Inductive Game Theory: Discrimination and Prejudices

This paper proposes a new theory, which we call inductive game theory . In this theory, the individual player does not have a priori knowledge of the structure of the game that he plays repeatedly. Instead, he accumulates experiences induced by occasional random trials in the repeated play. A stationary state is required to be stable against intentional deviations based on the player's experiences, and then it turns out to be a Nash equilibrium. The main part of the paper is the consideration of possible individual views of the society based on individual experiences. This view is defined to be a model of the society which the player builds from his experiences. Coherency with these experiences and a condition called rationalization are required for a model. As concrete objects of the theory, this paper analyzes the phenomena of discrimination and prejudice. The development of the new theory is undertaken by contrasting its observational and behavioral aspects with mental and judgmental aspects. The relationship between discrimination and prejudice will emerge in this dichotomous consideration.     

A theory of cooperation in games with an application to market socialism

Abstract

Economic theory has focused almost exclusively on how humans compete with each other in their economic activity, culminating in general equilibrium (Walras–Arrow–Debreu) and game theory (Cournot–Nash). Cooperation in economic activity is, however, important, and is virtually ignored. Because our models influence our view of the world, this theoretical lacuna biases economists’ interpretation of economic behavior. Here, I propose models that provide micro-foundations for how cooperation is decentralized by economic agents. It is incorrect, in particular, to view competition as decentralized and cooperation as organized only by central diktat. My approach is not to alter preferences, which is the strategy behavioral economists have adopted to model cooperation, but rather to alter the way that agents optimize. Whereas Nash optimizers view other players in the game as part of the environment (parameters), Kantian optimizers view them as part of action. When formalized, this approach resolves the two major failures of Nash optimization from a welfare viewpoint – the Pareto inefficiency of equilibria in common-pool resource problems (the tragedy of the commons) and the inefficiency of equilibria in public-good games (the free rider problem). An application to market socialism shows that the problems of efficiency and distribution can be completely separated: the dead-weight loss of taxation disappears.     

Competition vs. collaboration in the generation and adoption of a sequence of new technologies: a game theory approach

The study provides a game theoretic exploration of firms’ decisions on whether to compete or collaborate in the generation and adoption of a sequence of new technologies. Different from models proposed by previous studies, which concentrates on process innovation and a two-strategy set (innovation or do nothing), the present game theory model emphasises product innovation and a three-strategy set (innovation, collaboration, or do nothing). The study makes three contributions. The proposed game theory model extends current understanding of the impacts of collaboration possibilities and collaboration cost in a dynamic game theory. Further, the model clarifies the impact of transaction costs on the outcome. Finally, the study finds that the relationship between collaboration costs is not univariate, but depends on the market type and various market characteristics, such as technology gap, technology level, the product substitution index, transaction costs, and the discount rate of price sensitiveness.     

Subgame Monotonicity in Extensive Form Evolutionary Games

A theory of subgame monotonicity is developed for finite extensive form games to model evolutionary processes that respect the subgame structure of the game. It is shown how these evolutionary processes can be decomposed into their evolution on smaller games and also recombined to simplify the analysis of the original game. When applied to the replicator dynamic, a generalization of the Wright manifold from population genetics is a natural consequence of monotonicity. Subgame monotonicity and the Wright manifold are also shown to arise naturally in imitation models based on the extensive form. Journal of Economic Literature Classification Numbers: C70, C72.     

格莱明银行模式:基于关联博弈的分析

从关联博弈角度对格莱明银行模式进行了分析,认为格莱明银行小组贷款模式实现了贷款博弈与社会资本博弈的紧密结合,正是这种紧密关联博弈克服了成员贷款中的 "搭便车"行为.由于重复博弈的存在,社会资本成为一种可置信的威胁,保证了贷款协议的执行,成功克服了合约中产生的代理问题.格莱明银行模式对我国小额信贷激励机制的建立具有重要的参考价值.     

