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on Game Theory |
| By: | Laferrière, Vincent; Montez, João; Roux, Catherine; Thoeni, Christian |
| Abstract: | We study cooperation in the presence of coordination needs in indefinitely repeated games. In a laboratory experiment, subjects play a Prisoner's Dilemma and a Stag Hunt in each round, either with different partners (single-game contact) or with the same partner (multigame contact), creating strategic interplay across games in the latter case. In theory, multigame contact can strengthen cooperation without undermining coordination as players can link the strategy in one game to their partner’s actions in the other game. In contrast, we observe that multigame contact can reduce both cooperation and coordination rates, and it lowers payoffs. While a significant share of subjects link strategies across games, a large share instead restricts punishment to the game in which the deviation occurred. Such limited deterrence fails to prevent deviations, with occasional cross-game punishment destabilizing both cooperation and coordination and leading to more frequent low-payoff outcomes. |
| Keywords: | Cooperation; Coordination; Indefinitely repeated games; Multigame contact; Experiment |
| JEL: | C72 C73 C91 C92 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20509 |
| By: | Wenjie Cao; Angel Sanchez; Boyu Zhang |
| Abstract: | Real social and economic networks involve individuals with diverse incentives, yet most studies of network games assume homogeneous preferences or few player types. We introduce a general framework for binary choice network games with fully heterogeneous payoff structures. We first show that any such game can be transformed into an equivalent one with conformist, rebel, and stubborn archetypes, preserving equilibria and best response trajectories. We then establish sufficient conditions for pure strategy Nash equilibrium existence and convergence of best response dynamics on arbitrary networks, while proving that equilibria almost surely vanish in large sparse random networks. We further develop a deterministic approximation approach that predicts evolutionary trends and equilibrium strategy frequencies from network homophily and heterophily patterns, without computing equilibria explicitly. Extending the framework to limited information, we prove that dynamics converge either to a unique limited information equilibrium or to a unique stationary distribution, and we derive necessary and sufficient conditions for the existence of the limited information equilibrium. We validate our predictions using Prisoner's Dilemma games on real social networks that incorporate heterogeneous altruism and peer influence. These findings together provide a unified framework for equilibrium existence, evolutionary dynamics, and equilibrium outcome prediction in heterogeneous network games. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2607.05932 |
| By: | Franziska Lesigang; Christian Hilbe; Nikoleta E. Glynatsi |
| Abstract: | In this paper, we study reactive strategies in repeated additive games between two players with finitely many actions. Reactive strategies condition only on the opponent's previous action, making them one of the simplest ways players can respond to past interactions. Additive games include important models of cooperation, such as the donation game and games with a punishment option. We show that, for this class of games and strategies, the conditions for symmetric Nash equilibria reduce to a system of linear equalities and inequalities in the strategy parameters, allowing us to characterise all such equilibria. We establish a one-to-one correspondence between non-empty subsets S of the action set and equilibrium classes, which we call S-supporting equilibria. These are equilibria that use exactly the actions in S when playing against themselves. As a special case, we recover the well-known equalizer strategies as the equilibria supported on the entire action set. To assess which equilibrium classes are most evolutionarily relevant, we complement our analytical characterisation with simulations of social learning dynamics. We find that their prevalence is determined by two factors: how likely they are to be generated and how robust they are against invasion. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2606.27653 |
| By: | Aguirre, Iñaki |
| Abstract: | We study the strategic choice of spatial price policy (uniform pricing versus spatial price discrimination) in a linear city with quadratic transport costs and endogenous locations, under two alternative three-stage game orderings (following Eber, 1997). The asymmetric subgame (in which one firm discriminates while the other prices uniformly) is solved via the mixed-strategy Nash equilibrium under simultaneous price competition, replacing the Stackelberg standard of Thisse and Vives (1988). In Game I (location-pricing policy-prices), the policy game is a coordination game: both are Nash equilibria but mutual uniform pricing Pareto dominates mutual discrimination. This overturns the Prisoner’s Dilemma that arises under the Stackelberg standard, in which price discrimination is a dominant strategy. In Game II (pricing policy-location-prices), mutual uniform pricing is the unique equilibrium. |
