http://repub.eur.nl/res/concept/jel-C72/ Recent publications classified by JEL Code C72 en http://repub.eur.nl/static-eur/img/logo.png http://repub.eur.nl http://repub.eur.nl/res/pub/31779/ 2012-02-29T00:00:00Z Social networks, be it on the internet or in real life, facilitate information flows. We model this by giving agents incentives to link with others and receive information through those links. In many networks agents will value confirmation of the information they receive from others. Our paper analyzes the impact such a need for confirmation has on the social networks which are formed. We first study the existence of Nash equilibria and then characterize the set of strict Nash networks. Next, we characterize the set of strictly ecient networks and discuss the relationship between strictly efficient networks and strict Nash networks. Billand, P. Bravard, C. Kamphorst, J.J.A. Sarangi, S. http://repub.eur.nl/res/pub/21429/ 2011-06-01T00:00:00Z There is by now a large literature arguing that auctions with a variety of after-market interactions may not yield an efficient allocation of the objects for sale, especially when the bidders impose strong negative externalities upon each other. In this note, we argue that these inefficiencies can be avoided by asking bidders prior to the auction to submit any publicly observable payment they would like to make. These payments, so-called flexible entry fees, do not affect the allocation decision of the auctioneer. We show that auctions with flexible entry fees have a fully revealing equilibrium where bidders signal their type before the auction itself takes place Janssen, M.C.W. Karamychev, V.A. Maasland, E. http://repub.eur.nl/res/pub/26648/ 2011-01-01T00:00:00Z Communal violence requires a prior existence of radicalism. The chapter shows that the degree of extremism of one group can increase or decrease in response to that of the other. Lootable wealth unambiguously raises radicalism. It is not the absolute level of income but the difference between peacetime income and that of conflict periods that determines the magnitude of radicalism. Murshed, S.M. Mahmud, A.S. http://repub.eur.nl/res/pub/21865/ 2010-11-01T00:00:00Z This paper characterizes the set of equilibrium networks in the two-way flow model of network formation with small decay, and this for all increasing benefit functions of the players. We show that as long as the population is large enough, this set contains large- as well as small-diameter networks. For all benefit functions, the periphery-sponsored star is the most stable. When the marginal benefits of information are constant, all non-star networks are equally stable. With increasing marginal benefits of information, small-diameter networks in general tend to be more stable. However, with decreasing marginal benefits of information, large-diameter networks tend to be the most robust along with the periphery-sponsored star Jaegher, K. de Kamphorst, J.J.A. http://repub.eur.nl/res/pub/20754/ 2010-07-01T00:00:00Z The Babylonian bridal auction, described by Herodotus, is regarded as one of the earliest uses of an auction in history. Yet, to our knowledge, the literature lacks a formal equilibrium analysis of this auction. We provide such an analysis for the twoplayer case with complete and incompete information, and in so doing identify what we call the "Herodotus Paradox". Baye, M.R. Kovenock, D. Vries, C.G. de http://repub.eur.nl/res/pub/20175/ 2010-06-01T00:00:00Z A simultaneous pooled auction with multiple bids and preference lists is a way to auction multiple heterogeneous objects to multiple bidders with unit demand. Bidders submit bids for every object, and a preference ordering over which object they would like to get if they have the highest bid on more than one object. This type of auction has been used in the Netherlands and in Ireland to auction available spectrum. We show that this type of auction does not satisfy elementary desirable properties such as the existence of an efficient equilibrium. Janssen, M.C.W. Karamychev, V.A. Maasland, E. http://repub.eur.nl/res/pub/17494/ 2009-11-01T00:00:00Z There is by now a large literature arguing that auctions with a variety of after-market interactions may not yield an efficient allocation of the objects for sale, especially when the bidders impose strong negative externalities upon each other. This paper argues that these inefficiencies can be avoided by asking bidders prior to the auction to submit any public payment they would like to make. These payments, so-called flexible entry fees, do not affect the allocation decision of the auctioneer. We show that auctions with flexible entry fees have a fully revealing equilibrium where bidders signal their type before the auction itself takes place. Janssen, M.C.W. Karamychev, V.A. http://repub.eur.nl/res/pub/16516/ 2009-07-28T00:00:00Z A firm may induce voters or elected politicians to support a policy it favors by suggesting that it is more likely to invest in a district whose voters or representatives support the policy. In equilibrium, no one vote may be decisive, and the policy may gain strong support though the majority of districts suffer from adoption of the program. When votes reveal information about the district, the firm's implicit promise or threat can be credible. Dahm, M. Dur, A.J. Glazer, A. http://repub.eur.nl/res/pub/16514/ 2009-04-01T00:00:00Z This paper presents a unified framework