Evolutionary foundations of aggregate-taking behavior

Summary. I show that aggregate-taking behavior is often evolutionarily stable for finite population in symmetric games in which payoff depends only on own strategy and an aggregate. I provide economic examples exhibiting this phenomenon. Received: August 27, 2001; revised version: January 29, 2002 RID="*" ID="*" The paper has profited from the comments of Maria Montero, Burkhard Hehenkamp, Wolfgang Leininger, and Dave Furth. Financial support from the DFG via Postgraduate Programme at the University of Dortmund and via SFB 504 at the University of Mannheim is acknowledged. RID="*" ID="*" Present address: University of Mannheim, SFB 504, L 13, 15, 68131 Mannheim, Germany (e-mail: possajen@sfb504.uni-mannheim.de)     

Fending off one means fending off all: evolutionary stability in quasi-submodular aggregative games

The implications of evolutionarily stable behavior in finite populations have recently been explored for a variety of aggregative games. This note proves an intimate relationship between quasi-submodularity and global evolutionary stability of strategies for these games, which – apart from being of independent interest – accounts for a number of results obtained in the recent literature: we show that any evolutionarily stable strategy of a quasi-submodular aggregative game must also be globally stable. That is, if one mutant cannot successfully invade a population, any number of mutants can do so even lessThe author is grateful to Ana Ania and Carlos Alōs-Ferrer for comments on an earlier version     

The evolution of conventions in minimum effort games

The literature on minimum effort game has been concerned with a symmetric game with linear payoff functions. The main aim of the present paper is to study the coordination problem arising in a not necessarily symmetric minimum effort game with two players. The sources of asymmetry can be twofold: the productivity of effort and the distribution of the join output. To select among the Pareto ranked equilibria we use the stochastic stability criterion. We show that, for any configuration parameters, the set of stochastically stable equilibria coincides with the set of potential maximizers. We also show that when the disutility of effort is linear, the Pareto dominant equilibrium is stochastically stable provided that the distributive parameter belongs to a well defined range. When the disutility of effort is nonlinear no distributive arguments can be used to successfully affect the selection process. Lastly we prove that the connection between stochastic stability and maximum potential can fail when more than two agents are considered.     

The evolutionary stability of constant consistent conjectures

In the general context of smooth two-player games, this paper shows that there is a close connection between (constant) consistent conjectures in a given game and the evolutionary stability of these conjectures. Evolutionarily stable conjectures are consistent and consistent conjectures are the only interior candidates to be evolutionarily stable. Examples are provided to illustrate the result.     

A note on evolutionary stability of Bertrand equilibrium

It is shown that the equilibrium notion of an evolutionary stable strategy (ESS) does have predictive power for standard models of Bertrand competition. This is in contrast to a recent claim by Qin and Stuart (1997). The claim is based on the observation that the solution concept ESS behaves discontinuously when finite (discrete) action games approach an infinite (continuous) action game in the limit. Furthermore, it is argued that from a model-theoretic point of view evolutionary stability in prices (i.e. in the Bertrand model) is quite different from evolutionary stability in quantities (i.e. in the Cournot model).     

An evolutionary analysis of insurance markets with adverse selection

The equilibrium nonexistence problem in Rothschild and Stiglitz's insurance market is reexamined in a dynamic setting. Insurance firms are boundedly rational and offer menus of insurance contracts which are periodically revised: profitable competitors' contracts are imitated and loss-making contracts are withdrawn. Occasionally, a firm experiments by withdrawing or innovating a random set of contracts. We show that Rothschild and Stiglitz's candidate competitive equilibrium contracts constitute the unique long-run market outcome if innovation experiments are restricted to contracts which are sufficiently “similar” to those currently on the market.     

Global asymptotic stability of a competitive equilibrium with recursive preferences

Summary. This paper demonstrates global stability of a competitive equilibrium in a multi-sector model of many firms, each of which exhibits constant returns to scale technology, and of infinitely lived consumers, whose preferences are recursive but not necessarily additively separable. In the topology induced by a sup-norm, the dominant diagonal blocks condition (Araujo and Scheinkman (Econometrica 45, 1977)) allows us to apply the implicit function theorem to obtain continuity of the equilibrium path. If a stationary equilibrium is locally asymptotically stable, then the continuity of the equilibrium path and smoothness of a weight function on heterogeneous consumers imply that all equilibrium paths converge to the steady state. The dominant diagonal blocks condition is also shown to be sufficient for the local asymptotic turnpike property. Received: December 13, 1996; revised version: June 2, 1999     

