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Editor’s Choice Articles

Editor’s Choice articles are based on recommendations by the scientific editors of MDPI journals from around the world. Editors select a small number of articles recently published in the journal that they believe will be particularly interesting to readers, or important in the respective research area. The aim is to provide a snapshot of some of the most exciting work published in the various research areas of the journal.

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20 pages, 506 KiB  
Article
Countervailing Conflicts of Interest in Delegation Games
by Saori Chiba and Kaiwen Leong
Games 2023, 14(6), 71; https://doi.org/10.3390/g14060071 - 16 Nov 2023
Cited by 1 | Viewed by 1575
Abstract
In this paper, we investigate optimal delegation mechanisms in the presence of countervailing conflicts of interest in the context of principal–agent problems. We introduce two dimensions of conflict of interest—pandering incentives related to the outside option and project biases. We compare three delegation [...] Read more.
In this paper, we investigate optimal delegation mechanisms in the presence of countervailing conflicts of interest in the context of principal–agent problems. We introduce two dimensions of conflict of interest—pandering incentives related to the outside option and project biases. We compare three delegation mechanisms: full delegation, veto-based delegation, and communication (no delegation). Contrary to conventional one-dimensional conflict models, our findings reveal a non-monotonic relationship between pandering incentives and bias. These conflicts counterbalance each other, resulting in a principal’s benefit from delegation not strictly decreasing with increased bias. Surprisingly, delegation to a biased agent can be advantageous in certain scenarios. This research sheds light on the complex dynamics of delegation mechanisms when confronted with countervailing conflicts of interest, offering insights into decision-making in principal–agent relationships. Full article
(This article belongs to the Section Applied Game Theory)
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10 pages, 365 KiB  
Communication
A Discrete-Time Homing Problem with Two Optimizers
by Mario Lefebvre
Games 2023, 14(6), 68; https://doi.org/10.3390/g14060068 - 27 Oct 2023
Cited by 1 | Viewed by 1628
Abstract
A stochastic difference game is considered in which a player wants to minimize the time spent by a controlled one-dimensional symmetric random walk {Xn,n=0,1,…} in the continuation region [...] Read more.
A stochastic difference game is considered in which a player wants to minimize the time spent by a controlled one-dimensional symmetric random walk {Xn,n=0,1,…} in the continuation region C:={1,2,…}, and the second player seeks to maximize the survival time in C. The process starts at X0=x>0 and the game ends the first time Xn≤0. An exact expression is derived for the value function, from which the optimal solution is obtained, and particular problems are solved explicitly. Full article
(This article belongs to the Special Issue Applications of Game Theory with Mathematical Methods)
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14 pages, 314 KiB  
Article
Simple Mediation in a Cheap-Talk Game
by Chirantan Ganguly and Indrajit Ray
Games 2023, 14(3), 47; https://doi.org/10.3390/g14030047 - 2 Jun 2023
Viewed by 1640
Abstract
In the Crawford–Sobel (uniform, quadratic utility) cheap-talk model, we consider a simple mediation scheme (a communication device) in which the informed agent reports one of the N possible elements of a partition to the mediator and then the mediator suggests one of the [...] Read more.
In the Crawford–Sobel (uniform, quadratic utility) cheap-talk model, we consider a simple mediation scheme (a communication device) in which the informed agent reports one of the N possible elements of a partition to the mediator and then the mediator suggests one of the N actions to the uninformed decision-maker according to the probability distribution of the device. We show that no such simple mediated equilibrium can improve upon the unmediated N-partition Crawford–Sobel equilibrium when the preference divergence parameter (bias) is small. Full article
31 pages, 1917 KiB  
Article
Payment Systems, Supplier-Induced Demand, and Service Quality in Credence Goods: Results from a Laboratory Experiment
by Manela Karunadasa, Katri K. Sieberg and Toni Tapani Kristian Jantunen
Games 2023, 14(3), 46; https://doi.org/10.3390/g14030046 - 31 May 2023
Cited by 1 | Viewed by 2173
Abstract
This experiment examines the relationship between payment systems and the quality and quantity of services provided in credence goods markets. By using a real-effort task to stimulate the decision making of service providers, the study finds that payment systems do indeed have an [...] Read more.
This experiment examines the relationship between payment systems and the quality and quantity of services provided in credence goods markets. By using a real-effort task to stimulate the decision making of service providers, the study finds that payment systems do indeed have an impact on service provision. Specifically, providers in fee-for-service systems over-provide, while those in salary systems under-provide services. Additionally, there is a lack of alignment between the services provided under fee-for-service and the actual needs of customers, resulting in a substantial loss of customer benefits under fee-for-service in comparison to under salary. The study also finds that providers in fee-for-service systems perform more faulty tasks than those in salary, indicating that they may prioritize quantity over quality in their services. As for insurance, the results of this study show no significant effect of insurance on the number of services provided; however, customers without insurance received significantly more faulty tasks. Based on these results, the study concludes that payment systems play an important role in determining the quality and quantity of services provided in credence goods markets. Overall, this study highlights the need for a better alignment between customer needs and services provided under fee-for-service systems. Full article
(This article belongs to the Special Issue Competition, Coordination, and Cooperation: Theory and Evidence)
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8 pages, 278 KiB  
Article
Training, Abilities and the Structure of Teams
by Tobias Hiller
Games 2023, 14(3), 44; https://doi.org/10.3390/g14030044 - 26 May 2023
Cited by 1 | Viewed by 1627
Abstract
Training in firms has an effect on the productivity of employees who receive the training, and depending on the production technology, on the other employees as well. Meanwhile, changing the remuneration structure within a team can change the stability of a team. In [...] Read more.
