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Speakers |
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Centre of Research and Advanced Studies, CINVESTAV Monday, July 12, 11:45, Session A Base Ball sacrifice play strategies: towards the Nash Equilibrium based strategies [pdf] (joint work with Arturo Yee Rendón) Abstract In this paper the sacrifice play as a base ball strategy is quantified. In addition, the Nash Equilibrium (NE) to identify base ball winning strategies twice, when the team plays on offense as well as defensively is introduced. The aim is to identify situations and conditions during the course of a game, such that the sacrifice plays apply is opportune; alongside, to apply the Nash equilibrium model for identifying strategies in order to augment the eventual success of a team in the game, as a result from these strategies application. In multiplayer games the analysis of strategies usage is of high complexity; hence it is relevant the EN automation for simulating the strategies applicability in multiplayer games. |
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LAGA Université Paris 13 Wednesday, July 14, 14:45, Session C Correlated Bandit Game [pdf] (joint work with D. Rosenberg, N. Vieille) Abstract We study a two-player two-arm bandit game: in continuous time, players choose between pulling a risky arm or dropping out irreversibly to a safe arm. We analyze both the case in which payoffs are observed, and the case in which only decisions are observed. The interaction between the two players is also driven by the fact the types of the risky arms are correlated. We claim that the nature of equilibria, and in particular the existence of an encouragement effect, hinge on the nature of informational shocks - whether they bring bad news or good news. |
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Hebrew University of Jerusalem My Shmuel Abstract
A review of some of the jewels in Shmuel Zamir's work, as seen from a |
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The Ohio State University Wednesday, July 14, 10:00, Session B Pure equilibria in non-anonymous large games [pdf] (joint work with Eran Shmaya) Abstract Recent literature shows that pure approximate Nash equilibria exist in anonymous and continuous large finite games. Here we study continuous but non-anonymous games. Call the impact of a game to the maximal difference in some player's payoff when one other player changes his strategy. We prove that small impact is exactly what guarantees existence of pure approximate equilibria. That is, we show that there is a threshold (which depends on the number of players and strategies in the game) such that pure approximate equilibria exist whenever the impact is less than this threshold. Further, whenever the impact is larger than the threshold there are arbitrarily large games with no pure approximate equilibria. |
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Jawaharlal Nehru University, New Delhi Stable Commitment in an Intertemporal Collusive Trade [pdf] Abstract This study presents a more general collusive mechanism that is sustainable in an oligopolistic repeated game. In this setup, firms can obtain average payoffs beyond the collusive profits while at the same time improve consumer welfare through a lower market price offer. In particular, we introduce here the notion of intertemporal collusive trade where each oligopolist, apart from regularly producing collusive outputs, is also allowed in a systematic way to earn higher than the rest at some stages of the game. This admits subgame-perfection and is shown under some conditions to be Pareto-superior to the typical collusive outcome. |
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Aalto University School of Science and Technology Tuesday, July 13, 10:30, Session C Equilibrium Paths in Discounted Supergames [pdf] (joint work with Mitri Kitti) Abstract We characterize subgame perfect pure strategy equilibrium paths in discounted supergames with perfect monitoring. It is shown that all the equilibrium paths are generated by fragments called elementary subpaths. When there are finitely many elementary subpaths, all the equilibrium paths are represented by a directed multigraph. Moreover, in that case the set of equilibrium payoffs is a graph directed self-affine set. The Hausdorff dimension of the payoff set is discussed. |
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Stockholm School of Economics Tuesday, July 13, 10:00, Session C Repeated Games with Time-Inconsistent Preferences [pdf] Abstract
I examine when and how results from the theory of repeated games hold in a model with time-inconsistent preferences of an unspecified form which allows time-consistent exponential discounting as a particular case. Three results emerge: (a) Nash reversion can be used to support beneficial cooperation whenever the sum of the discount factors is sufficiently large. (b) The two most well-known folk theorems hold not just for exponential discounting, but also for large classes of parameterized discount functions that have a parameter that can be adjusted to make the future more important. (c) There exists "optimal penal codes", and if an outcome path of the repeated game is supported by some equilibrium strategy profile, then it is supported by some equilibrium strategy profile that is simple in the sense of Abreu (1988). |
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Université Paris-Dauphine Tuesday, July 13, 11:15, Session C Strategic collusion in auctions with externalities [pdf] Abstract We study a first price auction preceded by a negotiation stage, during which bidders may form a bidding ring. We prove that in the absence of external effects the all-inclusive ring forms in equilibrium, allowing ring members to gain the auctioned object for a minimal price. However, identity dependent externalities may lead to the formation of small cartels, as often observed in practice. Finally, we analyze cartels' effciency in the presence of externalities. |
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University of Pittsburgh Tuesday, July 13, 15:15, Session C Language Barriers [pdf] (joint work with Oliver Board) Abstract
Private information about language competence drives a wedge between the indicative meanings of messages (i.e. the sets of states indicated by those messages) and their imperative meanings (i.e. the actions induced by those messages). Even when sender and receiver have common interests, optimal use of an imperfectly shared language subverts both the indicative and imperative meanings of utterances: Messages convey both directly payoff relevant information and instrumental information about the sender's language competence. Furthermore the actions induced by messages depend on the receiver's uncertain ability to decode them. With conflict of interest, an imperfectly shared |
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Stanford University Wednesday, July 14, 15:45, Session B The Simple Behavior of Large Mechanisms [pdf] Abstract In this paper we compare the equilibria of a mechanism with a large finite number of participants to the equilibria of an analogous mechanism featuring a nonatomic continuum of participants. We show that the equilibrium strategies of the two models will converge as the number of participants in the large finite mechanism goes to infinity under mild technical conditions. Given that these conditions hold, we can use tractable nonatomic models to analyze the large market behavior of otherwise intractable game-theoretic models. We apply these results to show that the equilibrium of a uniform price auction with a large number of agents and goods can be approximated by a nonatomic exchange economy. From this approximation, we are able to show that the uniform price auction is approximately efficient with a large number of participants even when agents have complementary preferences for multiple units, a case that has resisted analysis using game-theoretic techniques. In a second application, we show that the Markov perfect equilibria of a dynamic market competition model approaches the dynamic competitive equilibria of a game with a continuum of agents in the limit as the number of competitors in the large finite model approaches infinity. |
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New York University Tuesday, July 13, 10:30, Session B Satisfaction Approval Voting [pdf] (joint work with D. Marc Kilgour) Abstract We propose a new voting system, satisfaction approval voting (SAV), for multiwinner elections, in which voters can approve of as many candidates or as many parties as they like. However, the winners are not those who receive the most votes, as under approval voting (AV), but those candidates or parties that maximize the sum of the satisfaction scores of all voters, where a voter’s satisfaction score is the fraction of his or her approved candidates who are elected. If individuals are the candidates, SAV may give a different outcome from AV—in fact, SAV and AV outcomes may be disjoint—but SAV generally chooses candidates representing more diverse interests than does AV (this is demonstrated empirically in the case of a recent election of the Game Theory Society). On the minus side, it may encourage more bullet voting than does AV. In party-list systems, SAV apportions seats to parties according to the Jefferson/d’Hondt method with a quota constraint, which favors large parties and gives an incentive to smaller parties to coordinate their policies and forge alliances, even before an election, that reflect their supporters’ coalitional preferences. |
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University of Queensland (Australia) Wednesday, July 14, 14:45, Session B Implementation and revenue equivalence without differentiability [pdf] (joint work with Jeffrey Ely (Northwestern University)) Abstract We introduce a characterization of (dominant strategy) implementable allocation rules based on an integral monotonicity condition. This condition relates valuation differences with the integral of measurable selections of the subderivative correspondence between two types, defined at equilibrium allocations. We use this characterization, which does not rely on convexity or full differentiability assumptions of the valuation function with respect to types, to provide a generalized Revenue Equivalence result that holds even when the standard version fails. Our new version of Revenue Equivalence imposes bounds on the difference between indirect utility functions generated by two payment schemes that implement the same allocation rule and assign the same equilibrium payoff to the “lowest type”. We provide some examples to illustrate our results. |
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Facultés Universitaires Saint Louis, Bruxelles, Belgium Wednesday, July 14, 15:45, Session A Caolitional Network Games [pdf] (joint work with Ana Mauleon and Vincent Vannetelbosch) Abstract Coalitional network games are real-valued functions defined on a set of players (the society) organized into networks and coalition structures. Networks specify the nature of the relationship each individual has with the other individuals and coalition structures specify a collection of groups among the society. Coalitional network games model situations where the total productive value of a network among players depends on the players’ group membership. These games thus capture the public good aspect of bilateral cooperation, i.e., network games with externalities. After studying the specific structure of coalitional networks, we propose an allocation rule under the perspective that players can alter the coalitional network structure. This means that the value of all potential alternative coalitional networks can and should influence the allocation of value among players in any given coalitional network structure. |
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Shin Hsin University Wednesday, July 14, 14:45, Session D Bid or Wait ? Theory and Evidence of Auctions for Foreclosed [pdf] Abstract
The paper explores theoretically and empirically the determinants of the outcomes of a multiple-stage first-price sealed-bid juridical auction for distressed properties. |
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Pennsylvania State University Wednesday, July 14, 11:45, Session C A game theory model for predator-prey dynamics [pdf] (joint work with Christopher Byrne, Department of Mathematics, the Pennsylvania State University) Abstract In our research we first use a simplified non-cooperative zero sum game theory model to investigate how predators and preys of different body sizes use different predation strategies. We assume both predator and prey have two types of strategies: active and passive, hence the game is a 2*2 matrix. We apply energy acquisition and loss as a measurement to define the payoff matrix for both predator and prey. By calculating the mixed equilibrium we show smaller predator tends to use passive strategy more frequently than larger predator while prey always prefers active strategy. This result could be explained by Keliber's law of metabolic rate. Then we extend this model with a more realistic general sum form in which the unique equilibrium is mixed for both predators and prey and it is not stable, but rather results in limit cycles around the boundary of the state space starting from any point other than the equilibrium. This phenomenon is discussed in terms of the biological implications. |
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University of Wisconsin-Madison Wednesday, July 14, 10:30, Session B Relational Executive Contact with Captital Investment [pdf] (joint work with Ho-Jun Lee) Abstract
Executive compensation has been recently analyzed by voluminous literature in in principal-agent theory, corporate finance and labor economics. Executive manager's wage contracts consist of 3 components - base salaries, stock options, and bonuses. While the stock option structure is addressed by a lot of theoretical and empirical researches, the bonus scheme has not been studied much even though it amounts to the 2nd largest component in the contract. The main objective of this paper is to study the characteristics of CEO bonus compensation and to prove its optimality. |
