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on Game Theory |
| By: | Cannerozzi, Federico (Center for Mathematical Economics, Bielefeld University); Ferrari, Giorgio (Center for Mathematical Economics, Bielefeld University) |
| Abstract: | We consider ergodic symmetric $N$-player and mean-field games of singular control in both cooperative and competitive settings. The state process dynamics of a representative player follow geometric Brownian motion, controlled additively through a nondecreasing process. Agents aim to maximize a long-time average reward functional with instantaneous profit of power type. The game shows strategic complementarities, in that the marginal profit function is increasing with respect to the dynamic average of the states of the other players, when $N |
| Keywords: | mean-field games, $N$-player games, singular stochastic control, ergodic reward, Nash equilibrium, Pareto efficiency, coarse correlated equilibrium, strategic complementarities |
| Date: | 2024–04–30 |
| URL: | http://d.repec.org/n?u=RePEc:bie:wpaper:691&r=gth |
| By: | Alessandro Calvia; Salvatore Federico; Giorgio Ferrari; Fausto Gozzi |
| Abstract: | We establish the existence and uniqueness of the equilibrium for a stochastic mean-field game of optimal investment. The analysis covers both finite and infinite time horizons, and the mean-field interaction of the representative company with a mass of identical and indistinguishable firms is modeled through the time-dependent price at which the produced good is sold. At equilibrium, this price is given in terms of a nonlinear function of the expected (optimally controlled) production capacity of the representative company at each time. The proof of the existence and uniqueness of the mean-field equilibrium relies on a priori estimates and the study of nonlinear integral equations, but employs different techniques for the finite and infinite horizon cases. Additionally, we investigate the deterministic counterpart of the mean-field game under study. |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2404.02871&r=gth |
| By: | Buccella, Domenico; Fanti, Luciano; Gori, Luca |
| Abstract: | The Corporate Social Responsibility (CSR) theory of the firm states that, in strategic markets, social actions lead to a prisoner's dilemma. This paper develops a model with pollution externalities and environmental taxation to incentivise firms' abatement activities through green R&D investments. When the firms' objective function embed environmental issues (Environmental CSR, ECSR), a large spectrum of Nash equilibria emerges, from the Pareto inefficient to the Pareto efficient (ECSR, ECSR), depending on social concern and product differentiation degree. The time (in)consistency policy affects the endogenous market structure of the ECSR decision game more than in the standard CSR without abatement and taxation. |
| Keywords: | Abatement, Corporate Social Responsibility, Duopoly, Emissions |
| JEL: | H23 L13 M14 Q58 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:1421&r=gth |
| By: | Thomas Eichner; Rüdiger Pethig |
| Abstract: | We analyze international environmental agreements in a two-stage game when governments have homo moralis preferences à la Alger and Weibull (2013, 2016). The countries base their decisions on the material payoff obtained on the hypothesis that all other countries act as they with predetermined probability. They are assumed to act morally w.r.t. both membership and emissions. We investigate the interaction and impact of that moral behavior on coalition formation and material payoff. The membership morality tends to increase while the emissions morality tends to decrease the coalition size, but the outcome is not smoothly determined by these opposite forces. |
| Keywords: | IEA, stability, homo moralis, emissions morality, membership morality |
| JEL: | C72 Q50 Q58 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_11040&r=gth |
| By: | Andrew Komo; Scott Duke Kominers; Tim Roughgarden |
| Abstract: | In a single-item auction, a duplicitous seller may masquerade as one or more bidders in order to manipulate the clearing price. This paper characterizes auction formats that are shill-proof: a profit-maximizing seller has no incentive to submit any shill bids. We distinguish between strong shill-proofness, in which a seller with full knowledge of bidders' valuations can never profit from shilling, and weak shill-proofness, which requires only that the expected equilibrium profit from shilling is nonpositive. The Dutch auction (with suitable reserve) is the unique optimal and strongly shill-proof auction. Moreover, the Dutch auction (with no reserve) is the unique prior-independent auction that is both efficient and weakly shill-proof. While there are a multiplicity of strategy-proof, weakly shill-proof, and optimal auctions; any optimal auction can satisfy only two properties in the set {static, strategy-proof, weakly shill-proof}. |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2404.00475&r=gth |
