Incentive monotonicity and equilibrium selection in 2×2 matrix games

For the class of 2×2 matrix games with two strict Nash equilibria the paper introduces an equilibrium refinement called incentive monotonicity. It selects the risk-dominant equilibrium if interests are conflicting, while it remains silent in games with common interests. These results suggest that the equilibrium-selection problem might be more difficult in games with common interests, which is certainly the case if risk dominance and payoff dominance go in opposite directions.     

Weak monotonicity and Bayes–Nash incentive compatibility

An allocation rule is called Bayes–Nash incentive compatible, if there exists a payment rule, such that truthful reports of agents' types form a Bayes–Nash equilibrium in the direct revelation mechanism consisting of the allocation rule and the payment rule. This paper provides a characterization of Bayes–Nash incentive compatible allocation rules in social choice settings where agents have multi-dimensional types, quasi-linear utility functions and interdependent valuations. The characterization is derived by constructing complete directed graphs on agents' type spaces with cost of manipulation as lengths of edges. Weak monotonicity of the allocation rule corresponds to the condition that all 2-cycles in these graphs have non-negative length. For the case that type spaces are convex and the valuation for each outcome is a linear function in the agent's type, we show that weak monotonicity of the allocation rule together with an integrability condition is a necessary and sufficient condition for Bayes–Nash incentive compatibility.     

Structure of neutral and monotonic binary social decision rules with quasi-transitive individual preferences

The paper investigates the structure of neutral and monotonic binary social decision rules with unrestricted domain under the assumption that individual weak preference relations are reflexive, connected, and quasi-transitive. Among other results, neutral and monotonic binary social decision rules on this domain are characterized for alternative social rationality assumptions.