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on Game Theory |
| By: | Mariya Teteryatnikova |
| Abstract: | We propose a new notion of farsighted pairwise stability for dynamic network formation which includes two notable features: consideration of intermediate payos and cautiousness. This diers from existing concepts which typically consider either only immediate or nal payos, and which often require a certain amount of optimism on the part of the players in any environment without full communication and commitment. We show that for an arbitrary denition of preferences over the process of network formation, a non-empty cautious path stable set of networks always exists, and provide a characterization of this set. Strongly ecient networks do not always belong to a cautious path stable set for a common range of preference specications. But if there exists a Pareto dominant network and players value payos in a nal network most, then this Pareto dominant network is the unique prediction of the cautious path stable set. Finally, in the special case where players derive utility only from a nal network, we study the relationship between cautious path stability and a number of other farsighted concepts, including pairwise farsightedly stable set and von Neumann-Morgenstern pairwise farsightedly stable set. |
| JEL: | A14 C71 C92 D85 |
| Date: | 2015–08 |
| URL: | http://d.repec.org/n?u=RePEc:vie:viennp:1509&r=gth |
| By: | Ying Chen (Key Laboratory of Inorganic Functional Materials and Devices - Chinese Academy of Science (CAS) - Shangai Institute of Ceramics); Sidartha Gordon (ECON - Département d'économie - Sciences Po) |
| Abstract: | We introduce a "nestedness" relation for a general class of sender-receiver games and compare equilibrium properties, in particular the amount of information transmitted, across games that are nested. Roughly, game is nested in game if the players's optimal actions are closer in game. We show that under some conditions, more information is transmitted in the nested game in the sense that the receiver's expected equilibrium payoff is higher. The results generalize the comparative statics and welfare comparisons with respect to preferences in the seminal paper of Crawford and Sobel (1982). We also derive new results with respect to changes in priors in addition to changes in preferences. We illustrate the usefulness of the results in three applications: (i) delegation to an intermediary with a different prior, the choice between centralization and delegation, and two-way communication with an informed principal. |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00973071&r=gth |
| By: | Tjaša Bjedov (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS - UCBL - Université Claude Bernard Lyon 1 - UL2 - Université Lumière - Lyon 2 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - ENS Lyon - École normale supérieure - Lyon); Thierry Madiès (Université de Fribourg, Faculté des sciences économiques et sociales - Université de Fribourg); Marie Claire Villeval (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS - UCBL - Université Claude Bernard Lyon 1 - UL2 - Université Lumière - Lyon 2 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - ENS Lyon - École normale supérieure - Lyon) |
| Abstract: | We study the impact of communication on behavior in a two-stage coordination game with asymmetric payoffs. We test experimentally whether individuals can avoid a head-to-head confrontation by means of coordinated strategies. In particular we analyze whether and how quickly a conflict-avoidance take-turn strategy can emerge. First, our results show that players learn to solve the conflict by choosing opposite options at both stages of the game. Second, many adopt a take-turn strategy to sustain coordination over time and alleviate the inequality induced by the asymmetry of payoffs. Third, communication increases the likelihood of conflict resolution even when a single pair member has the right to communicate. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01139112&r=gth |
| By: | Astrid Gamba (University of Milan-Bicocca, Milan, Italy); Tobias Regner (School of Economics and Business Administration, Friedrich-Schiller-University Jena) |
| Abstract: | We study experimentally whether heterogeneity of behavior in the Centipede game can be interpreted as the result of a learning process of individuals with different preference types (more and less pro-social) and coarse information regarding the opponent's past behavior. We manipulate the quality of information feedbacks provided after each play. If subjects rely only on their personal database, long run behavior resembles a Self-confirming equilibrium whereby less pro-social types take at earlier nodes due to prediction errors. Aggregate information release decreases heterogeneity of behavior by increasing the passing rates of pro-selfs and play moves towards Bayesian Nash equilibrium. |
| Keywords: | social preferences, learning, Self-confirming equilibrium, experiment |
| JEL: | C71 C73 C91 D83 |
| Date: | 2015–08–06 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2015-012&r=gth |
| By: | Sylvain Béal (CRESE - Centre de REcherches sur les Stratégies Economiques - Université de Franche-Comté); Amandine Ghintran (EQUIPPE - Economie Quantitative, Intégration, Politiques Publiques et Econométrie - Université Lille II - Droit et santé - Université Lille 1 - Sciences et technologies - Université Charles-de-Gaulle Lille 3 - Sciences humaines et sociales - PRES Université Lille Nord de France); Eric Rémila (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS - UCBL - Université Claude Bernard Lyon 1 - UL2 - Université Lumière - Lyon 2 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - ENS Lyon - École normale supérieure - Lyon); Philippe Solal (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS - UCBL - Université Claude Bernard Lyon 1 - UL2 - Université Lumière - Lyon 2 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - ENS Lyon - École normale supérieure - Lyon) |