Training in firms has an effect on the productivity of employees who receive the training, and depending on the production technology, on the other employees as well. Meanwhile, changing the remuneration structure within a team can change the stability of a team. In this paper, we apply the production games approach of cooperative game theory to analyze how training employees affects the stability of team structures and employee wages. Concretely, we apply coalition structures and the χ value. Our results are in line with the literature and numerous further research questions can be addressed based on our approach. Full article
(This article belongs to the Special Issue Applications of Game Theory to Industrial Organization)
24 pages, 487 KiB  
Article
Strategic Information Suppression in Borrowing and Pre-Lending Cognition: Theory and Evidence
by Zhongwen Chen and Xiaojian Zhao
Games 2023, 14(3), 43; https://doi.org/10.3390/g14030043 - 24 May 2023
Cited by 1 | Viewed by 1717
Abstract
This paper theoretically studies the interaction between an informed borrower and an uninformed lender facing possible default of a loan application. The lender is motivated to invest cognitive resources before making a lending decision. If the regulatory fine is weak, it is impossible [...] Read more.
This paper theoretically studies the interaction between an informed borrower and an uninformed lender facing possible default of a loan application. The lender is motivated to invest cognitive resources before making a lending decision. If the regulatory fine is weak, it is impossible for a bad-debt borrower to fully disclose his situation in the application. In this case, when the likelihood of a bad debt is low, the borrower always claims that nothing in the application is wrong. Otherwise, the borrower randomizes between full disclosure and information suppression. The transaction cost of the lender’s pre-lending cognition increases with the default probability, as the default probability is small and decreases thereafter. Evidence from a peer-to-peer lending platform with 816,274 observations between 2012 and 2015 in the United States is largely consistent with our model implications. Full article
(This article belongs to the Special Issue Economics of Motivated Beliefs)
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9 pages, 333 KiB  
Article
Blockchain-Based Dispute Resolution: Insights and Challenges
by Yannick Gabuthy
Games 2023, 14(3), 34; https://doi.org/10.3390/g14030034 - 28 Apr 2023
Cited by 4 | Viewed by 6345
Abstract
A smart contract can be defined as a computer program, stored on a blockchain, which allows a transaction or an agreement—defined ex-ante—to be self-executed when some conditions are met, and without the need for a central authority to enforce it. Even if [...] Read more.
A smart contract can be defined as a computer program, stored on a blockchain, which allows a transaction or an agreement—defined ex-ante—to be self-executed when some conditions are met, and without the need for a central authority to enforce it. Even if this new technology is very promising, it may face a challenge: the codified nature of smart contracts creates new types of disputes that require new mechanisms of dispute resolution, which are precisely based on the blockchain. The aim of this article is to analyze one of these emerging mechanisms, namely Kleros, which is a blockchain-based dispute resolution platform implying crowdsourced jurors whose incentives to make fair decisions are based on game theory. The Kleros case provides also a basis for a broader discussion on the future of the decentralized justice market. Full article
(This article belongs to the Special Issue Negotiations: The Good, the Bad, and the Ugly)
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24 pages, 404 KiB  
Article
Global Innovation Contests
by Elias Dinopoulos, Constantinos Syropoulos and Theofanis Tsoulouhas
Games 2023, 14(1), 18; https://doi.org/10.3390/g14010018 - 20 Feb 2023
Cited by 3 | Viewed by 2284
Abstract
The primary objective of this paper is to develop a two-country, dynamic, general equilibrium model with innovation contests to formally analyze the impact of globalization on the skill premium and fully-endogenous growth. Higher quality products are endogenously discovered through stochastic and sequential global [...] Read more.
The primary objective of this paper is to develop a two-country, dynamic, general equilibrium model with innovation contests to formally analyze the impact of globalization on the skill premium and fully-endogenous growth. Higher quality products are endogenously discovered through stochastic and sequential global innovation contests in which challengers devote resources to R&D, while technology leaders undertake rent-protection activities (RPAs) to prolong the expected duration of their temporary monopoly power by hindering the R&D effort of challengers. The model generates intra-sectoral trade, multinationals, and international outsourcing of investment services. Globalization, captured by a move from autarky to the integrated-world equilibrium, leads to convergence of wages and growth rates. Globalization and long-run growth are either substitutes or complements depending on a country’s relative skill abundance and the ranking of skill intensities between RPAs and R&D services. Trade openness between two countries that possess identical relative skill endowments but differ in size does not affect either country’s long-run growth. Full article
(This article belongs to the Special Issue Advances in the Theory and Applications of Contests and Tournaments)
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15 pages, 317 KiB  
Review
Motivated Memory in Economics—A Review
by Andrea Amelio and Florian Zimmermann
Games 2023, 14(1), 15; https://doi.org/10.3390/g14010015 - 31 Jan 2023
Cited by 6 | Viewed by 3637
Abstract
Motivated reasoning refers to the idea that people hold certain beliefs about themselves or the world due to their desire to do so, rather than striving for accuracy. This type of belief formation can lead to overconfidence and polarization, as well as facilitate [...] Read more.
Motivated reasoning refers to the idea that people hold certain beliefs about themselves or the world due to their desire to do so, rather than striving for accuracy. This type of belief formation can lead to overconfidence and polarization, as well as facilitate immoral behavior at both the individual and collective levels. One of the supply-side mechanisms for motivated reasoning is motivated memory, or the selective retrieval of past experiences or information based on self-serving criteria. In this article, we review the still young economics literature on motivated memory. Summarizing both theoretical and empirical work, we highlight the key results this literature has produced. We also discuss open questions and potentially exciting avenues for future research in this area. Full article
(This article belongs to the Special Issue Economics of Motivated Beliefs)
13 pages, 2315 KiB  
Article
Robust Data Sampling in Machine Learning: A Game-Theoretic Framework for Training and Validation Data Selection
by Zhaobin Mo, Xuan Di and Rongye Shi
Games 2023, 14(1), 13; https://doi.org/10.3390/g14010013 - 30 Jan 2023
Cited by 2 | Viewed by 3198
Abstract
How to sample training/validation data is an important question for machine learning models, especially when the dataset is heterogeneous and skewed. In this paper, we propose a data sampling method that robustly selects training/validation data. We formulate the training/validation data sampling process as [...] Read more.