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Stanford University Monday, July 12, 11:15, Session C Running on Policies or on Values? The Choice of Rhetoric In Electoral Competitions [pdf] Abstract I develop a model of electoral competition in which candidates have two types of costly messages to send to voters: policy announcements and statements about their values. The key difference between the messages is that a candidate who lies about his intended policies experiences a cost only if elected but bears no cost otherwise, while a candidate who misstates his values bears a cost regardless of the outcome of the election. At equilibrium, the more extreme candidates run on values while the centrists announce policies. A stronger set of values improves the payoff to all candidates in a party, but gives that party no electoral advantage in fully separating equilibria. In hybrid equilibria, the stronger-values party also has an advantage at the polls. Supplementing the set of electoral messages with value statements is a Pareto improvement for society over policies-only elections in fully separating equilibria, but this is not necessarily true in hybrid equilibria. In that case, the centrist candidates and the median voter may lose while the more extreme candidates are better off than in policies-only elections. |
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University of Essex Friday, July 16, 10:00, Session C Dynamic Bilateral Trading in Networks [pdf] Abstract I study a dynamic market-model where a set of agents, located in a network that dictates who can trade with whom, engage in bilateral trading for a single object under asymmetric information about the private values. My equilibrium characterization provides new insights into how economic networks shape trading outcomes. Traders who link otherwise disconnected areas of the trading network become intermediaries. They pay the object at their resale values but, if they have a high value, they consume and extract a positive rent. All other traders, except for the initial owner of the object, make zero profit. The object travels along a chain of intermediaries before someone consumes it. Intermediaries who are located later in the trading chain have a lower probability of acquiring the object, but they pay lower prices for it. Compounding, early intermediaries gain a pay-off advantage over late ones. Adding links to the network increases downstream competition and it is beneficial to the initial owner. However, it has ambiguous effects on the other traders and may be detrimental to total welfare, when information is asymmetric. More generally, inefficient outcomes are possible if information is not complete and the network is not fully connected. |
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University of Siena Wednesday, July 14, 10:00, Session A Bertrand-Edgeworth games under oligopoly with a complete characterization for the triopoly [pdf] (joint work with Neri Salvadori) Abstract The paper extends the analysis of price competition among capacity-constrained sellers beyond the cases of duopoly and symmetric oligopoly. We first provide some general results for the oligopoly, highlighting features of a duopolistic mixed strategy equilibrium that generalize to oligopoly. Unlike in the duopoly, however, there can be infinitely many equilibria when the capacity of a subset of firms is so large that no strategic interaction among smaller firms exists. Then we focus on the triopoly, providing a complete characterization of the mixed strategy equilibrium of the Bertrand-Edgeworth game. The mixed-strategy region of the capacity space is partitioned according to key equilibrium features. We also prove the possibility of a disconnected support of an equilibrium strategy and show how gaps are then determined. Computing the mixed strategy equilibrium then becomes quite a simple task. |
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Instituto Tecnológico Autónomo de México Wednesday, July 14, 14:45, Session A Factors Contribution to Poverty Index : 2FGT Abstract In this paper we apply the methodology proposed by Shorrocks (1999) to estimate which factor contributes more to poverty. This paper makes an attempt in this direction. It examines deficiencies on food consumption; assess which payoffs affects poverty index for population subgroups category, per adult equivalence unit. The question in this paper is: Which factor of the value of consumption, fruits and vegetables, cereals and grains, meat and chicken, industrialized food, makes to poverty index across seven states in Mexico? |
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Paris Descartes University Tuesday, July 13, 14:45, Session C On the Optimality of a Duty-to-Rescue Rule and the Bystander Effect (joint work with Bertrand Crettez) Abstract
The majority American rule on omissions is that there is no legal duty to rescue persons in danger. By contrast, the New French Penal Code and most Western European civil laws impose a duty to aid persons in danger. Which system is better ? What does "better" mean in that context ? To address these issues, we combine a game-theoretic model inspired from that of Osborne (2004) with the model of Hasen (1995) and we rely on the fact that a witness may wish above all to avoid the embarrassment su ffered because of a misinterpretation of the situation. We show that a duty-to-rescue rule is more likely to be optimal when the cost of the embarrassment is low. In addition, we show that, when encouraging would-be rescuers is possible, it is always preferable to do so rather than to rely on a duty-to-rescue rule. |
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Bocconi University Reasoning about Conditional Probability and Counterfactuals [pdf] (joint work with Joe Halpern and Dov Samet) Abstract The analysis of static games involves descriptions of beliefs about beliefs. When beliefs are probabilistic, this is modeled by Harsanyi type spaces, and more generally belief spaces, where beliefs vary with states. Belief spaces were characterized axiomatically using operators of the form "John's probability of x is at least p". The analysis of dynamic games requires conditional belief systems, and in particular conditional beliefs about conditional beliefs. In this paper we consider spaces where conditional belief systems vary with states, and we axiomatize such spaces using conditional belief operators of the form "John's probability of x given y is at least p". An informal assumption of probability theory is that the agent is being informed of the conditioning event. In our model this can be made formal, as being informed, or being certain of an event is itself an event in the model. Using the axiom of Echo, which appears in many guises in the theory of belief spaces, we relate conditional and unconditional probabilities: at each state, John's conditional probability of x given that he is certain of y is an average of the unconditional beliefs he may have when he is certain of y. Our operators naturally define a kind of counterfactual implication that satisfies the usual axioms behind the standard models of counterfactuals due to e.g. Lewis and Stalnaker. |
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Washington University in St. Louis Friday, July 16, 14:45, Session C Bargaining with Revoking Costs [pdf] Abstract
A simple two stage bilateral bargaining game is analyzed. The players simultaneously demand shares of a unit size pie in the first stage. If the demands add up to more than one, both players, in the second stage, simultaneously choose whether to stick to their demand or accept the other's offer. While both parties sticking to their offers leads to an impasse, accepting a lower share than the original demand is costly for each party. The set of pure strategy subgame perfect equilibria of the game is characterized for continuous payoff functions strictly increasing in the pie share and continuous cost functions, strictly increasing in the amount conceded. Higher cost functions are shown to improve bargaining power. The limit equilibrium prediction of the model, as the cost functions are made arbitrarily high, selects a unique equilibrium in the Nash Demand Game. |
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Princeton University Monday, July 12, 10:00, Session A On the Structure of Weakly Acyclic Games [pdf] (joint work with Aaron D. Jaggard and Michael Schapira) Abstract
Weakly acyclic games comprise a superclass of potential games and dominance-solvable games that captures many practical application domains. Informally, a weakly acyclic game is one where natural distributed dynamics, such as better-reply dynamics, cannot enter inescapable oscillations. We establish a novel link between such games and the existence of pure Nash equilibria in subgames. Specifically, we show that the existence of a unique pure Nash equilibrium in every subgame implies the weak acyclicity of a game. In contrast, we show that the existence of (potentially) multiple pure Nash equilibria in every subgame is insufficient for weak acyclicity. |
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Washington University in St.Louis Friday, July 16, 14:45, Session A Cognition Investment, Accuracy Significance and Contracts' Incompleteness [pdf] Abstract This paper studies the effect of accuracy of cognition investment on the completeness of the contracts. Principal invests to find the future state as well as the blueprint of the design. The blueprint, however, may not be accurate and comprehensive. We use two classes of contracts; hiring in which principal and agent work together just for developing the design and joint production in which they develop and produce the product jointly, to explain accuracy significance on the cognition investment as well as incompleteness of contract. In particular, we find that accuracy of the blueprint is one of the important factors of the cognition investment and incompleteness. We also find that accuracy is the only driving force of the relative incompleteness of each contracts. And in line with empirical works, we explain why we see different levels of completeness in joint production contracts by using this notion. |
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Yale University The strategic impact of higher-order beliefs (joint work with Yi-Chun Chen, Alfredo Di Tillio and Siyang Xiong) Abstract
We study the robustness of the rationalizable outcomes of Bayesian games to perturbations of higher-order beliefs. We consider metric topologies on the universal type space under which two types are close if they have similar first-order beliefs, attach similar probabilities to other players having similar first-order beliefs, and so on, where the degree of similarity is uniform over the levels of the belief hierarchy. These uniform topologies generalize the notion of proximity to common knowledge based on common p-belief (Monderer and Samet (1989)), a central tool in the studies of robustness of Nash equilibrium to small amounts of incomplete information. Using these uniform topologies over hierarchies of beliefs, we obtain belief-based characterizations of both the strategic topology and the uniform strategic topology over types, which have been recently introduced by Dekel, Fudenberg and Morris (2006) to capture proximity of types in terms of similarity of strategic behavior in games. |
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Pontificia Universidad Católica del Perú Tuesday, July 13, 10:00, Session D Game Theory and the Law: The Legal-Rules-Acceptability Theorem (A rationale for non-compliance with legal rules) [pdf] (joint work with Yaish Pimentel (Universidad del Pacífico)) Abstract
Since its creation, legal science has lacked of a formal explanation for the non-compliance with legal rules by citizens, and only intuitive explanations exist arguing that it would be a psychological issue or that it derives from an uncontrollable desire of citizens to maximize their individual utility functions. |
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Caltech Friday, July 16, 15:15, Session B Combinatorial Assignment under Dichotomous Preferences [pdf] Abstract
We consider the problem of assigning shares of a imperfectly divisible resource when preferences are dichotomous. One such problem is the problem of assigning bundles from a finite set of indivisible objects to a finite set of agents. When preferences are dichotomous, mechanisms that satisfy voluntary participation only require agents to report a set of acceptable bundles/shares. We characterize strategyproof mechanisms for such problems and provide a mechanism that is utilitarian-efficient, strategyproof and envy-free, thereby showing that impossibilities like the ones pointed out by Kojima (2009) can be circumvented if we assume dichotomous preferences. We also show that, unlike in the assignment problem with dichotomous preferences of Bogomolnaia and Moulin (2004), the existence of a Lorenz-dominant assignment is not guaranteed. We analyze real-world difficulties involved in using efficient mechanisms, both from a computational and a strategic point of view. In particular, we show that utilitarian-efficient mechanisms require computations that can have running times that are exponentially long in the number of agents, but we point out that some classes of problems can be solved faster. We also show that agents with general preferences facing a mechanism that is strategyproof and efficient in the dichotomous domain might have an incentive to misreport their acceptable shares/bundles, and in that case, the only profitable deviation is to report a smaller set of acceptable shares/bundles. |
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Dokkyo University Wednesday, July 14, 10:00, Session D Network Centrality and Activities in Small Social Networking Sites (SNS) [pdf] (joint work with Tatsuhiro Shichijo (Osaka Prefecture University)) Abstract
