Authors:Siddhartha Bandyopadhyay, Mandar Oak First page: 48 Abstract: We study a game theoretic model of a parliamentary democracy under proportional representation where ideologically motivated citizen groups form parties, voting occurs and governments are formed. We study the coalition governments that emerge as functions of the parties’ seat shares, the size of the rents from holding office and their ideologies. We show that governments may be minimal winning, minority or surplus. Moreover, coalitions may be ‘disconnected’. We then look at how the coalition formation game affects the incentives for party formation. In particular, we show that when the rents from office are low, the median citizen stands unopposed, and when rents are high, there is more political entry. For intermediate rents, we show that strategic dropouts can happen to influence the final policy. We show that the incentives for strategic dropout can be higher under proportional representation than plurality voting, contrary to Duverger’s law. Our model explains the diverse electoral outcomes seen under proportional representation and integrates models of political entry with models of coalitional bargaining. Citation: Games PubDate: 2022-06-21 DOI: 10.3390/g13040048 Issue No:Vol. 13, No. 4 (2022)
Authors:Daniel H. Wood First page: 49 Abstract: I experimentally investigate how vague language changes the nature of communication in a biased strategic information transmission game. Counterintuitively, when both precise and imprecise messages can be sent, in aggregate, senders are more accurate, and receivers trust them more than when only precise messages can be sent. I also develop and structurally estimate a model showing that vague messages increase communication between boundedly rational players, especially if some senders are moderately honest. Moderately honest senders avoid stating an outright lie by using vague messages to hedge them. Then, precise messages are more informative because there are fewer precise lies. Citation: Games PubDate: 2022-06-22 DOI: 10.3390/g13040049 Issue No:Vol. 13, No. 4 (2022)
Authors:Kalliopi Kastampolidou, Christos Papalitsas, Theodore Andronikos First page: 33 Abstract: The Kolkata Paise Restaurant Problem is a challenging game in which n agents decide where to have lunch during their break. The game is not trivial because there are exactly n restaurants, and each restaurant can accommodate only one agent. We study this problem from a new angle and propose a novel strategy that results in greater utilization. Adopting a spatially distributed approach where the restaurants are uniformly distributed in the entire city area makes it possible for every agent to visit multiple restaurants. For each agent, the situation resembles that of the iconic traveling salesman, who must compute an optimal route through n cities. We rigorously prove probabilistic formulas that confirm the advantages of this policy and the increase in utilization. The derived equations generalize formulas that were previously known in the literature, which can be seen as special cases of our results. Citation: Games PubDate: 2022-04-20 DOI: 10.3390/g13030033 Issue No:Vol. 13, No. 3 (2022)
Authors:Ramzi Suleiman First page: 34 Abstract: Experimental studies show that the Nash equilibrium and its refinements are poor predictors of behavior in non-cooperative strategic games. Cooperation models, such as ERC and inequality aversion, yield superior predictions compared to the standard game theory predictions. However, those models are short of providing a general theory of behavior in economic interactions. In two previous articles, we proposed a rational theory of behavior in non-cooperative games, termed Economic Harmony theory (EH). In EH, we retained the rationality principle but modified the players’ utilities by defining them as functions of the ratios between their actual and aspired payoffs. We also abandoned the equilibrium concept in favor of the concept of “harmony,” defined as the intersection of strategies at which all players are equally satisfied. We derived and tested the theory predictions of behavior in the ultimatum game, the bargaining game with alternating offers, and the sequential common-pool resource dilemma game. In this article, we summarize the main tenets of EH and its previous predictions and test its predictions for behaviors in the public goods game and the trust game. We demonstrate that the harmony solutions account well for the observed fairness and cooperation in all the tested games. The impressive predictions of the theory, without violating the rationality principle nor adding free parameters, indicate that the role of benevolent sentiments in promoting fairness and cooperation in the discussed games is only marginal. Strikingly, the Golden Ratio, known for its aesthetically pleasing properties, emerged as the point of fair demands in the ultimatum game, the sequential bargaining game with alternating offers, and the sequential CPR dilemma game. The emergence of the golden ratio as the fairness solution in these games suggests that our perception of fairness and beauty are correlated. Because the harmony predictions underwent post-tests, future experiments are needed for conducting ex ante tests of the theory in the discussed games and in other non-cooperative games. Given the good performance of economic harmony where game theory fails, we hope that experimental economists and other behavioral scientists undertake such a task. Citation: Games PubDate: 2022-04-21 DOI: 10.3390/g13030034 Issue No:Vol. 13, No. 3 (2022)