How to sample training/validation data is an important question for machine learning models, especially when the dataset is heterogeneous and skewed. In this paper, we propose a data sampling method that robustly selects training/validation data. We formulate the training/validation data sampling process as a two-player game: a trainer aims to sample training data so as to minimize the test error, while a validator adversarially samples validation data that can increase the test error. Robust sampling is achieved at the game equilibrium. To accelerate the searching process, we adopt reinforcement learning aided Monte Carlo trees search (MCTS). We apply our method to a car-following modeling problem, a complicated scenario with heterogeneous and random human driving behavior. Real-world data, the Next Generation SIMulation (NGSIM), is used to validate this method, and experiment results demonstrate the sampling robustness and thereby the model out-of-sample performance. Full article
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11 pages, 303 KiB  
Article
Rent Dissipation in Simple Tullock Contests
by Alex Dickson, Ian A. MacKenzie and Petros G. Sekeris
Games 2022, 13(6), 83; https://doi.org/10.3390/g13060083 - 13 Dec 2022
Cited by 3 | Viewed by 2722
Abstract
We investigate observed rent dissipation—the ratio of the total costs of rent seeking to the monetary value of the rent—in winner-take-all and share contests, where preferences are more general than usually assumed in the literature. With concave valuation of the rent, we find [...] Read more.
We investigate observed rent dissipation—the ratio of the total costs of rent seeking to the monetary value of the rent—in winner-take-all and share contests, where preferences are more general than usually assumed in the literature. With concave valuation of the rent, we find that contests can exhibit observed over-dissipation if the contested rent is below a threshold and yet observed under-dissipation with large rents: the nature of preferences implies contestants are relatively effortful in contesting small rents. Considering more general preferences in contests thus allows us to reconcile the Tullock paradox—where rent-seeking levels are relatively small despite the contested rent being sizeable—with observed over-dissipation of rents in experimental settings, where contested rents are arguably small. Full article
(This article belongs to the Special Issue Advances in the Theory and Applications of Contests and Tournaments)
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10 pages, 1209 KiB  
Article
The Strategy Method Risks Conflating Confusion with a Social Preference for Conditional Cooperation in Public Goods Games
by Maxwell N. Burton-Chellew, Victoire D’Amico and Claire Guérin
Games 2022, 13(6), 69; https://doi.org/10.3390/g13060069 - 25 Oct 2022
Cited by 2 | Viewed by 2969
Abstract
The strategy method is often used in public goods games to measure an individual’s willingness to cooperate depending on the level of cooperation by their groupmates (conditional cooperation). However, while the strategy method is informative, it risks conflating confusion with a desire for [...] Read more.
The strategy method is often used in public goods games to measure an individual’s willingness to cooperate depending on the level of cooperation by their groupmates (conditional cooperation). However, while the strategy method is informative, it risks conflating confusion with a desire for fair outcomes, and its presentation may risk inducing elevated levels of conditional cooperation. This problem was highlighted by two previous studies which found that the strategy method could also detect equivalent levels of cooperation even among those grouped with computerized groupmates, indicative of confusion or irrational responses. However, these studies did not use large samples (n = 40 or 72) and only made participants complete the strategy method one time, with computerized groupmates, preventing within-participant comparisons. Here, in contrast, 845 participants completed the strategy method two times, once with human and once with computerized groupmates. Our research aims were twofold: (1) to check the robustness of previous results with a large sample under various presentation conditions; and (2) to use a within-participant design to categorize participants according to how they behaved across the two scenarios. Ideally, a clean and reliable measure of conditional cooperation would find participants conditionally cooperating with humans and not cooperating with computers. Worryingly, only 7% of participants met this criterion. Overall, 83% of participants cooperated with the computers, and the mean contributions towards computers were 89% as large as those towards humans. These results, robust to the various presentation and order effects, pose serious concerns for the measurement of social preferences and question the idea that human cooperation is motivated by a concern for equal outcomes. Full article
(This article belongs to the Special Issue Learning and Evolution in Games, 1st Edition)
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20 pages, 323 KiB  
Article
Assortative Matching by Lottery Contests
by Chen Cohen, Ishay Rabi and Aner Sela
Games 2022, 13(5), 64; https://doi.org/10.3390/g13050064 - 29 Sep 2022
Cited by 1 | Viewed by 1714
Abstract
We study two-sided matching contests with two sets, A and B, each of which includes a finite number of heterogeneous agents with commonly known types. The agents in each set compete in a lottery (Tullock) contest, and then are assortatively matched, namely, [...] Read more.
We study two-sided matching contests with two sets, A and B, each of which includes a finite number of heterogeneous agents with commonly known types. The agents in each set compete in a lottery (Tullock) contest, and then are assortatively matched, namely, the winner of set A is matched with the winner of set B and so on until all the agents in the set with the smaller number of agents are matched. Each agent has a match value that depends on their own type and the type of their match. We assume that the agents’ efforts do not affect their match values and that they have a positive effect on welfare. Therefore, an interior equilibrium in which at least some of the agents are active is welfare superior to a corner equilibrium in which the agents choose to be non-active. We analyze the conditions under which there exists a (partial) interior equilibrium where at least some of the agents compete against each other and exert positive efforts. Full article
(This article belongs to the Special Issue Advances in the Theory and Applications of Contests and Tournaments)
14 pages, 989 KiB  
Article
The Influence of Trial-By-Trial Feedback on Trust in Health, First-Episode and Chronic Psychosis
by Imke L. J. Lemmers-Jansen, Rune J. Wichmann, Sophie Perizonius and Sukhi S. Shergill
Games 2022, 13(5), 59; https://doi.org/10.3390/g13050059 - 31 Aug 2022
Cited by 1 | Viewed by 2196
Abstract
Trust is crucial to establishing reciprocal, positive social interactions and seems to be compromised in psychosis. The trust game offers methods to assess an individual’s trust responses to trust-reciprocating, positive feedback. Various computational techniques have been implemented to measure trust responsiveness, mostly based [...] Read more.