The distinctive function of a Social Networking Service allows people to connect with others by mutual consent, as well as to acknowledge them as friends. This is important in social relationships in SNS, as such relationships constitute online social networks. Theoretically, the structure of a social network affects individual behavior (Bramoulle and kranton 2007). In Ballester et al. (2006), they show that the Nash equilibrium action is proportional to Bonacich centralities. The purpose of this paper is to examine the theoretical relationship between Bonacich centrality and individual behavior using actual data from SNS. In contrast to other empirical complex network studies, our empirical study is based on the game theoretic micro foundation. |
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London Business School Wednesday, July 14, 11:15, Session A Multiproduct Price Discrimination with Two-Part Tariffs [pdf] Abstract
This paper gives a new "multiproduct" explanation of the wide application of two-part tariffs, complementary to the classical "single-product" efficiency-related explanation. We consider a monopolist provider of n (>1) products who uses two-part tariffs consisting of a membership fee common to all consumers and separate prices for different product bundles. We show that the change in demand for any bundle of m∈[1,n] products caused by imposing an extra membership fee on top of any separate pricing strategy is proportional to the membership fee to the power of m. Therefore a small extra membership fee has no first-order impact on the demand for any multi-product bundles (m>1), which enables the firm to extract more consumer surplus. When this positive effect dominates the loss of single-product demand, two-part tariff dominates separate pricing. We present conditions that guarantee such an outcome, which generalize McAfee, McMillan and Whinston (1989)'s result from two products to multiple products. Our results suggest that two-part tariffs can achieve multidimensional price discrimination and should be subject to the same antitrust scrutiny as bundling strategies. |
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Indiana U-Purdue U Indianapolis Friday, July 16, 14:45, Session D Robust equlibria and epsilon-dominance [pdf] (joint work with Rachel Hemphill) Abstract We propose a resolution of some classic anomalies in game theory, including Rosenthal's centipede, Basu's traveler's dilemma, and Luce and Raiffa's restricted strategy finitely repeated prisoner's dilemma, using refinements of Radner's epsilon-equilibria. The central idea is to require a solution for a noncooperative game to exhibit some degree of robustness. When epsilon is zero, our epsilon-robust equilibria are Nash, but for(sufficiently) positive epsilon our solutions in games such as those mentioned contrast sharply with the Nash equilibria and fit very well with experiment and intuition. |
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Northwestern University Tuesday, July 13, 15:45, Session B Dynamic Information Aggregation with Biased Experts [pdf] (joint work with Yishay Mansour) Abstract
The paper studies the repeated interaction between a central information aggregation agency and a set of biased strategic experts. |
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Boston University Friday, July 16, 15:15, Session D Games with Real Talk [pdf] (joint work with Benjamin Bachi and Zvika Neeman) Abstract When players in a game can communicate they may learn each other's strategy. In such situations, it is natural to define a player's (pure) strategy as a mapping from what he has learned about the other players' strategies into actions. In this paper we investigate the consequences of this possibility in two player games and show that it expands the set of equilibrium outcomes the players can reach. When strategies are completely observable, any feasible and individually rational outcome can be sustained in equilibrium. If communication fails to reveal the players' strategies with some positive probability, the set of equilibria may be smaller. We demonstrate this in the prisoner's dilemma and find the exact level of cooperation the can be sustained in equilibrium for any set of parameters. |
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Harvard University Friday, July 16, 15:15, Session A Auditing the Intermediary [pdf] Abstract see attached pdf file (extended abstract) |
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Graduate school of management, St. Petersburg state university Tuesday, July 13, 10:00, Session A Game-theoretical model of service quality indicators choice: mobile service market [doc] (joint work with Nikolay Zenkevich)
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Carnegie Mellon University Friday, July 16, 11:15, Session A Why Learning Doesn't Add Up: Equilibrium Selection with a Composition of Learning Rules [pdf] Abstract In this talk, I investigate the aggregate behavior of populations of learning agents. I compare the outcomes in homogeneous populations learning in accordance with imitate the best dynamics and with replicator dynamics to outcomes in populations that mix these two learning rules. New outcomes can emerge. In certain games, a linear combination of the two rules almost always attains an equilibrium that homogeneous learners almost never locate. Moreover, even when almost all weight is placed on one learning rule, the outcome can differ from homogeneous use of that rule. Thus, allowing even an arbitrarily small chance of using an alternative learning style can shift a population to select a different equilibrium. |
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Paris School of Economics & London School of Economics The robustness of incomplete codes of law Abstract
How do players coordinate on an equilibrium amongst their vast multiplicity in a repeated game? A solution is that equilibrium strategies are given to the players in the form of a code of law. |
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University College London Tuesday, July 13, 15:15, Session A On the Folk Theorem with One-Dimensional Payoffs and Different Discount Factors [pdf] (joint work with Thibaut Lamadon and Caroline Thomas) Abstract Until now, proving the folk theorem in a game with three or more players required imposing restrictions on the dimensionality of the stage-game payoffs. Fudenberg and Maskin (1986) assume full dimensionality of payoffs, while Abreu, Dutta, and Smith (1994) assume the weaker NEU condition (“nonequivalent utilities”). In this note, we consider a class of n-player games where each player receives the same stage-game payoff, either zero or one. The stage-game payoffs therefore constitute a one dimensional set, violating NEU. We show that if all players have different discount factors, then for discount factors sufficiently close to one, any strictly individually rational payoff profile can be obtained as the outcome of a subgame-perfect equilibrium with public correlation. |
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Ben-Gurion University Friday, July 16, 11:15, Session B Continuity of the value and optimal strategies when common priors change [pdf] (joint work with Ezra Einy and Biligbaatar Tumendemberel) Abstract We show that the value of a zero-sum Bayesian game is a Lipschitz continuous function of the players' common prior belief, with respect to the total variation metric on beliefs. This is unlike the case of general Bayesian games, where lower semi-continuity of Bayesian equilibrium (BE) payoffs rests on the "almost uniform" convergence of conditional beliefs. We also show upper semi-continuity (USC) and approximate lower semi-continuity (ALSC) of the optimal strategy correspondence, and discuss ALSC of the BE correspondence in the context of zero-sum games. In particular, the interim BE correspondence is shown to be ALSC for some classes of information structures with highly non-uniform convergence of beliefs, that would not give rise to ALSC of BE in non-zero-sum games. |
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Johns Hopkins University Tuesday, July 13, 14:45, Session D T.V.’s “Jeopardy!” : A Rich Empirical Data Set for Behavioral Economics [pdf] Abstract In the final round of the game show “Jeopardy!” the three contestants must make a strategic wager under conditions of uncertainty. Analyzing how people have handled this surprisingly complex strategic game provides a novel source of data for the study of how actual human behavior deviates from the rational strategies dictated by game theory. The 900 games in this paper’s data set reveal scenarios in which one or more of the players wager in a consistently sub-optimal manner, resulting in steady equilibria that simply should not exist under the assumptions of traditional game theory. This paper indicates that the seemingly irrational or inconsistent behavior exhibited by some of the contestants is explainable using results from behavioral economics, specifically heuristic (rule-based) reasoning and overconfidence. |
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Hebrew University of Jerusalem Comparing Risks by Acceptance and Rejection Abstract Stochastic dominance is a partial order on risky assets ("gambles") that is based on the uniform preference, of all decision-makers (in an appropriate class), for one gamble over another. We modify this, first, by taking into account the status quo (given by the current wealth) and the possibility of rejecting gambles, and second, by comparing rejections that are substantive (that is, uniform over wealth levels or over utilities). This yields two new stochastic orders: wealth-uniform dominance and utility-uniform dominance. Unlike stochastic dominance, these two orders are complete: any two gambles can be compared. Moreover, they are equivalent to the orders induced by, respectively, the Aumann-Serrano (JPE 2008) index of riskiness and the Foster-Hart (JPE 2009) measure of riskiness. |
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Rutgers-Camden Tuesday, July 13, 15:45, Session D An Experimental Investigation of Costly and Discrete Communication [pdf] (joint work with Sean Duffy and John Smith) Abstract Language is necessarily an imperfect and uneven means of communicating information about a complex and nuanced world. We run an experimental investigation of a setting in which the messages available to the sender imperfectly describe the state of the world, however the sender can improve communication, at a cost, by increasing the complexity or elaborateness of the message. As is standard in the communication literature, the sender learns the state of the world then possibly sends a message to the receiver. The receiver observes the message and provides a best guess about the state. The incentives of the players are aligned in that both sender and receiver are paid on the basis of how close the receiver's guess was to the state. Our most notable departure from the literature is that the set of messages imperfectly relate to the underlying state space and that a larger communication cost is incurred by the sender for transmitting a more elaborate message. Roughly consistent with the experimental communication literature, we find that there is overcommunication. In particular, we find that the payoffs to the receiver do not vary enough with the communication costs incurred by sender and that the per period payoffs of the sender vary too much with the communication costs. We also find that the time in which the senders make their decision is positively related to their per period payoffs. However, despite that each subject plays as both receiver and sender, no such relationship exists for the receiver. |
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School of Mathemtical Sciences, Tel-Aviv University Tuesday, July 13, 14:45, Session A Sequential correlated equilibria in stopping games [pdf] Abstract This paper studies extensive form games with public information where all players have the same information at each point in time. We prove that when there are at least three players, all communication equilibrium payoffs can be obtained by unmediated cheap-talk procedures. The result encompasses repeated games and stochastic games. |
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Hebrew University of Jerusalem Friday, July 16, 11:45, Session B Almost Common Priors [pdf] Abstract What happens when priors are not common? We show that for each type profile over a knowledge space, we can associate a non-negative value epsilon that we term the prior separation of of the space, and that there exist priors that are epsilon-almost common priors. The significance of these definitions is that if a space has epsilon prior separation, then under common knowledge the extent of possible disagreement of the players with respect to a random variable f is bounded by epsilon times the sup-norm of f. The results indicate that the geometry of the posteriors always imposes bounds on disagreement, extending no betting results under common priors. They also indicate that as more information is obtained, and partitions are refined, the extent of common knowledge disagreement decreases. |
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Yale University Selling information (joint work with Andrzej Skrzypacz) Abstract We study a dynamic buyer-seller problem in which the good is information and there are no property rights. The potential buyer is reluctant to pay for information whose value to him is uncertain, but the seller cannot credibly convey this value to the buyer without disclosing the information itself. Information comes as divisible hard evidence. We show how and why the seller can appropriate a substantial fraction of the value through gradual revelation, and how the entire value can be extracted with the help of a mediator. |
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Utrecht University Wednesday, July 14, 11:15, Session D Strategic Network Disruption [pdf] (joint work with Kris DeJaegher) Abstract