Authors:Olga Gorbaneva, Guennady Ougolnitsky First page: 35 Abstract: A formal game-theoretic model of an intertwined supply network, in full and simplified versions, is proposed. Conditions for the sustainable development of an active system are presented in general form and then specified to the class of intertwined supply networks. As an illustration, a concise example of the dynamic Cournot duopoly and a detailed example of the model of Social and Private Interests Coordination Engines (SPICE-model) for a marketing network are considered and analytically investigated and sustainability conditions are established. An important conclusion is that the sustainable development of the active system is possible only under the viability conditions satisfied simultaneously with coordinating the interests of all active agents of the system. Citation: Games PubDate: 2022-04-28 DOI: 10.3390/g13030035 Issue No:Vol. 13, No. 3 (2022)
Authors:Margy Nathalia Rojas Palacios, Diego León Peña Orozco, Jesús Gonzalez-Feliu First page: 36 Abstract: This paper aims to analyze the impacts of a backup agreement contract on the performance of a small agricultural producers’ citrus supply chain. A backup agreement contract, which ensures for each echelon that a quantity of products will be bought independently of real demand, is proposed to coordinate a three-echelon supply chain, aimed at improving income. After presenting an overview of the literature that shows various coordination mechanisms but no backup agreement proposals for supply chain coordination, this paper develops a decentralized three-echelon supply chain facing stochastic customer demand and includes the backup agreement as a coordination mechanism to guarantee a balanced relationship between the chain members. The model is tested in a real case study in Colombia, and a sensitivity analysis is provided. Results show that a backup agreement contract coordinates the small agricultural producers’ supply chain and improves income for each echelon, especially for the small producer. However, the economic mechanism complexity can limit coordination among echelons, mainly because of a lack of trust and consolidated supply capacity from small farmers. The foregoing requires the development of an associative structure by small producers, which is proposed as future research work. Citation: Games PubDate: 2022-04-29 DOI: 10.3390/g13030036 Issue No:Vol. 13, No. 3 (2022)
Authors:Malcolm Brady First page: 37 Abstract: Horizontal differentiation is generally derived from the aggregate utility function and is assumed to be symmetric. However, empirical work suggests that asymmetric horizontal differentiation can exist in practice. This paper examines the topic of asymmetric horizontal differentiation by allowing a firm’s costly advertising to have a different impact on its own demand function than it does on that of its rival. This leads to the interesting analytical result that advertising that increases the cross-price effect of its rival can lead to an increase in firm profits. This introduces the possibility of a ‘couple’ effect where firm advertising can tilt its own and its rival’s demand functions in different directions. Several competitive advertising ‘couple’ scenarios are explored using numerical simulation. Citation: Games PubDate: 2022-05-07 DOI: 10.3390/g13030037 Issue No:Vol. 13, No. 3 (2022)
Authors:Shih-Shen Chen, Chien-Shu Tsai, Chen Chen First page: 38 Abstract: We construct a dynamic bilateral monopoly game to analyze the bargaining between a foreign manufacturer and a domestic retailer regarding the wholesale price and explain the foreign upstream firm’s corporate social responsibility (CSR) initiative and its economic impacts on the domestic market. Under free trade, the foreign upstream firm’s CSR initiative realizes improvements in consumer surplus and social welfare in the home country. A “win–win–win” strategy exists, as the foreign manufacturer has more of an incentive to implement CSR when the government implements a strategic trade policy. The consumer-friendly action implemented by the foreign upstream firm leads to adequate consumer welfare and social welfare, which mitigates the government’s political hostility. With the high bargaining power of the foreign upstream firm and the low weight of the consumer-friendly upstream firm, the government should set a higher tariff rate for the foreign upstream firm to extract rent and enhance social welfare. Citation: Games PubDate: 2022-05-12 DOI: 10.3390/g13030038 Issue No:Vol. 13, No. 3 (2022)