Trust is crucial to establishing reciprocal, positive social interactions and seems to be compromised in psychosis. The trust game offers methods to assess an individual’s trust responses to trust-reciprocating, positive feedback. Various computational techniques have been implemented to measure trust responsiveness, mostly based on investments. Here, we propose a new method, focusing on feedback response. Psychosis patients show social dysfunction and reduced trust during early and more progressed illness stages. The present study inspects differences in feedback responsiveness of 102 first-episode psychosis patients (FEPs), 43 chronic psychosis patients (CPs), and 39 healthy controls (HCs) by adopting a novel assessment approach. Additionally, baseline trust, the trust exerted without any prior knowledge of the partner’s trustworthiness, and mean trust were examined. Participants performed a multi-round trust game, playing the investor role, and were paired with a computer, programmed to return at least the invested amount, representing a trustworthy partner. The new method detected group differences, more distinguished than the former methods. Contrary to our expectations, baseline trust was intact in patients. Relative to HCs, patients were less responsive to feedback, failing to integrate the positive information into their decision-making process. The magnitude of returns was not associated with increases in trust. This novel method showed promising results and confirmed patients’ deficits within the social interactional domain. Full article
(This article belongs to the Special Issue A Yin and Yang Perspective on the Trust Game: Trust and Reciprocity)
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27 pages, 427 KiB  
Article
Communication-Enhancing Vagueness
by Daniel H. Wood
Games 2022, 13(4), 49; https://doi.org/10.3390/g13040049 - 22 Jun 2022
Cited by 2 | Viewed by 2462
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 [...] Read more.
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. Full article
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12 pages, 321 KiB  
Article
Level-k Models and Overspending in Contests
by Malin Arve and Marco Serena
Games 2022, 13(3), 45; https://doi.org/10.3390/g13030045 - 10 Jun 2022
Cited by 1 | Viewed by 2637
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 [...] Read more.
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. Full article
(This article belongs to the Special Issue Advances in the Theory and Applications of Contests and Tournaments)
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27 pages, 1659 KiB  
Article
A Model of Trust
by Gabriele Bellucci
Games 2022, 13(3), 39; https://doi.org/10.3390/g13030039 - 17 May 2022
Cited by 2 | Viewed by 3645
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 [...] Read more.
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. Full article
(This article belongs to the Special Issue A Yin and Yang Perspective on the Trust Game: Trust and Reciprocity)
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14 pages, 1273 KiB  
Article
Asymmetric Horizontal Differentiation under Advertising in a Cournot Duopoly
by Malcolm Brady
Games 2022, 13(3), 37; https://doi.org/10.3390/g13030037 - 7 May 2022
Cited by 2 | Viewed by 2690
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 [...] Read more.
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. Full article
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21 pages, 726 KiB  
Article
Sustainability of Intertwined Supply Networks: A Game-Theoretic Approach
by Olga Gorbaneva and Guennady Ougolnitsky
Games 2022, 13(3), 35; https://doi.org/10.3390/g13030035 - 28 Apr 2022
Cited by 6 | Viewed by 3042
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, [...] Read more.
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. Full article
(This article belongs to the Topic Game Theory and Applications)
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21 pages, 349 KiB  
Article
The Distributed Kolkata Paise Restaurant Game
by Kalliopi Kastampolidou, Christos Papalitsas and Theodore Andronikos
Games 2022, 13(3), 33; https://doi.org/10.3390/g13030033 - 20 Apr 2022
Cited by 4 | Viewed by 3524
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 [...] Read more.
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. Full article
(This article belongs to the Topic Game Theory and Applications)
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14 pages, 349 KiB  
Article
Should I Play or Should I Go? Individuals’ Characteristics and Preference for Uncertainty
by Tânia Saraiva and Tiago Cruz Gonçalves
Games 2022, 13(2), 31; https://doi.org/10.3390/g13020031 - 13 Apr 2022
Cited by 1 | Viewed by 2697
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 [...] Read more.
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. Full article
(This article belongs to the Section Behavioral and Experimental Game Theory)
28 pages, 349 KiB  
Article
An Experimental Study of Strategic Voting and Accuracy of Verdicts with Sequential and Simultaneous Voting
by Lisa R. Anderson, Charles A. Holt, Katri K. Sieberg and Beth A. Freeborn
Games 2022, 13(2), 26; https://doi.org/10.3390/g13020026 - 30 Mar 2022
Cited by 1 | Viewed by 2956
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 [...] Read more.
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. Full article
(This article belongs to the Special Issue Social Dilemmas and Other-Regarding Preferences)
10 pages, 276 KiB  
Article
Random Rank-Dependent Expected Utility
by Nail Kashaev and Victor H. Aguiar
Games 2022, 13(1), 13; https://doi.org/10.3390/g13010013 - 20 Jan 2022
Cited by 1 | Viewed by 3422
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 [...] Read more.
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. Full article
(This article belongs to the Special Issue Developing and Testing Theories of Decision Making)
12 pages, 1729 KiB  
Article
Conflicts with Momentum
by James W. Boudreau, Timothy Mathews, Shane D. Sanders and Aniruddha Bagchi
Games 2022, 13(1), 12; https://doi.org/10.3390/g13010012 - 19 Jan 2022
Cited by 3 | Viewed by 3245
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 [...] Read more.
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. Full article
(This article belongs to the Special Issue Economics of Conflict and Terrorism)
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49 pages, 809 KiB  
Article
Partial Order Games
by Valeria Zahoransky, Julian Gutierrez, Paul Harrenstein and Michael Wooldridge
Games 2022, 13(1), 2; https://doi.org/10.3390/g13010002 - 21 Dec 2021
Cited by 2 | Viewed by 3682
Abstract
We introduce a non-cooperative game model in which players’ decision nodes are partially ordered by a dependence relation, which directly captures informational dependencies in the game. In saying that a decision node v is dependent on decision nodes [...] Read more.
