Communication in Repeated Games with Private Monitoring

The paper considers repeated games where each player can be observed by only a subset of the other players, and where players can make public announcements about the behavior of the players they observed. We address the following question: What is the minimal level of observability that is required to obtain efficient outcomes? The main result is that the limit set of sequential equilibrium payoffs, when the discount factor tends to one, contains the set of individual rational payoffs whenever each player is observed by at leasttwoother players.Journal of Economic LiteratureClassification Number: C73.     

Detecting Failures of Backward Induction: Monitoring Information Search in Sequential Bargaining

We did experiments in a three-round bargaining game where the (perfect) equilibrium offer was $1.25 and an equal split was $2.50. The average offer was $2.11. Patterns of information search (measured with a computerized information display) show limited lookahead rather than backward induction. Equilibrium theories which adjust for social utilities (reflecting inequality-aversion or reciprocity) cannot explain the results because they predict subjects will make equilibrium offers to “robot” players, but offers to robots are only a little lower. When trained subjects (who quickly learned to do backward induction) bargained with untrained subjects, offers ended up halfway between equilibrium and $2.11. Journal of Economic Literature Classification Numbers: C7, C9.     

Quantal Response Equilibria for Extensive Form Games

This article investigates the use of standard econometric models for quantal choice to study equilibria of extensive form games. Players make choices based on a quantal-choice model and assume other players do so as well. We define an agent quantal response equilibrium (AQRE), which applies QRE to the agent normal form of an extensive form game and imposes a statistical version of sequential rationality. We also define a parametric specification, called logit-AQRE, in which quantal-choice probabilities are given by logit response functions. AQRE makes predictions that contradict the invariance principle in systematic ways. We show that these predictions match up with some experimental findings by Schotter et al. (1994) about the play of games that differ only with respect to inessential transformations of the extensive form. The logit-AQRE also implies a unique selection from the set of sequential equilibria in generic extensive form games. We examine data from signaling game experiments by Banks et al. (1994) and Brandts and Holt (1993). We find that the logit-AQRE selection applied to these games succeeds in predicting patterns of behavior observed in these experiments, even when our prediction conflicts with more standard equilibrium refinements, such as the intuitive criterion. We also reexamine data from the McKelvey and Palfrey (1992) centipede experiment and find that the AQRE model can account for behavior that had previously been explained in terms of altruistic behavior. This revised version was published online in August 2006 with corrections to the Cover Date.     

Cost Structures and Nash Play in Repeated Cournot Games

This paper reports an experiment designed to assess the effects of a rotation in the marginal cost curve on convergence in a repeated Cournot triopoly. Increasing the cost curve's slope both reduces the serially-undominated set to the Nash prediction, and increases the peakedness of earnings. We observe higher rates of Nash equilibrium play in the design with the steeper marginal cost schedule, but only when participants are also rematched after each decision. Examination of response patterns suggests that the treatment with a steeper marginal cost curve and with a re-matching of participants across periods induces the selection of Nash Consistent responses.     

Repeated Games with Almost-Public Monitoring

In repeated games with imperfect public monitoring, players can use public signals to coordinate their behavior, and thus support cooperative outcomes, but with private monitoring, such coordination may no longer be possible. Even though grim trigger is a perfect public equilibrium (PPE) in games with public monitoring, it often fails to be an equilibrium in arbitrarily close games with private monitoring. If a PPE has players' behavior conditioned only on finite histories, then it induces an equilibrium in all close-by games with private monitoring. This implies a folk theorem for repeated games with almost-public almost-perfect monitoring. Journal of Economic Literature Classification Numbers: C72, C73.     

A probabilistic ghost in the experimental machine

This paper focuses on the opposition between two contemporary research programs in economics: behavioral economics (BE) and experimental market economics (EME). Our claim is that the arguments of this opposition can be clarified through the lens of another opposition in the philosophy of probability and in probability theory, between Bayesianism and frequentism. We show how this probabilistic opposition has indirectly shaped a controversy in psychology that opposes two research programs – Heuristics and Biases and Ecological Rationality – which play respective roles in the foundations of individual rationality in BE and EME. To understand these theoretical interrelationships, we investigate the 1996 controversy between Kahneman, Tversky, and Gigerenzer. Those psychologists held different views on how probabilistic representations influence the context-dependency of rationality. This provides a rationale to suggest that a probabilistic ghost may be haunting the experimental machine in economics, and explains how and why the oppositions between BE and EME are structured around the interplay between the norms of rationality and the context in which rationality is exercised.     