Authors:Gabriele Bellucci First page: 39 Abstract: Trust is central to a large variety of social interactions. Different research fields have empirically and theoretically investigated trust, observing trusting behaviors in different situations and pinpointing their different components and constituents. However, a unifying, computational formalization of those diverse components and constituents of trust is still lacking. Previous work has mainly used computational models borrowed from other fields and developed for other purposes to explain trusting behaviors in empirical paradigms. Here, I computationally formalize verbal models of trust in a simple model (i.e., vulnerability model) that combines current and prospective action values with beliefs and expectancies about a partner’s behavior. By using the classic investment game (IG)—an economic game thought to capture some important features of trusting behaviors in social interactions—I show how variations of a single parameter of the vulnerability model generates behaviors that can be interpreted as different “trust attitudes”. I then show how these behavioral patterns change as a function of an individual’s loss aversion and expectations of the partner’s behavior. I finally show how the vulnerability model can be easily extended in a novel IG paradigm to investigate inferences on different traits of a partner. In particular, I will focus on benevolence and competence—two character traits that have previously been described as determinants of trustworthiness impressions central to trust. The vulnerability model can be employed as is or as a utility function within more complex Bayesian frameworks to fit participants’ behavior in different social environments where actions are associated with subjective values and weighted by individual beliefs about others’ behaviors. Hence, the vulnerability model provides an important building block for future theoretical and empirical work across a variety of research fields. Citation: Games PubDate: 2022-05-17 DOI: 10.3390/g13030039 Issue No:Vol. 13, No. 3 (2022)
Authors:Kyle Weishaar, Igor V. Erovenko First page: 40 Abstract: We investigate the effect of the environment dimensionality and different dispersal strategies on the evolution of cooperation in a finite structured population of mobile individuals. We consider a population consisting of cooperators and free-riders residing on a two-dimensional lattice with periodic boundaries. Individuals explore the environment according to one of the four dispersal strategies and interact with each other via a public goods game. The population evolves according to a birth–death–birth process with the fitness of the individuals deriving from the game-induced payouts. We found that the outcomes of the strategic dispersal strategies in the two-dimensional setting are identical to the outcomes in the one-dimensional setting. The random dispersal strategy, not surprisingly, resulted in the worst outcome for cooperators. Citation: Games PubDate: 2022-05-20 DOI: 10.3390/g13030040 Issue No:Vol. 13, No. 3 (2022)
Authors:King-King Li First page: 41 Abstract: We experimentally investigate the memory recall bias of overconfident (underconfident) individuals after receiving feedback on their overconfidence (underconfidence). Our study differs from the literature by identifying the recall pattern conditional on subjects’ overconfidence/underconfidence. We obtain the following results. First, overconfident (underconfident) subjects exhibit overconfident (underconfident) recall despite receiving feedback on their overconfidence (underconfidence). Second, awareness of one’s overconfidence or underconfidence does not eliminate memory recall bias. Third, the primacy effect is stronger than the recency effect. Overall, our results suggest that memory recall bias is mainly due to motivated beliefs of sophisticated decision makers rather than naïve decision-making. Citation: Games PubDate: 2022-05-23 DOI: 10.3390/g13030041 Issue No:Vol. 13, No. 3 (2022)
Authors:Albert Argilaga, Jijian Fan First page: 42 Abstract: We develop a numerical model that simulates the evolution of a virtual population with an incentive and ability-based wage, capital yield from savings, social welfare system, and total income subject to taxation and political turnovers. Meta-heuristics, particle swarm optimization (PSO) in particular, is used to find optimal taxation given the constraints of a plurality democracy with yardstick vote. Results show that the policymaker tends to a taxation system that is highly punitive for a minority in order to win the election by benefiting others. Such decision-making leads to a cyclic taxation policy with high taxation targeting sequential portions of the population. Citation: Games PubDate: 2022-05-30 DOI: 10.3390/g13030042 Issue No:Vol. 13, No. 3 (2022)
Authors:Ernan Haruvy, Yefim Roth First page: 43 Abstract: Delegating bargaining to an intermediary agent is common practice in many situations. The proposer, while not actively bargaining, sets constraints on the intermediary agent’s offer. We study ultimatum games where proposers delegate bargaining to an intermediary agent by setting boundaries on either end of the offer. We find that after accounting for censoring, intermediaries treat these boundaries similarly to a nonbinding proposer suggestion. Specifically, we benchmark on a nonbinding setting where the proposer simply states the offer they would like to have made. We find that specifying a constraint on the intermediary has the same effect as the benchmark suggestion once censoring is accounted for. That is, giving an agent a price ceiling or price floor is treated, by the agent, the same as expressing a direct price wish, as long as the constraint is not binding. We discuss the implications of these findings in terms of the importance of communication and the role of constraints in bargaining with intermediaries. Citation: Games PubDate: 2022-05-31 DOI: 10.3390/g13030043 Issue No:Vol. 13, No. 3 (2022)
