|
on Game Theory |
| By: | Lukyanov, Georgy; Makhmudova, Anastasia |
| Abstract: | We study a regime change game in which the state and an opposition leader both observe the regime’s true strength and may engage in costly communication by manipulating the mean of citizens’ private signals. Each citizen then decides whether to attack the regime. From the perspective of both the state and the opposition, the size of the attack is uncertain, as the number of committed partisans—those who always attack regardless of their signal—is not observed in advance. We show that a regime on the brink of collapse optimally refrains from propaganda, while the opposition engages in counter-propaganda. The equilibrium level of counter-propaganda increases with the opposition’s benefit-cost ratio and with the precision of citizens’ private signals, and decreases with the cost of attacking. |
| Keywords: | Global games, Signalling, Policymaker, Information asymmetry, Coordinated attack, Regime change |
| JEL: | D82 D84 E58 F31 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:131436 |
| By: | Alapini, Gefry B.; Djima, Jesugnon E.; Zhazhin, Kirill |
| Abstract: | We replicate Horváth (2025), experimentally studying link formation and effort in a linear-quadratic game with positive externalities. Across five treatments, subjects exert 38-97 percent more effort than the Nash benchmark yet create too few links, depressing payoffs. In groups of five, the complete network appears in roughly 25 percent of final rounds (66-76 percent if deviations of ±2 links are allowed); in groups of nine it is almost never reached. Larger groups and lower link costs fail to improve connectivity. Following the original procedures and analysis step-for-step, our replication reproduces the sign, magnitude, and statistical significance of every reported effect. Robustness checks-learning, benefit salience, group benchmarking, alternative clustering, and multiple link-formation specifications- confirm the core pattern: persistent over-provision of effort coupled with under-provision of links, generating substantial efficiency losses. |
| Keywords: | network formation, efficiency, linear-quadratic payoffs, experiment |
| JEL: | D85 D62 C92 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:i4rdps:280 |
| By: | Zebiao Li; Rui Liu; Chengyi Tu |
| Abstract: | The governance of common-pool resources-resource systems characterized by high subtractability of yield and difficulty of exclusion-constitutes one of the most persistent and intricate challenges in the fields of economics, ecology, and applied mathematics. This comprehensive review delineates the historical and theoretical evolution of the mathematical frameworks developed to analyze, predict, and manage these systems. We trace the intellectual trajectory from the early, deterministic bioeconomic models of the mid-20th century, which established the fundamental tension between individual profit maximization and collective efficiency, to the contemporary era of complex coupled human-environment system models. Our analysis systematically dissects the formalization of the "Tragedy of the Commons" through the lens of classical cooperative and non-cooperative game theory, examining how the N-person Prisoner's Dilemma and Nash Equilibrium concepts provided the initial, albeit pessimistic, predictive baseline. We subsequently explore the "Ostrom Turn, " which necessitated the integration of institutional realism-specifically monitoring, graduated sanctions, and communication-into formal game-theoretic structures. The review further investigates the relaxation of rationality assumptions via evolutionary game theory and behavioral economics, highlighting the destabilizing roles of prospect theory and hyperbolic discounting. Finally, we synthesize recent advances in stochastic differential equations and agent-based computational economics, which capture the critical roles of spatial heterogeneity, noise-induced regime shifts, and early warning signals of collapse. By unifying these diverse mathematical threads, this review elucidates the shifting paradigm from static optimization to dynamic resilience in the management of the commons. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2602.03129 |
| By: | Tom Hutchcroft; Olga Rospuskova; Omer Tamuz |
| Abstract: | We study agents playing a pure coordination game on a large social network. Agents are restricted to coordinate locally, without access to a global communication device, and so different regions of the network will converge to different actions, precluding perfect coordination. We show that the extent of this inefficiency depends on the network geometry: on some networks, near-perfect efficiency is achievable, while on others welfare is strictly bounded away from the optimum. We provide a geometric condition on the network structure that characterizes when near-efficiency is attainable. On networks in which it is unattainable, our results more generally preclude high correlations between outcomes in a large spectrum of dynamic games. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2602.12571 |
| By: | Itai Arieli (Technion: Israel Institute of Technology, University of Toronto); Yakov Babichenko (Technion: Israel Institute of Technology); Atulya Jain (ajain@uni-bonn.de); Rann Smorodinsky (Technion: Israel Institute of Technology) |
| Abstract: | We study games with incomplete information and characterize when a feasible outcome is Pareto efficient. Outcomes with excessive randomization are inefficient: generically, the total number of action profiles across states must be strictly less than the sum of the number of players and the number of states. We consider three applications. A cheap talk outcome is efficient only if pure; with state-independent sender payoffs, it is efficient if and only if the sender’s most preferred action is induced with certainty. In natural settings, Bayesian persuasion outcomes are inefficient across many priors. Finally, ranking-based allocation mechanisms are inefficient under mild conditions. |
| Keywords: | Pareto efficiency, Incomplete information, Cheap talk, Bayesian persuasion |
| JEL: | C72 D82 D83 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:ajk:ajkdps:390 |
| By: | Krishna Dasaratha; Anant Shah |