植入"公平博弈"的委托-代理模型——来自行为经济学的一个贡献

本文通过将Rabin(1993)提出的"公平博弈"概念植入现有委托一代理模型,获得一个考虑了代理人表现出"互惠性"非理性行为的新委托一代理模型.由该模型给出来的最优委托一代理合约可以给委托人带来比现有委托一代理最优合约更高的利润水平.研究发现,现有的Holmstrom-Milgrom模型中的最优合约不是帕累托最优的.新模型可以解释企业人性化管理和许多有特色的人性化企业文化的形成.本文是行为经济学与现有激励理论相结合研究的一种初步尝试,是运用行为经济学原理重建信息经济学基本框架的原创性工作.     

直入“公平博弈”的委托—代理模型——来自行为经济学的一个贡献

本文通过将Rabin（1993）提出的“公平博弈”概念植入现有委托一代理模型，获得一个考虑了代理人表现出“互惠性”非理性行为的新委托一代理模型：由该模型给出来的最优委托一代理合约可以给委托人带来比现有委托一代理最优合约更高的利润水平研究发现，现有的Holmstrom-Milgrom模型中的最优合约不是帕累托最优的。新模型可以解释企业人性化管理和许多有特色的人性化企业文化的形成本文是行为经济学与现有激励理论相结合研究的一种初步尝试，是运用行为经济学原理重建信息经济学基本框架的原创性工作。     

The Repeated Prisoner's Dilemma with Imperfect Private Monitoring

In this paper, I study a repeated Prisoner's Dilemma game in which monitoring is private and imperfect. A partial folk theorem is proved for the case of almost perfect monitoring.     

Belief-Based Equilibria in the Repeated Prisoners' Dilemma with Private Monitoring

We analyze repeated prisoners' dilemma games with imperfect private monitoring and construct mixed trigger strategy equilibria. Such strategies have a simple representation, where a player's action only depends upon her belief that her opponent(s) are continuing to cooperate. When monitoring is almost perfect, the symmetric efficient outcome can be approximated in any prisoners' dilemma game, while every individually rational feasible payoff can be approximated in a class of such games. The efficiency result extends when there are more than two players. It requires that monitoring be sufficiently accurate but does not require very low discounting when a public randomization device is available. Journal of Economic Literature Classification Numbers: C73, D82.     

Evolutionary Theory and Economic Policy with Reference to Sustainability

Synopsis The policy recommendations of most economists are driven by a view of economic reality embodied in Walrasian general equilibrium theory. Ironically, the Walrasian system has been all but abandoned by leading economic theorists. It has been demonstrated to be theoretically untenable, its basic assumptions about human decision making have been empirically falsified, and it consistently makes poor predictions of economic behavior. The current revolution in welfare economics offers opportunities on two related fronts for an evolutionary perspective on human behavior to reshape economic theory and policy. The first opportunity is to incorporate empirically-based information about human behavior to the study of human wants and their formation. This includes information about the evolution of the genetic component of decision making as well as the cultural dimensions of behavior. Expanding the role of economic analysis beyond stylized market behavior to focus on well-being (real utility) has far-reaching consequences for microeconomic policy. Secondly, abandoning the Walrasian model also means rethinking the microfoundations approach to the economic analysis of sustainability. This opens the door for economists to engage with the growing body of research on the evolution of whole societies. One link between the evolution of human behavior and the evolution of human societies is the psychological phenomenon of considering sunk costs. Understanding and overcoming the sunk cost fallacy may be the key to creating a sustainable society.     

Combinatorial Games under Auction Play

ARichman gameis a combinatorial game in which, rather than alternating moves, the two players bid for the privilege of making the next move. The theory of such games is a hybrid between the classical theory of games (von Neumann, Morgenstern, …) and the combinatorial theory of games (Berlekamp, Conway, Guy, …). We expand upon our previous work by considering games with infinitely many positions as well as several variants including thePoorman variantin which the high bidder pays a third party (rather than the other player).Journal of Economic LiteratureClassification Number: C7.     

