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on Game Theory |
| By: | Madjid Eshaghi Gordji; Esmaiel Abounoori; Mohamadali Berahman |
| Abstract: | We extend the concept of meta-Nash equilibrium, introduced by Eshaghi Gordji and Bagha [2026] for complete-information games, to environments with incomplete information. We define a meta-Bayesian Nash equilibrium as a profile of type-dependent mixed meta-strategies together with an environmental move such that no player type can profitably deviate and the environment cannot improve its expected payoff. For each transformed game, meta-payoffs are determined by the unique Bayesian Nash equilibrium of that game. Using Kakutani's fixed point theorem, we establish existence under finiteness assumptions on type spaces, meta-actions, and transformations, together with the assumption that each transformed game admits a unique Bayesian Nash equilibrium. Several illustrative examples, including adaptive subsidy competition, cybersecurity protocol selection, and platform rule formation, demonstrate that private information at the meta-level plays an essential role in endogenous game transformation. The framework contains both classical Bayesian games and complete-information meta-games as special cases. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.16926 |
| By: | Mehmet Mars Seven |
| Abstract: | We extend the optimin notion of Ismail (2025) from mixed strategy profiles to correlated distributions. A correlated distribution is evaluated by the worst expected payoff each player can receive when opponents may either obey their private recommendations or make unilateral recommendation-contingent deviations that are strictly profitable under the posterior induced by the distribution. Correlated optimins are Pareto optimal with respect to this vector of guaranteed payoffs. We show that a correlated optimin exists in every finite game. In addition, for every correlated equilibrium, there exists a correlated optimin such that every player's guaranteed payoff is weakly higher than his or her correlated equilibrium payoff. In two-player zero-sum games, correlated optimin coincides with correlated equilibrium and yields the maximin value. Outside zero-sum games, correlated optimin may strictly improve upon all correlated equilibria. We illustrate this with a simple 2x2 game with a unique correlated and coarse correlated equilibrium, in which there exists a correlated optimin that strictly Pareto dominates the equilibrium payoff. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.19129 |
| By: | Madjid Eshaghi Gordji; Esmaiel Abounoori; Mohamadali Berahman |
| Abstract: | Many economic interventions are designed as marginal changes in incentives. Yet in environments shaped by coordination, institutional persistence, and path dependence, such reforms often leave behavior largely unchanged. This paper studies interventions in games when equilibrium selection displays status-quo inertia: if the pre-intervention equilibrium remains a Nash equilibrium after policy, it continues to be selected. In that environment, price-based interventions and simple option expansion may fail even when they improve welfare in a partial-equilibrium sense. By contrast, interventions that modify the feasible action space, especially deletion and replacement interventions, can be substantially more effective because they remove the strategic basis for persistence. We develop a simple framework, derive general results, provide complete proofs, and illustrate the economics with examples from climate transition, platform regulation, financial reform, and industrial modernization. The analysis highlights a basic policy lesson: when inefficient equilibria are institutionally entrenched, the central problem is often not how to price the existing game more finely, but how to change the game itself. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.09083 |
| By: | Zhe Sage Chen; Quanyan Zhu |
| Abstract: | We propose a game-theoretic framework for adaptive multi-agent intelligent systems. Unlike classical game theory, which often treats strategies as primitive objects chosen by perfectly rational agents, the proposed framework provides a mathematical foundation for studying equilibrium in NeuroAI and can be viewed as an extension of game theory under relaxed assumptions, including partial observability, bounded computation, and uncertainty. At its core, Multilevel Interactive Equilibrium (MIE) generalizes the classical Nash equilibrium to intelligent systems with internal computation. Rather than being defined solely at the level of observable behavior, equilibrium emerges when neural learning dynamics, cognitive representations, and behavioral strategies mutually stabilize between interacting agents. This framework applies uniformly to interactions between two biological brains, two artificial agents, or hybrid human-AI systems. We discuss applications of multilevel game theory to human-autonomous vehicle driving, human-machine interaction, human-large language model (LLM) interaction, and computational psychiatry. We also outline experimental strategies and computational methods for estimating MIE and discuss challenges and prospects for future research. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.10505 |