| Keywords: | Price Discrimination, Prisoner’s Dilemma, Location Choice, Mixed-Strategy Nash Equilibrium. |
| JEL: | D43 L13 R32 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:129636 |
| By: | Songzi Du |
| Abstract: | A Nash equilibrium is learnable if there exists a myopic adjustment dynamic for which it is asymptotically stable. In generic symmetric two-player games, a Nash equilibrium is learnable if and only if it has index +1. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2606.22701 |
| By: | Shan Pei; Wenjie Cao; Boyu Zhang |
| Abstract: | In this paper, we analyze a multi-strategy network game with three types of players, conformists, rebels, and stubborn agents. Conformists adopt the strategy that is most common among their neighbors, rebels adopt the least common, and stubborn agents adhere to a fixed strategy. We study the existence and structure of pure strategy Nash equilibrium (PNE). On arbitrary networks, we establish sufficient conditions for PNE existence, and we prove that in large random networks PNE almost surely fails to exist. For several specific network architectures, such as complete network, lines, rings, trees, and stars, we derive necessary and sufficient conditions for PNE existence and fully characterize the equilibrium strategy frequencies. Collectively, these results offer a unified perspective that PNE is likely to exist when every conformist has more conformist and stubborn neighbors, and fails when the network game has numerous conformist-rebel edges. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2607.10997 |
| By: | Koessler, Frédéric; Skreta, Vasiliki |
| Abstract: | We consider a privately informed sender selecting a mediated communication device to influence players’ actions. In contrast to standard information design, there is no ex-ante commitment, and the communication device relies on information elicited from the informed parties. We define an informed communication equilibrium (ICE) as a perfect Bayesian equilibrium outcome of the informed mediated communication game. We show that the set of ICE is the subset of communication equilibria (CE) that yield sender payoff vectors bounded below by an equilibrium payoff vector of the silent game, under some consistent interim beliefs. The principal’s ex-ante optimal CE may not be an ICE. In sender-receiver games, the set of CE payoff vectors lies in the convex hull of the set of payoff vectors above silence. Hence, if the latter set is convex, as is the case when the sender has transparent motives, the sets of CE and ICE coincide. |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20455 |
| By: | Nocke, Volker; Schutz, Nicolas |
| Abstract: | We develop a potential games approach to multiproduct-firm pricing games. We introduce the concept of transformed potential and characterize classes of demand systems that give rise to pricing games admitting such a potential. The resulting demand systems may contain nests (of closer substitutes) or baskets (of products that are purchased jointly), or combinations thereof. These demand systems allow for flexible substitution patterns, and can feature product complementarities arising from joint purchases and substitution away from the outside option. Combining the potential games approach with a competition-in-utility approach, we derive powerful results on existence and uniqueness of a pure-strategy Nash equilibrium. |
| Keywords: | Multiproduct firms; potential game |
| JEL: | L13 D43 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20527 |
| By: | Zijun Meng |
| Abstract: | This paper studies a cheap-talk model of strategic test announcements. A teacher observes the day of the test of the next week decided by the nature and makes an announcement to his students who choose effort levels of studying. The competing forces are the teacher's value on consistent study habits and the students' grade orientation. We characterize the pure strategy Nash equilibrium under the linear-quadratic student utility. We also study what happens when the teacher can commit to an information policy. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2606.22434 |
| By: | Dorje C. Brody |
| Abstract: | A game of information concerns two players transmitting messages that are obscured by noise. A receiver digests the combination of the two information sources and makes an assessment rationally. The aim of the players is to generate opposing assessments for the receiver by choosing signal-to-noise ratios of their information. It is shown that this problem can be reduced into an elementary infinite game on the square, thus admitting a complete equilibrium solution. Three generalisations of the game are proposed. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2606.15936 |
| By: | Jingyu Liu; Bolin Zhang; Lin William Cong; Siguang Li; Xuechao Wang |
