Outside option values for network games

2016 ◽  
Vol 84 ◽  
pp. 76-86 ◽  
Author(s):  
Julia Belau
Keyword(s):  
Network Games ◽  
Outside Option ◽  
Option Values

Pandering to Persuade

2013 ◽  
Vol 103 (1) ◽  
pp. 47-79 ◽  
Author(s):  
Yeon-Koo Che ◽  
Wouter Dessein ◽  
Navin Kartik
Keyword(s):  
Strategic Communication ◽  
Expected Value ◽  
Comparative Statics ◽  
Outside Option ◽  
Optimal Mechanism ◽  
Option Values

An agent advises a principal on selecting one of multiple projects or an outside option. The agent is privately informed about the projects' benefits and shares the principal's preferences except for not internalizing her value from the outside option. We show that for moderate outside option values, strategic communication is characterized by pandering: the agent biases his recommendation toward “conditionally better-looking” projects, even when both parties would be better off with some other project. A project that has lower expected value can be conditionally better-looking. We develop comparative statics and implications of pandering. Pandering is also induced by an optimal mechanism without transfers. (JEL D23, D82)

scholarly journals ALLOCATION RULES WITH OUTSIDE OPTION IN COOPERATION GAMES WITH TIME‐INCONSISTENCY

2010 ◽  
Vol 11 (1) ◽  
pp. 56-96
Author(s):  
Harald D. Stein
Keyword(s):  
Game Theory ◽  
Bounded Rationality ◽  
Time Inconsistency ◽  
Allocation Rule ◽  
Network Games ◽  
Myerson Value ◽  
Allocation Rules ◽  
Outside Option ◽  
Coalition Structures ◽  
Dynamic Setting

In game theory agents have the possibility to make binding agreements. The agents are assumed to determine their strategies based on intended but bounded rationality. The field of strategic games provides the possibility to an agent to understand the optimality of his behaviour. In coalition and network games stability, Pareto‐efficiency and fairness of agreements is investigated. The paper shows the relationship between the different fields of game theory in the case of 3 agents. On that basis it shows the ubiquity of time‐inconsistency in dynamic setting due to bounded rationality, deception and environment changes. The paper explains why allocation rules like the Shapley‐based Aumann‐Drèze‐value and the Myerson‐value for coalition structures must be modified in dynamic setting in order to consider the influence of excluded agents, the outside option. An accordingly modified allocation rule is introduced and investigated. It is shown that the “Aumann‐Drèze‐value” and the “Myerson‐value for coalition structures” remains relevant for the case that the switching of the partner is connected with high costs. It is shown through the example of enterprise cooperation in supply chains that low partner switching costs require the introduced allocation rule that considers the outside option. Santrauka Žaidimu teorijoje agentai turi galimybe sudaryti isipareigojančius susitarimus. Agentai, kaip yra mano‐ma, numato savo strategijas riboto racionalumo salygomis. Strateginiu žaidimu sritis sudaro galimybe agentui suvokti optimalios elgsenos krypti. Straipsnyje tyrinejamas ryšys tarp skirtingu žaidimu teo‐rijos sričiu tuo atveju, kai susitarimuose dalyvauja trys agentai. Atskleidžiamas neišvengiamas agentu elgsenos nesuderinamumas del riboto racionalumo, apgavysčiu bei aplinkos pokyčiu. Straipsnyje aiš‐kinama, kad žaidimu teorijos numatomos agentu susitarimu taisykles turetu būti modifikuotos siekiant ivertinti papildomu susitarimu alternatyvu galimybe.

scholarly journals ALLOCATION RULES WITH OUTSIDE OPTION IN COOPERATION GAMES WITH TIME‐INCONSISTENCY

2010 ◽  
Vol 11 (1) ◽  
pp. 56-96 ◽  
Author(s):  
Harald D. Stein
Keyword(s):  
Game Theory ◽  
Bounded Rationality ◽  
Time Inconsistency ◽  
Allocation Rule ◽  
Network Games ◽  
Myerson Value ◽  
Allocation Rules ◽  
Outside Option ◽  
Coalition Structures ◽  
Dynamic Setting

In game theory agents have the possibility to make binding agreements. The agents are assumed to determine their strategies based on intended but bounded rationality. The field of strategic games provides the possibility to an agent to understand the optimality of his behaviour. In coalition and network games stability, Pareto‐efficiency and fairness of agreements is investigated. The paper shows the relationship between the different fields of game theory in the case of 3 agents. On that basis it shows the ubiquity of time‐inconsistency in dynamic setting due to bounded rationality, deception and environment changes. The paper explains why allocation rules like the Shapley‐based Aumann‐Drèze‐value and the Myerson‐value for coalition structures must be modified in dynamic setting in order to consider the influence of excluded agents, the outside option. An accordingly modified allocation rule is introduced and investigated. It is shown that the “Aumann‐Drèze‐value” and the “Myerson‐value for coalition structures” remains relevant for the case that the switching of the partner is connected with high costs. It is shown through the example of enterprise cooperation in supply chains that low partner switching costs require the introduced allocation rule that considers the outside option. Santrauka Žaidimu teorijoje agentai turi galimybe sudaryti isipareigojančius susitarimus. Agentai, kaip yra mano‐ma, numato savo strategijas riboto racionalumo salygomis. Strateginiu žaidimu sritis sudaro galimybe agentui suvokti optimalios elgsenos krypti. Straipsnyje tyrinejamas ryšys tarp skirtingu žaidimu teo‐rijos sričiu tuo atveju, kai susitarimuose dalyvauja trys agentai. Atskleidžiamas neišvengiamas agentu elgsenos nesuderinamumas del riboto racionalumo, apgavysčiu bei aplinkos pokyčiu. Straipsnyje aiš‐kinama, kad žaidimu teorijos numatomos agentu susitarimu taisykles turetu būti modifikuotos siekiant ivertinti papildomu susitarimu alternatyvu galimybe.