We introduce a non-cooperative game model in which players’ decision nodes are partially ordered by a dependence relation, which directly captures informational dependencies in the game. In saying that a decision node v is dependent on decision nodes v1,…,vk, we mean that the information available to a strategy making a choice at v is precisely the choices that were made at v1,…,vk. Although partial order games are no more expressive than extensive form games of imperfect information (we show that any partial order game can be reduced to a strategically equivalent extensive form game of imperfect information, though possibly at the cost of an exponential blowup in the size of the game), they provide a more natural and compact representation for many strategic settings of interest. After introducing the game model, we investigate the relationship to extensive form games of imperfect information, the problem of computing Nash equilibria, and conditions that enable backwards induction in this new model. Full article
(This article belongs to the Section Algorithmic and Computational Game Theory)
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25 pages, 432 KiB  
Article
On Weights and Quotas for Weighted Majority Voting Games
by Xavier Molinero, Maria Serna and Marc Taberner-Ortiz
Games 2021, 12(4), 91; https://doi.org/10.3390/g12040091 - 6 Dec 2021
Cited by 1 | Viewed by 3322
Abstract
In this paper, we analyze the frequency distributions of weights and quotas in weighted majority voting games (WMVG) up to eight players. We also show different procedures that allow us to obtain some minimum or minimum sum representations of WMVG, for any desired [...] Read more.
In this paper, we analyze the frequency distributions of weights and quotas in weighted majority voting games (WMVG) up to eight players. We also show different procedures that allow us to obtain some minimum or minimum sum representations of WMVG, for any desired number of players, starting from a minimum or minimum sum representation. We also provide closed formulas for the number of WMVG with n players having a minimum representation with quota up to three, and some subclasses of this family of games. Finally, we complement these results with some upper bounds related to weights and quotas. Full article
(This article belongs to the Special Issue Weighted Majority Voting Games)
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15 pages, 1868 KiB  
Article
The Hybridisation of Conflict: A Prospect Theoretic Analysis
by Pieter Balcaen, Cind Du Bois and Caroline Buts
Games 2021, 12(4), 81; https://doi.org/10.3390/g12040081 - 26 Oct 2021
Cited by 4 | Viewed by 3654
Abstract
Revisionist actors are increasingly operationalising a broad number of non-violent threats in their quest to change the status quo, popularly described as hybrid conflict. From a defensive point of view, this proliferation of threats compels nations to make difficult choices in terms of [...] Read more.
Revisionist actors are increasingly operationalising a broad number of non-violent threats in their quest to change the status quo, popularly described as hybrid conflict. From a defensive point of view, this proliferation of threats compels nations to make difficult choices in terms of force posture and composition. We examine the choice process associated with this contemporary form of state competition by modelling the interactions between two actors, i.e., a defender and a challenger. As these choices are characterised by a high degree of uncertainty, we study the choice from the framework of prospect theory. This behavioural–economic perspective indicates that the defender will give a higher weight and a higher subjective value to conventional threats, inducing a higher vulnerability in the domain of hybrid deterrence. As future conflict will increasingly involve choice dilemmas, we must balance threats according to their probability of occurrence and their consequences. This article raises awareness regarding our cognitive biases when making these choices. Full article
(This article belongs to the Special Issue Economics of Conflict and Terrorism)
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33 pages, 1475 KiB  
Article
The Condorcet Jury Theorem with Information Acquisition
by Jun Chen
Games 2021, 12(4), 79; https://doi.org/10.3390/g12040079 - 25 Oct 2021
Cited by 1 | Viewed by 2705
Abstract
We analyze a committee decision in which individuals with common preferences are uncertain which of two alternatives is better for them. Members can acquire costly information. Private signals and information choice are both continuous. As is consistent with Down’s rational ignorance hypothesis, each [...] Read more.
We analyze a committee decision in which individuals with common preferences are uncertain which of two alternatives is better for them. Members can acquire costly information. Private signals and information choice are both continuous. As is consistent with Down’s rational ignorance hypothesis, each member acquires less information in a larger committee and tends to acquire zero information when the committee size goes to infinity. However, with more members, a larger committee can gather more aggregate information in equilibrium. The aggregate information is infinite with the size going to infinity if and only if marginal cost at “zero information acquisition” is zero. When the marginal cost at “zero information acquisition” is positive, the probability of making an appropriate decision tends to be less than one. Full article
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20 pages, 3711 KiB  
Article
Unravelling Theory: Strategic (Non-) Disclosure of Online Ratings
by David Butler and Daniel Read
Games 2021, 12(4), 73; https://doi.org/10.3390/g12040073 - 30 Sep 2021
Cited by 2 | Viewed by 4669
Abstract
This paper investigates disclosure by testing if the game theoretic predictions of unravelling theory are borne out in a heretofore unstudied market. We analyse TripAdvisor disclosures from hoteliers across 22 locations (N = 4357). Contrary to theoretical predictions, we find that disclosure [...] Read more.
This paper investigates disclosure by testing if the game theoretic predictions of unravelling theory are borne out in a heretofore unstudied market. We analyse TripAdvisor disclosures from hoteliers across 22 locations (N = 4357). Contrary to theoretical predictions, we find that disclosure decreases linearly with TripAdvisor ratings. We find the same pattern of disclosure occurs when consumers know the information provider has information to disclose, and when they do not. We also find evidence suggesting the most elite hotels may disclose less. We provide practical as well as theoretical implications. Full article
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14 pages, 292 KiB  
Article
Green Innovation and Competition: R&D Incentives in a Circular Economy
by Giovanna Bimonte, Maria Grazia Romano and Maria Russolillo
Games 2021, 12(3), 68; https://doi.org/10.3390/g12030068 - 16 Sep 2021
Cited by 15 | Viewed by 4266
Abstract
The present paper provides theoretical insights regarding the determinants of firms’ incentives to invest in a Circular Economy. The analysis relies on a Cournot model disaggregating the disposal cost in the production function. In a non-simultaneous sequential game, two risk-neutral firms are endowed [...] Read more.