| Abstract: | Ethereum's Glamsterdam upgrade introduces enshrined proposer-builder separation (ePBS), replacing relay-centric PBS with direct builder bids to proposers. We study how this shift changes the block-building microstructure through a general imperfect-information two-stage auction with verifiable messages, where an early bid serves as both a price offer and a signal. PBS and ePBS are modeled as restrictions of the same block-building game: PBS fixes stopping and disclosure exogenously, while ePBS lets the proposer choose stopping and disclosure ex post. Latency heterogeneity is captured by asymmetric information updates: fast builders observe disclosed early information before rebidding, while slow builders do not. We combine exact perfect Bayesian equilibrium characterizations in tractable cases with calibrated no-regret learning in finite games. For PBS, we show that separating equilibria preserve the standard first-price-auction payoff benchmark and provide conditions for their existence. For ePBS, we demonstrate a ratchet effect: because the proposer can defer block proposal and use early bid information in the second stage, builders anticipate ex-post extraction and shade or pool early bids, generating allocation inefficiency and revenue-efficiency valleys. We interpret this ratchet distortion as a commitment failure. Under full commitment, the optimal policy collapses to the static Myerson auction and removes the ratchet channel. To realize part of this commitment advantage in a feasible mechanism, we propose a Trusted Execution Environment (TEE) sidecar that enforces limited commitment. We formulate the revenue-maximizing TEE mechanism as a bilinear optimization problem. In conservative finite benchmarks, the TEE design increases the proposer revenue relative to the first-price benchmark by approximately \(25\%\). |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2607.11240 |
| By: | Domenico DeGiovanni (Aarhus University School of Business and Social Sciences; Universita degli Studi della Calabria); Richard R. Ruble (EM Lyon (Ecole de Management de Lyon)); Dimitrios Zormpas (University of Macedonia Department of Economics) |
| Abstract: | We introduce overlapping ownership into a sequential move duopoly and find conditions where internalization has positive welfare effects in contrast with other standard oligopoly models. Internalization of rival profits softens follower output and entry decisions, inducing more aggressive leader behavior. In Stackelberg equilibrium follower internalization raises total output and welfare provided the follower is active. The effect is stronger if demand is more convex which makes the follower less responsive. In an entry deterrence setting, higher symmetric internalization that shifts equilibrium from accommodation to deterrence raises welfare relative to a benchmark with independent firms. Product differentiation attenuates the first effect but is necessary for the second effect if firms compete in prices. |
| Keywords: | entry deterrence; overlapping ownership; Stackelberg; |
| JEL: | D25 G32 L13 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:mcd:mcddps:2026_10 |
| By: | Fabien Prieur (CEE-M) |
| Abstract: | We develop a dynamic model of exhaustible resource exploitation, with exploration, in which a regulator determines the end date of the fossil regime by trading off industry profits against climate damages. The weight assigned to damages reflects the fossil industry's pre-existing political influence. We compare Nash and Stackelberg interactions between the industry and the regulator. Under Nash behavior, regulation shortens the fossil regime and reduces cumulative emissions relative to the unregulated benchmark. Under Stackelberg leadership, however, a monopoly may increase exploration relative to the Nash outcome in order to delay the transition. Calibrating the model to global oil market data, we obtain that strategic leadership increases reserves by approximately 7% relative to the Nash outcome and delays the transition by about 2-3 years. The analysis thus provides an explanation for sustained upstream fossil fuel investment despite announced net-zero commitments. |
| Keywords: | exploration, energy transition, political influence, Nash vs Stackelberg interaction, |
| JEL: | D72 C73 Q54 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:fae:wpaper:2026.05 |
| By: | Attar, Andrea; Campioni, Eloisa; Mariotti, Thomas; Pavan, Alessandro |
| Abstract: | We study the design of market information in competing-mechanism games. We identify a new dimension, private disclosures, whereby the principals asymmetrically inform the agents of how their mechanisms operate. We show that private disclosures have two important effects. First, they can raise a principal's payoff guarantee against her competitors' threats. Second, they can support equilibrium outcomes and payoffs that cannot be supported with standard mechanisms. These results call for a novel approach to competing mechanisms, which we develop to identify a canonical game and a canonical class of equilibria, thereby establishing a new revelation principle for this class of environments. |
| JEL: | D82 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20450 |
| By: | Domenico DeGiovanni (Aarhus University School of Business and Social Sciences; Universita degli Studi della Calabria); Richard R. Ruble (EM Lyon (Ecole de Management de Lyon)); Dimitrios Zormpas (University of Macedonia Department of Economics) |
| Abstract: | We show how common ownership fundamentally transforms entry in an uncertain market from sequential preemption into a regime of coordination with contest-like dynamics. We do this by studying an industry with three firms facing a stochastically evolving demand that internalize the effect of their entry and output decisions on rivals. Equilibrium exhibits an accordion effect with respect to internalization: common ownership softens the last entry, intensifies competition at the duopoly stage, and ultimately slows down first market entry, reducing overall dynamism. But unlike in two-firm industries, a coordination equilibrium emerges at the duopoly stage if option value is high enough. The contest-like dynamics in this equilibrium accelerate first entry and raise welfare. |