| By: | Langtry, A.; Taylor, S.; Zhang, Y. |
| Abstract: | This paper proposes a new lens for studying threshold games played on networks when the thresholds are heterogeneous. These are games where agents have two possible actions, and prefer action 1 if and only if enough of their neighbours choose action 1. We propose a transformation of the network that 'absorbs' the heterogeneity in thresholds into the network. This allows us to characterise equilibria in terms of the k-core – a well-studied measure of network cohesiveness – of the transformed network. Our model is also the direct analogy to the workhorse model of Ballester et al. [2006] when actions are 0 or 1. Further, our binary action version exhibits a remarkable stability property. When agents have linear-quadratic preferences, the k-core of the transformed network characterises the unique subgame perfect equilibrium of a sequential move version of the game – no matter what order agents move in. |
| Keywords: | Networks, Threshold Games, Strategic Complements, Contagion, Diffusion, Coordination |
| JEL: | D85 O33 |
| Date: | 2026–04–17 |
| URL: | https://d.repec.org/n?u=RePEc:cam:camdae:2633 |
| By: | Kirill Rudov; Fedor Sandomirskiy; Leeat Yariv |
| Abstract: | Correlated equilibria arise naturally when agents communicate or rely on intermediaries such as recommendation systems. We study when a given Nash equilibrium can be improved within the set of correlated equilibria for general objectives. Our key insight is a detail-free criterion: any Nash equilibrium with three or more randomizing agents is generically improvable. We refine this insight to specific classes of games and objectives, including Pareto and utilitarian welfare, and provide constructive methods to obtain improvements. Our findings underscore the ubiquity of improvable Nash equilibria and the crucial role of correlation in enhancing strategic outcomes. |
| JEL: | C60 C72 D02 D60 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35170 |
| By: | J. C. Gon\c{c}alves-Dosantos; R. Mart\'inez; J. S\'anchez-Soriano |
| Abstract: | We introduce and study the axiom of null player neutrality in the context of cooperative games with transferable utility (TU-games). This axiom weakens the classical coalitional strategic equivalence: rather than requiring that augmenting a game by a null-player game leaves that player's payoff unchanged, it only requires that any change in payoff be independent of the specific augmenting game, provided both the null-player condition and the grand-coalition value are preserved. We show that efficiency, linearity, symmetry, and null player neutrality together characterize the family of all real linear combinations of the Shapley value and the equal division solution, a family that strictly extends the well-known class of $\alpha$-egalitarian Shapley values (convex combinations, $\alpha \in [0, 1]$) to arbitrary $\alpha \in \mathbb{R}$. Replacing null player neutrality by its natural analogue for nullifying players uniquely pins down the equal division solution. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.20113 |
| By: | Stark, Oded (University of Bonn); Kosiorowski, Grzegorz (Krakow University of Economics) |
| Abstract: | We establish a new approach to the modeling of cooperation, and we formulate a new solution concept for cooperative games. We do this by constructing a game of cooperation between individuals who exhibit distaste for relative deprivation, RD, in the sense that they experience stress when their income is lower than that of their comparators. In such a game, the sharing out of the jointly earned income between these individuals when they cooperate, as prescribed by standard solutions of cooperative games, might not be acceptable to the individuals. The stress from RD may have the upper hand. Measuring stress by RD, we thus model a setting in which two individuals who are concerned with being relatively deprived need to decide whether or not to cooperate. We term this setting an RD cooperative game, and we design a rule, the RD solution, for the distribution of the income yielded in this game. The RD solution prescribes cooperation in spite of cooperation-induced stress and preserves the spirit of standardness (an equal sharing of the gain that accrues from cooperation) for two-player games (a property shared by the main solution concepts for cooperative games). |
| Keywords: | inclination to cooperate, cooperative games, social preferences, cooperation-induced stress, relative deprivation (RD), RD cooperative games, RD solution |
| JEL: | D01 D30 D63 D71 D91 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18608 |
| By: | Pan, Xiaojun |