Networks are one of the essential building blocks of society. Not only do firms cooperate in R&D networks, but firms themselves may be seen as networks of information-exchanging workers. However, the literature on networks has mainly focused on the cooperative side of networks and has so far neglected the competition side of networks. Networks themselves may face competition from actors with opposing interests to theirs. Several R&D networks may compete with one another. The firm as a network of employees obviously faces competition. |
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University College London and PSE On Transparency in Organizations Abstract Abstract: Non-transparency both in the form of incomplete information disclosure and in the form of coarse feedback disclosure is optimal in virtual all organizational arrangements of interest. Specifically, in moral hazard interactions, some form of non-transparency is always desirable, as soon as the dimensionality of the problem exceeds the dimensionality of the action spaces of the various agents. |
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City University of New York Friday, July 16, 10:30, Session D The Bridge Policy Problem [pdf] (joint work with Rohit Parikh) Abstract We study variants of an optimization problem posed by Glazer & Rubinstein [1], in which a listener decides which arguments to accept, or alternatively a transit authority decides which bridges to open. We show that a maximization version of the problem essentially admits no nontrivial approximation algorithm; for a minimization version, we give a logarithmic factor approximation algorithm, and provide a matching lower bound. Moreover, we provide dynamic programming algorithms to solve the problem optimally in certain constrained settings. Finally, we study the problem modeled as a two-person simultaneous game. |
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University of Twente Tuesday, July 13, 11:15, Session A Paul Samuelson's critique and equilibrium concepts in evolutionary game theory [pdf] Abstract
We present two new notions of evolutionary stability, the truly evolutionarily stable state (TESS) and the generalized evolutionarily stable equilibrium (GESE). The GESE generalizes the evolutionarily stable equilibrium (ESE) of Joosten [1996]. An ESE attracts all nearby trajectories monotonically, i.e., the Euclidean distance decreasing steadily in time. For a GESE this property should holds for at least one metric. The TESS generalizes the evolutionarily stable strategy (ESS) of Maynard Smith & Price [1973]. A TESS attracts nearby trajectories too, but the behavior of the dynamics nearby must be similar to the behavior of the replicator dynamics near an ESS. |
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Harvard University Tuesday, July 13, 11:45, Session B Asynchronous Revision Games with Deadline: Unique Equilibrium in Coordination Games [pdf] (joint work with Takuo Sugaya) Abstract Two players prepare their actions before they play a normal-form coordination game at a predetermined deadline. In the preparation stage, each player stochastically obtains opportunities to revise their actions, and finally-revised action is played at the deadline. We show that, (i) a strictly Pareto-dominant Nash equilibrium, if there exists one, is the only equilibrium in the dynamic game; and (ii) in ”battle of the sexes” games, (ii-a) the equilibrium payoff set is a full-dimensional subset of the feasible payoff set under perfectly symmetric payoff structure, but (ii-b) a unique equilibrium is selected with asymmetric payoff structure. |
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University of Haifa Bidding Behaviour in Asymmetric First-Price Auctions [pdf] (joint work with Surajeet Chakravarty and Gareth Myles) Abstract We present a costly voting model in which each voter has a private valuation for their preferred outcome of a vote. When there is a zero cost to voting, all voters vote and hence all values are counted equally regardless of how high they may be. By having a cost to voting, only those with high enough values would choose to incur this cost. Hence, the outcome will be determined by voters with higher valuations. We show that in such a case welfare may be enhanced. Such an effect occurs when there is both a large enough density of voters with low values and a high enough expected value. |
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SUNY Monday, July 12, 14:45, Session B A Strategic Theory of Markets Abstract
This paper studies a strategic foundation for the price mechanism by considering a uniform price double auction among players with affiliated asymmetric signals and interdependent values. Every nondegenerate mixed strategy Bayesian Nash equilibrium is asymptotically outcome equivalent to the fully revealing rational expectations equilibrium. A monotone pure strategy equilibrium exists in a large finite double auction, and the equilibrium price is a consistent and asymptotically normal estimator of the unknown value. |
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University of Pennsylvania Behavioral Game Theory in Social Networks Abstract For five years now, we have been conducting "medium-scale" experiments in how human subjects behave in strategic and economic settings mediated by an underlying network structure. We have explored a wide range of networks inspired by generative models from the literature, and a diverse set of collective strategic problems, including biased voting, graph coloring, consensus, networked trading, bargaining, and a network formation game. These experiments have yielded a wealth of both specific findings and emerging general themes about how populations of human subjects interact in strategic networks. I will review these findings and themes, with an emphasis on the many more questions they raise than answer. |
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Indiana University-Purdue University Indianapolis Wednesday, July 14, 11:45, Session A Price Discrimination for Bayesian Buyers [pdf] (joint work with Se Hoon Bang (Michigan State University) and Young-ro Yoon (Wayne State University)) Abstract The paper studies 2.5-degree price discrimination to buyers whose prior valuations are initially observable to a seller but receive private information about a product or service. The buyers interpret new information via Bayes rule. In this environment, we show that prices are not monotonic in buyers' ex ante expected valuation. Surprisingly, a seller may offer a higher price to a low-valuation buyer than to a high-valuation buyer. This result is sharply contrasting to the standard result of price discrimination. The reverse price discrimination is caused by slightly different reasons in monopoly and duopoly markets. |
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Monday, July 12, 11:45, Session D The Importance of Being Honest [pdf] Abstract
I analyze the case of a principal who wants to give an agent proper incentives to investigate a hypothesis which can be either true or false. The agent can shirk, thus never proving the hypothesis, or he can avail himself of a known technology to manipulate the data. If the hypothesis is true, a proper investigation yields successes with a higher intensity than manipulation would; if it is false, it never yields a success. The principal is only interested in the first success achieved through proper investigation, yet cannot distinguish how a given success has been achieved. I show that in the optimal incentive scheme there exists some integer m such that the principal will only reward the (m+1)-st breakthrough, and that this reward is increasing in the time of the second breakthrough. |
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Institute for Economic Analysis (CSIC) Wednesday, July 14, 11:15, Session C Farsighted House Allocation [pdf] (joint work with Bettina Klaus and Markus Walzl) Abstract In this note we study von Neumann-Morgenstern farsightedly stable sets for Shapley and Scarf (1974) housing markets. Kawasaki (2009) shows that the set of competitive allocations coincides with the unique von Neumann-Morgenstern stable set based on a farsighted version of antisymmetric weak dominance (cf., Wako, 1999). We demonstrate that the set of competitive allocations also coincides with the unique von Neumann-Morgenstern stable set based on a farsighted version of strong dominance (cf., Roth and Postlewaite, 1977) if no individual is indifferent between his endowment and the endowment of someone else. |
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Penn State University Monday, July 12, 15:15, Session B Overcoming Ideological Bias in Elections (joint work with John Morgan) Abstract We study a model in which voters choose between two candidates on the basis of both ideology and competence. While the ideology of the two candidates is commonly known, voters are imperfectly informed about competence. Voter preferences, however, are such that it is a dominant strategy to vote according to ideology alone. When voting is compulsory, the outcome may be inefficient from a social perspective. However, when voting is voluntary and costly, we show that the outcome of a large election is always first-best. |
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Lehigh University Tuesday, July 13, 15:15, Session D Authority and Communication in the Laboratory [pdf] (joint work with Wooyoung Lim) Abstract We experimentally investigate delegation and communication as two alternative means of coordinations among individuals with misaligned interests. We implement in the laboratory two delegation-communication games in which a principal chooses whether to delegate her decision-making authority to an informed agent or to make the decision herself after a cheap-talk communication with the agent. In the game in which equilibrium predicts communication over delegation, we observe that decision-making authorities are almost always retained and communication opted for. In the communication, subjects coordinate over the separating equilibrium when pooling is also consistent with equilibrium. In the game in which equilibrium predicts delegation over communication, significantly more delegations than communications are observed, although incidences of off-equilibrium-path plays are higher than those in the other game. In the off-equilibrium-path communication, relative to the unique pooling equilibrium we observe, consistent with findings in the previous literature, over-transmission of information. |
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University of Michigan Friday, July 16, 15:15, Session C Adverse Selection with Search [pdf] (joint work with Asher Wolinsky) Abstract
This paper explores a dynamic model of adverse selection in which trading partners receive noisy information. A monopolistic buyer wants to procure service. Seller's cost depend on the buyer's type. The buyer contacts sellers sequentially and enters into a bilateral bargaining game. Each seller observes the buyer's offer. In addition, each seller observes a noisy signal. Contacting sellers (search) is costly. We characterize equilibrium when search cost become small. In the limit, the price will depend in a simple way on the curvature of the signal distribution. If signals are sufficiently strong, the limit outcome is equivalent to the full information outcome. (The equilibrium is separating and prices are equal to the true cost.) If signals are weak, the limit outcome is equivalent to an outcome with no information. (The equilibrium is pooling and prices are equal to ex ante expected cost.) |
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California Institute of Technology Monday, July 12, 11:45, Session C Strategic Voting in a Jury Trial with Plea Bargaining [pdf] Abstract We study a model of the criminal court process focusing on the interaction between plea bargaining and a jury trial. A prosecutor and a defendant participate in plea bargaining while anticipating possible outcomes of the jury trial. We assume that plea bargaining produces a bias in which the jury believes the defendant is less likely to be guilty if the case goes to trial. Consequently, the bias alters the trial outcome which is assumed to follow a strategic voting model. We find that the equilibrium behavior in the court process with plea bargaining and a jury trial resembles the equilibrium behavior in the separate jury model. However, unlike in the case of jury model, the jurors may act as if they have the prosecutor’s preference against convicting the innocent and acquitting the guilty. |
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Chinese University of Hong Kong Monday, July 12, 10:00, Session C One-to-Many Bargaining with Endogenous Protocol [pdf] Abstract This paper studies the bargaining between one active player and N passive players. In each period the active player can choose any passive player to bargain with; thus, the bargaining protocol is endogenously determined. The passive players are heterogeneous in terms of their bargaining power. The set of equilibrium outcomes is characterized with two different contract forms: contingent and cash-offer contracts. It is shown that various bargaining protocols may arise in equilibria sustaining different agreements. The active player can also play one passive player off against another. We further investigate the influence of contract form on the set of equilibrium outcomes and examine the properties of Markov equilibria. |
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Stanford University Tuesday, July 13, 14:45, Session B Selling Storable Goods to a Dynamic Population of Buyers: A Mechanism Design Approach [pdf] Abstract
In this paper, we study the problem of selling multiple units of identical storable goods over a finite time horizon. Buyers arrive stochastically over time and have single unit demand for the product. They are risk neutral and patient, and keep their birthdays and valuations (jointly called the types) as private information. We discuss the challenges raised by market dynamics with emphasis on the interdependency it creates on top of our private value environment. |
