajeet |
| Abstract: | We study pollution cleanup investments, signaling, and the resilience of the Ganges river when investors differ in capability and cleanup projects differ in their ability to enhance resilience. First, we derive the minimal level of signaling necessary to sustain a separating equilibrium in which the government agency can distinguish between more and less capable investors. Larger cleanup efforts require greater signaling, although the marginal increase in signaling declines as the scale of cleanup expands. Second, we analyze the benchmark case in which signaling is impossible. Here, more and less capable investors choose the more resilience enhancing cleanup projects because the expected payment from these projects is larger than the payment from less resilience enhancing projects. Hence, eliminating signaling raises investor welfare and encourages projects that are more beneficial for the resilience of the Ganges. |
| Keywords: | Ganges River, Investment, Pollution Cleanup, Resilience, Signaling |
| JEL: | C72 D82 Q53 |
| Date: | 2026–04–03 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:129356 |