Game Theory http://lists.repec.org/mailman/listinfo/nep-gth Game Theory 2026-08-10 Comparing Subsidies to Solve Coordination Failure https://d.repec.org/n?u=RePEc:cpr:ceprdp:20035&r=&r=gth We use experiments to systematically test the performance of subsidies aimed at inducing efficient coordination in a coordination game. We consider two classes of policies: those based on divide-and-conquer (i.e.\ iterated dominance) and those making the efficient Nash equilibrium of the game risk dominant. Cost-efficient policies from both classes are equally expensive but differ in the distribution of subsidies among agents. Our results show that risk dominance subsidies increase coordination more effectively or at a lower cost than divide-and-conquer subsidies. Heijmans, Roweno Suetens, Sigrid 2025-03 Disclosure by Groups https://d.repec.org/n?u=RePEc:cpr:ceprdp:20057&r=&r=gth This paper introduces a model of group communication, in which a group of senders with conflicting interests collectively communicate with a receiver through the disclosure or non-disclosure of information about a relevant state. Collective disclosure decisions are reached via the aggregation of group members’ disclosure recommendations via a pre-determined deliberation procedure. In contrast with classic results from single-agent disclosure, (sequential) equilibria of the group disclosure game typically do not involve full disclosure. We investigate the relation between the group’s deliberation procedure and features of equilibrium communication. In particular, we characterize changes in the deliberation procedure that increase a group’s informativeness; and show that the receiver interprets group messages less favorably for group members who have relatively more power. Onuchic, Paula Ramos, João Disclosure; Groups; Organizations; Communication 2025-03 Axioms for Correlated Equilibrium https://d.repec.org/n?u=RePEc:arx:papers:2607.06282&r=&r=gth We characterize correlated equilibrium in finite normal-form games. Interpreting correlated strategies as action recommendations, we show that correlated equilibrium is the unique solution concept that never recommends a pure-strategy dominated action, treats payoff-equivalent actions interchangeably, and respects the sure-thing principle under uncertainty about payoffs and the correlation device. A parallel characterization identifies coarse correlated equilibrium among solution concepts that recommend dominant actions whenever they exist and treat payoff-equivalent actions as strongly interchangeable. Florian Brandl 2026-07 Symmetry-in-Asymmetry: On the Existence and Structure of Asymmetric Pure-Strategy Equilibria in Symmetric Tullock Two-Group Contests https://d.repec.org/n?u=RePEc:mib:wpaper:579&r=&r=gth When information is complete, symmetric group-contest games `a la Tullock are known to display within-group-symmetric (WGS) pure-strategy equilibria. Far less is known about the possible existence and structure of their asymmetric counterparts—pure-strategy equilibria where, symmetry notwithstanding, members of the same group exert different effort levels. This note fills the gap by proving that within-group-asymmetric (WGA) pure-strategy equilibria indeed exist, but only for a specific subset of incentivisation schemes. All such equilibria display a peculiar ‘group-splitting’ structure: a subgroup of members free-ride exerting null effort, whereas the other members provide the same positive effort level. Because of this symmetry-in-asymmetry, the game displays the same aggregative structure identified in the context of WGS equilibria. Accordingly, an explicit characterisation is feasible also for their WGA counterparts. Davide Bosco Mario Gilli (A)Symmetry, Conflict, Group contests, Sharing rules, Strategic complements and substitutes 2026-07 Congestion Games with Heterogeneous Valuations: An Optimal Transport Approach https://d.repec.org/n?u=RePEc:arx:papers:2607.03625&r=&r=gth In emerging urban mobility and logistics applications, such as advanced air mobility, electric vehicle charging, and shared service systems, agents with heterogeneous valuations choose among multiple destinations while sharing congested network resources. However, existing congestion game and resource allocation models do not simultaneously capture heterogeneous destination preferences and aggregate congestion externalities. We introduce a new nonatomic congestion game framework in which agents are endowed with heterogeneous destination valuations modeled by a measure space. We characterize Nash equilibria and social optima in this setting and show that both admit finite-dimensional representations in terms of threshold vectors and dual potentials. These structures induce a partition of the valuation space that determines agents' destination