阿马蒂亚·森发展理论探析

阿马蒂亚.森凭借自己在经济伦理方面的突出贡献,打开了或至少是恢复了一个与现代主流经济学世界迥异的、经济学研究的"另一个世界"。站在这另一个世界中,森向我们昭示了一种相异于主流增长发展、堪称"异端"的另类发展理论。他的这一另类发展理论具有三方面的特点,一是以伦理原则指导发展,二是以理性争取发展,三是以自由看待发展。就当前而言,森的发展理念无疑切中了我们现代社会的发展困境问题。     

Knowledge Games

The subject of epistemic logic is firmly entrenched in game theory, including the analysis of common knowledge and of public announcements, such as in 'hat problems'. How to analyse communications to sub groups of the public, and the effects of such common knowledge of a subgroup on the information state of a larger group, has only recently come into fruition. Knowledge games are introduced to provide a comfortably concrete vehicle for the study of such interactions. This paper introduces the concepts of knowledge game, deal of cards, knowledge game state, game action, and action execution. A deal of cards is a function from cards to players. A knowledge game state is represented by a pointed multiagent S5 model on the set of card deals where all players hold the same number of cards as in the actual deal. A game action combines a question with an answer, and is represented by a pointed multiagent S5 frame on the set of possible answers. The execution of a game action in a knowledge game state corresponds to the computation of a pointed multiagent S5 model that is a restriction of the direct product of the corresponding action frame and game model.     

Value,sign, and social structure: the ‘game’ metaphor and modern social science

This exploratory paper, part of continued work on the history of game theory, seeks to illustrate certain links between von Neumann's theory of games and contemporaneous ideas in other fields. In particular, we claim that the emergence of the analytical metaphor of the ‘game’ in economics can be viewed as part of a general reconceptualization of theory in a range of disciplines. That methodological reconstitution may be described as the emergence of a Structuralist view, an approach to theorizing which treated its object – be that a text, a kinship arrangement, or an economy – as a self-contained system, with its own internal logic, subject to its own ‘laws’. In particular, individual texts, or observed social and economic arrangements, are now viewed as variations on an underlying logical theme, on a structural invariant. The latter is to be uncovered, in the case of linguistics, through the analysis of phonemes; in kinship analysis, through the rules governing the exchange of women because of the incest taboo; in von Neumann and Morgensterns game theory, through the possibilities for equilibrium coalition formation, based on the stable set. There thus emerged a tendency, across the intellectual spectrum, towards seeing things in combinatorialterms. Theoretical coherence was to be found in examining how objects ‘held together’ rather than analysing where they ‘came from’: nineteenth-century concerns with history, evolution and individual psychology give way to a distinctly modern emphasis on synchronic, formal structure, on analogical reasoning. Atomism gave way to holism, and formal elegance superceded immediate empirical content. Recourse to the metaphor of the ‘game’ was constitutive of this shift, which we examine by referring to Saussures General Course in Linguistics, to Formalism in mathematics and literary analysis, to Lévi-Strauss's analysis of kinship and myth, and to von Neumann and Morgenstern's Theory of Games and Economic Behaviour.     

PowerPlay: Exploring decision making behaviors in energy efficiency markets

Computer models are widely used to analyze decisions about energy efficiency improvements in the residential and commercial sectors. Few models exist that can actually be run interactively by decision makers to play out alternative future scenarios. None are available that interactively capture the dynamics, subtleties and complexities of interdependent decisions by utilities, households and firms in an ever-changing technological and economic environment.This paper presents the features and experiences of PowerPlay, a computer-facilitated game which fills that gap and does more: it is a game to be played by at least a dozen player groups who interact with each other, make deals (or break them), plan for the future and revise decisions. The computer model functions like a game board to trace actions and offer choices. The observed behaviors can be analyzed to advance understanding of investment strategies and consumer choices; to generate experimentally-based data on energy efficiency changes; and to provide the basis for analyses that can substantiate or complement historical, time-series driven specifications of energy models.     

博弈论对正统经济学思维方式的冲击

自20世纪40年代博弈论被引入经济学之后,现代经济学在许多领域发生了很大的变化。与此同时,作为工具的博弈论与作为思想的博弈论却出现了一种分离的倾向。在作为工具的博弈论满足经济学家对形式主义模型沉溺的同时,作为思想的博弈论却对正统经济学形成了根基性的挑战。博弈论不仅是一种数学工具,更是一种方法论。它引导着人们彻底重新认识经济世界和人们的经济行为,在这一过程中,正统经济学的思维方式——确定性的经济社会观、理性经济人假设、个体主义原则受到了愈来愈强的冲击。     

Reputation building in a monetary policy game

This paper examines the notion of reputation building on the part of the central bank as a means of eliminating socially suboptimal inflation rates that arise in monetary policy games. The framework developed here explicitly models the behavior of wage setters, and it is shown that in the Nash equilibrium these private agents do not attain their desired outcome. Hence, wage setters have an incentive for engaging in a reputation-building game with the central bank. In this game, wage setters are allowed to select “optimally” a reputation based wage strategy, thereby making the strategy choice endogenous. This framework thus lays the groundwork for models in which the private sector behaves as a strategic player. It is shown that there exists a wage contract resembling an indexing arrangement which eliminates the suboptimal inflation rate. Finally, a discussion on the ways of restricting the number of permissible solutions to this game is presented.     