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Universitat Autonoma de Barcelona Tuesday, July 13, 15:45, Session C Transfer of Authority within Hierarchy [pdf] Abstract Bureaucracy is featured by vertical hierarchical structure in which the decision maker usually lacks direct access to the informed agent, and the span of discretionary authority decreases top down. In this paper we analyze the performance of delegation mechanism in three-level hierarchies. The decision maker delegates authority to a biased mediator, then the mediator makes further delegation decision. We provide a full characterization of the implemented delegation set. It's shown that the efficiency is attained if and only if the mediator's bias lies between the DM and the sender. On the other hand, given the bias of the mediator, the optimal sender should lie between the mediator and the DM. We also show that under certain conditions that the loyal agent doesn't get promotion, and complete delegation to the mediator may be beneficial if the DM is uncertain about the bias of the sender. We then compare the performance of delegation with communication (mediator cheap talk), and reverse the conclusion in Dessein (2002) that delegation ex ante dominates informative cheap talk and show that the inability to access informed party restrict the attractiveness of delegation to the DM. |
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The University of Hong Kong Wednesday, July 14, 10:30, Session A Reputation and Competition for Information Intermediaries [pdf] Abstract This paper investigates the effect of competition on the reputation mechanism in the market for information intermediaries, such as rating agencies. I use a dynamic model to endogenize the value of reputation so as to enable comparison of equilibria under different market structures. In the model, behavior is determined by weighing the current rating fee against the future value the rating agency derives from having a higher reputation. I show that competition worsens the quality of ratings by reducing the value of high reputation but not the short-term gain of cheating. |
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Bielefeld University Friday, July 16, 10:00, Session A On The Stability of CSS under the Replicator Dynamic [pdf] Abstract This paper considers a two-player game with a one-dimensional continuous strategy. We study the asymptotic stability of equilibria under the replicator dynamic when the support of the initial population is an interval. We find that, under strategic complementarities, Continuously Stable Strategy (CSS) have the desired convergence properties using an iterated dominance argument. For general games, however, CSS can be unstable even for populations that have a continuous support. We present a sufficient condition for convergence based on elimination of iteratively dominated strategies. This condition is more restrictive than CSS in general but equivalent in the case of strategic complementarities. Finally, we offer several economic applications of our results. |
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University of Rochester Wednesday, July 14, 15:15, Session B When too little is as good as nothing at all: Rationing a disposable good among satiable people with acceptance thresholds [pdf] Abstract
We study the problem of rationing a divisible good among a group of people. Each person’s preferences are characterized by an ideal amount that he would prefer to receive and a minimum quantity that he will accept: he finds any amount less than this threshold to be just as good as receiving nothing at all. Further, any amount beyond his ideal quantity has no effect on his welfare. |
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ECARES - Universitè Libre de Bruxelles Wednesday, July 14, 15:45, Session D Contracts with Aftermarkets - Hidden Actions [pdf] Abstract I study the effects of financial markets on incentives and production, when not every individual can access markets. In a model of many heterogenous firms, each firm is subject to a moral hazard problem and the uninformed part has the opportunity to trade their claims to profits. I prove existence and uniqueness of equilibrium for the model. Equilibrium analysis show that markets change the trade-off between risk sharing and incentives provision. Examples show that the effect of markets on equilibrium contracts and production are ambiguous. I give sufficient conditions for aggregate production to be lower when markets are available. |
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Facultés Universitaires Saint-Louis Friday, July 16, 11:45, Session D Contractually Stable Coalition Structures with Externalities [pdf] (joint work with Jose Sempere-Monerris and Vincent Vannetelbosch) Abstract The organization of individual agents into groups has an important role in the determination of the outcome of many social and economic interactions. In many interesting social and economic situations, group formation creates either negative externalities or positive externalities for nonmembers. Examples of negative externalities are research coalitions and customs unions. Examples of positive externalities include output cartels and public goods coalitions. To predict the coalition structures that are going to emerge at equilibrium we use the concept of contractual stability (Drèze and Greenberg, Econometrica 1980) which requires that any change made to the coalition structure needs the consent of both the deviating players and their original coalition partners. The word "contractual" is used to reflect the notion that coalitions are contracts binding all members and subject to revision only with consent of coalition partners. One example are rules governing entry and exit in labor cooperatives. A new partner will enter the cooperative only if (i) he wishes to come in; (ii) his new partners wish to accept him; and (iii) he obtains from his former partners permission to withdraw (only if he was before member of another cooperative). Two different decision rules for consent are analyzed: simple majority or unanimity. We investigate whether requiring the consent of group members may help to reconcile stability and efficiency. |
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Osaka University of Economics Monday, July 12, 10:30, Session C Noncooperative Foundation of Nash Bargaining Solution in n-Person Games with Incomplete Information [pdf] Abstract
This paper provides a non-cooperative bargaining game model to support the n-person asymmetric Nash bargaining solution for the bargaining problem with incomplete information. We show that our bargaining game possesses a stationary sequential equilibrium in which all types of proposers offer the ex-post efficient, Bayesian incentive compatible, budget-balanced mechanism with the ``full surplus extraction'' property. Furthermore, the conditionally expected payoff vector in the stationary sequential equilibrium is characterized as the generalized asymmetric Nash bargaining solution under incomplete information. |
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University of New South Wales Monday, July 12, 10:30, Session A Collusion and Selective Supervision [pdf] Abstract This paper studies the role of a policy of inducing selective supervision in combating collusion within organizations, or in regulatory setups. In a mechanism-design problem involving a principal-supervisor-agent we show the role of endogenous selection of supervisory activity by the principal. One simple example is a mechanism in which the agent bypasses the supervisor and contracts directly with the principal in some states of the world. If collusion between supervisor and agent can occur only after they have decided to participate in the mechanism, this can costlessly eliminate collusion. This result is robust to alternative information structures, collusive behaviors and specification of agent's types. Applications include self-reporting of crimes, tax amnesties, immigration amnesties, work contracts specifying different degrees of discretion, mechanisms based on recommendation letters, embassies issuing immigration permits, and hiring committees. |
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London School of Economics Monday, July 12, 15:15, Session C Quantity Competition in Networked Markets [pdf] Abstract This paper investigates how quantity competition operates in economies in which a network describes the set of feasible trades. A general equilibrium model is presented in which prices and flows of goods are endogenously determined. In such economies equilibrium dictates whether an individual buys, sells or does both (which is possible). The first part of the analysis provides sufficient conditions for pure strategy equilibrium existence; characterizes equilibrium prices, flows and markups; and details negative effects on welfare of changes in the network structure. The main contributions show that goods do not cycle, since prices strictly increase along the supply chains; that not all connected players with different marginal rates of substitution trade; and that adding trading relationships may decrease individual and social welfare. The second part of the analysis provides necessary and sufficient conditions for a networked economy to become competitive as the number of players grows large. In this context it shown that no economy in which goods are resold can ever be competitive; and that large well connected economies are competitive. |
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Hebrew University of Jerusalem The Rate of Convergence in Repeated Games with Incomplete Information
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University of the Basque Country Monday, July 12, 14:45, Session A Information, stability and dynamics in networks under institutional constraints [pdf] (joint work with Federico Valenciano) Abstract
Several seminal papers study the stability and efficiency of networks where links are formed either unilaterally (in this setting Goyal (1993) and Bala and Goyal (2000a) study Nash stability and provide a dynamic model) or based on bilateral agreements (in this setting Jackson and Wolinsky (1996) introduce pairwise stability). In these seminal papers it is assumed homogeneity across players and also that the current network is common knowledge to all node-players. Galeotti et al. (2006) consider heterogeneous players, while Bloch and Dutta (2009) consider endogenous link strength. The common knowledge assumption may be unrealistic in many cases and is dropped by McBride (2006), who studies the effects of a limited perception, namely, assuming that each node-player perceives the current network only up to a certain distance from the node. |
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Haas School of Business-University of California, Berkeley Tuesday, July 13, 10:00, Session B Combinatorial Voting [pdf] (joint work with David Ahn) Abstract We study elections that simultaneously decide multiple issues, where voters have independent private values over bundles of issues. The innovation is considering nonseparable preferences, where issues may be complements or substitutes. Voters face a political exposure problem: the optimal vote for a particular issue will depend on the resolution of the other issues. Moreover, the probabilities that the other issues will pass should be conditioned on being pivotal. We first prove equilibrium exists when distributions over values have full support or when issues are complements. We then study limits of symmetric equilibria for large elections. Suppose that, conditioning on being pivotal for an issue, the outcomes of the residual issues are asymptotically certain. Then limit equilibria are determined by ordinal comparisons of bundles. We characterize when this asymptotic conditional certainty occurs. Using these characterizations, we construct a nonempty open set of distributions where the outcome of either issue remains uncertain in all limit equilibria. Thus, predictability of large elections is not a generic feature of independent private values. While the Condorcet winner is not necessarily the outcome of the election, we provides conditions that guarantee the implementation of the Condorcet winner. Finally, we prove results that suggest transitivity and ordinal separability of the majority preference relation are conducive for ordinal efficiency and for predictability. |
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Northwestern University Attributes [pdf] (joint work with Diego Klabjan and Asher Wolinsky) Abstract
An agent makes the decision whether to acquire an object. Before making this decision, she can discover, at some cost, some attributes of the object (or equivalently, some signals about the object’s value). We characterize the solution to the following problem of sequential discovering of attributes with the option of stopping at any point of time, and accepting or rejecting the object. |
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TU Delft Monday, July 12, 15:45, Session C An electricity market incentive game based on time-of-use tariff [pdf] (joint work with Ashish Pandharipande, Scott W. Cunningham) Abstract In this paper we model an electricity market game in which producer acts as profit taker and consumer is a follower bounded to a cost function related to comfort of load shifting from day time to night time. We consider a time-of-use (TOU) tariff scheme where the night and day pricing differs. We first analyse the interaction between a single retailer and consumers and then extend the framework to a two retailer case. |
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Oakland University Monday, July 12, 10:00, Session D Core-stable rings in second price auctions with common values [pdf] (joint work with Françoise Forges) Abstract In a common value auction in which the information partitions of the bidders are connected, all rings are core-stable. |