| Keywords: | accordion effect; business dynamism; common ownership; investment underuncertainty; preemption games; real options |
| JEL: | D25 G32 L13 |
| Date: | 2026–11 |
| URL: | https://d.repec.org/n?u=RePEc:mcd:mcddps:2026_11 |
| By: | Charles Nolan |
| Abstract: | The "financial trilemma" asserts that deep financial integration, purely national financial policies and financial stability cannot simultaneously be achieved. Existing formalizations employing ex post burden-sharing games imply the trilemma result hinges on equilibrium selection. We develop a minimal ex ante prudential-effort model where financial integration amplifies cross-border crisis risk and national regulators internalise only part of global losses. The unique symmetric Nash equilibrium underprovides prudential effort and cannot deliver first-best stability when both integration and national policy autonomy are high. That provides a unique-equilibrium foundation for the financial trilemma and clarifies when supranational prudential arrangements are needed. |
| Keywords: | financial trilemma, financial stability, prudential coordination |
| JEL: | F33 G28 H41 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:een:camaaa:2026-51 |
| By: | Kirchsteiger, Georg; Lenaerts, Tom; Suchon, Remi |
| Abstract: | Experimental evidence shows that in a repeated dilemma setting cooperation is more likely in small matching groups than in large ones. This result holds even if cooperation is an equilibrium outcome for all investigated group sizes. But what happens if small matching groups are merged to become large ones? Our paper is based on the idea that due to behavioral spillovers, a large group created by a merger of small groups is more likely to cooperate than a large group of similar size that is created directly. We tested this idea experimentally in the context of an infinitely repeated prisoner’s dilemma game. We compared the cooperation behavior of groups that result from mergers of smaller groups with the cooperation behavior of groups with constant group size. We found that cooperation levels were significantly higher in large groups that resulted from gradual growth than in large groups of the same size that were directly created. Looking at the individual behavior, we see that more subjects adopt lenient strategies when the group size increases than when it is already large from the beginning. Hence, our results confirm the idea that cooperation is much more likely to be achieved when groups grow from small to large than when large groups are formed directly. |
| Keywords: | Prisoner's dilemma |
| JEL: | C73 C92 D23 D90 L22 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20326 |
| By: | Tianhang Lu; Han Xiao; Qizhi Fang |
| Abstract: | We study flow games with public arcs, an extension of classical cooperative flow games that allows players to use public resources. In these games, a coalition corresponds to a set of arcs, while certain arcs, called public arcs, can be used freely by any coalition. The value of a coalition is the maximum flow value achievable using the arcs controlled by the coalition along with the public arcs. These games have significant applications in financial, communication, and supply-chain networks. We investigate two solution concepts, the least core and the nucleolus. Both solution concepts provide principled ways to allocate the value of the grand coalition among individual players. We provide characterizations of the least core of these games. We also give a polynomial-time algorithm to compute the nucleolus when the core is non-empty. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2606.23288 |
| By: | Bonatti, Alessandro; Dahleh, Munther; Horel, Thibaut |
| Abstract: | We study linear–quadratic games of incomplete information with Gaussian uncertainty, where each player's payoff depends on a privately observed type and a common state. The designer observes the state, elicits types, and sells action recommendations. We characterize all implementable mechanisms with Gaussian joint distributions of actions and fundamentals, and identify the players-optimal, consumer-optimal, and revenue-maximizing designs. In games of strategic complements (substitutes), these optimal mechanisms maximally correlate (anticorrelate) players’ actions. When type uncertainty is large, recommendations become deterministic linear functions of the state and reports, but remain only partially revealing. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20794 |
| By: | Po Han Teo |