大国货币崛起的中国道路：人民币孕育成长百年历程*

经历四十余年改革开放，中国经济迅速崛起，作为主权货币的人民币逐步迈向世界货币舞台。基于此，人民币如何走上与欧美主要货币比肩的大国货币道路便引起人们的广泛关注。本文试图就此谈些看法。本文认为，若要客观准确地分析和评判人民币迈向大国货币之路，必须着眼于历史逻辑与理论逻辑的统一视角。仅从理论逻辑看，英镑美元道路似乎是人民币迈向大国货币的必然选择，但若着眼于历史逻辑，此种选择的合理性则会大打折扣。历史地看，中国货币制度长期由超大规模经济与低值货币本位加以塑造而呈现出十分独特的格局，由此决定其具有更多服务于国内经济民生的特质，这与一些欧美国家货币动辄充当对外扩张与建立世界霸权的工具形成鲜明对照。人民币制度无疑受到中国货币传统的影响，特别是经历近代以降百余年来的民族危亡与自强图存，作为该制度的肇建者，中国共产党人深知币制独立与币值稳定之重要，因此自始至终以服务国内经济民生为要而缓图国际使用，结果出现经济规模与主权货币国际化的不对称格局。最终，问题就归结为如何客观认识这种不对称格局，也就是说，对于人民币成长为大国货币而言，这种格局是“悖论”还是“特色”？本文的结论是：人民币成为大国货币是中国经济崛起的结果而非前提，因此须在基本条件上合理安排迈向大国货币的次序，特别是要审慎把握国际使用的节奏，走出大国货币成长的中国道路。     

A Classroom Tariff-Setting Game

The author outlines a classroom tariff-setting game that allows students to explore the consequences of import tariffs imposed by large countries (countries able to influence world prices). Groups of students represent countries, which are organized into trading pairs. Each group's objective is to maximize welfare by choosing an appropriate ad valorem tariff that may be changed intermittently throughout the game. The game is built on a computable general-equilibrium model, which allows each nation's utility and terms of trade under alternative tariff regimes to be expressed quantitatively. The exercise encourages students to consider terms-of-trade improvements and efficiency losses resulting from large-country tariffs and provides a framework to discuss the Nash equilibrium of a tariff war. The game is a useful supplement to traditional teaching methods.     

A bargaining model in general equilibrium

The goal of the paper is to present a simple model of rational endogenous household formation in a general equilibrium framework in which Pareto optimality at the economy level is not necessarily obtained. The simplest example of household formation is the case in which pairs of individuals engage themselves in a bargaining process on the division of some wealth: if an agreement on the distribution is (not) reached, we can say that the household is (not) formed. The vast majority of existing bargaining models predicts agreements on an efficient outcome. A seminal paper by Crawford (Econometrica 50:607–637, 1982) describes a very simple game with incomplete information in which, even with rational agents, disagreement causes welfare losses. We embed that model in a general equilibrium framework and present some results on equilibria both in the bargaining game and the associated exchange economy. Crawford’s results support Schelling’s intuition on the reasons of disagreement: it may arise if players’ commitments are reversible. Crawford shows that high probabilities of reversibility tend to favor the bargaining impasse, in fact with low probability. We prove that even if those probabilities are arbitrarily close to zero, disagreement is an equilibrium outcome, with high probability. That conclusion seems to be an even stronger support to Schelling’s original viewpoint. In the exchange economy model with that noncooperative bargaining game as a first stage, we present significant examples of economies for which equilibria exist. Because of disagreement, Pareto suboptimal exchange economy equilibria exist for all elements in the utility function and endowment spaces and they may coexist with Pareto optimal equilibria even at the same competitive prices.     

Macro-econometric modelling for the Nigerian economy: A growth–poverty gap analysis

This study develops comprehensive full-sector macro-econometric models for the Nigerian economy with the aim of explaining and providing a long-term solution for the persistent growth–poverty divergence experienced by the country. The models are applied to test the hypothesis of existing structural supply-side constraints versus demand-side constraints impeding the economic growth and development of the country. A review of the historical performance of the Nigerian economy reveals significant socio–economic constraints as the predominant impediments to high and sticky levels of poverty in the economy. Thus, a model which is suitable for policy analyses of the Nigerian economy needs to capture the long-run supply-side characteristics of the economy. A price block is incorporated to specify the price adjustment between the production or supply-side sector and real aggregate demand sector. The institutional characteristics with associated policy behaviour are incorporated through a public and monetary sector, whereas the interaction with the rest of the world is represented by a foreign sector, with specific attention being given to the oil sector. The models are estimated with time-series data from 1970 to 2006 using the Engle–Granger two-step co-integration technique, capturing both the long-run and short-run dynamic properties of the economy. The full-sector models are subjected to a series of policy scenarios to evaluate various options for government to improve the productive capacity of the economy, thereby achieving sustained accelerated growth and a reduction in poverty in the Nigerian economy.     