| Abstract: | We introduce a new allocation rule, called the sequential equal surplus division for rooted forest TU-games. We provide two axiomatic characterizations for this allocation rule. The first one uses the classical property of component efficiency plus an edge deletion property. The second characterization uses standardness, an edge deletion property applied to specific rooted trees, a consistency property, and an amalgamation property. We also provide an extension of the sequential equal surplus division applied to the problem of sharing a river with bifurcations. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-01098766&r=gth |
| By: | Ariane Lambert-Mogiliansky (PSE - Paris-Jourdan Sciences Economiques - CNRS - Institut national de la recherche agronomique (INRA) - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics); Ismael Martinez-Martinez (DUCE - Dusseldorf Institute for Competition Economics - Heinrich Heine Universitat, Dusseldorf) |
| Abstract: | We develop a framework for the analysis of strategic interactions under the constructive preference perspective à la Kahneman and Tversky formalized in the Type Indeterminacy model. The players are modeled as systems subject to measurements and characterized by quantum-like uncertain preferences. The decision nodes are modeled as, possibly non-commuting, operators that measure preferences modulo strategic reasoning. We define a Hilbert space of types spanned by the players' eigentypes representing their potential preferences in different situations. We focus on pure strategy TI games of maximal information where all uncertainty stems from the intrinsic indeterminacy of preferences. We show that preferences evolve in a non-deterministic manner with actions along the play: they are endogenous to the interaction. We propose the notion of cashing-on-the-go to compute a player's utility, and the Type Indeterminate Nash Equilibrium as a solution concept relying on best-replies at the level of the eigentypes. We illustrate an example exhibiting the phenomenon of the manipulation of rivals' preferences. |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:psewpa:hal-01095472&r=gth |
| By: | Cubitt, Robin (University of Nottingham); Gächter, Simon (University of Nottingham); Quercia, Simone (University of Bonn) |
| Abstract: | We investigate whether there is a link between conditional cooperation and betrayal aversion. We use a public goods game to classify subjects by type of contribution preference and by belief about the contributions of others; and we measure betrayal aversion for different categories of subject. We find that, among conditional cooperators, only those who expect others to contribute little to the public good are significantly betrayal averse, while there is no evidence of betrayal aversion for those who expect substantial contributions by others. This is consistent with their social risk taking in public goods games, as the pessimistic conditional cooperators tend to avoid contribution to avoid exploitation, whereas the optimistic ones typically contribute to the public good and thus take the social risk of being exploited. |
| Keywords: | exploitation aversion, betrayal aversion, trust, conditional cooperation, public goods game, free riding, experiments |
| JEL: | H41 C91 C72 D03 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9241&r=gth |
| By: | Attanasi, Giuseppe; Hopfensitz, Astrid; Lorini, Emiliano; Moisan, Frédéric |
| Keywords: | Social ties, Group identity, Coordination, Experiment |
| JEL: | C72 C91 C92 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:29369&r=gth |
| By: | Yukio Koriyama (Department of Economics, Ecole Polytechnique - CNRS - Polytechnique - X); Matias Nunez (CNRS and Université de Cergy-Pontoise, THEMA - [-]) |
| Abstract: | We examine the conditions under which iterative elimination of weakly dominated strategies refines the set of proper outcomes of a normal-form game. We say that the proper inclusion holds in terms of outcome if the set of outcomes of all proper equilibria in the reduced game is included in the set of all proper outcomes of the original game. We show by examples that neither dominance solvability nor the transference of decision-maker indifference condition (TDI of Marx and Swinkels [1997]) implies proper inclusion. When both dominance solvablility and the TDI condition are satisfied, a positive result arises: the game has a unique stable outcome. Hence, the proper inclusion is guaranteed. |
| Date: | 2014–10–13 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01074178&r=gth |
| By: | Attanasi, Giuseppe; Hopfensitz, Astrid; Lorini, Emiliano; Moisan, Frédéric |
| Keywords: | Social ties, Group identity, Coordination, Experiment |
| JEL: | C72 C91 C92 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:tse:iastwp:29363&r=gth |
| By: | Camille Cornand (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS - UCBL - Université Claude Bernard Lyon 1 - UL2 - Université Lumière - Lyon 2 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - ENS Lyon - École normale supérieure - Lyon); Rodolphe Dos Santos Ferreira (BETA - Bureau d'économie théorique et appliquée - CNRS - Université Nancy II - Université de Strasbourg) |
| Abstract: | In Keynes' beauty contest, agents have to choose actions in accordance with an expected fundamental value and with the conventional value expected to be set by the market. In doing so, agents respond to a fundamental and to a coordination motive respectively, the prevalence of either motive being set exogenously. Our contribution is to consider whether agents favor the fundamental or the coordination motive as the result of a strategic choice that generates a strong strategic complementarity of agents' actions. We show that the coordination motive tends to prevail over the fundamental one, which yields a disconnection of activity away from the fundamental. A valuation game and a competition game are provided as illustrations of this general framework. Abstract In Keynes' beauty contest, agents have to choose actions in accordance with an ex-pected fundamental value and with the conventional value expected to be set by the market. In doing so, agents respond to a fundamental and to a coordination motive re-spectively, the prevalence of either motive being set exogenously. Our contribution is to consider whether agents favor the fundamental or the coordination motive as the result of a strategic choice that generates a strong strategic complementarity of agents' actions. We show that the coordination motive tends to prevail over the fundamental one, which yields a disconnection of activity away from the fundamental. A valuation game and a competition game are provided as illustrations of this general framework. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01116156&r=gth |
