Hope springs eternal: learning and the stability of cooperation in short horizon repeated games

This paper considers learning rates in finitely repeated prisoners’ dilemmas. If players think their opponents might be relatively cooperative (e.g., tit-for-tat or grim types), they will cooperate in finitely repeated prisoners’ dilemmas (see Kreps et al., J. Econom. Theory 27 (1982) 245). However, if there are actually no cooperative types, players will eventually learn this and cooperation will break down. This paper shows that this learning is extremely slow, so it will take an extremely long time for cooperation to break down.Thus, suppose the world is either “good” or “bad.” The probability of a grim type is δ>0 if the world is good, and zero if the world is bad. Successive generations pair up to play finitely repeated prisoners’ dilemmas. Players observe play in previous generations and use Bayes’ rule to update their prior, π, that the world is good. We show that, if the world is really bad, then π falls per generation on average. Thus, if δ is small, there is less cooperation if the world is good, but cooperation may become more stable. For a representative 19 period repeated prisoners’ dilemma, beliefs fall one percentage point on average after a thousand generations.To derive these learning rates, we must refine existing results on the sensitivity of repeated games to Kreps et al. (1982) type perturbations. Specifically, we show cooperation is possible in perturbed prisoners’ dilemmas repeated O(log(1/δ)) times. This improves significantly on the O(1/δ) results in previous work. The paper thus provides two new reasons why cooperation tends to be stable, even in short horizon repeated games.     

Random-player games

This paper introduces general games with incomplete information in which the number, as well as the types or identities, of the participating players are determined by chance and might not be known to the players when they make their choices of actions. In these games, the selection of the number and types of players is modeled as a finite point process on a suitable type space. Definitions of pure-strategy, mixed-strategy, and correlated equilibria in random-player games are given, extending the corresponding ones for finite games, Bayesian games, and games with population uncertainty, which may all be considered as special cases of random-player games.     

Caught in the Web? Addictive behavior in cyberspace and the role of goal-orientation

New online 3-D virtual worlds are complex and differ significantly from each other. In this study we examine whether the type of virtual world is likely to make a difference on how addictive behavior develops and its subsequent outcomes. We examine the effect of goal-orientation on the degree to which cognitive absorption within the virtual world results in addiction and in the impact of addiction on continuance and purchasing intentions. Using surveys conducted in World of Warcraft (goal-oriented) and Second Life (experience-oriented) virtual worlds and analysis via ANOVA, we find that while cognitive absorption contributes to the development of addiction, which subsequently leads to increased continuance and spending intentions in goal-oriented virtual worlds, none of these relationships hold in the case of the experience-oriented world. Goal-oriented virtual worlds provide a problematic conduit for addictive behavior and marketing manipulation and the authors believe that they would benefit from further attention by policy-makers. Experience-oriented virtual worlds do not appear to provide the same dangers and would appear to be more healthy avenues for marketing-consumer engagement.     

Group play in games and the role of consent in network formation

We study games played between groups of players, where a given group decides which strategy it will play through a vote by its members. When groups consist of two voting players, our games can also be interpreted as network-formation games. In experiments on Stag Hunt games, we find a stark contrast between how groups and individuals play, with payoffs playing a primary role in equilibrium selection when individuals play, but the structure of the voting rule playing the primary role when groups play. We develop a new solution concept, robust-belief equilibrium, which explains the data that we observe. We provide results showing that this solution concept has application beyond the particular games in our experiments.     

Conservative belief and rationality

Playersʼ beliefs may be incompatible, in the sense that player i can assign probability 1 to an event E to which player j assigns probability 0. One way to block incompatibility is to assume a common prior. We consider here a different approach: we require playersʼ beliefs to be conservative, in the sense that all players must ascribe the actual world positive probability. We show that common conservative belief of rationality (CCBR) characterizes strategies in the support of a subjective correlated equilibrium where all playersʼ beliefs have common support. We also define a notion of strong rationalizability, and show that it is characterized by CCBR.     