choices. Our analysis leverages Kantorovich duality from optimal transport theory and provides a new geometric perspective on congestion games with heterogeneous valuations. Pan-Yang Su Negar Mehr Shankar Sastry 2026-07 The Sharing Trap: Duplicate Work and Coordination in Teams https://d.repec.org/n?u=RePEc:zbw:esprep:342325&r=&r=gth This paper studies costly information sharing in teams where members may duplicate one another's work. Members first decide whether to share their intended task assignments and then choose productive effort. Sharing allows a teammate to direct effort toward nonoverlapping tasks, while the sharer benefits only through complementary team production. This creates strategic complementarity in sharing and can sustain both a low-sharing, low-effort equilibrium and a high-sharing, high-effort equilibrium. The incentive to initiate sharing is strongest at an intermediate level of duplication risk: when duplication is limited, sharing prevents little wasted work; when duplication is severe, a lone sharer retains too little effective output to gain much from the teammate's response. Yet the value of coordinated sharing rises with duplication risk. A leader who shares first can select the high-sharing equilibrium, while larger teams may require a critical mass of initial sharers. The main equilibrium structure also survives with continuous sharing. The analysis identifies when communication platforms must be supplemented by visible first movers or coordinated initial participation to prevent duplicate work. Hattori, Keisuke information sharing, duplicate work, team production, coordination failure, leadership 2026 Revisiting the Theory of International Environmental Agreements with Heterogenous Players. https://d.repec.org/n?u=RePEc:luc:wpaper:26-08&r=&r=gth "We study an n-country pollution differential game in which countries differ in their sensitivity to environmental damages while contributing to a common pollution stock. Such heterogeneity implies that countries value environmental quality differently and disagree on the desirable long-run environmental outcome. Within a linear-quadratic framework, we characterize the decentralized equilibrium and compare it to a centralized benchmark that maximizes aggregate welfare. We show that decentralized steady-state pollution is inefficiently high and that its level depends systematically on the distribution of damage sensitivities: intriguingly, holding average damages constant, more evenly distributed damages lead to more long-run pollution. We next show, among others, that while polarized damages reduce equilibrium pollution, they do generate distributional tensions. We therefore suggest a mechanism combining Pigouvian taxation with lump-sum transfers that can found an International Environment Agreement redistributing gains and implementing the first-best allocation despite divergent incentives." Raouf Boucekkine Weihua Ruan Benteng Zou "Transboundary pollution; Differential games; Asymmetric players; International Envionmental agreements" 2026 Bid Behavior and Policy Design in Public Food Procurement https://d.repec.org/n?u=RePEc:ags:aaea26:404368&r=&r=gth Public food procurement contracts are commonly awarded through competitive sealed-bid procedures in which vendors strategically determine bid prices while competing for institutional food supply contracts. However, procurement outcomes depend not only on underlying costs but also on strategic vendor responses within competitive bidding environments. This paper develops an integrated empirical and structural framework to analyze strategic bidding behavior in public lettuce procurement. First, a lognormal bid-distribution model is estimated in which conditional bid distributions vary according to procurement costs, local sourcing status, vendor size, and lettuce product category. Second, the estimated probability density and cumulative distribution functions are incorporated into a Bayes Nash equilibrium model of first-price procurement auctions to derive optimal equilibrium bid prices under alternative competition scenarios. Results indicate substantial cost pass-through into submitted bids and significant heterogeneity across vendor types and lettuce categories. Small vendors submit substantially higher bids than comparable large vendors. Local sourcing is associated with modestly higher bid prices, although the estimated effect is not statistically significant after controlling for procurement costs, vendor size, and product categories. Increased bidder participation substantially reduces equilibrium markups through intensified competitive pressure. More broadly, the study demonstrates how empirically estimated bid distributions can be integrated with structural auction theory to evaluate