Authors:Yuto Ushioda, Masato Tanaka, Tomomi Matsui First page: 44 Abstract: This paper deals with the problem of calculating the Shapley–Shubik power index in weighted majority games. We propose an efficient Monte Carlo algorithm based on an implicit hierarchical structure of permutations of players. Our algorithm outputs a vector of power indices preserving the monotonicity, with respect to the voting weights. We show that our algorithm reduces the required number of samples, compared with the naive algorithm. Citation: Games PubDate: 2022-06-02 DOI: 10.3390/g13030044 Issue No:Vol. 13, No. 3 (2022)
Authors:Malin Arve, Marco Serena First page: 45 Abstract: The experimental evidence on contests often reports overspending of contest participants compared to the theoretical Nash equilibrium outcome. We show that a standard level-k model may rationalize overspending in contests. This result complements the existing literature on overspending in contests, and it bridges an open gap between the contest and auction literature. In fact, the literature on auctions often runs parallel to that on contests.Overbidding in auctions has also been documented empirically, and it has been shown that, in private-value auctions, such overbidding can be rationalized by level-k reasoning. We bridge the existing gap between the auction and contest literature by showing that overbidding may also be true in a theoretical contest environment with level-k reasoning. Citation: Games PubDate: 2022-06-10 DOI: 10.3390/g13030045 Issue No:Vol. 13, No. 3 (2022)
Authors:Michael S. Harré First page: 46 Abstract: Game theory includes a rich source of methods for analysing strategic interactions where there are a small number of agents, each having only a few choices. In more complex settings though, where there are many choices over indefinite time horizons involving large social groups, these methods are unlikely to fully capture the causes of agent behaviour. If agents are able to simplify the task of understanding what others might do by modelling the constraints of others, particularly unobservable cognitive constraints, then the possible behavioural outcomes can be similarly restricted, thereby reducing the complexity of a social interaction. Having a cognitive representation of the unobserved causal states of others is an aspect of a ‘Theory of Mind’ and it plays a central role in the psychology of social interactions. In this article I examine a selection of results on the theory of mind and connect these with the ‘game theory of mind’ to draw conclusions regarding the complexity of one-on-one and large-scale social coordination. To make this explicit, I will illustrate the relationship between the two psychological terms ‘introspection’ and ‘theory of mind’ and the economic analysis of game theory, while retaining as much as possible of the richness of the psychological concepts. It will be shown that game theory plays an important role in modelling interpersonal relationships for both biological and artificial agents, but it is not yet the whole story, and some psychological refinements to game theory are discussed. Citation: Games PubDate: 2022-06-20 DOI: 10.3390/g13030046 Issue No:Vol. 13, No. 3 (2022)
Authors:Barsha Saha, Miguel Martínez-García, Sharad Nath Bhattacharya, Rohit Joshi First page: 47 Abstract: Subscription decision in the telecom market is quite complex and cumbersome, invoking decision inertia in consumers and resulting in suboptimal choices. We implemented choice inertia and consumer interaction as an agent-based model to better understand the process. The model illustrates that with adequate peer interactions with active consumers, inactive consumers could overcome their inertia significantly and switch to a better alternative. Furthermore, the newly converted active consumers influenced their inert neighbors as a ripple effect. Active consumers contribute to firm profits and healthy market competition. Moreover, in environments with low neighborhood effects and a stronger inertia threshold, firms are able to maintain profits by retaining inert consumers. We show that apart from the attractiveness of market offerings, firms can benefit from understanding consumer inertia and devising means to reduce it. Citation: Games PubDate: 2022-06-20 DOI: 10.3390/g13030047 Issue No:Vol. 13, No. 3 (2022)
Authors:Roland Mühlenbernd, Sławomir Wacewicz, Przemysław Żywiczyński First page: 20 Abstract: We study an extended version of a sender–receiver signaling game—a context-signaling (CS) game that involves external contextual cues that provide information about a sender’s private information state. A formal evolutionary analysis of the investigated CS game shows that ambiguous signaling strategies can achieve perfect information transfer and are evolutionarily stable. Moreover, a computational analysis of the CS game shows that such perfect ambiguous systems have the same emergence probability as non-ambiguous perfect signaling systems in multi-agent simulations under standard evolutionary dynamics. We contrast these results with an experimental study where pairs of participants play the CS game for multiple rounds with each other in the lab to develop a communication system. This comparison shows that unlike virtual agents, human agents clearly prefer perfect signaling systems over perfect ambiguous systems. Citation: Games PubDate: 2022-02-22 DOI: 10.3390/g13020020 Issue No:Vol. 13, No. 2 (2022)