| Abstract: | Industrial internet platforms reshape both the digital infrastructure and the internal governance of downstream firms. This paper shows that platform enablement can trap firms in a doubly-nested prisoner's dilemma: access decisions (whether to join the platform) and delegation decisions (whether to hire a manager) simultaneously yield Nash equilibria that are strictly Pareto-dominated by the joint non-access, non-delegation optimum, with joint profit losses of approximately 3.2 percent. Unlike single-decision platform traps (Hagiu and Wright, 2026), our dilemma arises from the interaction between two distinct firm-level decisions, each generating its own Pareto-suboptimal equilibrium. Within a three-tier platform-duopoly-consumers Bertrand game, we obtain three results. First, platform-enhanced network externalities shift the sales-oriented delegation threshold downward by an amount equal to the platform's network-enhancement parameter, pushing firms from defensive profit-oriented to offensive sales-oriented incentive contracts. Second, the dilemma is sustained by a division of roles within the platform's two-part tariff: the fixed fee absorbs network premia through a threat-point channel, while the usage fee distorts marginal incentives. Third, the dilemma forms a structural ridge along the Choi-Lee threshold, occupying approximately 18 percent of the relevant differentiation-network parameter space. Because the equilibrium violates neither per se collusion nor abuse-of-dominance prohibitions, conventional antitrust is structurally inadequate; mandatory data interoperability, by raising non-accessing firms' outside option, emerges as a targeted instrument. |
| Keywords: | Industrial Internet Platform, Strategic Delegation, Network Externalities, Two-Part Tariff, Prisoner's Dilemma, Platform Regulation |
| JEL: | D43 L13 L51 L86 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:341117 |
| By: | Francesc Dilmé |
| Abstract: | This paperdevelopsasimplenotionofperfectBayesianequilibriumforarbitraryfiniteextensive form games with perfect recall. Its key ingredient is cross-pair independence from common actions, a belief restriction that compares the likelihoods of two pairs of histories, possibly in different information sets, after canceling actions common to both pairs. The condition extends Bayes’ rule whenever possible and no signaling what you don’t know beyond sequentially ordered information sets. In multi-stage games with observable actions and independent types, it implies the belief-reasonableness requirements of Fudenberg and Tirole (1991). Extending the same cancellation logic to arbitrary multisets is equivalent to consistency. The construction therefore provides a tractable, assessment-based notion of reasonableness without non standard probabilities, plausibility orders, or auxiliary belief-revision structures. |
| Keywords: | Perfect Bayesian equilibrium, extensive-form games, cross-pair independence from common actions, belief restrictions, sequential equilibrium, consistency, no signaling what you don't know |
| JEL: | C72 C73 D82 D83 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_748 |
| By: | Dominik Atella-Suri (University of Bonn); Sebastian Kube (University of Bonn) |
| Abstract: | Artificial intelligence (AI) is increasingly becoming part of economic decision-making. Yet, in many strategic interactions, individuals may not know whether others rely on AI when forming their decisions. We examine whether decision-makers who are themselves not allowed to use AI behave differently when other group members may consult AI. In an incentivized experiment with a public goods game and a weakest-link game, we exogenously vary whether group members are allowed to use AI to inform their decisions. We find that AI can affect strategic interaction even when it is not directly used by the decision-maker: merely knowing that others may use AI reduces cooperation in the public goods game and effort provision in the weakest-link game. Participants also perceive group members who may use AI as socially more distant and report lower beliefs about appropriate and expected contributions and effort levels. At the same time, the shares of conditional cooperators and conditional coordinators remain largely stable across treatments. These findings suggest that AI is not only a private decision aid but can also shape the social and strategic environment in which economic decisions are made. |
| Keywords: | Cooperation, Coordination, Human-AI Interaction, Artificial Intelligence, Experiment |
| JEL: | C71 D83 D91 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:ajk:ajkdps:407 |
| By: | Madjid Eshaghi Gordji; Ali Jabbari; Mohammad Ali Berahman; Esmaiel Abounoori |
| Abstract: | Westudy how a planner can design dynamic interventions to overcome status-quo inertia in living temporal games, where strategic agents control their state (active, sleep, partially dead) on a temporal network. Building on the continuous-time stochastic game framework of our companion paper, we introduce three intervention classes: bounded transfers (price based), structural modifications (edge deletion, addition, or replacement), and information signals. We formalize the notion of inertia depth and prove a threshold theorem: the status quo equilibrium survives all transfer perturbations whose magnitude is below a critical bound that depends on the remaining horizon. A central structural dominance result shows that for any finite transfer budget there exists a family of games where no bounded price intervention can eliminate the inefficient equilibrium, yet a single edge replacement (continuous-flow to discrete-transport) succeeds. We then study private-information subclasses with static types. Using a uniformization reduction, we prove an impossibility result: no direct mechanism can simultaneously satisfy ex post incentive compatibility, ex post budget balance, and history privacy while always implementing an efficient equilibrium. In the same subclass we construct a dynamic pivot mechanism that achieves second-best efficiency with bounded deficit. Finally, we show that replacing continuous-flow edges by discrete-transport edges weakly expands the set of implementable outcomes, highlighting the importance of temporal semantics for mechanism design. Our results extend the static analysis of [5] to continuous time strategic networks and provide a rigorous foundation for subsequent papers on learning and mean-field design. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.19087 |