国外网络货币虚转实交易研究述评

虚转实交易（RMT）是网络时代兴起的一种经济行为,它搭起了一座从虚拟世界到现实经济的桥梁。RMT弱化并模糊了虚拟与现实的边界,使虚拟世界的通货膨胀、价值创造和财富转移通过RMT对现实世界中的财富、税收、福利分配等发生作用。RMT的主体虚拟货币的发行量及需求波动虽然总量很小,但已经显现出可能导致现实货币的汇率浮动的力量,虚拟世界中交易物品在种类和数量急剧增长的背景下催生出现实世界中新的产业链。国外学者从其产生发展、福利效应、价格影响、产业链等不同角度对其进行了研究,本文仅对此加以述评并指出今后RMT的研究取向及一些启示。     

Partial exposure in large games

In this work we introduce the notion of partial exposure, in which the players of a simultaneous-move Bayesian game are exposed to the realized types and chosen actions of a subset of the other players. We show that in any large simultaneous-move game, each player has very little regret even after being partially exposed to other players. If players are given the opportunity to be exposed to others at the expense of a small decrease in utility, players will decline this opportunity, and the original Nash equilibria of the game will survive.     

Farsightedness in a Coalitional Great Fish War

We explore the implications of the farsightedness assumption on the conjectures of players in a coalitional Great Fish War model with symmetric players, derived from the seminal model of Levhari and Mirman (Bell J Econ 11:649–661, 1980). The farsightedness assumption for players in a coalitional game acknowledges the fact that a deviation from a single player will lead to the formation of a new coalition structure as the result of possibly successive moves of her rivals in order to improve their payoffs. It departs from mainstream game theory in that it relies on the so-called rational conjectures, as opposed to the traditional Nash conjectures formed by players on the behavior of their rivals. For values of the biological parameter and the discount factor more plausible than the ones used in the current literature, the farsightedness assumption predicts a wide scope for cooperation in non-trivial coalitions, sustained by credible threats of successive deviations that defeat the shortsighted payoff of any prospective deviator. Compliance or deterrence of deviations may also be addressed by acknowledging that information on the fish stock or on the catch policies actually implemented may be available only with a delay (dynamic farsightedness). In that case, the requirements are stronger and the sizes and number of possible farsighted stable coalitions are different. In the sequential move version, which could mimic some characteristics of fishery models, the results are not less appealing, even if the dominant player or dominant coalition with first move advantage assumption provides a case for cooperation with the traditional Nash conjectures.     

Social equilibrium and cycles on compact sets

One proof of existence of general equilibrium assumes convexity and continuity of a preference correspondence on a compact convex feasible set W. Here the existence of a local equilibrium for a preference field which satisfies, not convexity, but the weaker local acyclicity is shown. The theorem is then applied to a voting game, σ, without veto players. It is shown that if the dimension of the policy space is no greater than ν(σ) ? 2, where ν(σ) is the Nakamura number of the game, then no local cycles may occur and a local equilibrium must exist. With convex preferences, then, there will exist a choice of the game from W.     

Risk-dominance and perfect foresight dynamics in N-player games

In perfect foresight dynamics, an action is linearly stable if expectation that people will always choose the action is self-fulfilling. A symmetric game is a PIM game if an opponent's particular action maximizes the incentive of an action, independently of the rest of the players. This class includes supermodular games, games with linear incentives and so forth. We show that, in PIM games, linear stability is equivalent to u-dominance, a generalization of risk-dominance, and that there is no path escaping a u-dominant equilibrium. Existing results on N-player coordination games, games with linear incentives and two-player games are obtained as corollaries.     