| Abstract: | Consider a network game with linear best responses and spillovers between players, and let agents endogenously choose their links. A planner considers interventions to subsidize actions and/or links between players, aiming to maximize a welfare function depending on equilibrium actions. The structure of the optimal intervention depends on whether links provide non-negative intrinsic value to agents. When they do, it is optimal to focus only on subsidizing actions. When the intrinsic value of links is negative, we give conditions for including link subsidies to be optimal. This reverses the basic structure of the optimal intervention in settings with exogenous links. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2602.12897 |
| By: | Gyarmathy, Andrei; Lukyanov, Georgy |
| Abstract: | Costly pre-play messages can deter unnecessary wars—but the same messages can also entrench stalemates once violence begins. We develop an overlapping-generations model of a security dilemma with persistent group types (normal vs. bad), one-sided private signaling by the current old to the current young, and noisy private memory of the last encounter. We characterize a stationary equilibrium in which, for an intermediate band of signal costs, normal old agents mix on sending a costly reassurance only after an alarming private history; the signal is kept marginally persuasive by endogenous receiver cutoffs and strategic mimicking by bad types. Signaling strictly reduces the hazard of conflict onset; conditional on onset, duration is unchanged in the private model but increases once a small probability of publicity (leaks) creates a public record of failed reconciliation. With publicity, play generically absorbs in a peace trap or a conflict trap. We discuss welfare and policy: when to prefer back-channels versus public pledges. |
| JEL: | D74 D83 C73 C72 D82 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:131434 |
| By: | Lukyanov, Georgy; Safaryan, Samuel |
| Abstract: | We study public persuasion when a sender communicates with a large audience that can fact-check at heterogeneous costs. The sender commits to a public information policy before the state is realized, but any verifiable claim she makes after observing the state must be truthful (an ex-post implementability constraint). Receivers observe the public message and then decide whether to verify; this selective verification feeds back into the sender’s objective and turns the design problem into a constrained version of Bayesian persuasion. Our main result is a reverse comparative static: when factchecking becomes cheaper in the population, the sender optimally supplies a strictly less informative public signal. Intuitively, cheaper verification makes bold claims invite scrutiny, so the sender coarsens information to dampen the incentive to verify. We also endogenize two ex-post instruments—continuous falsification and fixed-cost repression—and characterize threshold substitutions from persuasion to manipulation and, ultimately, to repression as monitoring improves. The framework provides testable predictions for how transparency, manipulation, and repression co-move with changes in verification technology. |
| Keywords: | Bayesian persuasion; information design; verifiable evidence; costly verification;; public signals; Blackwell informativeness; falsification; repression |
| JEL: | D72 D82 D84 L14 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:131438 |
| By: | Luca Corazzini (University of Milan-Bicocca); Marco Diamante (Ca’ Foscari University of Venice); Valeria Maggian (Ca’ Foscari University of Venice) |
| Abstract: | Assessing the causal impact of narratives on beliefs and behaviors remains an empirical challenge for social scientists, largely due to endogeneity and cultural factors. To address these limitations, we present the results of a novel, content-neutral laboratory experiment. In this experiment, participants (i) engage in a zero-sum game against a non-strategic robot, where the final outcome is determined with equal probability either by their choices or by randomness, and (ii) are exposed to either hopeful or passive narratives. These narratives differ in how ambiguous evidence is presented, suggesting whether or not participants can actively determine the final outcome of the game through their choices. Our findings reveal that, regardless of the narrative they are exposed to, participants consistently form beliefs and make choices under the illusion that they can influence the final outcomes. When provided with unambiguous evidence disproving this illusion, participants adjust their beliefs accordingly, although their choices take longer to align with these updated beliefs. Furthermore, exposure to the passive narrative reduces the inconsistency between beliefs and choices when participants mistakenly believe their choices determine the final outcome. Finally, presenting unambiguous evidence that contradicts the narrative's content increases the proportion of random and unpredictable choices. |
| Keywords: | Narratives, polarization, illusion of control, lab experiment |
| JEL: | C91 C70 D91 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ven:wpaper:2026:02 |
| By: | Afonso Rodrigues |
| Abstract: | This paper develops a linear-demand framework to investigate endogenous product design. The key assumption is that the same product characteristics which drive goods utility also (at least partially) shape competitive interactions across products. I model this relationship allowing for differences in each characteristic's relevance to competition, their absolute intensity per good, and correlations to other characteristics. The framework is novel in its broad applicability to settings with any finite number of goods, firms, and attributes, allowing for both vertical and horizontal differentiation, all in an empirically testable model. Under Bertrand price competition I show that across different market structures, a pattern emerges: product differentiation along product attributes that firms control is primarily vertical, with horizontal differentiation only in latent attributes. Counter to standard intuition, simulations show that allowing for endogenous design can imply higher consumer surplus under monopoly than under competition, as monopoly's stronger incentives for attribute investment translate into higher effective quality. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2602.02833 |
| By: | Zhiyuan Chen (David); Rui (David); Chen; Ming Hu; Yun Zhou |