Authors:Yuta Saito First page: 21 Abstract: This paper investigates the effects of members’ exits from a currency union on the credibility of the common currency. In our currency union model, the inflation rate of the common currency is determined by majority voting among N member countries that are heterogeneous with respect to their output shocks. Once an inflation rate of the common currency has been selected, each member decides whether to remain in the currency union or not. If a member decides to exit, it has to pay a fixed social cost and individually chooses the inflation rate of its currency. Unlike previous research on this topic, we focus on the possibility of achieving an optimal outcome, which generates no inflation bias, when more than one member is expected to leave the currency union. We show that the optimal outcome can only be achieved if no members leave the currency union. Citation: Games PubDate: 2022-02-23 DOI: 10.3390/g13020021 Issue No:Vol. 13, No. 2 (2022)
Authors:Marek M. Kaminski First page: 22 Abstract: I investigate the paradoxes associated with the Fédération Internationale de Football Association (FIFA) point-based ranking of national soccer teams. The ranking has been plagued with paradoxes that incentivize teams to avoid playing friendly matches, i.e., matches that are not part of any official FIFA tournament or preliminaries, and applying other counterintuitive strategies. The most spectacular paradox was the dramatic underrating of the hosts of major tournaments. For a long time, host teams, which were absent from preliminary matches, would play only friendly matches that awarded few points. Here, I present three models that estimate the magnitude of the resulting “host effect” at 14.2–16 positions. Such an estimate counteracts the intuition that a large investment in hosting a tournament should result in an improvement in the host team’s standing. However, as discussed here, a given host’s low ranking could decrease interest in the tournament, and likely result in a major loss of advertisement revenue. Citation: Games PubDate: 2022-03-03 DOI: 10.3390/g13020022 Issue No:Vol. 13, No. 2 (2022)
Authors:Daniela Grieco First page: 23 Abstract: Social identity theory has become increasingly important for economists. I discuss the contribution of Van Bavel and Packer’s “The Power of Us” in light of what economists (especially experimental ones) can learn from their research. Citation: Games PubDate: 2022-03-10 DOI: 10.3390/g13020023 Issue No:Vol. 13, No. 2 (2022)
Authors:Marco Sahm First page: 24 Abstract: I characterize the optimal accuracy level r of an unbiased Tullock contest between two players with heterogeneous prize valuations. The designer maximizes the winning probability of the strong player or the winner’s expected valuation by choosing a contest with an all-pay auction equilibrium (r≥2). By contrast, if she aims at maximizing the expected aggregate effort or the winner’s expected effort, she will choose a contest with a pure-strategy equilibrium, and the optimal accuracy level r<2 decreases in the players’ heterogeneity. Finally, a contest designer who faces a tradeoff between selection quality and minimum (maximum) effort will never choose a contest with a semi-mixed equilibrium. Citation: Games PubDate: 2022-03-25 DOI: 10.3390/g13020024 Issue No:Vol. 13, No. 2 (2022)
Authors:Anna Dodonova First page: 25 Abstract: When a firm finances a new project by issuing debt, it has an incentive to invest in excessively high-risk projects because shareholders enjoy all the benefits in case the project is successful but have limited liability when it fails. Anticipating such behavior, creditors may require a higher interest rate or may even refuse to provide capital. This debt–equity conflict is alleviated by the fact that most investment decisions are made by risk-averse managers who are not as well diversified as shareholders. This paper investigates the debt–equity conflict in firms in which the managers have an unobservable degree of risk averseness. Since managerial risk averseness is a desirable quality, such asymmetric information makes managers undertake actions that increase the market’s perception of them as being highly risk-averse. Consequently, such reputation building leads to a lower number of excessively high-risk projects being undertaken. This paper compares the entrepreneurial economy, in which managers are the sole owners of the firms, with the corporate economy, in which managers are hired by shareholders. Using the overlapping generations model, this paper shows that managerial reputation building can partially resolve the debt–equity conflict and improve efficiency in both economies; however, such improvement is larger in the entrepreneurial economy. Citation: Games PubDate: 2022-03-30 DOI: 10.3390/g13020025 Issue No:Vol. 13, No. 2 (2022)
Authors:Lisa R. Anderson, Charles A. Holt, Katri K. Sieberg, Beth A. Freeborn First page: 26 Abstract: In a model of simultaneous voting, Feddersen and Pesendorfer (1998) consider the possibility that jurors vote strategically, rather than sincerely reflecting their individual information. This results in the counterintuitive result that a jury is more likely to convict the innocent under a unanimity rule than under majority rule. Dekel and Piccione (2000) show that those unintuitive predictions also hold with sequential voting. In this paper, we report paired experiments with sequential and simultaneous voting under unanimity and majority rule. Observed behavior varies significantly depending on whether juries vote simultaneously or in sequence. We also find evidence that subjects use information inferred from prior votes in making their sequential voting decisions, but that information implied by being pivotal in simultaneous votes does not seem to be reliably processed. Citation: Games PubDate: 2022-03-30 DOI: 10.3390/g13020026 Issue No:Vol. 13, No. 2 (2022)
