2009
Hart, Sergiu .
“A Simple Riskiness Order Leading To The Aumann &Ldquo;Serrano Index Of Riskiness”.
Discussion Papers 2009. Web.
Publisher's VersionAbstractWe introduce a simple "riskier than" order between gambles, from which the index of riskiness developed by Aumann and Serrano (2008) is directly obtained.
Hellman, Ziv .
“Bargaining Set Solution Concepts In Repeated Cooperative Games”.
Discussion Papers 2009. Web.
Publisher's VersionAbstractThis paper is concerned with the question of extending the definition of the bargaining set, a cooperative game solution, when cooperation takes place in a repeated setting. The focus is on situations in which the players face (finite or infinite) sequences of exogenously specified TU-games and receive sequences of imputations against those static cooperative games in each time period. Two alternative definitions of what a `sequence of coalitions' means in such a context are considered, in respect to which the concept of a repeated game bargaining set may be defined, and existence and non-existence results are studied. A solution concept we term subgame-perfect bargaining set sequences is also defined, and sufficient conditions are given for the nonemptiness of subgame-perfect solutions in the case of a finite number of time periods.
Schuster, Amir Perelberg, and Richard.
“Bottlenose Dolphins (Tursiops Truncatus) Prefer To Cooperate When Petted: Integrating Proximate And Ultimate Explanations Ii”.
Discussion Papers 2009. Web.
Publisher's VersionAbstract' Cooperation poses theoretical problems because the behaviors of individuals can benefit others. Evolutionary and game-theory explanations that focus on maximizing one's own material outcomes are usually supported by experimental models with isolated and anonymous subjects. Cooperation in the natural world, however, is often a social act whereby familiar individuals coordinate behaviors for shared outcomes. Social cooperation is also associated with a cooperation bias expressed as a preference for cooperation even when noncooperation is immediately more beneficial. The authors report on evidence for such a bias in a captive group of bottlenose dolphins that voluntarily preferred to receive petting from human guides by using a pairwise coordinated approach, even though this was more difficult, and total petting amount was thereby reduced. To explain why this bias occurs, the authors propose an integrated behavioral-evolutionary approach whereby performance is determined by two kinds of immediate outcomes: material gains and intrinsic affective states associated with cooperating. The latter can provide reinforcement when immediate material gains are reduced, delayed, or absent. Over a lifetime, this proximate mechanism can lead to cooperative relationships whose long-term ultimate consequences can be adaptive.
Perry, Alex Gershkov, and Motty.
“Contracts For Providers Of Medical Treatments”.
Discussion Papers 2009. Web.
Publisher's VersionAbstractWe analyze the nature of optimal contracts in a dynamic model of repeated (and persistent) adverse selection and moral hazard. In particular we consider the case of surgeons who diagnose patients and then decide whether to perform an operation, and if so, whether to exert a costly but unobservable effort. The probability of a successful operation is a function of the surgeon's effort, his quality, and the severity of the patient's problem, all of which are the surgeon's private information.The principal observes only the history of successes and failures and is allowed to promise financial rewards as a function of the observed history. His goal is to provide incentives at minimum cost so that if the patient needs minor surgery he will be treated by any type of surgeon (low- or high-quality) but if he needs major surgery, only a high-quality surgeon will perform the operation.The optimal contract-pair is characterized and is shown to reflect the practice often observed in the medical industry. Performing an operation is a gamble whose probability of success is higher, the higher the quality of the surgeon. A sequence of operations is exponentially less likely to be successful if the surgeon is not high-quality. An optimal contract for a high-quality surgeon exploits this fact by stipulating a high reward conditional on a long history of successes, while such a stipulation makes the contract much less attractive to a low-quality surgeon.
Schuster, Amir Perelberg, and Richard.
“Coordinated Breathing In Bottlenose Dolphins (Tursiops Truncatus) As Cooperation: Integrating Proximate And Ultimate Explanations”.
Discussion Papers 2009. Web.
