Games2014, 5(3), 188-190; doi:10.3390/g5030188 - published 4 September 2014 Show/Hide Abstract
Abstract: Classical economists from Adam Smith to Thomas Malthus and to Karl Marx have considered the importance of direct interdependence and direct interactions for the economy. This was even more the case for original institutionalist thinkers such as Thorstein Veblen, John Commons, and Clarence Ayres. In their writings, direct interdependence, interactions (or transactions) among agents, with all beneficial and with all problematic consequences, took center stage in economic analysis. Why, for instance, do people adhere to a particular new fashion or trend? Because others do, after eminent people, wealthy people, the “leisure class” (T. Veblen), have made it a symbol for status. The new fashion, however, ceases to serve as such a symbol once too many people follow it. The constant effort put into following trends and adopting fashion turns out to be a social dilemma, driven by Veblenian instincts, such as invidious distinction in predatory societies, conspicuous consumption and emulation. [...]
Games2014, 5(3), 160-187; doi:10.3390/g5030160 - published 18 August 2014 Show/Hide Abstract
Abstract: We use an agent-based model to investigate the interdependent dynamics between individual agency and emergent socioeconomic structure, leading to institutional change in a generic way. Our model simulates the emergence and exit of institutional units, understood as generic governed social structures. We show how endogenized trust and exogenously given leader authority influences institutional change, i.e., diversity in institutional life-cycles. It turns out that these governed institutions (de)structure in cyclical patterns dependent on the overall evolution of trust in the artificial society, while at the same time, influencing this evolution by supporting social learning. Simulation results indicate three scenarios of institutional life-cycles. Institutions may, (1) build up very fast and freeze the artificial society in a stable but fearful pattern (ordered system); (2) exist only for a short time, leading to a very trusty society (highly fluctuating system); and (3) structure in cyclical patterns over time and support social learning due to cumulative causation of societal trust (complex system).
Games2014, 5(3), 140-159; doi:10.3390/g5030140 - published 31 July 2014 Show/Hide Abstract
Abstract: Our study analyzes theories of learning for strategic interactions in networks. Participants played two of the 2 × 2 games used by Selten and Chmura . Every participant played against four neighbors. As a distinct aspect our experimental design allows players to choose different strategies against each different neighbor. The games were played in two network structures: a lattice and a circle. We analyze our results with respect to three aspects. We first compare our results with the predictions of five different equilibrium concepts (Nash equilibrium, quantal response equilibrium, action-sampling equilibrium, payoff-sampling equilibrium, and impulse balance equilibrium) which represent the long-run equilibrium of a learning process. Secondly, we relate our results to four different learning models (impulse-matching learning, action-sampling learning, self-tuning EWA, and reinforcement learning) which are based on the (behavioral) round-by-round learning process. At last, we compare the data with the experimental results of Selten and Chmura . One main result is that the majority of players choose the same strategy against each neighbor. As other results, we observe an order of predictive success for the equilibrium concepts that is different from the order shown by Selten and Chmura and an order of predictive success for the learning models that is only slightly different from the order shown in a recent paper by Chmura, Goerg and Selten .
Games2014, 5(2), 127-139; doi:10.3390/g5020127 - published 24 June 2014 Show/Hide Abstract
Abstract: Agents located from downstream to upstream along an estuary and exposed to a flooding risk have to invest in facilities like a seawall (or dike). As the benefits of that local public good increase along the estuary, upstream agents have to bargain for monetary compensation with the most downstream agent in exchange for more protection effort. The paper analyses different bargaining protocols and determines the conditions under which agents are better off. The results show that upstream agents are involved in a chicken game when they have to bargain with the most downstream agent.
Games2014, 5(2), 116-126; doi:10.3390/g5020116 - published 20 May 2014 Show/Hide Abstract
Abstract: Using the political-economic history of the development of telephony during the 1870s as a backdrop, this paper studies a two-player Tullock contest that includes both research effort (R&D) and legal effort (i.e., rent-seeking effort). The two types of efforts complement each other and positively influence the payoff of the contest. We assume that legal effort affects the prize value, increasing the winner’s prospective rents, and research effort impacts the probability of winning the contest. The results of the model break new ground in showing that research effort is a function of legal effort, wherein research effort increases with rent-seeking effort. The model also shows the existence of a strategic equivalence between rent seeking and patent races.
Games2014, 5(2), 97-115; doi:10.3390/g5020097 - published 30 April 2014 Show/Hide Abstract
Abstract: We characterize the efficiency space of deterministic, dominant-strategy incentive compatible, individually rational and Pareto-optimal combinatorial auctions in a model with two players and k nonidentical items. We examine a model with multidimensional types, private values and quasilinear preferences for the players with one relaxation: one of the players is subject to a publicly known budget constraint. We show that if it is publicly known that the valuation for the largest bundle is less than the budget for at least one of the players, then Vickrey-Clarke-Groves (VCG) uniquely fulfills the basic properties of being deterministic, dominant-strategy incentive compatible, individually rational and Pareto optimal. Our characterization of the efficient space for deterministic budget constrained combinatorial auctions is similar in spirit to that of Maskin 2000 for Bayesian single-item constrained efficiency auctions and comparable with Ausubel and Milgrom 2002 for non-constrained combinatorial auctions.