Authors:Irinel C. Dragan First page: 27 Abstract: In the Inverse Set, relative to the Shapley Value of a non-convex cooperative game, we derive a procedure to find out a convex game in which the Egalitarian Allocation is a coalitional rational value. The procedure depends on the relationship between two parameters called the Convexity Threshold and the Coalitional Rationality Threshold. Some examples follow and illustrate the procedure. We discussed a similar problem for other efficient values, the Shapley Value and the Egalitarian Nonseparable Contribution, in earlier work. Citation: Games PubDate: 2022-03-31 DOI: 10.3390/g13020027 Issue No:Vol. 13, No. 2 (2022)
Authors:Elizabeth Schroeder, Carol Horton Tremblay, Victor J. Tremblay First page: 28 Abstract: We investigate why a firm might purposefully hire a chief executive officer (CEO) who under- or over-estimates the degree of substitutability between competing products. This counterintuitive result arises in imperfect competition because CEO bias can affect rival behavior and the intensity of competition. We lay out the conditions under which it is profitable for owners to hire biased managers. Our work shows that a universal policy that effectively eliminates such biases need not improve social welfare. Citation: Games PubDate: 2022-03-31 DOI: 10.3390/g13020028 Issue No:Vol. 13, No. 2 (2022)
Authors:João Ricardo Faria, Daniel Arce First page: 29 Abstract: The current Special Issue presents an interesting collection of seven articles that expand the existing literature on the subjects of terrorism and conflict [...] Citation: Games PubDate: 2022-04-01 DOI: 10.3390/g13020029 Issue No:Vol. 13, No. 2 (2022)
Authors:Mir Adnan Mahmood, John Rehbeck First page: 30 Abstract: Experiments on revealed preference often use budget sets that are randomly and independently drawn according to some criteria for each participant. However, this means that the budget sets faced by different individuals are not the same. This paper proposes a method to control for these differences. In particular, we control for the “power” of different budget sets by examining the consistency of an individual’s choices relative to some simulated baseline behavior conditional on budgets faced by the individual. We apply this methodology to two existing experimental datasets. Our results show that failure to account for this variation results in a bias when looking directly at measures of choice consistency and the sign of this bias depends on the measure being used. However, controlling for this variation does not change the correlation between measures of choice consistency and observable demographic characteristics like income and education. Citation: Games PubDate: 2022-04-11 DOI: 10.3390/g13020030 Issue No:Vol. 13, No. 2 (2022)
Authors:Tânia Saraiva, Tiago Cruz Gonçalves First page: 31 Abstract: This paper presents an incentivized experiment analyzing the role of demographic characteristics in individual decision-making under uncertainty. Reactions to a natural source of uncertainty, payoffs in a TV game show, were measured using Fuzzy-set Qualitative Comparative Analysis (fsQCA), allowing us to identify multiple configurations of causal conditions that are sufficient for individuals to prefer an uncertain payoff to a sure gain, and, thus, lower risk aversion. This paper found evidence of preference for uncertainty, measured as willingness to play for an uncertain payoff, in individuals with characteristics most commonly present in the literature: being male; young; childless; with studies in finance or similar areas. This paper also shows that conditions that would not justify the preference for uncertainty according to the literature (an older individual or having children), when combined with other conditions, change contestants’ behavior regarding preference for uncertainty. Individuals that are both older and single, and individuals that have children combined with education in finance, show an inverse effect on preference for uncertainty. Citation: Games PubDate: 2022-04-13 DOI: 10.3390/g13020031 Issue No:Vol. 13, No. 2 (2022)
Authors:Naoto Aoyama, Emilson Caputo Delfino Silva First page: 32 Abstract: In a domestic market, a duopoly produces a homogeneous final good, pollution, pollution abatement, and R&D, which reduces abatement cost. One of the firms (foreign) has superior technology. The government regulates the duopoly by levying a pollution tax to maximize domestic welfare. We consider the potential implementation of three innovation agreements: cooperative research joint venture (RJV), non-cooperative RJV, and licensing. In the cooperative (non-cooperative) RJV, the firms (do not) internalize R&D spillovers. We show that, for the domestic firm, the cooperative RJV dominates, and licensing is the least desirable alternative. Although licensing is dominant for the foreign firm, it is not implementable. Both RJVs are implementable. Implementation of both types of RJVs improves the competitiveness of the domestic firm and welfare. This study yields an important policy prescription: a subsidy policy that induces the foreign firm to accept a feasible cooperative RJV when it strictly prefers a feasible non-cooperative RJV is always welfare improving. Citation: Games PubDate: 2022-04-14 DOI: 10.3390/g13020032 Issue No:Vol. 13, No. 2 (2022)