The present paper provides theoretical insights regarding the determinants of firms’ incentives to invest in a Circular Economy. The analysis relies on a Cournot model disaggregating the disposal cost in the production function. In a non-simultaneous sequential game, two risk-neutral firms are endowed with a green innovation project that, if successful, would reduce the overall production costs and implement a Circular Economy. Firms are plagued by asymmetric information about the exact value of the other firm’s innovation. In this setting, the R&D investment in a Circular Economy, by affecting the distribution of production and disposal costs, influences the production decisions of both the innovating and the rival firms. The sign of the impact depends on the firms’ strategy in the product market. Furthermore, the analysis points out that cooperation in R&D of firms competing in the product market reinforces incentives to invest in green innovation. This suggests that governments aimed to advance a Circular Economy should encourage firms’ cooperation. Full article
(This article belongs to the Special Issue Cooperation, Innovation and Safeguarding of the Environment)
16 pages, 1484 KiB  
Article
Trusting the Trust Game: An External Validity Analysis with a UK Representative Sample
by Sanchayan Banerjee, Matteo M. Galizzi and Rafael Hortala-Vallve
Games 2021, 12(3), 66; https://doi.org/10.3390/g12030066 - 3 Sep 2021
Cited by 15 | Viewed by 6082
Abstract
Using a nationally representative sample of 1052 respondents from the United Kingdom, we systematically tested the associations between the experimental trust game and a range of popular self-reported measures for trust, such as the General Social Survey (GSS) and the Rosenberg scale for [...] Read more.
Using a nationally representative sample of 1052 respondents from the United Kingdom, we systematically tested the associations between the experimental trust game and a range of popular self-reported measures for trust, such as the General Social Survey (GSS) and the Rosenberg scale for self-reported trust. We find that, in our UK representative sample, the experimental trust game significantly and positively predicts generalised self-reported trust in the GSS. This association is robust across a number of alternative empirical specifications, which account for multiple hypotheses corrections and control for other social preferences as measured by the dictator game and the public good game, as well as for a broad range of individual characteristics, such as gender, age, education, and personal income. We discuss how these results generalise to nationally representative samples from six other Organisation for Economic Co-operation and Development (OECD) countries (France, Germany, Italy, Korea, Slovenia, and the US). Full article
(This article belongs to the Section Behavioral and Experimental Game Theory)
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34 pages, 527 KiB  
Article
Mechanism Design for Demand Management in Energy Communities
by Xupeng Wei and Achilleas Anastasopoulos
Games 2021, 12(3), 61; https://doi.org/10.3390/g12030061 - 31 Jul 2021
Cited by 4 | Viewed by 2859
Abstract
We consider a demand management problem in an energy community, in which several users obtain energy from an external organization such as an energy company and pay for the energy according to pre-specified prices that consist of a time-dependent price per unit of [...] Read more.
We consider a demand management problem in an energy community, in which several users obtain energy from an external organization such as an energy company and pay for the energy according to pre-specified prices that consist of a time-dependent price per unit of energy as well as a separate price for peak demand. Since users’ utilities are their private information, which they may not be willing to share, a mediator, known as the planner, is introduced to help optimize the overall satisfaction of the community (total utility minus total payments) by mechanism design. A mechanism consists of a message space, a tax/subsidy, and an allocation function for each user. Each user reports a message chosen from her own message space, then receives some amount of energy determined by the allocation function, and pays the tax specified by the tax function. A desirable mechanism induces a game, the Nash equilibria (NE), of which results in an allocation that coincides with the optimal allocation for the community. As a starting point, we design a mechanism for the energy community with desirable properties such as full implementation, strong budget balance and individual rationality for both users and the planner. We then modify this baseline mechanism for communities where message exchanges are allowed only within neighborhoods, and consequently, the tax/subsidy and allocation functions of each user are only determined by the messages from their neighbors. All of the desirable properties of the baseline mechanism are preserved in the distributed mechanism. Finally, we present a learning algorithm for the baseline mechanism, based on projected gradient descent, that is guaranteed to converge to the NE of the induced game. Full article
(This article belongs to the Special Issue Social and Economic Networks)
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12 pages, 286 KiB  
Article
The Evolution of Networks and Local Public Good Provision: A Potential Approach
by Markus Kinateder and Luca Paolo Merlino
Games 2021, 12(3), 55; https://doi.org/10.3390/g12030055 - 2 Jul 2021
Cited by 4 | Viewed by 3430
Abstract
In this paper, we propose a game in which each player decides with whom to establish a costly connection and how much local public good is provided when benefits are shared among neighbors. We show that, when agents are homogeneous, Nash equilibrium networks [...] Read more.
In this paper, we propose a game in which each player decides with whom to establish a costly connection and how much local public good is provided when benefits are shared among neighbors. We show that, when agents are homogeneous, Nash equilibrium networks are nested split graphs. Additionally, we show that the game is a potential game, even when we introduce heterogeneity along several dimensions. Using this result, we introduce stochastic best reply dynamics and show that this admits a unique and stationary steady state distribution expressed in terms of the potential function of the game. Hence, even if the set of Nash equilibria is potentially very large, the long run predictions are sharp. Full article
(This article belongs to the Special Issue Game Theory in Social Networks)
29 pages, 433 KiB  
Article
Competing Conventions with Costly Information Acquisition
by Roberto Rozzi
Games 2021, 12(3), 53; https://doi.org/10.3390/g12030053 - 25 Jun 2021
Cited by 1 | Viewed by 3312
Abstract
We consider an evolutionary model of social coordination in a 2 × 2 game where two groups of players prefer to coordinate on different actions. Players can pay a cost to learn their opponent’s group: if they pay it, they can condition their [...] Read more.
We consider an evolutionary model of social coordination in a 2 × 2 game where two groups of players prefer to coordinate on different actions. Players can pay a cost to learn their opponent’s group: if they pay it, they can condition their actions concerning the groups. We assess the stability of outcomes in the long run using stochastic stability analysis. We find that three elements matter for the equilibrium selection: the group size, the strength of preferences, and the information’s cost. If the cost is too high, players never learn the group of their opponents in the long run. If one group is stronger in preferences for its favorite action than the other, or its size is sufficiently large compared to the other group, every player plays that group’s favorite action. If both groups are strong enough in preferences, or if none of the groups’ sizes is large enough, players play their favorite actions and miscoordinate in inter-group interactions. Lower levels of the cost favor coordination. Indeed, when the cost is low, in inside-group interactions, players always coordinate on their favorite action, while in inter-group interactions, they coordinate on the favorite action of the group that is stronger in preferences or large enough. Full article
(This article belongs to the Special Issue Social Coordination Games)
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10 pages, 819 KiB  
Article
Brexit and Power in the Council of the European Union
by László Á. Kóczy
Games 2021, 12(2), 51; https://doi.org/10.3390/g12020051 - 21 Jun 2021
Cited by 7 | Viewed by 3801
Abstract
The exit of the United Kingdom from the European Union has had profound economic and political effects. Here, we look at a particular aspect, the power distribution in the Council of the European Union. Using the Shapley–Shubik power index, we calculate the member [...] Read more.