Publisher's VersionAbstractIn this study, coordinated breathing was studied in 13 common bottlenose dolphins because of its links with spontaneous coordinated behaviors (e.g., swimming, foraging, and playing). A strong link was shown between dyadic coordination levels and age/sex categories when both association patterns and spatial formation are considered. This is consistent with a significant influence of social relationships on cooperating and contrasts with an economic perspective based on immediate material outcomes alone. This cooperation bias is explained by linking proximate processes that evoke performance with ultimate evolutionary processes driven by long-term adaptive outcomes. Proximate processes can include 2 kinds of immediate outcomes: material reinforcements and affective states associated with acts of cooperating that can provide positive reinforcement regardless of immediate material benefits (e.g., when there is a time lag between cooperative acts and material outcomes). Affective states can then be adaptive by strengthening social relationships that lead to eventual gains in fitness.
Zultan, M. Vittoria Levati, and Ro I.
“Cycles Of Conditional Cooperation In A Real-Time Voluntary Contribution Mechanism”.
Discussion Papers 2009. Web.
Publisher's VersionAbstractThis paper provides a new way to identify conditional cooperation in a real-time version of the standard voluntary contribution mechanism. Our approach avoids most drawbacks of the traditional procedures because it relies on endogenous cycle lengths, which are defined by the number of contributors a player waits before committing to a further contribution. Based on hypothetical distributions of randomly generated contribution sequences, we provide strong evidence for conditionally cooperative behavior. Moreover, notwithstanding a decline in contributions, conditional cooperation is found to be stable over time.
Lehmann, Daniel .
“Foundations Of Non-Commutative Probability Theory”.
Discussion Papers 2009. Web.
Publisher's VersionAbstractKolmogorov's setting for probability theory is given an original generalization to account for probabilities arising from Quantum Mechanics. The sample space has a central role in this presentation and random variables, i.e., observables, are defined in a natural way. The mystery presented by the algebraic equations satisfied by (non-commuting) observables that cannot be observed in the same states is elucidated
Aumann, Robert J. .
“Game Engineering”.
Discussion Papers 2009. Web.
Publisher's VersionAbstract"Game Engineering" deals with the application of game theoretic methods to interactive situations or systems in which the rules are well defined, or where the designer can himself specify the rules. This talk, which addressed a business-school audience with no specific knowledge of game theory, describes five examples of game engineering: two dealing with auctions, two with traffic systems, and one with arbitration. At the end of the talk there was a Q & A session, which, too, is recorded here.
Lehmann, Aron Matskin, and Daniel.
“General Matching: Lattice Structure Of The Set Of Agreements”.
Discussion Papers 2009. Web.
Publisher's VersionAbstractThe subset agreement problem generalizes all forms of two-sided matching. Two agents need to agree on some subset of a given
Kalai, Gil .
“How Quantum Computers Can Fail”.
Discussion Papers 2009. Web.
Publisher's VersionAbstractWe propose and discuss two postulates on the nature of errors in highly correlated noisy physical stochastic systems. The first postulate asserts that errors for a pair of substantially correlated elements are themselves substantially correlated. The second postulate asserts that in a noisy system with many highly correlated elements there will be a strong effect of error synchronization. These postulates appear to be damaging for quantum computers. The paper includes a self-contained description of the model of quantum computers.
Winter, Eyal .
“Incentive Reversal”.
Discussion Papers 2009. Web.
Publisher's VersionAbstractBy incentive reversal we refer to situations in which an increase of rewards for all agents results in fewer agents exerting effort. We show that externalities among peers may give rise to such intriguing situations even when all agents are fully rational. We provide a necessary and sufficient condition on the organizational technology in order for it to be susceptible to incentive reversal. The condition implies that some degree of complementarity is enough to allow incentive reversal.
Levy, Itai Arieli, and Yehuda (John).
“Infinite Sequential Games With Perfect But Incomplete Information”.
Discussion Papers 2009. Web.
Publisher's VersionAbstractInfinite sequential games, in which Nature chooses a Borel winning set and reveals it to one of the players, do not necessarily have a value if Nature has 3 or more choices. The value does exist if Nature has 2 choices. The value also does not necessarily exist if Nature chooses from 2 Borel payoff functions. Similarly, if Player 1 chooses the Borel winning set and does not reveal his selection to Player 2, then the game does not necessarily have a value if there are 3 or more choices; it does have a value if there are only 2 choices. If Player 1 chooses from 2 Borel payoff functions and does not reveal his choice, the game need not have a value either.
Romm, Dror Lellouche, and Assaf.
“Information Effects Of Jump Bidding In English Auctions”.
Discussion Papers 2009. Web.