| By: | Bertomeu, Jeremy; Cheynel, Edwige; Hu, Peicong |
| Abstract: | We study voluntary disclosure when investors observe firm reports through noisy information intermediaries such as auditors, analysts, rating agencies, or data providers. Any processing noise overturns the standard prediction of a unique partial-disclosure equilibrium. With low disclosure costs, the model unravels to full disclosure despite positive costs. With higher costs, the game admits two threshold equilibria featuring different disclosure probabilities. We characterize how the cost threshold for unraveling and the equilibrium set respond to changes in noise and fundamental uncertainty. In settings with high disclosure, both uncertainty and processing noise reduce disclosure, while higher certification costs can counterintuitively increase it. Endogenizing disclosure costs as optimal fees shows how profit-maximizing intermediaries select among equilibria, potentially generating a high-fee, high-disclosure regime. Extensions with bounded support, uncertain information endowment, endogenous noise, and competing information sources apply the insights to general information environments. The results caution against interpreting greater frictions as necessarily reducing disclosure. |
| Keywords: | Voluntary Disclosure, Information Processing, Noisy Communication, Certification, Auditors, Information Intermediaries, Equilibrium Multiplicity, Unraveling |
| JEL: | D43 D82 D83 M41 |
| Date: | 2026–04–27 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:128905 |
| By: | Joseph Feffer; Filip Tokarski |
| Abstract: | This paper studies when strategic understanding acquired in one mechanism can be transferred to another. We introduce a framework in which agents' knowledge is represented as a set of payoff comparisons they can make, and use it to formalize what it means to understand that a strategy profile is an equilibrium. We first apply this framework to mechanisms that are strategically equivalent-that is, share the same game form up to relabeling of actions-and show that agents' understanding of equilibrium transfers across such mechanisms once the relevant action correspondences are explained to them. We then define strategic analogy, a weaker notion that allows not only actions but also types to be remapped, and show that understanding of equilibrium transfers across strategically analogous mechanisms once agents recognize how actions and types correspond. Applications include single-item auctions, scoring auctions, and nonlinear pricing with capacity constraints. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.12802 |
| By: | Marta Pagano; Alexander Schlenga |
| Abstract: | Additively separable hedonic games (ASHGs) are a prominent model of coalition formation where agents' preferences are derived from their individual valuations of peers. While social welfare maximization in ASHGs has traditionally focused mostly on utilitarian welfare, Nash welfare -- a well-established metric in economics which balances fairness with efficiency and offers scale invariance -- has been entirely overlooked. In this paper, we initiate the study of Nash welfare in ASHGs. We point out desirable properties fulfilled by partitions with high Nash welfare. This includes guaranteed contractual Nash stability in symmetric games, even for any approximation of Nash welfare. This is particularly appealing since, as for other welfare notions, Nash welfare turns out to be NP-hard to maximize, even for the ASHG subclass of symmetric aversion to enemies games (AEGs). A main focus of our study is on approximation algorithms for the Nash welfare objective. We present packing-based algorithms with approximation ratios for well-established subclasses of ASHGs: $n-1$ for AEGs and $2n$ for appreciation of friends games. This is complemented by a strict inapproximability result showing it is NP-hard to approximate Nash welfare within a factor of $1.0000759$ in general ASHGs. Further, we investigate the restricted settings with an upper bound on the coalition size or number of coalitions, and draw the boundary between the cases admitting efficient algorithms and those yielding NP-hardness: bounding the allowed size or number of coalitions by $2$ admits polynomial-time solvability, whereas bounds of $3$ or more yield NP-hardness or unbounded inapproximability. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.19030 |
| By: | Vaibhav Rangan |