巴西航空工业崛起的战略博弈分析及对我国的启示

本文运用博弈论分析方法,从新贸易理论角度出发,分析了巴西航空工业崛起的历程,得出结论：差异化产品研发战略及巴西政府对于本国航空工业的鼎力扶持是巴航成长为当今四大航空制造商之一的根本原因。     

Measuring Motivations for the Reciprocal Responses Observed in a Simple Dilemma Game

A reciprocal action is an action meant to have a similar influence on another's payoff as another's action has on one's own. One hypothesis asserts that reciprocal action is triggered by the reciprocator's belief that another's action was good or ill intended. The other hypothesis says that the reciprocator is simply acting to implement fixed preferences over payoff allocations. We report on an experiment that allows us to study both positive (reward) and negative (punishment) reciprocal action in a single framework. Knowing the preferences for payoff allocations is sufficient to account for nearly all the reciprocal action we observe in our experiment.     

Games superheroes play: Teaching game theory with comic book favorites

The valuable insights of game theory sometimes remain out of reach for students who are overwhelmed by the subject's complexity. Comic book applications of game theory, with superheroes as players, can facilitate enthusiasm and classroom interaction to enhance the learning of game theory. Drawing from content in superhero movies and books, the authors construct games to illustrate pure-strategy Nash equilibrium, Bayes-Nash equilibrium, mixed strategies, sub-game perfection, and perfect Bayesian equilibrium. To help instructors build students' skills in finding and interpreting game solutions, they translate comic book scenarios into specific game forms; however, not all scenarios are obvious so they suggest instructors help students develop their own game-theoretic judgments to determine what game forms, payoffs, and solution concepts might be appropriate for understanding a situation.     

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。     

投资决策中个人理性与集体理性博弈分析及对策研究

针对近期多起曝光的企业对外投资、担保大案,本文应用博弈论分析方法,在强调个人理性与集体理性矛盾的基础上研究投资决策中两者的完全信息博弈及无限阶段重复博弈,并建立相应的定量分析模型,通过分析博弈参与人均衡行为,指出投资决策中寻租的存在的必然性及巨大危害,并针对性的提出了适合实际操作的对策建议.     

Holding back from theory: limits and methodological alternatives of randomized field experiments in development economics

ABSTRACT

In this paper, we critically and constructively examine the methodology of evidence-based development economics, which deploys randomized field experiments (RFEs) as its main tool. We describe the context in which this movement started, and illustrate in detail how RFEs are designed and implemented in practice, drawing on a series of experiments by Pascaline Dupas and her colleagues on the use of bednets, saving and governance in Kenya. We show that this line of experiments have evolved to address the limitation of obtaining policy-relevant insights from RFEs alone, characterized as their lack of external validity in the literature. After examining the two prominent responses by leading figures of evidence-based development economics, namely machine learning and structured speculation, we propose an alternative methodological strategy that incorporates two sub-fields, namely experimental economics and behavioral economics, to complement RFEs in investigating the data-generating process underlying the treatment effects of RFEs. This strategy highlights promising methodological developments in RFEs neither captured by the two proposals nor recognized by methodologists, and also guides how to combine different sub-fields of economics.     

The Quest for Economic Stability: Roosevelt to Reagan

We investigate whether positional concerns (Veblen [1899] 1970; Hirsch, 1976) vary along several dimensions and domains, namely goods vs. bads, private vs. public, oneself vs. oneself s children, socially visible vs. nonsocially visible. Using a hypothetical survey in France, we replicate the empirical strategy of Solnick and Hemenway (1998; 2005) and test a larger set of socio-demographic variables that can be related to positional concerns. Despite some differences, our results are mostly consistent with those of Solnick and Hemenway (1998; 2005). We emphasize some policy implications.     

Survivor: Three principles of economics lessons as taught by a reality television show

The reality television show Survivor has been a ratings success on CBS for over 16 years. In the show, 16 strangers are marooned in a remote location, required to compete in physical and mental challenges and periodically vote to eliminate players from the game. The last person remaining wins one million dollars. The author uses this popular television show to demonstrate three important principles of microeconomics: (a) for individual decision-making, concepts like pride and honor may belong in the utility function, alongside more classical components such as consumption of goods and services; (b) considering how others will respond to your action is critical for good economic and strategic thinking; and (c) repeated interaction can help collusive behavior hold.