The exit of the United Kingdom from the European Union has had profound economic and political effects. Here, we look at a particular aspect, the power distribution in the Council of the European Union. Using the Shapley–Shubik power index, we calculate the member states’ powers with and without the United Kingdom and update earlier power forecasts using the Eurostat’s latest population projections. There is a remarkably sharp relation between population size and the change in power: Brexit increases the largest members’ powers while decreasing the smallest ones’ powers. Full article
(This article belongs to the Special Issue Weighted Majority Voting Games)
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43 pages, 3198 KiB  
Article
Spoofing the Limit Order Book: A Strategic Agent-Based Analysis
by Xintong Wang, Christopher Hoang, Yevgeniy Vorobeychik and Michael P. Wellman
Games 2021, 12(2), 46; https://doi.org/10.3390/g12020046 - 24 May 2021
Cited by 9 | Viewed by 9818
Abstract
We present an agent-based model of manipulating prices in financial markets through spoofing: submitting spurious orders to mislead traders who learn from the order book. Our model captures a complex market environment for a single security, whose common value is given by [...] Read more.
We present an agent-based model of manipulating prices in financial markets through spoofing: submitting spurious orders to mislead traders who learn from the order book. Our model captures a complex market environment for a single security, whose common value is given by a dynamic fundamental time series. Agents trade through a limit-order book, based on their private values and noisy observations of the fundamental. We consider background agents following two types of trading strategies: the non-spoofable zero intelligence (ZI) that ignores the order book and the manipulable heuristic belief learning (HBL) that exploits the order book to predict price outcomes. We conduct empirical game-theoretic analysis upon simulated agent payoffs across parametrically different environments and measure the effect of spoofing on market performance in approximate strategic equilibria. We demonstrate that HBL traders can benefit price discovery and social welfare, but their existence in equilibrium renders a market vulnerable to manipulation: simple spoofing strategies can effectively mislead traders, distort prices and reduce total surplus. Based on this model, we propose to mitigate spoofing from two aspects: (1) mechanism design to disincentivize manipulation; and (2) trading strategy variations to improve the robustness of learning from market information. We evaluate the proposed approaches, taking into account potential strategic responses of agents, and characterize the conditions under which these approaches may deter manipulation and benefit market welfare. Our model provides a way to quantify the effect of spoofing on trading behavior and market efficiency, and thus it can help to evaluate the effectiveness of various market designs and trading strategies in mitigating an important form of market manipulation. Full article
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7 pages, 397 KiB  
Article
Collaboration and Gender Focality in Stag Hunt Bargaining
by Geraldine Guarin and J. Jobu Babin
Games 2021, 12(2), 39; https://doi.org/10.3390/g12020039 - 6 May 2021
Cited by 8 | Viewed by 3062
Abstract
Knowing the gender of a counterpart can be focal in the willingness to collaborate in team settings that resemble the classic coordination problem. This paper explores whether knowing a co-worker’s gender affects coordination on the mutually beneficial outcome in a socially risky environment. [...] Read more.
Knowing the gender of a counterpart can be focal in the willingness to collaborate in team settings that resemble the classic coordination problem. This paper explores whether knowing a co-worker’s gender affects coordination on the mutually beneficial outcome in a socially risky environment. In an experimental setting, subjects play a one-shot stag hunt game framed as a collaborative task in which they can “work together” or “work alone.” We exogenously vary whether workers know the gender of their counterparts pre-play. When gender is revealed, female players tend to gravitate to collaboration and efficient coordination regardless of the knowledge. Males, when knowingly paired with another male, tend to collaborate less, and thus, are less likely to coordinate on the Pareto optimal outcome. These results demonstrate one way that gender focality can lead to inefficient outcomes and provide insight for organizations looking to induce collaboration among workers. Full article
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31 pages, 2065 KiB  
Article
The Effect of Disclosing Identities in a Socially Incentivized Public Good Game
by Britta Butz and Christine Harbring
Games 2021, 12(2), 32; https://doi.org/10.3390/g12020032 - 9 Apr 2021
Cited by 3 | Viewed by 4290
Abstract
We investigate whether revealing the identities in a public good game that includes a donation incentive leads to higher contributions to the public good. Previous evidence suggests that contributions to a public good increase significantly when these take place in public. Also, the [...] Read more.
We investigate whether revealing the identities in a public good game that includes a donation incentive leads to higher contributions to the public good. Previous evidence suggests that contributions to a public good increase significantly when these take place in public. Also, the amount of money given in charitable donations seems to be sensitive to the revealing of identities. Using a laboratory experiment, we implement a 20% donation share that is dependent on participants’ contributions to a public good. The donation is either costless (because it is financed by the experimenter) or deducted from a team’s contributions. In both settings, we explore whether informing participants that group members’ identities will be disclosed at the end of the experiment leads to higher contributions to the public good. Non-parametric statistics indicate that when donations are costly for the participants, the announcement of subsequent identity disclosure results in significantly higher contributions in the second half of the repeated public good game. In contrast, revealing identities in settings with costless donations reduces contributions to the public good significantly. The regression results indicate that conditional cooperators might be one subgroup driving these results. Full article
(This article belongs to the Special Issue Pro-sociality and Cooperation)
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22 pages, 337 KiB  
Article
Optimal Incentives Schemes under Homo Moralis Preferences
by Roberto Sarkisian
Games 2021, 12(1), 28; https://doi.org/10.3390/g12010028 - 19 Mar 2021
Cited by 2 | Viewed by 2564
Abstract
This study focuses on the optimal incentive schemes in a multi-agent moral hazard model, where each agent has other-regarding preferences and an individual measure of output, with both being observable by the principal. In particular, the two agents display homo moralis preferences. I [...] Read more.