The new organizational structure and its virtual functioning

"Virtuality" is initiating a change in organizations. It is necessary for companies to be managed flexibly and to respond to the changing needs of the environment. Some new concepts of understanding the organization, accompanied by current technological developments, may offer some opportunities and solutions to the various strategies. How does this new concept of organization with no presence, no physical attendance, and no material factors affect existing companies? This paper deals with questions such as: What is virtuality for companies? How does one manage a virtual company? What elements of virtuality need to be considered by traditional companies entering the new millennium? These questions will be reflected upon and analyzed from a theoretical framework. The framework will provide the basis for the design of an empirical study. The results of the study contribute to and give feedback on these initial questions.     

The constitutional political economy of virtual worlds

In virtual worlds, a social order able to coordinate the actions of tens of thousands of people emerges in a non-predetermined but designed way. The central puzzle the developers of such worlds have to solve is the same political economists face: to establish a well-functioning set of rules allowing for the thriving of the regulated community. The purpose of this paper is to provide a discussion of the particularities of the constitutional political economy of virtual worlds: their institutions, the prevalent beliefs of the players, and their organizations. The main reason why we should care about doing research on virtual worlds is the huge potential for research in virtual worlds. Virtual worlds present a middle ground in the debate between the greater control of laboratory experiments and the higher external validity of the field. Besides being an important cultural phenomenon per se, they emerge as the researchers’ tool to conduct experiments on a truly social level with tens of thousands of subjects. To show the usefulness of such environments for research in political economy in an exemplary but concrete fashion, the paper also presents some findings difficult to be produced elsewhere: data on an astonishingly high percentage of altruistic behavior in a Hobbesian natural state drawn from a dictator game played online.     

Research on Model of Virtual Organization and Its Practice

This paper discusses an organizational model to be used for both conventional and virtual organizations. The model deals with variable relationships within an organization and provides a framework for overall organizational design that may include relationship among different design variables and external relationship with environment. Based on the researches of virtual organization, this paper also illustrates the new model of organization in the real world such as Beijing 2008 Olympic games and Dongfeng Automobile group.     

Behavior and Learning in the “Dirty Faces” Game

This paper examines the Dirty Faces problem as a Bayesian game. The equilibrium in the general form of the game requires the extreme assumption of common knowledge of rationality. However, for any finite number of players, the exact number of steps of iterated rationality necessary for the equilibrium to arise depends on the number of players of a particular type, allowing the game to be used to bound the number of steps satisfied by actual players. The game differs from other games used to study iterated rationality in that all players are better off when common knowledge of rationality is satisfied. While behavior in experiments is inconsistent with the game-theoretic prediction at the group level, individual level behavior shows a greater degree of consistency with theory and with previous results on iterated rationality. Finally, there is some evidence of learning in repeated play.     

New Frontiers of Profit and Risk: The Fourth Industrial Revolution’s Impact on Business and Human Rights

ABSTRACT

The Fourth Industrial Revolution, characterised by the fusion of physical, digital, and biological technologies, will have profound social and economic consequences. But what impact will it have on human rights? This article critically interrogates key writings and speeches about the Fourth Industrial Revolution, which requires reading between the lines of technical, business, and policy-orientated materials that rarely address human rights explicitly. The findings are a mix of good and bad news. First, the traditional linkage between economic competition and violations of bodily integrity is weakening as new forms of profitability in tomorrow’s digital ecosystems require empowered and creative individuals. However, these celebratory visions of the profitable interpenetration of our bodies, hardware and virtual worlds has a dark side. The next-generation of human rights violations arising from transnational business activities will be increasingly subtle, diffuse, and sophisticated.     