| Abstract: | I study coordination failures in housing development markets with network effects, where the value of building depends on aggregate supply. When network effects are sufficiently strong and convex, multiple equilibria arise: a low-supply coordination failure and a high-supply outcome. Without a coordination mechanism, equilibrium is indeterminate. I introduce a large developer who moves first in a Stackelberg game, committing to housing supply before atomistic developers make entry decisions. The main result is that the large developer always commits at least to the high-supply equilibrium, eliminating the coordination failure by pushing past the unstable threshold that separates the low and high outcomes. The result is unconditional; it holds for general demand functions and cost distributions, and does not depend on which stable continuation equilibrium materializes. The leader's commitment inverts standard monopoly intuition: first-mover commitment can improve welfare by resolving a coordination problem that atomistic markets cannot solve on their own. I also characterize when the developer builds beyond the high equilibrium into a monopoly region, and show that the market underprovides housing relative to the social optimum. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.12559 |
| By: | Jens Gudmundsson; Jens Leth Hougaard; Kohmei Makihara; Alexandros Rigos |
| Abstract: | We study a model in which shocks propagate along a path chosen by agents embedded in a network. When a shock hits an agent, the affected agent cancels one of her outgoing edges. This cancellation cascades sequentially along a chosen path until reaching a terminal agent, resulting in a systemic cost equal to the sum of individual cancellation losses. A liability rule determines agent payments for realized losses, and we seek to implement efficient path selection in the induced sequential-move game. Our main axiomatic result characterizes a family of rules, which set each agent's liability to be proportional to the system's total realized losses with agent weights depending only on the network structure. We propose a way to set such weights based on a simple path-based procedure that assigns equal importance to all non-sink agents along each path and then aggregates these contributions across paths. These weights coincide with the Shapley value of an associated "path-counting" cooperative game and can be computed in polynomial time. A simulation study illustrates the mechanics of our approach. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.14485 |
| By: | Taylor, S. |
| Abstract: | Who counts as "the same" in a network, and when must they act or be treated identically? Whilst many economic settings are network games, where with whom agents interact shapes their behaviour, this question has remained largely unanswered. I develop a general notion of identical network incentives and use it to organise the analysis of equilibria and interventions in network games. I introduce algebraic tools that leverage network symmetries, which fold the network so that nodes on either side of the fold occupy identical positions. In unique or extremal equilibria, agents with the same network position must take the same action. These equilibria can admit tractable comparative statics. For budget-constrained interventions, symmetries structure how changes in incentives flow through the network, revealing a contrast as the budget grows. With complements in the network externality, total good provision shifts by the same amount amongst similar agents. With substitutes, targeting can fix total good provision by simply redistributing the original total equilibrium action amongst equivalent agents. |
| Date: | 2026–05–11 |
| URL: | https://d.repec.org/n?u=RePEc:cam:camdae:2635 |
| By: | Dmitry Dagaev; Egor Ivanov; Petr Parshakov; Alexey Savvateev; Gleb Vasiliev |
| Abstract: | The emergence of large language models (LLMs) has spurred economists to study how humans and LLMs behave in strategic settings. We organized a series of round-robin tournaments in the Colonel Blotto game. This game attracts game theorists' attention due to high-dimensional action space and the absence of pure strategy Nash equilibria. In the first tournament, more than 200 human participants competed against one another. In the second tournament, several popular LLMs were invited to submit strategies. In the third tournament, we matched the number of LLM strategies to the number submitted by humans. We find that humans more often employ better-calibrated intermediate-level allocation heuristics and outperform the simpler, more stereotyped strategies submitted by LLMs. Strategic sophistication is key to success if and only if the necessary level of reasoning depth is reached, while lower and higher levels of reasoning offer no clear advantage over the primitive strategies. Among humans, field of study weakly predicts success: participants with STEM backgrounds perform better in the first tournament. Surprisingly, humans almost do not adjust their strategies across tournaments with different sets of opponents. This result suggests that humans base their choices primarily on the game's rules rather than on the identity of their opponents, treating LLMs much like human competitors. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.22095 |
| By: | Pan, Xiaojun |