| By: | Angela Sutan (ESC Dijon Bourgogne - ESC Dijon Bourgogne); Radu Vranceanu (Economics Department - Essec Business School) |
| Abstract: | This paper reports results from a three-player variant of the ultimatum game in which the Proposer can delegate to a third party his decision regarding how to share his endowment with a Responder with a standard veto right. However, the Responder cannot verify whether the delegation is effective or the third party merely plays a “scapegoat” role while the decision is made by the Proposer himself. In this imperfect information setting, the Proposer can send an unverifiable message declaring his delegation strategy. The most interesting strategy is “false delegation”, in which the Proposer makes the decision but claims to have delegated it. In our sample, the recourse to false delegation is significant, and a significant number of potential Delegates accept serving in the scapegoat role. However, there are many honest Proposers, and 20% of all Delegates will refuse to be the accomplices of a dishonest Proposer. Responders tend to more readily accept poor offers in a setup that permits lying about delegation; the acceptance rate of the poor offer is the highest when Delegates can refuse the scapegoat role. |
| Date: | 2015–01–09 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01109345&r=gth |
| By: | Finus, Michael; McGinty, Matthew |
| Abstract: | This paper considers the stability and success of a pubic good agreement. We allow for any type and degree of asymmetry regarding benefits and costs. We ask the question whether asymmetry and which type and degree of asymmetry is conducive to cooperation? We employ a simple non-cooperative game-theoretic model of coalition formation and derive analytical solutions for two scenarios: an agreement without and with optimal transfers. A central message of the paper is that asymmetry does not have to be an obstacle for successful cooperation but can be an asset. We qualify and reverse two central results in the literature. Firstly, the paradox of cooperation, known since Barrett (1994) and reiterated by many others afterwards, stating that under those conditions when cooperation would matter most, stable agreements achieve only little. Secondly, a kind of "coalition folk theorem", known (without proof) in the literature for a long time, stating that without transfers, stable coalitions will be smaller with asymmetric than symmetric players. We show that even without transfers the grand coalition can be stable if there is a negative covariance between benefit and cost parameters with massive gains from cooperation. Moreover, with transfers, many distributions of benefit and cost parameters lead to a stable grand coalition, again, some of them implying huge gains from cooperation. Stability and success greatly benefit from a very skewed asymmetric distribution of benefit and costs, i.e. diversity pays! |
| Keywords: | public good provision; coalition formation; asymmetry; externalities; transfers |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:eid:wpaper:46599&r=gth |
| By: | Pull, Kerstin; Stadler, Manfred |
| Abstract: | We study product market competition between firm owners (principals) where workers (agents) decide on their efforts and, hence, on output levels. Two worker compensation schemes are compared: a piece rate compensation as a benchmark when workers' output performance is verifiable, and a contest-based compensation scheme with variable, revenue-based prizes when it is only verifiable who the best performing worker is, i.e., only 'contest performance' is verifiable.Without rivalry between firms, the two compensation schemes lead to the same results. In case of product market competition, however, contest-based compensation schemes lead to more employment, more production, and lower firm profits. The reduction in profits represents the cost of being only able to verify workers' contest performance instead of output performance. |
| Keywords: | worker compensation,piece rates,team contests,revenue sharing,strategic competition |
| JEL: | C72 L22 M52 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:tuewef:85&r=gth |
| By: | Greselin, Francesca; Zitikis, Ricardas |
| Abstract: | The underlying idea behind the construction of indices of economic inequality is based on measuring deviations of various portions of low incomes from certain references or benchmarks, that could be point measures like population mean or median, or curves like the hypotenuse of the right triangle where every Lorenz curve falls into. In this paper we argue that by appropriately choosing population-based references, called societal references, and distributions of personal positions, called gambles, which are random, we can meaningfully unify classical and contemporary indices of economic inequality, as well as various measures of risk. To illustrate the herein proposed approach, we put forward and explore a risk measure that takes into account the relativity of large risks with respect to small ones. |
| Keywords: | economic inequality, reference measure, personal gamble, inequality index, risk measure, relativity. |
| JEL: | C13 C18 C7 I32 |
| Date: | 2015–07–20 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:65892&r=gth |