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University of Minnesota Friday, July 16, 11:45, Session C Reputation Effects in Two-Sided Incomplete-Information Games [pdf] Abstract This paper studies the sustainability of reputation in a class of games with imperfect public monitoring and two long-lived players, both of whom have private information about their own type and uncertainty over the types of other player. Players may be either a strategic type who maximizes expected utility or a (simple) commitment type who plays a prespecified action every period. The reputation of a strategic type of player for being the commitment type is established by mimicking the behavior of the commitment type. The distinct feature of our model is that both strategic players aim to establish a false reputation for being the commitment type. The class of games we consider encompasses a wide range of economic interactions between two parties that involve hidden-information (e.g. between a regulator and regulatee) or hidden action (e.g between an employer and employee), where the reputation concerns of both parties are apparent. In both games, one party (principal) prefers that the other party (agent) play in a specific way and use costly auditing to enforce this behavior. The principal aims to establish a reputation for being diligent; whereas the agent want to build a reputation for being virtuous. Extending the techniques of Cripps, Mailath, Samuelson (2004), we find that neither strategic player can sustain a reputation for playing a noncredible behavior, i.e a behavior which is not optimal given that the opponent is best responding in the stage game. Hence, in this class, the true types of both players will be revealed eventually in all Nash equilibria and the asymmetric information does not affect equilibrium analysis in the long-run. In fact, we show that this is the only class of two-sided incomplete information games (with simple commitment types) where reputations disappear in the long-run, in all equilibria. To do so, we provide an example where reputations for noncredible behavior are sustained in a Nash equilibrium. |
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Sabanci University Friday, July 16, 10:30, Session C Searching a Bargain: Play it Cool or Haggle [pdf] Abstract This paper aims to shed light on imperfectly competitive search markets where the sellers announce their initial demands prior to the buyer's visit and market participants of both sides have the opportunity of building reputation on inflexibility. The buyer facing two sellers can negotiate with only one at a time and can switch his bargaining partner with some cost. The introduction of commitment types that are inflexible in their demands, even with low probabilities, makes the equilibrium of the resulting multilateral bargaining game essentially unique. The equilibrium has a war of attrition structure. If the sellers' initial demands are the same, then the buyer will never visit one seller more than once. If instead the demands are different, a given seller may be visited twice and the buyer may choose to go first to the seller with the higher demand. Although the sellers compete in the spirit of Bertrand, the equilibrium prices are in contrast to the Bertrand's prediction. |
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Virginia Tech Monday, July 12, 15:15, Session D Naive Learning and Game Play in a Dual Social Network Framework [pdf] (joint work with Robert P. Gilles) Abstract We observe that people perform economic activities within the social setting of a small group, while they obtain relevant information from a broader source. We capture this feature with a dynamic interaction model based on two separate social networks. Individuals play a coordination game in an interaction network. Meanwhile, all individuals update their strategies via a naive learning process using information from a separate influence network through which information is disseminated. In each time period, the interaction and influence networks co-evolve, and the individuals' strategies are updated through a modified French-DeGroot updating process. We show that through this updating process both network structures and players' mixed strategies always reach a steady state. In particular, conformity occurs in the long run when the interaction cost is sufficiently low. We also analyze the influence exerted by a minority group on these outcomes. |
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University of Bristol, UK Friday, July 16, 10:30, Session B Seller Reputation and Trust in Pre-Trade Communication [pdf] (joint work with Bruno Jullien) Abstract We delineate a new reputation mechanism that sustains credible communication on product quality in experience good markets, as a consequence of the interplay between a seller's honesty in short-run communication and the evolution of the market belief regarding his ability to deliver quality. As maintaining honesty is less costly for high ability sellers who anticipate less "bad news" to disclose, they can signal their ability by communicating in a more trustworthy manner. Applying this model, we examine the extent to which consumer feedback systems foster trust in online markets, including the possibility that sellers may change identities or exit. |
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Corvinus University of Budapest Wednesday, July 14, 15:15, Session A Young's axiomatization of the Shapley value - a new proof [pdf] Abstract Young's characterization of the Shapley value is considered. A new proof of this axiomatization is presented, moreover, as applications of the new proof, it is demonstrated that the axioms under consideration characterize the Shapley value on various well-known subclasses of TU games. |
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Brigham Young University Wednesday, July 14, 15:15, Session D Auctions for Priority Access [pdf] Abstract
This paper analyzes an auction which allocates a perfectly divisible good among competing agents by granting them access in the order of their bids. The highest bidder is granted the first opportunity to purchase as many units as desired; if any remains, the next highest bidder is then given access, and so forth. This auction has immediate application to rent seeking behavior and waiting as a rationing mechanism. |
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University of Southampton Friday, July 16, 14:45, Session B Linear Mechanisms for Single-Parameter Domains: Characterization, Existence, and Construction [pdf] (joint work with Nicholas R. Jennings and Victor Naroditskiy) Abstract We give sufficient conditions for the existence of piecewise linear optimal mechanisms in single-parameter domains, and identify a rich class of mechanism design problems that satisfy these conditions. Specifically, we consider anonymous settings where the allocation is \"constant-dependent\": i.e., determined by a set of hyperplanes $v_i = c_j$, where $v_i$ is agent $i$\'s type and $c_j$ is some constant. Our proof is constructive and yields a general procedure for finding an optimal mechanism for any given problem in this class. |
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TSE (GREMAQ), University Toulouse 1 Wednesday, July 14, 15:15, Session C Dynamic Sender-Receiver Games [pdf] (joint work with Eilon Solan and Nicolas Vieille) Abstract
We consider a dynamic version of sender-receiver games, where the sequence of states follows a Markov chain observed by the sender. Under mild assumptions, we characterize the limit set of equilibrium payoffs. We obtain a strong dichotomy property: either only uninformative ``babbling" equilibria exist, or we can perturb the game so that all equilibrium payoffs can be achieved with strategies where, in most of the stages, the sender reveals the true state to the receiver. |
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University of Chicago Further Results on the Existence of Nash Equilibria in Discontinuous Games Abstract We provide several generalizations of the main equilibrium existence results in Reny (1999), as well as generalizations of some of the results in Barelli and Soza (2001) and McLennan, Montiero, and Tourky (2009). We also provide an example demonstrating that a natural additional generalization is not possible. |
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Harvard University Matching with Couples: Stability and Incentives in Large Markets [pdf] (joint work with Fuhito Kojima and Parag A. Pathak) Abstract Accommodating couples has been a longstanding issue in the design of centralized labor market clearinghouses for doctors and psychologists, because couples view pairs of jobs as complements. A stable matching may not exist when couples are present. We find conditions under which a stable matching exists with high probability in large markets. We present a mechanism that finds a stable matching with high probability, and which makes truth-telling by all participants an approximate equilibrium. We relate these theoretical results to the job market for psychologists, in which stable matchings exist for all years of the data, despite the presence of couples. |
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Tel Aviv University What if Achilles and the tortoise were to bargain? An argument against interim agreements [pdf] Abstract Engaging in a dynamic process of interim agreements guarantees that agreement will never be reached. Arguments of Zeno, Aristotle, von Neumann, Nash, Raiffa, and C. Northcote Parkinson lead to this grim conclusion. Is the everlasting Israeli-Palestinian peace process a case in point? |
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Yale University Common Learnning Abstract
Consider two agents who observe a string of private signals that are informative about the value of an underlying, unknown parameter. Let us say that the value of the parameter becomes common-p belief if each agent attaches probability at least p to that value, and each agent attaches probability at least p to the event that each agent attaches probability at least p to the value, and so on. The event is commonly learned if it eventually becomes common-p belief for arbitrarily large p. |
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University of Wisconsin Evolutionary game theory: overview and recent results Abstract Abstract: We provide an overview of the methods of evolutionary game theory and describe a variety of recent results. Evolutionary game theory provides dynamic models of behavior for populations of agents engaged in recurring strategic interactions. Population games provide a general model of strategic interactions among large numbers of agents; network congestion, multilateral externalities, and natural selection are among their many applications. As the direct assumption of equilibrium play seems difficult to justify in these games, behavior is most naturally modeled as a dynamic adjustment processes. To accomplish this, one begins with an explicit stochastic description of how individual agents make decisions. When the number of agents is large enough and the time horizon of interest not too long, the evolution of aggregate behavior is well approximated by solutions to ordinary differential equations. We discuss various classes of population games in which these deterministic evolutionary dynamics lead to equilibrium play, and also consider simple examples in which more complicated limit behavior occurs. If one is interested in behavior over very long time spans, one studies the stochastic evolutionary processes directly, focusing on their ergodic and large deviations properties; this is the context for analyses of stochastic stability. We discuss recent work that uses large deviation theory to derive the probabilities and the paths of excursions from stable equilibria, the times required for transitions between such equilibria, and the consequences of these analyses for the infinite-horizon distribution of play. |
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LUISS On the Core of Dynamic Cooperative Games (joint work with Ehud Lehrer) Abstract
We consider dynamic cooperative games, where the worth of coalitions varies over time according to the history of allocations. When defining the core of a dynamic game, we allow the possibility for coalitions to deviate at any time and thereby to give rise to a new environment. When a coalition deviates, from that point on, the game is no longer played with the original set of players. The deviating coalition becomes the new grand coalition which, in turn, induces a new dynamic game. The stage games of the new dynamical game depend on all previous allocation including those that have been materialized from the deviating time on. |
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Kyoto University Tuesday, July 13, 11:15, Session B Finitely Repeated Games with Monitoring Options [pdf] (joint work with Yasuyuki Miyahara) Abstract We study a model of finitely repeated games where the players can decide whether to monitor the other players' actions or not each period. The standard model of repeated games can be interpreted as a model where the players automatically monitor each other. Monitoring is assumed to be private and costless. Hence it is weakly dominant to monitor the other players each period. We thus ask whether the option not to monitor the other players expands the equilibrium payoff vector set. In the context of finitely repeated games with a unique stage game equilibrium, we provide a sufficient condition for a folk theorem when the horizon is sufficiently long. |
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Kansai University Wednesday, July 14, 15:45, Session C Cheap Talk with an Exit Option: A Model of Exit and Voice [pdf] Abstract The paper presents a formal model of the exit and voice framework proposed by Hirschman (1970). To be more precise, we modify the cheap talk model of Crawford and Sobel (1982) such that the sender of a cheap talk message has the exit option. We demonstrate that the existence of the exit option may increase the informativeness of cheap talk and improve welfare if the exit option is attractive to the sender. Moreover, it is verified that perfect information transmission can be approximated in the limit. The results suggest that the exit reinforces the voice in that the credibility of the exit increases the informativeness of the voice. |