| Abstract: | Large Language Models (LLMs) are increasingly used as stand-ins in behavioural games. These stand-ins rely on the assumption that the LLM's distribution of choices meaningfully matches how humans play the same game. This study tests that assumption through two games. The first is a p-beauty contest, and the second one is a public goods game. The study first investigates five local-model settings within the same model family. These settings are varied together in a 360-cell factorial, which balances temperature, scale (0.5-32B), quantisation, instruct vs base, and framing. Each cell's distribution is then compared against whole choice distributions in published human data. Each deployment setting, except for quantisation, governs a different aspect of fidelity. Mechanically, while the dispersion of human players can be somewhat recovered through deployment settings, the strategic process behind it cannot. Through the lens of the level-k cognitive theory, we find that LLMs act as static, category-retrieved level-k players, where k is set by the model scale. The models also do not run within-game belief-updating or backward induction throughout multiple-round horizon settings. While human contributions decayed in the public goods game, LLMs stayed flat or rose at every scale. When the horizon test was administered, LLMs were more cooperative under an indefinite horizon compared to a finite one. However, LLMs ignore their relative round position, so no last-round defection was displayed. This implies that LLMs retrieved levels relative to the horizon category rather than working out iteratively from the specific game setting. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2606.27845 |
| By: | Yu-Ting Ho |
| Abstract: | We study competition among multiple firms that offer differentiated varieties of the same good to a unit-demand agent. The agent has heterogeneous valuations for goods from different firms. Firms do not observe the agent's exact valuations, but they know their distribution. Firms simultaneously post menus of contracts, after which the agent chooses a firm and one of its contracts to maximize her utility. This defines a game in which firms aim to maximize expected revenue. We introduce a sufficient condition, density-regularity, under which each firm's best response to any arbitrary menu profile posted by its opponents is equivalent to posting a menu that contains only a posted-price contract. Our result is not a direct extension of the canonical Myersonian model with a single seller. The standard argument in the literature breaks down once heterogeneous preferences and competition are introduced. We therefore adopt an optimal-control approach, in which the density-regularity condition is essential for establishing the optimality of posted prices. When this condition fails, posted prices may fail to be a best response. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2606.22720 |
| By: | Flip Klijn |
| Abstract: | We provide a systematic analysis of the conditional acceptance mechanism in the standard school-choice model. Students play a strategic game in which they may submit preference lists of length at most κ (the cap). Equilibrium sets are nested in the cap (Theorem 1) and coincide with the set of stable matchings for κ ≤ 2 (Propositions 1 and 2), whereas unstable equilibrium outcomes can arise for every κ ≥ 3 (Example 2 and Corollary 1). Our main results compare conditional acceptance with deferred acceptance. Ergin-acyclicity is sufficient (Theorem 2), but not necessary (Example 3), for conditional acceptance to implement the set of stable matchings, so conditional acceptance implements the set of stable matchings whenever deferred acceptance does (Corollary 2). Strikingly, under acceptable-only reports, every unstable conditional-acceptance equilibrium outcome is also a deferred-acceptance equilibrium outcome (Theorem 3). Overall, conditional acceptance may outperform deferred acceptance in producing stable equilibrium outcomes, but cumulative removal makes strategic mistakes more costly. |
| Keywords: | capped rank-order lists, conditional acceptance, Ergin-acyclicity, school choice, stability |
| JEL: | C78 D47 C72 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:bge:wpaper:1582 |
| By: | Zaruhi Hakobyan |
| Abstract: | Social-media platforms allocate reach, deciding whose content becomes widely visible. We study this as feed/reference design in a networked coordination game where users track an unknown state, coordinate with others, and hold biased ideal actions. Amplification changes both who receives information and who becomes a salient coordination reference. Making a private signal commonly observed adds a second common signal and removes the usual non-monotonicity of truth-tracking accuracy in public-signal precision; under a broadcast budget, accuracy depends only on total amplified precision. For any finite network and biases, a network intervention's effect on accuracy splits exactly into an information gain and a quadratic bias cost governed by a Katz--Bonacich influence-overlap matrix, yielding an exact source-ranking rule and a closed-form amplification threshold. A reduced-form engagement objective instead favors validating, same-type links, producing more segregated networks and lower accuracy. Amplification's value depends jointly on information, bias propagation, and the platform's objective. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2607.10228 |
| By: | Masaaki Fujii (Faculty of Economics, The University of Tokyo) |