Analysis of evolutionary game in structural formation of market power in remanufacturing supply chains

It is normal for enterprises to engage in remanufacturing nowadays. Nevertheless, the concern of enterprises and researchers is whether remanufacturers should compete for leadership in supply chains. Considering the WTP for new and remanufactured products differs, this article the evolutionary game theory model in three structures of leadership in supply chains. It investigates the processes of market evolution and choices of strategies when manufacturers and retailers compete or do not compete for leadership in the market. It has been shown in the case of market evolution, according to the 12 conditions formed from different prices that manufacturer and retailer have to pay for competing for leadership, there are five types of ultimate evolutionary stability about the choices of strategies. Further analyses show that these five different evolutionary stability results include nine different evolutionary paths. Analyses of examples further show the evolutionary processes and results in distinct circumstances. This article extends the application of the evolutionary game in remanufacturing supply chains in theory and provides some guidance for enterprises to make decisions when they consider whether they compete for leaders in remanufacturing supply chains in reality.     

Cyclical behavior of the financial stability of eurozone commercial banks

In light of the financial crisis and the European sovereign debt crisis, we investigate the cyclical behavior of the financial stability of banks of the Eurozone, using an unbalanced dynamic panel of 722 commercial banks covering the period 1999–2013, and the generalized method of moments system. We find a negative relationship between business cycle and bank risk-taking, indicating that financial stability is procyclical. In addition, the study shows that lending activity increases risk-taking while rising capital requirements boost financial stability. Moreover, our findings suggest positive co-movements between the business cycle and lending, compared to bank's capital, whereby the procyclicality of lending and bank capital have negative effects on the financial stability of commercial banks in the Eurozone. We notice then that the cyclical behavior of commercial banks, in terms of capital requirements and lending activities, depends on their size. Therefore, lending and capital of smaller banks are procyclical while lending and capital of larger banks are countercyclical. Finally, we find the Troika institutions’ bailouts programs significantly impacted banking stability in the Eurozone.     

Destruction and settlement norms as determinants of conflict: An evolutionary perspective

This paper studies conflict in a simple bargaining framework using an evolutionary game-theoretic approach. Our findings suggest that a player does not always regard the winning probability as an acceptable settlement rule. He accepts a division according to winning probability when the destruction caused to him in conflict is more than a threshold, which in turn depends on cost of conflict to the opponent and the size of the population. Further, our analysis shows that the norms with positive weight to disagreement payoff are effective against conflict, and incentivize peace. Contrary to the findings of extant studies carried out in finite population evolutionary game setting, the settlement possibility set is identical under both ESS and Nash equilibrium in our model with settlement norms.     

企业竞合行为的演化博弈分析--以我国创意产业为例

近年来,创意产业不仅成为学界关注的热点,也成为政府和企业专注与投资的特点。企业之间竞合行为将直接决定其竞争力,进而影响我国创意产业竞争力与发展方向。本文基于文化创意产业集群内企业间的竞合行为,运用演化博弈的理论方法,建立了核心企业之间的横向对称博弈及核心企业与其相邻下游企业之间的纵向非对称博弈的数理模型,分析了其演变的动态过程。研究结果表明,该系统的演化方向与双方博弈的支付矩阵相关,博弈结果受到合作收益、初始合作成本、独立创新能力、合作成功率、以及双方初始状态等因素的影响,最后给出了相关建议,为整合我国文化产业集群提供了理论依据。     

The evolution of conventions under incomplete information

Summary. We formulate an evolutionary learning process with trembles for static games of incomplete information. For many games, if the amount of trembling is small, play will be in accordance with the games (strict) Bayesian equilibria most of the time. This supports the notion of Bayesian equilibrium. Often the process will select a specific equilibrium. We study an extension to incomplete information of the prototype conflict known as Chicken and find that the equilibrium selection by evolutionary learning may well be in favor of inefficient Bayesian equilibria where some types of players fail to coordinate.Received: 17 March 2003, Revised: 3 December 2003, JEL Classification Numbers: C72.     