strategic vendor behavior in public food procurement markets. The paper contributes an empirically calibrated Bayes Nash equilibrium framework for analyzing strategic bidding behavior and equilibrium pricing in first-price public food procurement auctions. Ge, Houtian Gomez, Miguel Jablonski, Rebecca Nie, Xiaodong Agricultural and Food Policy 2026 Stochastic ultimatum game: Spite-driven resource feedback fosters fairness https://d.repec.org/n?u=RePEc:arx:papers:2607.14914&r=&r=gth Resource scarcity can fundamentally encourage antisocial behaviour, whereas resource abundance can promote fair behaviour. Experimental evidence indeed suggests that scarcity induces spiteful behaviour, while repeated interactions enhance fairness. However, existing studies of game--environment feedback systems are largely confined to the evolution of cooperation and they overlook the interplay between resources, spite, and fairness. To address this lacuna, we develop a stochastic ultimatum game framework in which an offerer and an accepter repeatedly interact to negotiate exploitation of a self-renewable resource under the ownership of the offerer. Successful agreements deplete the resource, whereas unsuccessful agreements inhibit exploitation and facilitate replenishment. The mutation--selection driven two-species stochastic evolutionary dynamics reveal that the emergence of spite and fairness strongly depends on the resource growth rate. Fairness predominantly prevails for resources with high growth rates. Intriguingly, low resource growth rates give rise to a resource feedback loop driven by spite: spiteful behaviour dominates in the depleted state, facilitating transition of the resource state to replete state which, in turn, promotes fairness through repeated interactions. Arunava Patra Prosanta Mandal Sagar Chakraborty 2026-07 Network Formation with Publicly Noxious but Privately Profitable Agents: An Experiment https://d.repec.org/n?u=RePEc:cpr:ceprdp:19933&r=&r=gth We study experimentally a new model to study the effect of climate externalities and contractual incompleteness on network formation. We model a network where good/green firms enjoy direct and indirect benefits from linking with one another. Bad/brown firms benefit from having a connection with a good firm, but they are a cost to both direct and indirect connections. In efficient networks the green firms should form large connected components with very few brown firms attached. The equilibrium networks, on the other hand, have many more brown firms attached, and components are also smaller than the efficient ones. Our experiments show that empirical results are broadly in line with the theoretical equilibrium predictions, although the precise quantitative outcomes are different from the theory. Cabrales, Antonio Pomares, Gema Ramos Muñoz, David Sánchez, Angel Network formation 2025-02 Data-Driven Mechanism Design: Jointly Eliciting Preferences and Information https://d.repec.org/n?u=RePEc:cpr:ceprdp:20227&r=&r=gth We study mechanism design when agents have private preferences and private information about a common payoff-relevant state. We show that standard message-driven mechanisms cannot implement socially efficient allocations when agents have multidimensional types, even under favorable conditions. To overcome this limitation, we propose data-driven mechanisms that leverage additional post-allocation information, modeled as an estimator of the payoff-relevant state. Our data-driven mechanisms extend the classic Vickrey-Clarke-Groves class. We show that hey achieve exact implementation in posterior equilibrium when the state is either fully revealed or the utility is affine in an unbiased estimator. We also show that they achieve approximate implementation with a consistent estimator, converging to exact implementation as the estimator converges, and present bounds on the convergence rate. We demonstrate applications to digital advertising auctions and large language model (LLM)-based mechanisms, where user engagement naturally reveals relevant information. Bergemann, Dirk Bojko, Marek Duetting, Paul Paes Leme, Renato Xu, Haifeng Zuo, Song Large Language Models 2025-05 When Hotelling meets Shaked and Sutton: A Unified Linear Model of Product Differentiation https://d.repec.org/n?u=RePEc:cpr:ceprdp:20171&r=&r=gth This paper provides a simple unified discrete-choice framework for analyzing differentiated duopolies. This framework nests models of horizontal and vertical differentiation, including standard textbook models (Hotelling and Shaked-Sutton). Contrary to these models, it also applies to economic environments where horizontal differentiation coincides with positive correlation of product valuations across consumers, and environments where vertical differentiation