Authors:Dario Madeo, Chiara Mocenni First page: 10 Abstract: The effectiveness of control measures against the diffusion of the COVID-19 pandemic is grounded on the assumption that people are prepared and disposed to cooperate. From a strategic decision point of view, cooperation is the unreachable strategy of the Prisoner’s Dilemma game, where the temptation to exploit the others and the fear of being betrayed by them drives the people’s behavior, which eventually results in a fully defective outcome. In this work, we integrate a standard epidemic model with the replicator equation of evolutionary games in order to study the interplay between the infection spreading and the propensity of people to be cooperative under the pressure of the epidemic. The developed model shows high performance in fitting real measurements of infected, recovered and dead people during the whole period of COVID-19 epidemic spread, from March 2020 to September 2021 in Italy. The estimated parameters related to cooperation result to be significantly correlated with vaccination and screening data, thus validating the model. The stability analysis of the multiple steady states present in the proposed model highlights the possibility to tune fundamental control parameters to dramatically reduce the number of potential dead people with respect to the non-controlled case. Citation: Games PubDate: 2022-01-10 DOI: 10.3390/g13010010 Issue No:Vol. 13, No. 1 (2022)
Authors:Nicola Maaser, Fabian Paetzel, Stefan Traub First page: 11 Abstract: In many bargaining situations, the distribution of seats or voting weights does not accurately reflect bargaining power. Maaser, Paetzel and Traub (Games and Economic Behavior, 2019) conducted an experiment to investigate the effect of such nominal power differences in the classic Baron–Ferejohn model. This paper re-analyzes the data from that experiment, looking at gender differences in bargaining behavior and in the effect of nominal weights. We find that women and men differ in particular with respect to the proposed distribution of payoffs and coalition size. By contrast, nominal weights have only minor gender-specific effects. Citation: Games PubDate: 2022-01-17 DOI: 10.3390/g13010011 Issue No:Vol. 13, No. 1 (2022)
Authors:James W. Boudreau, Timothy Mathews, Shane D. Sanders, Aniruddha Bagchi First page: 12 Abstract: Take the fort, then take the city. In a two-stage, two-party contest, victory in the initial stage can provide an advantage in the final stage. We examine such momentum in conflict scenarios and investigate how valuable it must be to avoid a Pyrrhic victory. Our main finding is that although the elasticity of effort—which we allow to vary between the two stages—does impact the contestants’ effort levels, it has no bearing on the endogenously determined value of momentum itself. Further, rent dissipation in the two-stage conflict is equal across party whether or not an individual obtains first-stage momentum. Thus, momentum helps a player solely by enhancing marginal ability for victory in the second-stage contest. It does not, however, change the player’s net calculus of second-stage contest spending. Such contestable advantage is also found to be more rent-dissipative than innate/uncontestable advantage. Therefore, Pyrrhic victories should be more common for contests with an intermediate stage or stages in which advantages can be earned, ceteris paribus. While intermediate targets appear as useful conflict benchmarks, they dissipate additional expected contest rents. This additional rent-dissipative toll exists even for backward-inductive equilibrium behavior in a complete information setting. Whereas the quagmire theory suggests parties can become involved in problematic conflicts due to incomplete information, the present paper finds that the setting of conflict—namely, contestable intermediate advantage—can alternatively generate rent-dissipative tolls. Similarly, contestable advantage can lead parties to optimally forego contest participation (i.e., if conflict parameters do not meet the participation constraint). This is in contrast to a one-stage simultaneous contest with second-stage parametric values of the present contest. Citation: Games PubDate: 2022-01-19 DOI: 10.3390/g13010012 Issue No:Vol. 13, No. 1 (2022)
Authors:Nail Kashaev, Victor H. Aguiar First page: 13 Abstract: We present a novel characterization of random rank-dependent expected utility for finite datasets and finite prizes. As a byproduct, we obtain a characterization of random expected utility that works for finite datasets. The test lends itself to statistical testing. We apply our test to an experimental dataset and find evidence against random expected utility, while random rank-dependent expected utility can explain the dataset. Citation: Games PubDate: 2022-01-20 DOI: 10.3390/g13010013 Issue No:Vol. 13, No. 1 (2022)