| Abstract: | This work solves the equilibrium price formation problem for the risky stock by combining mean-field game theory with the binomial tree framework, adapting the classic approach of Cox, Ross & Rubinstein. For agents with exponential and recursive utilities of exponential-type, we prove the existence of a unique mean-field market-clearing equilibrium and derive an explicit analytic formula for equilibrium transition probabilities of the stock price on the binomial lattice. The agents face stochastic terminal liabilities and incremental endowments that depend on unhedgeable common and idiosyncratic factors, in addition to the stock price path. We also incorporate an external order flow. Furthermore, the analytic tractability of the proposed approach allows us to extend the framework in two important directions: First, we incorporate multi-population heterogeneity, allowing agents to differ in functional forms for their liabilities, endowments, and risk coefficients. Second, we relax the rational expectations hypothesis by modeling agents operating under subjective probability measures which induce stochasti- cally biased views on the stock transition probabilities. Our numerical examples illustrate the qualitative effects of these components on the equilibrium price distribution. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:tky:fseres:2026cf1276 |
| By: | Choné, Philippe; Linnemer, Laurent |
| Abstract: | Sellers face a critical choice: run competitive auctions or strike exclusive deals with preferred buyers. Contrary to conventional wisdom that sellers should rely on open competition, we show that a powerful seller optimally commits to a sequential `flexclusivity' arrangement --a strategic mix of exclusivity and competitive bidding. Under broad conditions, the seller chooses with positive probability to disregard alternative buyers entirely. We demonstrate, in a parsimonious model, that simple option contracts implement flexclusivity efficiently, increasing the expected joint profit of the contracting parties. When a preferred buyer declines the option, this credibly signals his weakness, allowing the seller to extract more rent from stronger buyers in subsequent auctions. The joint gain from such arrangements can represent as much as 75% of what vertical integration would achieve, without requiring commitment beyond the initial contracting stage. |
| JEL: | D44 D82 D86 L22 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20620 |
| By: | Décamps, Jean-Paul; Gensbittel, Fabien; Mariotti, Thomas |
| Abstract: | We prove the existence of a Markov-perfect equilibrium in randomized stopping times for a model of the war of attrition in which the underlying state variable follows a homogenous linear diffusion. We first prove that the space of Markovian randomized stopping times can be topologized as a compact absolute retract. This in turn enables us to use a powerful fixed-point theorem by Eilenberg and Montgomery to prove our existence theorem. We illustrate our results with an example of a war of attrition that admits a mixed-strategy Markov-perfect equilibrium but no pure-strategy Markov-perfect equilibrium. |
| JEL: | C73 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20486 |
| By: | Gáti, Laura; Handlan, Amy |
| Abstract: | In a cheap-talk communication game, we model how a sender communicates their noisy forecasts while taking into account their own uncertainty (confidence) and the receiver’s perception of the sender’s uncertainty (reputation for confidence). This creates a mismatch between the sender’s and receiver’s interpretation of the announcement. This misunderstanding friction induces the sender to communicate with partial transparency and deliberate imprecision. Moreover, with higher confidence (lower reputation) announcements are more precise. To test the theory, we leverage unique data on Federal Reserve communication deliberations to create new text-based measures as direct counterparts to the model. We find communication patterns are largely consistent with the model except the Fed’s communication strategy underreacts to reputation compared to the model. |
| JEL: | E52 E58 C49 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20734 |
| By: | Daniela Bubboloni; Stefano Moretti |
| Abstract: | This work addresses the problem of assessing player importance in coalitional settings where the available information concerns the relative strength between pairs of coalitions, rather than the absolute worth of each coalition. We introduce a novel framework that is flexible enough to represent all coalitional pseudo-games and, through the use of coalitional networks, naturally accommodates scenarios with limited or heterogeneous coalition comparisons. Importantly, this framework still enables the computation of semivalues of pseudo-games, such as the Banzhaf and Shapley values, that can be expressed as weighted sums of differences in specific coalition comparisons, thus offering interpretations beyond traditional approaches. Furthermore, for ranking players rather than computing exact numerical attributions, we introduce the concept of a player's score, which simplifies the process of determining rankings based on semivalues, and shifts the perspective from average marginal contribution to average coalitional worth. This turns out to be particularly enlightening for the Banzhaf value. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2606.31955 |
| By: | Flip Klijn |