| Abstract: | Can observable managerial incentive contracts substitute for price transparency as a commitment device in two-sided platforms? Extending the framework of Hagiu and Halaburda (2014), we show that under monopoly, two-dimensional public delegation precisely reproduces the transparent-equilibrium allocation. Under Hotelling competition, a network-effect symmetry threshold partitions the parameter space: in the tool region (approximately symmetric network effects), delegation Pareto-dominates no delegation; in the trap region (highly asymmetric), the classical Fershtman-Judd dilemma re-emerges. Total social welfare under delegation equals that under transparency in both regions. Policy implication: in asymmetric markets, restricting asymmetric incentive contracts can resolve the dilemma among platform owners, although the restriction lowers consumer and total welfare relative to the unrestricted equilibrium. |
| Keywords: | Two-sided platforms, strategic delegation, managerial incentive contracts, information transparency, platform regulation |
| JEL: | D43 D82 D86 L13 L86 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:341118 |
| By: | Akio Kawasaki (Faculty of Economics, Oita University); Noriaki Matsushima (Osaka School of International Public Policy, the University of Osaka) |
| Abstract: | Digital entrants in health care and health insurance often compete against public or mission-oriented organizations rather than only against private rivals. We develop a Hotelling model of mixed competition in which a private data-rich firm chooses the scope of consumer-data collection and then uses the acquired information to personalize offers. The rival supplies a standard service and is either a welfare-maximizing public firm or a profit-maximizing private firm. We characterize equilibrium data collection, prices, consumer surplus, profits, and social welfare. The private digital firm chooses a wider data-harvesting range when its rival is private than when its rival is public, because a public rival uses welfare-oriented pricing to discipline the induced market allocation rather than to maximize its own profit. The welfare ranking is non-monotonic in the value created by personalization. When the benefit from personalization is either small or large, competition against a public rival yields higher welfare; when the benefit is intermediate, competition against a private rival can dominate because it induces a broader rollout of personalized service. These results highlight that the welfare effects of digital entry depend jointly on data-driven personalization and the ownership objective of incumbent health-sector organizations. |
| Keywords: | digital services, personalized pricing, public entities, health services |
| JEL: | I13 L13 D43 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:osp:wpaper:26e005 |
| By: | Ari Ercole |
| Abstract: | Health artificial intelligence (AI) adoption presents a paradox: point-solution tools diffuse readily through clinical populations, yet system-change AI, which carries the greatest potential for pathway-level transformation, consistently stalls at partial adoption. An evolutionary game theoretic model is developed to explain this pattern. Doctors choose among three strategies: genuine adoption, partial adoption, and rejection, where genuine adoption is required for systemic benefits to materialise above a population threshold. The system is shown to be generically bistable, with a stable partial adoption equilibrium coexisting alongside full genuine adoption. The basin of attraction of the partial adoption trap is enlarged by three compounding failure modes: a threshold coordination failure arising from the non-appropriable nature of systemic benefits; a trust failure arising from the organisation's inability to credibly commit to sharing productivity gains; and a cultural failure arising from negative coordination norms among doctors. These failure modes are shown to be most severe precisely for the technologies with the greatest systemic value: the Value-Adoption Paradox. A cost ratchet dynamic implies that failed adoption attempts permanently lower barriers even when embedding fails, but this benefit is offset when trust erosion is rapid. Conditions are derived under which sustained but imperfect adoption pressure is welfare-improving, and the policy architecture required to escape the trap (targeting trust, sequencing, and team-level adoption) is characterised. Standard health system digital transformation policy, which typically addresses only the threshold failure through individual incentives, is predicted to systematically produce the partial adoption trap. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.17388 |
| By: | Yujing Chen |
| Abstract: | We study Bayesian persuasion when the receiver evaluates actions by reward-side Conditional Value-at-Risk (CVaR) rather than expected utility. CVaR preferences break the standard action-based direct-recommendation reduction: merging signals that recommend the same action can change the receiver's tail-risk ranking and destroy incentive compatibility. We show that this failure does not imply intractability in the explicit finite-state model. Each CVaR action value is max-affine in the posterior, and refining recommendations by the active affine piece yields an active-facet revelation principle and an exact polynomial-size linear program. We further identify a representation boundary: listed polyhedral risks remain tractable by the same LP, whereas succinctly represented facet families make exact persuasion NP-hard. Finally, we give a finite-precision approximation scheme for risk preferences determined by finitely many stable posterior statistics. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.12094 |