CORRUPTION AND THE ANTI-CORRUPTION MOVEMENT: THE MODELLING AND ANALYSIS OF THE SITUATION IN CHINA*

In this paper the author offers an explanation for the increasing extent of China's corruption problem during the past several years. A mathematical model is constructed, in which the conflicts among three groups of the Chinese population in the anti-corruption movement are modelled as a two person game. The existence of Nash equilibrium is discussed. It is pointed out that the corruption level may increase as the GNP grows, as long as the majority of the people continue to be strategically passive. While the focus of this paper is on China's present situation, the author believes that this method of modelling and of analysis is also applicable to some other autocratic countries in the world.     

Unity versus Collaboration: Construction of China's Belt and Road Free Trade Agreement 2.0 Network

In the context of the United States prioritizing bilateral as well as trilateral trade agreements and China's regional economic integration strategy based on the Belt and Road (B&R) Initiative, the B&R free trade agreement (FTA) and the US–European–Japanese FTA (UEJFTA) have become the two regional economic integration processes with the greatest potential impact on the world economic landscape. The present paper examines the game situation as well as the economic effects of China's B&R‐FTA 2.0 network against the United States' UEJFTA to study the optimization of China's B&R FTA system. By constructing a four‐country extended game model under a two‐part expansion, we find that an increase in members will promote the welfare of each country when there is a single regional trade agreement; the potential member countries tend to choose larger organizations for higher economic benefits when there are several regional trade agreements. Our quantitative simulation shows that promoting the construction of the FTA 2.0 network based on the B&R can significantly alleviate the impact of FTA entered into by the United States with its major trading partners.     

A theory of reciprocity

People are reciprocal if they reward kind actions and punish unkind ones. In this paper we present a formal theory of reciprocity. It takes into account that people evaluate the kindness of an action not only by its consequences but also by its underlying intention. The theory is in line with the relevant stylized facts of a wide range of experimental games, such as the ultimatum game, the gift-exchange game, a reduced best-shot game, the dictator game, the prisoner's dilemma, and public goods games. Furthermore, it predicts that identical consequences trigger different reciprocal responses in different environments. Finally, the theory explains why outcomes tend to be fair in bilateral interactions whereas extremely unfair distributions may arise in competitive markets.     

Dissertation Abstract: Decision-Theoretic Models of Market Equilibration

There has been a surprising dearth of decision-theoretic approaches to market equilibration within the extended Arrow-Debreu-McKenzie framework. While game theory is replete with learning and evolutionary models in which Nash equilibria are not necessarily the only stable states of a game, general equilibrium theorists have generally been content to accept the attainment of competitive equilibrium as a matter of faith. The first two chapters of this dissertation advance the study of behaviorally plausible models of market equilibration. First, we develop the epsilon-intelligent competitive equilibrium algorithm. According to this model, the actions of minimally sophisticated agents based on local information will lead an exchange economy to approximate competitive equilibrium in a larger set of economics than Walras’ tatonnement. The algorithm also supports a behavioral interpretation of Negishi’s existence proof of competitive equilibrium. The second chapter is an empirical analysis of laboratory markets designed to test the extent to which human behavior is consistent with the algorithm’s behavioral restrictions, and suggest alternative hypotheses. The chief finding is that while subjects sufficiently sophisticated to consistently secure competitive utility for themselves exist, the majority are satisficers who follow small modifications of a simple utility-improvement rule.While general equilibrium theory has lacked a behaviorally plausible foundation of price equilibration, behavioral economic models typically ignore general equilibrium implications. In the third chapter of this dissertation, I present the surprising result that loss aversion and diminishing sensitivity for gains imply a greater redistribution of endowments than when otherwise identical preferences are reference-independent. The result is surprising because loss aversion was developed in part to account for the status quo bias, whereby people tend to value a good more when it is in their possession than when it is not. One might reasonably suspect trade to be inhibited by this bias. The counter-intuitive result is driven by the fact that, given the axiomatization of loss aversion and diminishing sensitivity for gains, the acquisition of some quantity of a good increases one’s taste for that good, thus perpetuating a taste for more trade.