coincides with negative correlation. The paper provides an equilibrium characterization that is applicable independently of the type of differentiation and the sign of the valuation correlation. Schmutzler, Armin Duopoly; Differentiated products; Price competition 2025-04 Evaluation and Assignment with Networked Competition and Spillovers https://d.repec.org/n?u=RePEc:ces:ceswps:_12816&r=&r=gth This paper studies how organizations should jointly design evaluation rules and assign workers when performance depends on both effort and non-discretionary advantage. Agents choose effort in positions linked by a competition network, while their effective advantage depends on own type and spillovers through a second network. The planner chooses both the assignment and the effort weight in evaluation. Equilibrium effort rises with a position's Katz-Bonacich centrality and falls with effective advantage. The optimal evaluation rule generally differs from true output. When effort is more important in production, the planner lowers the effort weight and uses negative assortative assignment to strengthen incentives. When advantage is more important, the planner raises the effort weight and uses positive assortative assignment to exploit spillovers. We also study a constraint requiring assignments to be pairwise stable, which creates an output loss depending on the intensity of competition. Antonio Cabrales Wenhao Cheng relative performance evaluation, worker assignment, organizational design, incentives; contests, network games, peer effects, spillovers, assortative matching 2026 Securing solidarity https://d.repec.org/n?u=RePEc:pot:cepadp:104&r=&r=gth Individuals who speak out against autocratic tendencies are taking a significant personal risk. This study tests whether forming preventive solidarity networks increases the likelihood of solidarity. In a laboratory experiment, we use an adapted version of the solidarity game, in which one of four group members may lose all their money at random. All group members decide how much they want to give to the individual who lost their endowment. Comparing two treatments with and without communication, we find that ex-ante communication substantially increases solidarity. In a further treatment, we inform participants that forming explicit agreements during the communication would be beneficial. This subtle suggestion doubles the effectiveness of communication in terms of solidarity. Further analysis suggests that, in our setting, solidarity is contingent on trusting that others will behave in a similar way. Higher trust in humans predicts a greater willingness to give, most likely because generally trusting individuals anticipate more solidarity from others towards them as well. The informational hint appears to foster such trust within the group strongly, rendering general trust irrelevant for one’s own solidaristic behaviour. Lisa Bruttel Eva Markowsky solidarity, communication, laboratory experiment 2026-08 Lost in Persuasion: Negative Reciprocity in Information Design https://d.repec.org/n?u=RePEc:cpr:ceprdp:20295&r=&r=gth We incorporate negative reciprocity into strategic information transmission, examining how a receiver's response to perceived manipulation influences optimal information design. In one setting, greater signal inaccuracy increases the likelihood that the receiver disregards it; in another, inaccuracy shifts the receiver's preferences unfavorably for the sender. In both cases, the revelation principle fails, yet we characterize the set of posterior beliefs on which an optimal signal is supported. While full revelation may be optimal in one setting, it is never so in the other. Our findings connect information design with behavioral economics, highlighting the implications of design-dependent preferences. Eliaz, Kfir Eilat, Ran Negative-reciprocity; Information design 2025-05 Price Competition and Endogenous Product Choice in Networks: Evidence from the US Airline Industry https://d.repec.org/n?u=RePEc:cpr:ceprdp:20144&r=&r=gth We develop a two-stage game in which competing airlines first choose the networks of markets to serve in the first stage before competing in price in the second stage. Spillovers in entry decisions across markets are allowed, which accrue on the demand, marginal cost, and fixed cost sides. We show that the second-stage parameters are point identified, and we design a tractable procedure to set identify the first-stage parameters and to conduct inference. Further, we estimate the model using data from the domestic US airline market and find significant spillovers in entry. In a counterfactual exercise, we evaluate the 2013 merger between American Airlines and US Airways. Our results highlight that spillovers in entry and post-merger network