| By: | Madjid Eshaghi Gordji; Mohammadali Berahman; Hasti Eshaghi |
| Abstract: | Why do societies remain stuck in inferior institutions even when superior al ternatives are widely recognized? This paper develops a model in which agents choose not only actions within a game but also transformations of the game it self. Transformations may be soft, changing payoffs through taxes or subsidies, or hard, changing feasibility through deletion or replacement of actions. Within a coordination model with status-quo bias (switching cost) and boundedly rational play (logit quantal response), we show that these interventions are qualitatively different: finite taxes shift behavior continuously but cannot eliminate residual use of the inherited action, whereas deletion bypasses inertia by removing the action from the feasible set. We further characterize how antagonistic social preferences at the meta level can block reforms that are individually beneficial for every player. The framework provides a formal rationale for why hard feasibility restrictions of ten dominate soft price incentives under inertia, with direct applications to climate transition (carbon tax vs. fossil-fuel phase-out) and platform regulation (fines vs. deletion of addictive features). |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.21656 |
| By: | Dongwoo Kim; Kyoo il Kim; Pallavi Pal |
| Abstract: | This paper extends the incomplete model of Haile and Tamer (2003) from static English auctions to sequential English auctions. Because bidders may wait for future opportunities, the static condition that bidders do not let rivals win at beatable prices need not hold. We replace it with a dynamic opportunity-cost restriction, yielding nonparametric valuation bounds without solving a dynamic equilibrium. Sharp bounds are also characterized. We propose a novel moment-condition inversion estimator that pools auctions with heterogeneous bidder counts, mitigating finite-sample instability of order statistics approaches and admitting analytical standard errors and smooth confidence intervals. Applications to Korean wholesale used-car auctions and Cars and Bids online auctions deliver informative bounds. Counterfactual analyses show that the option to wait lowers first-period revenue by 8--11% in the Korean market, that increasing effective competition from 8 to 20 serious bidders in Cars and Bids raises seller revenue by 40--65%, and that maximin reserve prices vary substantially across vehicle clusters. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.14400 |
| By: | Jackie Baek; Vivek F. Farias; Farrell Wu |
| Abstract: | We study whether simple algorithmic pricing systems can systematically produce collusive-like prices in multi-firm markets. We consider firms using an explore-then-exploit pipeline: they randomize prices during an initial exploration phase, then estimate demand from their own historical data and set prices myopically thereafter. The estimation step relies on a misspecified, monopoly-style model that omits competitors' prices. We characterize when this pipeline converges to supra-competitive prices above the Nash equilibrium, via a fluid-limit ordinary differential equation analysis. We show that supra-competitive prices arise when firms explore within similar price ranges on the same side of the Nash price. Moreover, prices can be substantially above the Nash price; we show that prices can reach monopoly levels under symmetric exploration. Simulations calibrated to a real multifamily rental market confirm that supra-competitive outcomes arise robustly beyond our theoretical assumptions, including under finite horizons, heterogeneous products, and nonlinear logit demand. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.16064 |
| By: | Zhang, Y. |
| Abstract: | Many products generate network spillovers: a user’s value of such a product is higher when her contacts also use it. This paper studies competition between an entrant and an incumbent selling such products. In the model, the firms set personalised prices (for example, via targeted discounts), and consumers embedded in a network choose which product to buy. The pattern of equilibrium consumption is shown to be the same as if firms were to charge a price of 0 to all consumers. The equilibrium prices reflect incumbent advantage and depend on the network structure in nuanced ways. The equilibrium characterisation provides the foundation for studying the profitability of entry and the effects of anti-trust tools in such markets. A key structural feature of the network is found to be cohesiveness – the extent to which consumers within a group are densely connected to one another. Firms are more likely to enter if they have a consumer base that is cohesive and influential. While regulators use interoperability as a tool to improve market contestability, I show that interoperability can actually discourage entry depending on the cohesiveness of consumer bases. |
| Date: | 2026–04–17 |
| URL: | https://d.repec.org/n?u=RePEc:cam:camdae:2634 |