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Northwestern University Describable tests need not be manipulable (joint work with Tai-Wei Hu) Abstract A decision maker needs predictions about the realizations of a repeated experiment in each period. An expert provides a theory that, conditional on each finite history of realizations, supplies a probabilistic prediction. However, there may be false experts without any knowledge of the data-generating process who may deliver theories strategically. Hence, empirical tests for these theories are necessary. A test is manipulable if a false expert can pass the test with a high probability. For the theories to be deliverable and for tests to be implementable, they have to be computable. Consider only computable theories and tests, we show that there is a test that is not manipulable and that accepts true experts with high probabilities. In particular, the constructed test is both future independent (Olszewski and Sandroni (2008)) and sequential. Our conclusion overturns earlier results that future independent tests are manipulable, and shows that computability considerations have significant effects in these problems. |
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University of Redlands Tuesday, July 13, 11:15, Session D All-Pay Auctions with Regret [pdf] (joint work with James W. Boudreau) Abstract Extensive experimental literature on first-price auctions documents bidding deviating from risk-neutral Nash equilibrium and bidder regret has been proposed as a possible explanation for these observations. Recent experimental literature on all-pay auctions reveals that bidders often deviate from risk-neutral Nash equilibrium bidding. We construct and study models of (first-price) all-pay auctions with n bidders that anticipate regret from winning and paying more than necessary (winner regret) and regret from losing at a price they would be willing to beat ex post (loser regret). We characterize symmetric Nash equilibria in such auctions for both complete information and incomplete information (independent private values) environments. Under complete information, the unique symmetric Nash equilibrium is in mixed strategies. We also establish the existence of a continuum of asymmetric equilibria for auctions with n>2 bidders. Relative to the symmetric risk-neutral Nash equilibrium, increased winner regret leads to less aggressive bidding (in the sense of first-order stochastic dominance), increased loser regret leads to more aggressive bidding (FOSD), and if bidders weight equally winner and loser regret the equilibria coincide. The implications of regret for auction revenue follow immediately from these comparative static results. For the independent private values case, we characterize a symmetric Bayes-Nash equilibrium and find that the implications of regret for bidding and revenue carry over to this environment. |
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Massachusetts Institute of Technology Friday, July 16, 15:45, Session D A fixed point free proof of Nash's Theorem via exchangeable equilibria [pdf] (joint work with Pablo A. Parrilo and Asuman Ozdaglar) Abstract
We prove existence of Nash equilibria in all finite games without using fixed point theorems or path following arguments. To do so we introduce the notion of exchangeable equilibria, which are correlated equilibria with certain symmetry and factorization properties. We prove these exist by adapting Hart and Schmeidler's proof of correlated equilibrium existence. Modifying Papadimitriou's correlated equilibrium algorithm in the same way, we can compute exchangeable equilibria in polynomial time. |
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Princeton University Wednesday, July 14, 10:30, Session C Policy Announcement Game: Valence Candidates and Ambiguous Policies [pdf] (joint work with Yuichiro Kamada) Abstract We construct a model to explain the phenomenon that in the course of election campaigns, candidates often use ambiguous language in the early stage of the campaigns while they sometimes make their attitudes clear later. In the model, two candidates obtain opportunities to make their policies unambiguous, which arrive stochastically until the election at a predetermined time. While there is no incentive to keep policies ambiguous if two candidates are perfectly symmetric with respect to valence, there is a strategic incentive to keep policies ambiguous if one candidate is slightly stronger than the other. |
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Shanghai Jiao Tong University Wednesday, July 14, 10:00, Session C A Contest Theoretical Study of Class Action [pdf] Abstract This paper presents a contest theoretical analysis of class action in litigation. Following Tullock's rent-seeking contest model, we show that homogeneous plaintiffs each have incentive to join class action against the defendant. If plaintiffs are heterogeneous, only low-value plaintiffs will pool together if upon winning each plaintiff gets equally compensated. However, if each plaintiff gets compensated in proportion to their claims or valuations, each of them has incentive to join the class action. |
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Hosei University Tuesday, July 13, 15:15, Session B Mechanism Design with Collusive Supervision: A Three-tier Agency Model with a Continuum of Types, including Applications to Organizational Design [pdf] Abstract We apply the “Monotone Comparative Statics” method à la Topkis (1978), Edlin and Shannon (1998), and Milgrom and Segal (2002)’s generalized envelope theorem to the three-tier agency model with hidden information and collusion à la Tirole (1986, 1992), thereby providing a framework that can address the issues treated in the existing literature, e.g., Kofman and Lawarree (1993)’s auditing application, in a much simpler fashion. Using its tractable framework, we examine some interesting extensions, such as the effect of introducing another supervisor, the problem resulting from a lack of the principal’s commitment, and the effect of incorporating behavioral elements into the model. In addition, we derive some clear and robust implications applicable to corporate governance reform, such as a choice between the companies with auditors vs. committees as a top management organization. |
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DePaul University Tuesday, July 13, 11:45, Session C Listing attributes and seller competition in internet auctions [pdf] (joint work with Gabriella A. Bucci) Abstract We analyze the effect of market conditions, trader types, and product types on listing strategies and outcomes in Internet auctions. A routine visit to eBay reveals that the way in which sellers list their products varies widely, not only across product categories, but also within them. At one extreme, some sellers build elaborate pages with multiple pictures, animations, colorful fonts, and detailed explanations of the characteristics and condition of their product. At the other extreme are sellers build very simple pages, with minimal explanation and no picture of the object. In between, there is a whole spectrum of intermediate cases where the page listing is neither very elaborate nor very simple. There are several reasons for this variation in the attributes of internet auction listings: (a) The type of product offered. A standard or commodity-like product may not require a lot of detail, whereas an antique or collectible usually warrants detail and visual aids; (b) The average value of the good. Small items may not give the seller the incentive to expend time and effort constructing sophisticated pages, whereas large or valuable items may warrant the construction of a detailed page; (c) The seller size/scale and reputation may affect her listing cost function; (d) The extent of buyer sophistication or savvy across different product categories also affects the amount of information a seller provides on the listing; and (e) The different costs involved in setting up detailed auction pages certainly matter too. The paper consists of both a theoretical and an empirical section. In the theoretical section we construct a simple model of optimal auction listing to derive testable predictions on seller behavior, and in the empirical section, we use data from hundreds of eBay auctions to test the main predictions of the model. |
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Maastricht University Friday, July 16, 10:00, Session D On consensus through communication without a commonly known protocol [pdf] (joint work with Mark Voorneveld) Abstract The present paper extends the standard model of pairwise communication among Bayesian agents to cases where the structure of the communication protocol is not commonly known. We show that, even under strict conditions on the structure of the protocols and the nature of the transmitted signals, a consensus may never be reached if very little asymmetric information about the protocol is introduced. |
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Foundacion para la cooperacion internacional Wednesday, July 14, 11:15, Session B N-Person Cooperative Games Strategic-Equilibrium [docx] Abstract
Based on von Neumann and Morgenstern´s detached extended imputations relation to the stable set solution of a cooperative game, necessary an sufficient conditions for the structural and strategic equilibriums that characterizes the symmetric (objective) solutions are given for all general-sum n-person cooperative games with transferable utility. The mathematical characterization of the equilibriums for these games is accomplished in terms of covering collections structures that are linearly-balanced, admissible utility transfers and fundamental theorems of the alternative for matrices: The Fredholm alternative for matrices form of the fundamental theorem of linear algebra and the Farkas lemma. The existence of a fundamental strategic equilibrium for every game is established and shown to constitute a von Neumann and Morgenstern un-dominated system of interrelated extended imputations. It is shown to be not necessarily a solution but a systemic attractor where all solutions may emerge from. Heuristic procedures to determine the fundamental equilibrium of a game and for generating vN-M non-discriminatory solutions are given. |
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CORE Monday, July 12, 15:15, Session A A characterization of farsightedly stable networks [pdf] (joint work with Grandjean Gilles and Ana Mauleon) Abstract
We study the stability of social and economic networks when players are farsighted. We adopt Herings, Mauleon and Vannetelbosch’s [Games and Economic Behavior 67, 526-541 (2009)] notions of farsightedly stable set and of myopically stable set. We first provide an algorithm that characterizes the unique pairwise and groupwise farsightedly table set of networks under the componentwise egalitarian allocation rule. We then show that this set coincides with the unique groupwise myopically stable set of networks but not with the unique pairwise myopically stable set of networks. We conclude that, (i) if groupwise deviations are allowed then whether players are farsighted or myopic does not matter; (ii) if players are farsighted then whether players are allowed to deviate in pairs only or in groups does not matter. |
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CORE Friday, July 16, 11:15, Session D Coalition formation among farsighted agents Abstract A set of coalition structures P is farsightedly stable (i) if all possible deviations from any coalition structure p belonging to P to a coalition structure outside P are deterred by the threat of ending worse off or equally well off, (ii) if there exists a farsighted improving path from any coalition structure outside the set leading to some coalition structure in the set, and (iii) if there is no proper subset of P satisfying Conditions (i) and (ii). A non-empty farsightedly stable set always exists. We provide a characterization of unique farsightedly stable sets of coalition structures. We study the relationship between farsighted stability and other concepts such as the largest consistent set and the von Neumann-Morgenstern farsightedly stable set. Finally, we illustrate our results by means of the cartel formation game. |
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University Toulouse 1 Capitole Tuesday, July 13, 15:45, Session A Commutative stochastic games [pdf] Abstract We are interested in stochastic games with finite sets of actions where the transitions commute. The exploitation of a mineral resource such as oil or gold is an example of an economic problem fitting this assumption. It is enough to remember how much of the resource has been exploited in the past to define the remaining quantity. The Big Match and more generally absorbing games can be formulated in this model. When there is only one player, we show that the existence of a uniform value in pure strategies implies the existence of 0-optimal strategies. For stochastic games we prove the existence of the uniform value when the set of states is finite and players observe past actions but not the state. They reduce to a specific class of zero-sum stochastic games on R^n which we solve by using the theorem of Mertens Neyman (1981). The same proof extends to the non zero-sum case if we use the result of Vieille (2000). |
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University of Rochester Tuesday, July 13, 11:45, Session D First-price auctions with resale: the case of many bidders [pdf] Abstract If agents engage in resale, it changes bidding in the initial auction. Resale offers extra incentives for bidders with lower valuations to win the auction. However, if resale markets are not frictionless, then use values affect bidding incentives, and stronger bidders still win the initial auction more often than weaker ones. I consider a first price auction followed by a resale market with frictions, and confirm the above statements. While intuitive, our results differ from the two bidder case of Hafalir and Krishna (2008): the two bidders win with equal probabilities regardless of their use values. The reason is that they face a common (resale) price at the relevant margin, a property that fails with more than two bidders. Numerical simulations show that asymmetry in winning probabilities increases in the number of bidders, and in large markets resale loses its effect on allocations. We also show in an example that the revenue advantage of first price auctions over second price auctions is positive, but decreasing in the number of bidders. |