| Abstract: | We study the school-choice model of Abdulkadiroğlu and Sönmez (2003) with capped rank-order lists and introduce deferred acceptance with clocked skips (sDA). The mechanism combines DA-style tentative holding with a public round clock: a student who is displaced after being held resumes only at the current clock position and skips list positions that passed while she was held. We first show that every stable matching can be supported as a Nash-equilibrium outcome of the game induced by sDA. With cap one, sDA coincides with immediate acceptance, and its Nash-equilibrium outcomes are exactly the stable matchings. This exact implementation result continues to hold at cap two for every priority structure—a guarantee DA provides only under Ergin-acyclicity. With caps of three or more, however, unstable Nash-equilibrium outcomes can arise even in one-to-one markets; moreover, every Ergin-cycle can be used to support such an outcome for some preference profile. Surprisingly, equilibrium outcomes are not necessarily nested in the cap. These findings identify a niche for sDA in transparent short-list environments while cautioning that the cap is not a monotone design lever: longer lists can both create and destroy unstable equilibrium outcomes. |
| Keywords: | capped rank-order lists, deferred acceptance, deferred acceptance with clocked skips, Ergin-acyclicity, school choice, stability |
| JEL: | C78 D47 C72 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:bge:wpaper:1583 |
| By: | Koessler, Frédéric; Renault, Régis |
| Abstract: | A buyer can learn about a product through search or seller-disclosed information. We examine how lower search costs or better seller disclosure affects this interaction. Whereas a drop in search costs improves consumer surplus and decreases profit when the seller can resort to an optimal disclosure strategy, its impact is ambiguous if the seller is unable to provide information. When it is unlikely that the buyer's valuation is below marginal cost, the buyer does not benefit from optimal information disclosure if search costs are high. With such high search costs and no disclosure both parties can be better off than with lower search costs and optimal information disclosure. The seller then adopts a mass market strategy where she posts a low enough price so the buyer always purchases the product without search. By contrast, if it is sufficiently likely that the buyer's valuation is below marginal cost, then the buyer can benefit from sophisticated information disclosure for relatively low search costs. The corresponding outcome is better for both parties than an environment with higher search costs and no information disclosure. The optimal seller strategy targets a niche of high-valuation buyers and prevents wasteful search by buyers with low valuations. |
| Keywords: | Information design; Information acquisition; Advertising; Consumer search |
| JEL: | D42 D82 D83 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20694 |
| By: | Gersbach, Hans |
| Abstract: | We present Pendular Voting as a novel two-stage voting procedure with applications to direct and representative democracies. A randomly chosen citizen group first votes on a proposal replacing the status quo. Depending on the outcome, a “counterproposal†ensues, positioned closer to or further away from the status quo than the original proposal. All citizens then vote pairwise on the status quo, the initial proposal, and the counterproposal, with the middle alternative prevailing in the case of cyclical collective preferences. We analyze the process on a one-dimensional policy space under uncertainty about preference distribution, showing that manipulation is confined to the first stage, but does not affect the final outcome. Even with selfish agenda setters, Pendular Voting can deliver results closer to the median voter’s preferences than standard procedures. In parliamentary contexts, pairing bills with structured counterproposals could shift outcomes toward the chamber’s median preference while reducing agenda manipulation. |
| Keywords: | Democracy; Manipulation; Information sharing; Referendum |
| JEL: | C72 D70 D72 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20656 |
| By: | P. Jean-Jacques Herings; Christian Seel; Arkadi Predtetchinski |
| Abstract: | This paper studies probabilistic properties of pairwise stability for a network model where individual utilities are random variables. We study the probability that a given network is pairwise stable and the expected number of pairwise stable networks. We provide a closed-form solution for the latter number. As the evaluation of the exact expression is computationally challenging for large populations, we provide tractable lower and upper bounds for this expression which allow us to pin down the asymptotic behavior of the expected number of pairwise stable networks up to a multiplicative constant. This asymptotic behavior is described by the number of networks $ 2^{n(n-1)/2} $ times $ (2/n+1)^{n} $, a sequence that tends to infinity fast. We normalize the number of pairwise stable networks by this sequence and show that the variance of the normalized number of pairwise stable networks converges to zero as $ n $ tends to infinity. We conclude that almost surely the number of pairwise stable networks tends to infinity, while the fraction of pairwise stable networks tends to $ 0 $ as $ n $ goes to infinity. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2606.23440 |