| By: | Bogliacino, Francesco (Universidad Nacional de Colombia); Aycinena, Diego (Universidad del Rosario); Kimbrough, Erik |
| Abstract: | We measure normative expectations in dictator games and naturally occurring vignettes using the norm-elicitation procedure based on coordination games (Krupka & Weber, 2013). We test a five-item scale, allowing subjects to report "neither socially appropriate nor inappropriate" behavior. In principle, this category is better suited to identify heterogeneity in normative expectations or asymmetries around the most appropriate action (as in the dictator game) but provides an oddity that may constitute a focal point, biasing the report. We find no evidence of distortions but also limited evidence of changes in the shape of the distribution. The use of the neutral category is robust to the inclusion of an incentive-compatible "I don't know" response, confirming that the category is correctly interpreted by subjects. The elicitation method using the coordination game appears robust to the risk of false positives (detecting norms where they do not apply) and the risk of a competing focal point. Based on our results, scholars who intend to recover norms in settings with asymmetries and normative and non-normative actions may use the neutral category, but if these issues are not a concern, should stick with the standard scale. |
| Date: | 2024–04–02 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:y3fha&r=gth |
| By: | Siting Lu |
| Abstract: | The growing adoption of large language models (LLMs) presents substantial potential for deeper understanding of human behaviours within game theory frameworks through simulations. Leveraging on the diverse pool of LLM types and addressing the gap in research on competitive games, this paper examines the strategic interactions among multiple types of LLM-based agents in a classical game of beauty contest. Drawing parallels to experiments involving human subjects, LLM-based agents are assessed similarly in terms of strategic levels. They demonstrate varying depth of reasoning that falls within a range of level-0 and 1, and show convergence in actions in repeated settings. Furthermore, I also explore how variations in group composition of agent types influence strategic behaviours, where I found higher proportion of fixed-strategy opponents enhances convergence for LLM-based agents, and having a mixed environment with agents of differing relative strategic levels accelerates convergence for all agents. There could also be higher average payoffs for the more intelligent agents, albeit at the expense of the less intelligent agents. These results not only provide insights into outcomes for simulated agents under specified scenarios, it also offer valuable implications for understanding strategic interactions between algorithms. |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2404.08492&r=gth |
| By: | Jonas von Wangenheim |
| Abstract: | Consumer data increasingly enable online marketplaces to identify buyers’ preferences and provide individualized product information. Buyers, however, fully learn their product value only after contracting, when the product is delivered. I characterize the impact of such ex-ante information on buyer surplus and seller surplus, when the seller sets prices and refund conditions in response to the ex-ante information. I show that efficient trade and an arbitrary split of the surplus can be achieved. For the buyer- optimal signal low-valuation buyers remain partially uninformed. Such a signal induces the seller to sell at low prices without refund options. |
| Keywords: | information disclosure, sequential screening, information design, strategic learning, Bayesian persuasion, mechanism design, platform economics, consumer protection |
| JEL: | D82 D47 D18 |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2022_352v2&r=gth |
| By: | Zhi Cao (Chinese University of Hong Kong); Arthur Lewbel (Boston College); Wenchao Li (Tongji University); Junjian Yi (Peking University) |
| Abstract: | We propose a new method for identifying bargaining power in collective house- hold models, based on information asymmetry. Our model allows household members to exploit an information advantage for bargaining. We formulate the household’s decision process under partial information disclosure using a Bayesian persuasion framework. We use this structure to point identify utility and bargaining power, which would not be identified under symmetric information. We illustrate these results by showing that our model can ex- plain known empirical outcomes regarding child educational investment and development in Chinese households where one parent is a migrant. |