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Southern Illinois University Monday, July 12, 15:45, Session A Fund-Raising Games Played on a Network [pdf] Abstract It is well known among fund-raisers that many people contribute to charities or organizations only when asked and that large donations are more likely to occur as a fund-raiser increases the time spent soliciting and/or researching a potential donor. As fund-raisers can only spend time with or research donors that they are aware of, the relationship (or links) between fund-raisers and donors is quite important. We model a fund-raising game where fund-raisers can only solicit donors whom they are tied to and analyze how this network influences donation requests. We show that if this network is incomplete and if donors experience extreme donor fatigue, then fund-raisers will spend more time soliciting donors that other fund-raisers are also tied to and less time soliciting donors that they are the only fund-raiser tied to. If instead donors experience mild donor fatigue, then fund-raisers prefer donors that they are the only fund-raiser tied to over donors that are shared with other fund-raisers. If donors are potential givers with no donor fatigue, then multiple equilibria may exist. Stochastic stability is used to refine the number of equilibria in this case and conditions are given under which the unique stochastically stable equilibrium is efficient. |
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Universidad de San Andres Monday, July 12, 10:30, Session D On favoritism in auctions with entry [pdf] (joint work with Leandro Arozamena) Abstract We examine the problem of endogenous entry in a single-unit auction when the seller's welfare depends positively on the utility of a subset of potential bidders. We show that, unless the seller values those bidders' welfare more than her own "private" utility, a nondiscriminatory auction is optimal. |
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Massachusetts Institute of Technology Friday, July 16, 11:15, Session C Repeated Public Good Provision [pdf] Abstract We provide a tractable framework for studying the effects of group size and structure on the maximum level of a public good that can be provided in sequential equilibrium in repeated games with private monitoring. We restrict attention to games with "all-or-nothing" monitoring, in which in every period player i either perfectly observes player j's contribution to the public good or gets no information about player j's contribution; this class of games includes many interesting examples, including random matching, monitoring on networks, and simple kinds of imperfect "quasi-public" monitoring. The first main result is that the maximum level of public good provision can be sustained in grim trigger strategies. In games satisfying a weak form of symmetry, comparative statics on the maximum per capita level of public good provision are shown to depend only on the product of a term capturing the rivalness of the good and a term capturing a simple characteristic of the monitoring technology: its "effective contagiousness." In leading examples, the maximum per capita level of provision of a pure public good is increasing in group size, but the maximum per capita level of provision of a divisible public good is often decreasing in group size. Under broad conditions, making monitoring less uncertain in the second-order stochastic dominance sense increases public good provision. For games played on asymmetric networks, we introduce a new notion of network centrality and show that more central players in social networks make larger contributions, and that every player in better connected networks can contribute more to the public good. We also consider an extension to local public goods. |
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Princeton University Friday, July 16, 10:00, Session B Games with Rational Inattention--Coordination with Endogenous Information [pdf] Abstract
The equilibria of a coordination game with incomplete information depend on its information structure. Rather than exogenously assuming an information structure like most models in literature, we allow the players to collect information according to their own interests. The information structure then emerges as a part of the equilibrium rather than results in it. This setup avoids the arbitrariness in choosing information structure. The players' information acquisition behavior is modeled by rational inattention, a theory stating that human beings have limited capacity for information processing and can optimally use it given such capacity constraint. It frees the model from the behavioral details of information acquisition and thus is flexible enough to provide a general framework for the analysis of endogenous information acquisition. |
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Massachusetts Institute of Technology Invariance to Representation of Information [pdf] Abstract Under weak assumptions on the solution concept, I construct an invariant selection across all finite type spaces, in which the types with identical information play the same action. Along the way, I establish an interesting lattice structure for finite type spaces and construct an equilibrium on the space of all finite types. |
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Boston College A Theory of House Allocation and Exchange Mechanisms (joint work with Marek Pycia) Abstract We study the allocation and exchange of indivisible objects without monetary transfers. In market design literature, some problems that fall in this category are the house allocation problem with and without existing tenants, and the kidney exchange problem. We introduce a new class of direct mechanisms that we call "trading cycles with brokers and owners," and show that (i) each mechanism in the class is coalitional strategy-proof and Pareto-efficient, and (ii) each coalitional strategy-proof and Pareto-efficient direct mechanism is in the class. As corollaries, we obtain new characterizations in the aforementioned market design problems. |
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University of Rochester Monday, July 12, 11:15, Session D Knowledge-Belief Space Approach to Robust Implementation [pdf] Abstract
In this paper, we give a characterization of robust implementation, which was first studied by Bergemann-Morris (2005). Our method is different and more general than Bergemann-Morris. We consider Bayesian implementation on the universal type space a la Mertens-Zamir. However, Mertens-Zamir's space is not applicable here due to the existence of redundant types and the failure of Equilibrium Extension Property by Friedenberg-Meier (2007). To deal with redundancy, we adopt an extended belief hierarchy space introducing a payoff irrelevant parameter space constructed by Yokotani (2009) which allows Harsanyi type spaces with redundant types to be embedded. In addition, by introducing knowledge partition to Harsanyi type spaces, we construct a "universal" type space where Equilibrium Extension Property holds. As a result, we obtain a characterization result about robust implementation by applying the methods by Jackson (1992) and Palfrey-Srivastava (1989) on this space. Due to the simplicity of the structure, we can easily extend this result to social choice correspondences and noisy signal models which were not covered by Bergemann-Morris. |
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University of Oxford Monday, July 12, 14:45, Session D Efficiency and Equilibrium in Trial and Error Learning [pdf] (joint work with Bary S.R. Pradelski) Abstract In trial and error learning, agents experiment with new strategies and adopt them with a probability that depends on their realized payoffs. Such rules are completely uncoupled, that is, each agent’s behavior depends only on his own realized payoffs and not on the payoffs or actions of anyone else. We show that by modifying a trial and error learning rule proposed by Young (2009) we obtain a completely uncoupled learning process that selects a Pareto optimal equilibrium whenever a pure equilibrium exists. When a pure equilibrium does not exist, there is a simple formula that relates the long-run likelihood of each disequilibrium state to the total payoff over all agents and the maximum payoff gain that would result from a unilateral deviation by some agent. This welfare/stability trade-off criterion provides a novel framework for analyzing the selection of disequilibrium as well as equilibrium states in finite n-person games. |
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The Hebrew University of Jerusalem On Bayesian-Nash Equilibria Satisfying the Condorcet Jury Theorem: The Dependent Case [pdf] (joint work with Bezalel Peleg) Abstract
We investigate sufficient conditions for the existence of Bayesian-Nash equilibria that satisfy the Condorcet Jury Theorem (CJT). In the Bayesian game Gn among n jurors, we allow for arbitrary distribution on the types of jurors. In particular, any kind of dependency is possible. If each juror i has a “constant strategy”, σi (that is, a strategy that is independent of the size n≥i of the jury), such that σ =(σ1, σ2, . . . , σn. . .) satisfies theCJT, then byMcLennan (1998) there exists a Bayesian-Nash equilibrium that also satisfies the CJT. We translate the CJT condition on sequences of constant strategies into the following problem: |
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Queen Mary University of London Monday, July 12, 15:45, Session D Decision Making in Uncertain and Changing Environments [pdf] (joint work with Karl Schlag) Abstract
We study a repeated decision making problem in a distribution-free environment, where a decision maker has full information about the past and is concerned about the discounted sum of future payoffs. We provide a simple learning algorithm that performs almost as well as the best of a given finite number of other decision makers, experts or benchmark strategies, and that does so in a dynamically consistent way. The key feature of the algorithm is in optimal rate of "forgetting" distant past. This treatment of aggregation of past information, known in the psychological and experimental literature as the “recency” phenomenon, is obtained endogenously in our model. We also show that standard learning algorithms that treat recent and distant past equally are not dynamically consistent. |
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The Basque Country University Monday, July 12, 11:15, Session A The Consistency of the Harsanyi NTU solution (joint work with M. A. Hinojosa and E. Romero) Abstract Maschler and Owen (1989) showed that there is not any NTU value that is scale covariant and consistent with respect to the Hart and Mas-Colel l reduced game. Subsequently by relaxing the consistency property, Maschler and Owen (1989) introduced the so called Consistent Shapley NTU value. In this paper we adopt the Hart’s (1985) approach, by considering that an NTU solution associates a set of payoff configurations to every game, instead of payoff vectors. Accordingly we adapt the consistency property, and the Harsanyi NTU solution turns out to be consistent. Moreover we prove that this solution is fully characterized with consistency together with some standard axioms. |
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Singapore Management University Robust Information Cascade with Endogenous Ordering [pdf] Abstract We analyze a sequential decision model with one-sided commitment in which decision makers are allowed to choose the time of acting (exercising a risky investment option A) or waiting. We characterize information cascade under endogenous ordering and show that with endogenous ordering, if the number of decision makers is large and decision makers are patient enough, at any fixed time, nearly all decision makers wait due to the negligible information disclosed. In this case, if decision makers can be forced to move with an exogenous order, the resulting equilibrium is more e±cient because exogenous ordering tends to aggregate more information. |
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Saint-Petersburg State University (Russia) Tuesday, July 13, 10:30, Session A The quality-price competition models’ analysis: equilibrium solutions and cooperation [doc] (joint work with Denis V. Kuzyutin and Margarita Gladkova) Abstract
We examine the game-theoretical models of product differentiation (basic “quality–price” 2–firm competition model [Ronnen, 1991; Tirole, 1997] and “2–dimentional” competition model [Kuzyutin & Zhukova, 2007] that takes into account both vertical and horizontal differentiation [Hotelling, 1929] features. |
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University of Cyprus Monday, July 12, 14:45, Session C Market Games and the Bargaining Set [pdf] Abstract We present the bargaining set of an economy, where trades among groups of individuals are conducted via the Shapley-Shubik mechanism. Then we prove that in atomless economies the allocations resulting from this equilibrium notion are competitive. |
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University of Copenhagen Wednesday, July 14, 11:45, Session B Merging and splitting in cooperative games: some (im)possibility results [pdf] (joint work with Peter Holch Knudsen) Abstract Allocation rules for cooperative games can be manipulated by coalitions merging into single players, or, conversely, players splitting into a number of smaller units. This paper collects some (im)possibility results on merging- and splitting-proofness of (core) allocation rules for cooperative games with side-payments. |