Authors:Marco Stimolo, Sergio Beraldo, Salvatore Capasso, Valerio Filoso First page: 14 Abstract: We investigate experimentally whether players deliberately use irrelevant market cues to shape their evaluations of a traded item. We implement a repeated Vickrey median price selling auction of an unusual bad where players are informed on the market price and on the three lowest or highest asks. We elicited players’ consideration of market signals through a questionnaire at the end of the auction. We find that extreme information has a stronger influence on players’ evaluations than the market price. However, players’ consideration of the market signals explains their behavioral reactivity to the market price but not to the extremes. Hence, players deliberately use an unbiased estimator of the central tendency of the appraisals distribution, while extreme asks’ influence is consistent with a priming effect. Citation: Games PubDate: 2022-01-22 DOI: 10.3390/g13010014 Issue No:Vol. 13, No. 1 (2022)
Authors:Fabio Römeis, Fabian Herweg, Daniel Müller First page: 15 Abstract: In this study, we enrich a standard principal–agent model with hidden action by introducing salience-biased perception on the agent’s side. The agent’s misguided focus on salient payoffs, which leads the agent’s and the principal’s probability assessments to diverge, has two effects: First, the agent focuses too much on obtaining a bonus, which facilitates incentive provision. Second, the principal may exploit the diverging probability assessments to relax participation. We show that salience bias can reverse the nature of the inefficiency arising from moral hazard; i.e., the principal does not necessarily provide insufficient incentives that result in inefficiently low effort but instead may well provide excessive incentives that result in inefficiently high effort. Citation: Games PubDate: 2022-01-26 DOI: 10.3390/g13010015 Issue No:Vol. 13, No. 1 (2022)
Authors:Herman Monsuur, René H. P. Janssen First page: 17 Abstract: Given a fixed network that links various actors, we introduce a formal model that describes the structural stability of coalitions. To this end, we used the partition of the set of all actors in three distinct positions: members, i.e., those who are central to a coalition; participants, i.e., those who are not actively engaged with the issues at hand; neutral actors, i.e., non-members, those who are not party to any interests and outside the coalition. Using the language of networks, we formulated three assumptions that may be used to characterize the stability of this partition. We paid particular attention to the role of participants as they facilitate or complicate extensions of a given coalition. Given the fixed network, we (1) illustrate the verification of the stability of a coalition, (2) provide existence results of stable coalitions, and (3) set the limits to their credible extensions. Our three formal assumptions may serve as a platform for discussions regarding the stability of coalitions. Citation: Games PubDate: 2022-01-28 DOI: 10.3390/g13010017 Issue No:Vol. 13, No. 1 (2022)
Authors:Dóra Gréta Petróczy, Mark Francis Rogers, László Á. Kóczy First page: 18 Abstract: Debates on an EU-leaving referendum arose in several member states after Brexit. We want to highlight how the exit of an additional country affects the power distribution in the Council of the European Union. We inspect the power indices of the member states both with and without the country which might leave the union. Our results show a pattern connected to a change in the number of states required to meet the 55% threshold. An exit that modifies this number benefits the countries with high population, while an exit that does not cause such a change benefits the small member states. According to our calculations, only the exit of Poland would be supported by the qualified majority of the Council. Citation: Games PubDate: 2022-02-07 DOI: 10.3390/g13010018 Issue No:Vol. 13, No. 1 (2022)
Authors:Julian Gutierrez, Thomas Steeples, Michael Wooldridge First page: 19 Abstract: Multi-player mean-payoff games are a natural formalism for modelling the behaviour of concurrent and multi-agent systems with self-interested players. Players in such a game traverse a graph, while attempting to maximise a (mean-)payoff function that depends on the play generated. As with all games, the equilibria that could arise may have undesirable properties. However, as system designers, we typically wish to ensure that equilibria in such systems correspond to desirable system behaviours, for example, satisfying certain safety or liveness properties. One natural way to do this would be to specify such desirable properties using temporal logic. Unfortunately, the use of temporal logic specifications causes game theoretic verification problems to have very high computational complexity. To address this issue, we consider ω-regular specifications. These offer a concise and intuitive way of specifying system behaviours with a comparatively low computational overhead. The main results of this work are characterisation and complexity bounds for the problem of determining if there are equilibria that satisfy a given ω-regular specification in a multi-player mean-payoff game in a number of computationally relevant game-theoretic settings. Citation: Games PubDate: 2022-02-09 DOI: 10.3390/g13010019 Issue No:Vol. 13, No. 1 (2022)
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