| Abstract: | We study a dynamic matching problem on a two-sided platform with unbalanced patience, in which long-lived supply accumulates over time with a unit waiting cost per period, while short-lived demand departs if not matched promptly. High- or low-quality agents arrive sequentially with one supply agent and one demand agent arriving in each period, and matching payoffs are supermodular. In the centralized benchmark, the optimal policy follows a threshold-based rule that rations high-quality supply, preserving it for future high-quality demand. In the decentralized system, where self-interested agents decide whether to match under an exogenously specified payoff allocation proportion, we characterize a welfare-maximizing Markov perfect equilibrium. Unlike outcomes in the centralized benchmark or in full-backlog markets, the equilibrium exhibits distinct matching patterns in which low-type demand may match with high-type supply even when low-type supply is available. Unlike settings in which both sides have long-lived agents and perfect coordination is impossible, the decentralized system can always be perfectly aligned with the centralized optimum by appropriately adjusting the allocation of matching payoffs across agents on both sides. Finally, when the arrival probabilities for H- and L-type arrivals are identical on both sides, we compare social welfare across systems with different patience levels: full backlog on both sides, one-sided backlog, and no backlog. In the centralized setting, social welfare is weakly ordered across systems. However, in the decentralized setting, the social welfare ranking across the three systems depends on the matching payoff allocation rule and the unit waiting cost, and enabling patience can either increase or decrease social welfare. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2602.03995 |
| By: | Daeyoung Jeong (Yonsei University); Jeong Yeol Kim (KDI School of Public Policy and Management) |
| Abstract: | We study cartel detection when two public authorities operate separate leniency programs within the same jurisdiction, as in Korea. We develop a simple repeated-game model to compare single-agency enforcement with dual-agency enforcement, to distinguish independent operation from cooperation, and to examine how the structure of leniency relief affects reporting incentives. When the two programs operate independently and do not recognize each other's leniency status, firms may have weaker incentives to self-report, and reporting can become concentrated in only one program. Cooperation that recognizes leniency rank across authorities restores a race to report and can make self-reporting attractive under a broader range of enforcement environments. The analysis also shows that cooperation is most reliable when early applicants receive comparable treatment across authorities: when second-in-line relief is available only in the administrative program, stronger criminal exposure can reduce the effectiveness of cooperation by raising the residual risk borne by non-first applicants. The policy implication is that effective dual-agency leniency can be achieved through a narrow form of coordination that verifies marker status and aligns the relief structure across authorities while preserving confidentiality. |
| Keywords: | Antitrust, Cartel Detection, Collusion, Dual-agency Enforcement, Leniency Program |
| JEL: | K21 K42 L41 L44 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:yon:wpaper:2026rwp-276 |
| By: | Hedieh Tajali (School of Economics, University of Edinburgh); Piruz Saboury (University of Houston) |
| Abstract: | The increasing use of dynamic fundraising schemes such as crowdfunding has given rise to a relatively small but growing body of literature focusing on understanding the effectiveness of such techniques. In this paper, we first present a simple model of dynamic fundraising as a sequential-move threshold public goods game. We demonstrate that donors have an incentive to free-ride on expected future contributions, which leads to the following testable hypotheses for our empirical analysis: Donations are, all else equal, decreasing in accumulated past donations and increasing in time from the beginning of fundraising. In the next step, we analyse a rich dataset from a prominent crowdfunding platform. We find evidence that supports our hypotheses and shows the presence of a small but statistically significant forward-looking crowd-out among donors. On average, a one-percentage-point increase in past cumulative donations leads to a reduction of 0.05 percentage points in the amount contributed, while a one-percentage-point increase in time passed results in an increase of 0.03 percentage points in the amount contributed. In short, we observe that an increased prospect of future provision crowds out earlier contributions. |
| Keywords: | public goods, philanthropy, fundraising, crowdfunding, free-riding, crowding-out. |
| JEL: | H00 H41 D64 I22 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:edn:esedps:322 |
| By: | Herbertson, Max; Lee, Neil; Pardy, Martina; Soskice, David; Storper, Michael |
| Abstract: | Europe’s economic stagnation and declining global position stem from its failure to lead in first mover innovation, as the United States and, increasingly, China have produced the new breakthrough technologies of the latest industrial revolution. In this paper, we consider the causes of this innovation problem: interrelated issues in the structure of innovation institutions, education, geography, finance and markets, all of which have deep political roots. We build on a game theory model of strategic complementarities and mutual commitments to suggest a path forward which would allow a ‘coalition of the willing’ of advanced European states to develop US style institutions of innovation while combining them with Europe’s social model. Using this, we chart a feasible transition path for Europe which builds on strengths in incremental innovation while creating first mover capacities through integrated capital markets, venture ecosystems, and focused regional cluster development. Only by overcoming its first mover innovation gap, while not abandoning the goals of its social model, can Europe achieve growth, global relevance, and social stability in an era of intensified geopolitical and technological competition. |
| JEL: | N0 R14 J01 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:137116 |