Publisher's VersionAbstractShould an auctioneer start a rising auction from some starting price or set it as a reservation price? Under what circumstances might a bidder find it rational to raise the current offer by a substantial factor instead of making just a small increase above the highest bid? This paper aims to answer both of these questions by exploring the implications of jump bidding over the information sets available to the bidders. Our motivation is to find whether hiding the information about other players' signals might be beneficial for one of the bidders. We first show that it is better for the auctioneer to set a reservation price rather than "jump" to the starting price. We then prove that in a very general setting and when bidders are risk-neutral there exist no equilibrium with jump bidding (in non-weakly dominated strategies). Finally, we demonstrate that jump bidding might be a rational consequence of risk aversion, and analyze the different effects at work.
Gura, Ein-Ya .
“Insights Into Game Theory: An Alternative Mathematical Experience”.
Discussion Papers 2009. Web.
Publisher's VersionAbstractFew branches of mathematics have been more influential in the social sciences than game theory. In recent years, it has become an essential tool for all social scientists studying the strategic behavior of competing individuals, firms, and countries. However, the mathematical complexity of game theory is often very intimidating for students who have only a basic understanding of mathematics. Insights into Game Theory addresses this problem by providing students with an understanding of the key concepts and ideas of game theory without using formal mathematical notation. The authors use four different topics (college admissions, social justice and majority voting, coalitions and cooperative games, and a bankruptcy problem from the Talmud) to investigate four areas of game theory. The result is a fascinating introduction to the world of game theory and its increasingly important role in the social sciences.
Winter, Eric D. Gould, and Eyal.
“Interactions Between Workers And The Technology Of Production: Evidence From Professional Baseball”.
Discussion Papers 2009. Web.
Publisher's VersionAbstractThis paper shows that workers can affect the productivity of their coworkers based on income maximization considerations, rather than relying on behavioral considerations such as peer pressure, social norms, and shame. We show that a worker's effort has a positive effect on the effort of coworkers if they are complements in production, and a negative effect if they are substitutes. The theory is tested using a panel data set of baseball players from 1970 to 2003. The results are consistent with the idea that the effort choices of workers interact in ways that are dependent on the technology of production.
Hellman, Ziv .
“Iterated Expectations, Compact Spaces, And Common Priors”.
Discussion Papers 2009. Web.
Publisher's VersionAbstractExtending to infinite state spaces that are compact metric spaces a result previously attained by D. Samet solely in the context of finite state spaces, a necessary and suficient condition for the existence of a common prior for several players is given in terms of the players' present beliefs only. A common prior exists if and only if for each random variable it is common knowledge that all Cesaro means of iterated expectations with respect to any permutation converge to the same value; this value is its expectation with respect to the common prior. It is further shown that compactness is a necessary condition for some of the results.
von Zamir, Bernhard Stengel, and Shmuel.
“Leadership Games With Convex Strategy Sets”.
Discussion Papers 2009. Web.
Publisher's VersionAbstractA basic model of commitment is to convert a two-player game in strategic form to a leadership game with the same payoffs, where one player, the leader, commits to a strategy, to which the second player always chooses a best reply. This paper studies such leadership games for games with convex strategy sets. We apply them to mixed extensions of finite games, which we analyze completely, including nongeneric games. The main result is that leadership is advantageous in the sense that, as a set, the leader s payoffs in equilibrium are at least as high as his Nash and correlated equilibrium payoffs in the simultaneous game. We also consider leadership games with three or more players, where most conclusions no longer hold.
Sheshinski, Eytan .
“Longevity And Aggregate Savings”.
Discussion Papers 2009. Web.
Publisher's VersionAbstractTwo salient features of modern economic growth are the rise in aggregate savings rates and the steady increase in life expectancy. This paper links these processes, showing that under certain conditions economic theory supports the hypothesis that increased longevity leads to higher aggregate savings in steady state. The analysis is based on a lifecycle model with uncertain longevity in which individuals choose an optimum consumption path and a retirement age. Conditions on the age-specific pattern of improvements in survival probabilities are shown to ensure that individual savings rise with longevity and that aggregation preserves this result. Population theory (Coale (1972)) is used to link the steady-state age density function and the population's growth rate to individuals' survival probabilities. The importance of a competitive annuity market in avoiding unintended bequests is underscored.