| Keywords: | Collective model; Information asymmetry; Bargaining power; Bayesian persuasion; Left-behind children |
| JEL: | D11 D13 D82 D13 D82 J13 |
| Date: | 2024–04–26 |
| URL: | http://d.repec.org/n?u=RePEc:boc:bocoec:1070&r=gth |
| By: | Ata Atay; Marina N\'u\~nez; Tam\'as Solymosi |
| Abstract: | This paper studies many-to-one assignment markets, or matching markets with wages. Although it is well-known that the core of this model is non-empty, the structure of the core has not been fully investigated. To the known dissimilarities with the one-to-one assignment game, we add that the bargaining set does not coincide with the core and the kernel may not be included in the core. Besides, not all extreme core allocations can be obtained by means of a lexicographic maximization or a lexicographic minimization procedure, as it is the case in the one-to-one assignment game. The maximum and minimum competitive salaries are characterized in two ways: axiomatically and by means of easily verifiable properties of an associated directed graph. Regarding the remaining extreme core allocations of the many-to-one assignment game, we propose a lexicographic procedure that, for each order on the set of workers, sequentially maximizes or minimizes each worker's competitive salary. This procedure provides all extreme vectors of competitive salaries, that is all extreme core allocations. |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2404.04847&r=gth |
| By: | Isa Hafalir; Donglai Luo; Cong Tao |
| Abstract: | We examine the unique format of the Istanbul Flower Auction and compare it to traditional Dutch and English auctions, emphasizing the need to auction large volumes rapidly. In a model with time costs, we study how this auction format, which cleverly combines Dutch and English auction mechanisms, manages time costs by dynamically adapting to initial bidding behaviors. Our numerical analysis considers specific time cost functions and reveals the high performance of the Istanbul Flower Auction in comparison to standard auction formats, in terms of both auctioneer and bidder utilities. This work highlights the critical role of auction design in improving social welfare, particularly in scenarios demanding the quick sale of numerous lots. |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2404.08288&r=gth |
| By: | Rolf Golombek; Michael Hoel; Snorre Kverndokk; Stefano Ninfole; Knut Einar Rosendahl; Michael Olaf Hoel |
| Abstract: | It is widely recognized that a cost-efficient way to achieve the climate targets of the Paris agreement requires investment in carbon capture and storage (CCS). However, to trigger sizeable investment in CCS the carbon price must exceed the historic carbon prices. This paper examines whether a higher price of carbon enhances competition of storage services and thus leads to lower costs of CCS. Using a Hotellling model with two storage sites, each being located at each end of the Hotelling line, we show that there are three alternative competition regimes. The level of the carbon tax determines which regime materializes. For “low” carbon taxes, there is no competition between the two storage firms. For “high” carbon taxes, there is standard Bertrand competition between the two storage firms. Finally, for “intermediate” carbon taxes, there is so called partial competition with multiple equilibria. Contrary to the standard conclusion on competition, we find that when each storage site is imposed to charge the same price for all its clients, the price under monopoly is lower than under partial competition. We offer several extensions of the model as well as numerical illustrations. With our reference parameter values and a carbon tax sufficiently high to reach the Paris targets, we find that we may end in a partial competition regime. |
| Keywords: | Hotelling line, kinked demand curve, duopoly, multiple equilibria, emission tax, carbon capture and storage |
| JEL: | L13 Q35 Q38 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_11052&r=gth |
| By: | Graubner, Marten; Hüttel, Silke |
| Abstract: | Much of the land economics literature has largely ignored the spatial nature of competition and related differences between farmland rental and sales markets. In this note we propose a model for price formation in both markets under a spatial competition framework. We demonstrate that price formation differs, particularly under policy-induced output price shocks. We suggest that using rent-price ratio as an approximation for expectations in the net returns of farming, based on the net present value model, may produce biased results. We conclude that estimates for the capitalization of agricultural, environmental and energy policy into farmland prices can be biased. |
| Keywords: | Land Markets, Rent-price Ratio, Spatial Competition |
| JEL: | L13 Q12 Q18 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:forlwp:290396&r=gth |