The impact of prudence on optimal prevention

Summary. What are the determinants of the optimal level of effort to reduce the probability of a loss to occur? Whereas most of the literature on this question focused on risk aversion, we show that the concept of prudence (i.e., a positive third derivative of the utility function) is essential to answer this question. We explain in this paper that prudence and prevention tend to be opponents rather than allies contrary to the intuition attached to everyday language.Received: 7 November 2003, Revised: 3 August 2004, JEL Classification Numbers: D61, D81. Correspondence to: Christian Gollier     

The Borda rule,Condorcet consistency and Condorcet stability

Summary. The Borda rule is known to be the least vulnerable scoring rule to Condorcet inconsistency, Saari (2000). Such inconsistency occurs when the Condorcet winner (the alternative which is preferred to any other alternative by a simple majority) is not selected by the Borda rule. This note exposes the relationship between the Borda rule and the Condorcet q-majority principle as well as the Condorcet q-majority voting rule. The main result establishes that the Borda rule is Condorcet q-majority consistent when where k is the number of alternatives. The second result establishes that is the minimal degree of majority decisiveness corresponding to the Borda rule under sincere voting. The same majority is required to ensure decisiveness under the Borda rule and to ensure that a q-rule (the generalized q-majority Condorcet rule) is a voting rule. Received: April 8, 2002; revised version: July 17, 2002 Correspondence to:S. Nitzan     

The role of lender behavior in international project finance

Summary. A sovereign borrower seeks to raise funds internationally to finance a fixed-size project, which no single lender can finance alone. Lenders cannot lend more than their endowments, which are private information. A coordination failure arises; therefore, some socially desirable projects may not be financed, even if ex post feasible. There are multiple equilibria, and a conflict exists between lenders about which equilibrium to coordinate on. When endowments are volatile, some lenders prefer an equilibrium in which the project is financed with probability , even if ex post feasible. The government eliminates such equilibria by offering a sufficiently high return, only if endowment volatility is small. Received: June 1, 1999; revised version: December 4, 2000     

Mixed equilibria in games of strategic complementarities

Summary. The literature on games of strategic complementarities (GSC) has focused on pure strategies. I introduce mixed strategies and show that, when strategy spaces are one-dimensional, the complementarities framework extends to mixed strategies ordered by first-order stochastic dominance. In particular, the mixed extension of a GSC is a GSC, the full set of equilibria is a complete lattice and the extremal equilibria (smallest and largest) are in pure strategies. The framework does not extend when strategy spaces are multi-dimensional. I also update learning results for GSC using stochastic fictitious play. Received: October 16, 2000; revised version: March 7, 2002 RID="*" ID="*" I am very grateful to Robert Anderson, David Blackwell, Aaron Edlin, Peter De Marzo, Ted O'Donoghue, Matthew Rabin, Ilya Segal, Chris Shannon, Clara Wang and Federico Weinschelbaum for comments and advise.     

The importance of government commitment in attracting firms: A dynamic analysis of tax competition in an agglomeration economy

Agglomeration tendencies of industrial firms significantly affect the nature of tax competition. This paper analyzes tax competition between two countries over an infinite time horizon in an economy with trade costs and internationally mobile industrial firms. Most of the previous studies on tax competition in the ‘new economic geography’ framework employ static models. In this study, two governments dynamically compete with each other to attract firms through their choices of taxes and subsidies. It is shown that the commitment of the governments to their policies is crucial in determining the distribution of firms in the long run. Specifically, if governments find each others׳ tax policies credible, then one country will attract all the firms when trade costs are low enough to make agglomeration forces dominant. If policies are not credible, both countries may attract an equal share of firms even when trade costs are low, as the lack of commitment by governments acts as a dispersion force.     

基金羊群行为的博弈分析

本文从博弈角度对信息不完全和声誉报酬型羊群行为的生成机理进行了剖析，最后从博弈均衡解出发，给出了弱化羊群行为的对策。     

农户中介组织选择行为分析

从种植户视角采用定量与定性相结合的方法研究苹果种植户与三类中介组织的行为关系规律,得出如下结论:分散的苹果收购商和种植户在苹果销售过程中需要中介组织发挥桥梁或纽带作用,目前,这个桥梁或纽带主要是由农民经纪人群体担当。苹果种植户组织化程度低使公司+基地+农户组织模式很难实现苹果贸易公司和苹果种植户之间产销的有效结合。农民专业合作经济组织的发展提高了苹果产业组织化程度,但导致相关利益主体的行为扭曲,其中主要表现是在现行的政府主导型、龙头企业及大户控制型、村社结合型等主要类型果农协会中,苹果种植户不同程度受到政府行政干预、龙头企业及大户控制、乡村级组织操纵而处于被动地位,其利益难以保障,协会对种植户苹果产后销售等服务明显缺位。