readjustments play an important role in shaping post-merger outcomes. Bontemps, Christian Gualdani, Cristina Remmy, Kevin Endogenous market structure; Networks; Airlines; Oligopoly; Product repositioning; Mergers; Remedies 2025-04 Markov Information Processes https://d.repec.org/n?u=RePEc:arx:papers:2607.04308&r=&r=gth We study information design when a designer with commitment shapes the information of strategically interacting, far-sighted agents whose actions drive a persistent, controlled Markov state. We introduce the Markov Bayes correlated equilibrium (Markov BCE), the controlled-Markov generalisation of the BCE of Bergemann and Morris (2016), characterised by a dynamic obedience condition that adds a continuation-value term to the static one and reduces to it when actions cannot move the state. Recommending actions is without loss; the designer's problem is recursive in the agents' promised continuation utilities and is solved by a set-valued backward-induction algorithm whose optimum exists and lies between the no-disclosure and first-best values. For linear-quadratic-Gaussian payoffs the obedience condition becomes a covariance condition with a modified interaction matrix, and the stationary case reduces to an algebraic Riccati equation. When agents instead learn the transition, we identify the rent an agent earns from a model of the dynamics sharper than the designer anticipates: it is non-negative, zero at the known-dynamics benchmark, and deterred only by building slack into obedience. Under persistent excitation the cumulative rent grows logarithmically as heterogeneous agents' estimates converge. Two worked examples, in congestion and resource coordination, together with a numerical study illustrate the theory. Furkan Sezer 2026-07 Demand reduction and initial endowments in consignment auctions https://d.repec.org/n?u=RePEc:arx:papers:2607.03648&r=&r=gth Consignment auctions, in which bidders first receive free initial endowments of a good and must then consign them to a subsequent uniform price auction, are often used in emissions allowance trading for the environmental regulation of greenhouse gas emissions. We study consignment auctions where many asymmetric bidders have flat demands up to their respective quantity constraints. We first characterize the equilibrium outcome and then examine the effects of initial endowments and total supply. If bidders' initial endowments increase or the total supply decreases, the equilibrium price increases whereas the social welfare and the auctioneer's revenue may increase or decrease. In particular, the revenue may increase even though fewer units remain in the hands of the auctioneer since an increase in initial endowments can prevent the low price equilibrium resulting from demand reduction. Kiho Yoon 2026-07 Concentration Indices, Welfare Distortions, and Misallocation in Oligopoly https://d.repec.org/n?u=RePEc:cpr:ceprdp:20019&r=&r=gth We study welfare distortions in a multiproduct-firm pricing game with constant elasticity of substitution (CES) or multinomial logit (MNL) demand. Using approximations both around small market shares and around monopolistic competition conduct, we identify sufficient statistics to gauge the extent of inefficiencies caused by oligopolistic market power. We find that, at a low order, the oligopoly distortions are proportional to the Herfindahl index of industry concentration. At a higher order, distortions also depend on the cubic Hannah-Kay concentration index. Additionally, we show that the welfare loss from resource misallocation is approximately proportional to the difference between the cubic Hannah-Kay index and the square of the Herfindahl index. Nocke, Volker Schutz, Nicolas Oligopoly pricing; Misallocation; Industry concentration; Herfindahl index; Sufficient statistic 2025-03 More Information, Less Reliability? Technological Change and Fact-Finding in Human Rights Investigations https://d.repec.org/n?u=RePEc:afd:wpaper:2601&r=&r=gth This paper examines how technological progress, by lowering the costs of both disseminating and fabricating information, affects the work of fact-finding missions investigating human rights violations. Using a game-theoretic model, we show that when (i) authentication costs are sufficiently low and (ii) technology makes it harder to distinguish false from genuine information, a positive technological shock increases the expected authentication cost while reducing information quality: although the circulation of genuine information increases, false information spreads even faster. When these conditions do not hold, the effects are ambiguous. Yann Lecorps Marie Obidzinski Yves Oytana disinformation; fake news; fact-finding missions; human rights violations; open-source investigations 2026-05