An econometric evaluation of the management of large-scale transport infrastructure in Spain during the great recession: Lessons for infrastructure bubbles

This paper reviews the way that air, rail, and toll motorways infrastructure have evolved in Spain since the beginning of the century, when all these types of transport have been subjected to a far-reaching economic crisis. Investments made in infrastructure during this time will also be analyzed in relative terms and compared to other countries in the European Union, as will the various policies applied to each of these modes of transport. The methodology applied in this paper is of the bottom-up type, in the sense that a thorough univariate–uniequational analysis is performed before proceeding to more complex, multivariate models. We found that the policy to drop fare prices for the HSR (AVE) has had an almost 14% positive effect on the number of passengers per kilometer for HS and long-distance trains, but it has also had a negative effect of as much as 16.7% on the number of domestic air passengers. The increase in airport taxes has not affected any of the endogenous variables, or major public investments in air terminals and new HSR lines, except for the Madrid–Barcelona AVE and Barcelona's T1. Domestic air transport has been seen to be more sensitive to the economic cycle than the other modes of transport. This paper contains a set of results that justify the need to use full and accurate “economic modeling” in the planning and management of what is generally very costly transport infrastructure.     

Tweeting identity? Ukrainian,Russian, and #Euromaidan

Why and when do group identities become salient? Existing scholarship has suggested that insecurity and competition over political and economic resources as well as increased perceptions of threat from the out-group tend to increase the salience of ethnic identities. Most of the work on ethnicity, however, is either experimental and deals with how people respond once identity has already been primed, is based on self-reported measures of identity, or driven by election results. In contrast, here we examine events in Ukraine from late 2013 (the beginning of the Euromaidan protests) through the end of 2014 to see if particular moments of heightened political tension led to increased identification as either “Russian” or “Ukrainian” among Ukrainian citizens. In tackling this question, we use a novel methodological approach by testing the hypothesis that those who prefer to use Ukrainian to communicate on Twitter will use Ukrainian (at the expense of Russian) following moments of heightened political awareness and those who prefer to use Russian will do the opposite. Interestingly, our primary finding in is a negative result: we do not find evidence that key political events in the Ukrainian crisis led to a reversion to the language of choice at the aggregate level, which is interesting given how much ink has been spilt on the question of the extent to which Euromaidan reflected an underlying Ukrainian vs. Russian conflict. However, we unexpectedly find that both those who prefer Russian and those who prefer Ukrainian begin using Russian with a greater frequency following the annexation of Crimea, thus contributing a whole new set of puzzles – and a method for exploring these puzzles – that can serve as a basis for future research.     

Collusive dominant-strategy truthfulness

We show that collusion and wrong beliefs may cause a dramatic efficiency loss in the Vickrey mechanism for auctioning a single good in limited supply. We thus put forward a new mechanism guaranteeing efficiency in a very adversarial collusion model, where the players can partition themselves into arbitrarily many coalitions, exchange money with each other, and perfectly coordinate their actions. Our mechanism bypasses classic impossibility results (such as those of Green and Laffont, and of Schummer) by providing the players with a richer set of strategies, making it dominant for every coalition C to instruct each of its members to report truthfully not only his own valuation, but also his belonging to C. Our mechanism is coalitionally rational, which implies being individually rational for independent players.     

Self-enforcing collusion in large dynamic markets

The “folk theorem” in game theory implies that any outcome that is better for all players than some single period Nash outcome can be achieved through noncooperative equilibrium in repeated games with discounting. Whether the folk theorem holds for a repeated Cournot oligopoly as the number of firms, N, increases without bound, is investigated. It is shown that the folk theorem holds in the limit iff demand increases at the same rate as the number of firms and the Cournot price sequence is bounded strictly above by the supremum of marginal cost for large N.     

Heterogeneous network games: Conflicting preferences

In many economic situations, a player pursues coordination or anti-coordination with her neighbors on a network, but she also has intrinsic preferences among the available options. We here introduce a model which allows to analyze this issue by means of a simple framework in which players endowed with an idiosyncratic identity interact on a social network through strategic complements or substitutes. We classify the possible types of Nash equilibria under complete information, finding two thresholds for switching action that relate to the two-player setup of the games. This structure of equilibria is considerably reduced when turning to incomplete information, in a setup in which players only know the distribution of the number of neighbors of the network. For high degrees of heterogeneity in the population the equilibria is such that every player can choose her preferred action, whereas if one of the identities is in the minority frustration ensues.