This study focuses on the optimal incentive schemes in a multi-agent moral hazard model, where each agent has other-regarding preferences and an individual measure of output, with both being observable by the principal. In particular, the two agents display homo moralis preferences. I find that, contrary to the case with purely selfish preferences, tournaments can never be optimal when agents are risk averse, and as the degree of morality increases, positive payments are made in a larger number of output realizations. Furthermore, I extend the analysis to a dynamic setting, in which a contract is initially offered to the agents, who then repeatedly choose which level of effort to provide in each period. I show that the optimal incentive schemes in this case are similar to the ones obtained in the static setting, but for the role of intertemporal discounting. Full article
11 pages, 1100 KiB  
Article
Teams Do Inflict Costly Third-Party Punishment as Individuals Do: Experimental Evidence
by Kenju Kamei
Games 2021, 12(1), 22; https://doi.org/10.3390/g12010022 - 3 Mar 2021
Cited by 1 | Viewed by 3018
Abstract
Initiated by the seminal work of Fehr and Fischbacher (Evolution and Human Behavior (2004)), a large body of research has shown that people often take punitive actions towards norm violators even when they are not directly involved in transactions. This paper shows in [...] Read more.
Initiated by the seminal work of Fehr and Fischbacher (Evolution and Human Behavior (2004)), a large body of research has shown that people often take punitive actions towards norm violators even when they are not directly involved in transactions. This paper shows in an experimental setting that this behavioral finding extends to a situation where a pair of individuals jointly decides how strong a third-party punishment to impose. It also shows that this punishment behavior is robust to the size of social distance within pairs. These results lend useful insight since decisions in our everyday lives and also in courts are often made by teams. Full article
(This article belongs to the Special Issue Behavioral Coalition Formation: Theory and Experiments)
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16 pages, 455 KiB  
Article
A Generalization of Quantal Response Equilibrium via Perturbed Utility
by Roy Allen and John Rehbeck
Games 2021, 12(1), 20; https://doi.org/10.3390/g12010020 - 1 Mar 2021
Cited by 6 | Viewed by 2955
Abstract
We present a tractable generalization of quantal response equilibrium via non-expected utility preferences. In particular, we introduce concave perturbed utility games in which an individual has strategy-specific utility indices that depend on the outcome of the game and an additively separable preference to [...] Read more.
We present a tractable generalization of quantal response equilibrium via non-expected utility preferences. In particular, we introduce concave perturbed utility games in which an individual has strategy-specific utility indices that depend on the outcome of the game and an additively separable preference to randomize. The preference to randomize can be viewed as a reduced form of limited attention. Using concave perturbed utility games, we show how to enrich models based on logit best response that are common from quantal response equilibrium. First, the desire to randomize can depend on opponents’ strategies. Second, we show how to derive a nested logit best response function. Lastly, we present tractable quadratic perturbed utility games that allow complementarity. Full article
(This article belongs to the Special Issue Limited Attention)
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16 pages, 376 KiB  
Article
Cartel Formation in Cournot Competition with Asymmetric Costs: A Partition Function Approach
by Takaaki Abe
Games 2021, 12(1), 14; https://doi.org/10.3390/g12010014 - 1 Feb 2021
Cited by 1 | Viewed by 3016
Abstract
In this paper, we use a partition function form game to analyze cartel formation among firms in Cournot competition. We assume that a firm obtains a certain cost advantage that allows it to produce goods at a lower unit cost. We show that [...] Read more.
In this paper, we use a partition function form game to analyze cartel formation among firms in Cournot competition. We assume that a firm obtains a certain cost advantage that allows it to produce goods at a lower unit cost. We show that if the level of the cost advantage is “moderate”, then the firm with the cost advantage leads the cartel formation among the firms. Moreover, if the cost advantage is relatively high, then the formed cartel can also be stable in the sense of the core of a partition function form game. We also show that if the technology for the low-cost production can be copied, then the cost advantage may prevent a cartel from splitting. Full article
(This article belongs to the Special Issue Behavioral Coalition Formation: Theory and Experiments)
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17 pages, 340 KiB  
Article
Social Pressure in Networks Induces Public Good Provision
by David Jimenez-Gomez
Games 2021, 12(1), 4; https://doi.org/10.3390/g12010004 - 12 Jan 2021
Cited by 2 | Viewed by 2759
Abstract
I develop a dynamic model with forward looking agents, and show that social pressure is effective in generating provision in a public good game: after a small group of agents start contributing to the public good, other agents decide to contribute as well [...] Read more.
I develop a dynamic model with forward looking agents, and show that social pressure is effective in generating provision in a public good game: after a small group of agents start contributing to the public good, other agents decide to contribute as well due to a fear of being punished, and this generates contagion in the network. In contrast to earlier models in the literature, contagion happens fast, as part of the best response of fully rational individuals. The network topology has implications for whether contagion starts and the extent to which it spreads. I find conditions under which an agent decides to be the first to contribute in order to generate contagion in the network, as well as conditions for contribution due to a self-fulfilling fear of social pressure. Full article
(This article belongs to the Special Issue Pro-sociality and Cooperation)
22 pages, 383 KiB  
Article
Constrained versus Unconstrained Rational Inattention
by Yaron Azrieli
Games 2021, 12(1), 3; https://doi.org/10.3390/g12010003 - 5 Jan 2021
Cited by 1 | Viewed by 2679
Abstract
The rational inattention literature is split between two versions of the model: in one, mutual information of states and signals are bounded by a hard constraint, while, in the other, it appears as an additive term in the decision maker’s utility function. The [...] Read more.
The rational inattention literature is split between two versions of the model: in one, mutual information of states and signals are bounded by a hard constraint, while, in the other, it appears as an additive term in the decision maker’s utility function. The resulting constrained and unconstrained maximization problems are closely related, but, nevertheless, their solutions differ in certain aspects. In particular, movements in the decision maker’s prior belief and utility function lead to opposite comparative statics conclusions. Full article
(This article belongs to the Special Issue Limited Attention)
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