for characterizing symmetric equilibrium in simultaneous move, two-player, rank-order contests with complete information, in which each player's strategy generates direct or indirect affine "spillover" effects that depend on the rank-order of her decision variable. These effects arise in natural interpretations of a number of important economic environments, as well as in classic contests adapted to recent experimental and behavioral models where individuals exhibit inequality aversion or regret. We provide the closed-form solution for the symmetric Nash equilibria of this class of games, and show how it can be used to directly solve for equilibrium behavior in auctions, pricing games, tournaments, R&D races, models of ligitation, and a host of other contests. Baye, M.R. Vries, C.G. de http://repub.eur.nl/res/pub/15029/ 2009-03-02T00:00:00Z This paper discusses how a manufacturer and its retailers interact with each other to optimize their product marketing strategies, platform product configuration and inventory policies in a VMI (Vendor Managed Inventory) supply chain. The manufacturer procures raw materials from multiple suppliers to produce a family of products sold to multiple retailers. Multiple types of products are substitutable each other to end customers. The manufacturer makes its decision on raw materials’ procurement, platform product configuration, product replenishment policies to retailers with VMI, price discount rate, and advertising investment to maximize its profit. Retailers in turn consider the optimal local advertising and retail price to maximize their profits. This problem is modeled as a dual simultaneous non-cooperative game (as a Nash game) model with two sub-games. One is between the retailers serving in competing retail markets and the other is between the manufacturer and the retailers. This paper combines analytical, iterative and GA (genetic algorithm) methods to develop a game solution algorithm to find the Nash equilibrium. A numerical example is conducted to test the proposed model and algorithm, and gain managerial implications. Yu, Y. Huang, G.Q. http://repub.eur.nl/res/pub/32452/ 2009-01-14T00:00:00Z ABSTRACT This paper focuses on two areas of security concern for the European Union: terrorism and international crime. I present a model of game-theoretic interaction between a European state and a domestic dissident group, who, on occasion, may resort to acts of terrorism. Here, identity is crucial to the putative terrorist, providing the microfoundations of dissident group behaviour by solving the collective action problem. I also sketch a macromodel of drugs production in a conflict-ridden developing country, where I argue that demand-side policies of regulation may be better than policies that are aimed at eradicating supply. As far as the policy implications are concerned, first excessive deterrence against potential terrorists may backfire. Secondly, space needs to be created so that Muslim migrants are able to merge their personal identities within their adopted European homelands. Thirdly, the economic discrimination against Muslims in Europe needs to be redressed. Finally, aid to fragile drug producing states should be broad-based and poverty reducing, not just benefiting warlords. Murshed, S.M. http://repub.eur.nl/res/pub/18280/ 2009-01-01T00:00:00Z We study the role of gender beliefs for cooperation in a public goods game experiment. Controlling for risk preferences and for subjects’ unconditional willingness to cooperate, we find that gender beliefs affect behavior in homogenous groups where the group composition was announced. Staveren, I.P. van Sent, E-M. Vyrastekova, J. http://repub.eur.nl/res/pub/31471/ 2008-11-01T00:00:00Z Abstract: In many jurisdictions, potential injurers are under a legal duty to incorporate possible mistakes of the potential victim. I distinguish three types of mistakes. First, victims might make mistakes because it is too costly to avoid them (e.g. little children in traffic). Second, the actual care level of an actor might sometimes be a bit above, and sometimes a bit below his average care level. Third, people might choose a lower care level than is optimal for them, even though they were able to take optimal care. This is the type of mistake I analyze in this paper. I argue on the basis of a game theoretical analysis that the duty to incorporate such mistakes might frustrate the preventive goal of tort law, because it decreases the care incentives provided to the victim, while simultaneously increasing the care incentives for the injurer. I provide examples of the legal duty to incorporate possible mistakes of the victim from different legal systems. I discuss the doctrine of the Last Clear Chance, as well as Donald Wittmans idea of Marginal Cost Liability. In cases where this idea is not feasible, I argue that the defense of comparative negligence might be a good alternative. Visscher, L.T. http://repub.eur.nl/res/pub/13672/ 2008-03-28T00:00:00Z A simultaneous pooled auction with multiple bids and preference lists is a way to auction multiple objects, in which bidders simultaneously express a bid for each object and a preference ordering over which object they would like to get in case they have the highest bid on more than one object. This type of auction has been used in the Netherlands and in Ireland to auction available spectrum. We show that this type of auction does not satisfy elementary desirable properties such as the existence of an efficient equilibrium. Janssen, M.C.W. Karamychev, V.A. Maasland, E. http://repub.eur.nl/res/pub/7809/ 2006-06-10T00:00:00Z In this chapter we give an overview on the theory of noncooperative games. In the first part we consider in detail for zero-sum (and constant-sum) noncooperative games under which necessary and sufficient conditions on the payoff function and different (extended) strategy sets for both players an equilibrium saddlepoint exists. This is done by using the most elementary proofs. One proof uses the separation result for disjoint convex sets, while the other proof uses linear programming duality and some elementary properties of compact sets. Also, for the most famous saddlepoint result given by Sion's minmax theorem an elementary proof using only the definition of connectedness is given. In the final part we consider n-person nonzero-sum noncooperative games and show by a simple application of the KKM lemma that a so-called Nash equilibrium point exists for compact strategy sets and concavity conditions on the payoff functions. Frenk, J.B.G. Kassay, G. http://repub.eur.nl/res/pub/19414/ 2005-06-01T00:00:00Z In this note we review some known minimax theorems with applications in game theory and show that these results form an equivalent chain which includes the strong separation result in finite dimensional spaces between two disjoint closed convex sets of which one is compact. By simplifying the proofs we intend to make the results more accessible to researchers not familiar with minimax or noncooperative game theory. Frenk, J.B.G. Kassay, G. http://repub.eur.nl/res/pub/6558/ 2005-06-01T00:00:00Z In this note we review some known minimax theorems with applications in game theory and show that these results form an equivalent chain which includes the strong separation result in finite dimensional spaces between two disjoint closed convex sets of which one is compact. By simplifying the proofs we intend to make the results more accessible to researchers not familiar with minimax or noncooperative game theory. Frenk, J.B.G. Kassay, G. http://repub.eur.nl/res/pub/6622/ 2004-07-15T00:00:00Z I consider a situation in which heterogenous senders (applicants) compete in order to be selected by one receiver (employer). Productivity is private information to the senders, and the receiver processes imperfect signals (applications) to screen among applicants. The information-processing technology is imperfect: the accuracy of each signal in predicting the unknown productivity decreases with the total number of signals processed. I show that, for a sufficiently large market, information overload occurs as there exist equilibria in which too many people apply and the receiver neglects some applications. For any information-processing technology level, information overload equilibria emerge when the cost of sending applications is low relatively to the existing technology level. The magnitude of information overload is bounded and it is larger if the receiver cannot neglect applications. As a result, an overloaded market in which the receiver has to process all applications is less efficient than an overloaded market where neglecting excessive information is an option. Ficco, S.S. http://repub.eur.nl/res/pub/6625/ 2004-07-01T00:00:00Z I examine a search model a la' Burdett and Judd (1983). Consumers are embedded in a consumers network, they may costly search for price quotations and the information gathered are non-excludable along direct links. This allows me to explore the effect of endogenous consumers externalities on market functioning. I first show that when search costs are low consumers randomize between searching for one price and two price quotations (high intensity search equilibrium). Otherwise, consumers randomize between searching for one price and not searching at all (low intensity search equilibrium). Second, in both equilibria consumers search less frequently in denser networks. Finally, when search costs are low the expected price and the social welfare increase as the consumers network becomes denser. These results are reverse when search costs are high. Galeotti, A. http://repub.eur.nl/res/pub/6624/ 2004-06-01T00:00:00Z A fundamental question in social sciences is how trust emerges. We provide an answer which relies on the formation of social and economic relationships. We argue that behind trust lies the fact that individuals invest in connections taking into account the potential externalities networks produce. Once social ties are in place, these externalities shape the individuals' incentives to behave efficiently in their interactions and thereby efficient social norms are sustained. We also show that the individual's incentives depend on the architecture of the network as well as on the position of the individual within the network. In particular, when an efficient interaction requires players to mutually cooperate, efficient social norms are easily sustained in symmetric networks. By contrast, when an efficient interaction requires players to play asymmetrically (one cooperates and the other free-rides), efficient social norms are best sustained in fully centralized architectures. We interpret these results indicating that a structural analysis is important to understand how individuals' incentives are shaped in many strategic contexts. Galeotti, A. Melendez, M.