Accounting for Employee Stock Options

2004 ◽  
Vol 18 (2) ◽  
pp. 135-156 ◽  
Author(s):  
Michael Kirschenheiter ◽  
Rohit Mathur ◽  
Jacob K. Thomas
Keyword(s):  
Stock Options ◽  
Financial Statements ◽  
Cash Flows ◽  
Stock Option ◽  
Share Price ◽  
Employee Stock Options ◽  
Deferred Taxes ◽  
Recommended Treatment ◽  
Option Values ◽  
The Common

Accounting for employee stock options is affected by whether outstanding options are viewed as equity or liabilities. The common perception is that the FASB's recommended treatment (per SFAS No. 123), which is based on the options-as-equity view, results in representative financial statements. We argue that this treatment distorts performance measures for three reasons. First, the deferred taxes associated with nonqualified options should also be included as equity, but are not. Second, since unexpected share price changes affect optionholders and equityholders differently, combining their interests provides an average earnings effect that is not representative for either group. We show that efforts to isolate the interests of common stockholders via diluted earning per share calculations (per SFAS No. 128) are inherently incapable of identifying wealth transfers between stockholders and optionholders. Finally, projections of future cash flow statements prepared under SFAS No. 95 overstate cash flows to current equityholders by the pretax value of projected option grants. We show that these distortions can be avoided simply by accounting for options as liabilities at grant and thereafter recognizing changes in option values (similar to the accounting for stock appreciation rights). Our analysis of stock option accounting leads to two, more general implications: (1) all securities other than common shares should be treated as liabilities, thereby simplifying the equity versus liability distinction, and (2) these liabilities should be recorded at fair values, thereby obviating the need to consider earnings dilution.

scholarly journals Asymmetric Opportunities After an Unsuccessful Sports Career

2021 ◽  
pp. 152700252199587
Author(s):  
Martin Grossmann
Keyword(s):  
Outside Option ◽  
Career Opportunities

Contestants enter a risky contest when pursuing a sports career or choose a secure outside option. If contestants enter this contest but their sports career fails, they may have asymmetric career opportunities outside of sport. Greater opportunities reduce the risk of entering this contest. However, contestants’ incentives to exert effort decrease. Two types of equilibria exist if the initial pool of contestants is large. Either only types with high opportunities or only types with low opportunities enter the sports contest. If the initial pool of contestants is low, both types of contestants participate in the contest.

scholarly journals Player-AI Interaction: What Neural Network Games Reveal About AI as Play

2021 ◽  
Author(s):  
Jichen Zhu ◽  
Jennifer Villareale ◽  
Nithesh Javvaji ◽  
Sebastian Risi ◽  
Mathias Löwe ◽  
...  
Keyword(s):  
Neural Network ◽  
Network Games

scholarly journals Player Attachment to Mobile Social Network Games: An Information Processing View

IEEE Access ◽  
2021 ◽  
Vol 9 ◽  
pp. 13031-13038
Author(s):  
Hsien-Cheng Lin And ◽  
Kai-En Hou
Keyword(s):  
Information Processing ◽  
Social Network ◽  
Mobile Social Network ◽  
Network Games

Canadian Ice Wine Production: A Case for the Use of Weather Derivatives

2007 ◽  
Vol 2 (2) ◽  
pp. 145-167 ◽  
Author(s):  
Don Cyr ◽  
Martin Kusy
Keyword(s):  
Jel Classification ◽  
Seasonal Temperature ◽  
Weather Derivatives ◽  
Wine Production ◽  
Option Values ◽  
Temperature Variable ◽  
Ice Wine ◽  
The Impact ◽  
Potential Use ◽  
Underlying Variable

AbstractWeather derivatives are a relatively new form of financial security that can provide firms with the ability to hedge against the impact of weather related risks to their activities. Participants in the energy industry have employed standardized weather contracts trading on organized exchanges since 1999 and the interest in non-standardized contracts for specialized weather related risks is growing at an increasing rate. The purpose of this paper is to examine the potential use of weather derivatives to hedge against temperature related risks in Canadian ice wine production. Specifically we examine historical data for the Niagara region of the province of Ontario, Canada, the largest icewine producing region of the world, to determine an appropriate underlying variable for the design of an option contact that could be employed by icewine producers. Employing monte carlo simulation we derive a range of benchmark option values based upon varying assumptions regarding the stochastic process for an underlying temperature variable. The results show that such option contracts can provide valuable hedging opportunities for producers, given the historical seasonal temperature variations in the region. (JEL Classification: G13, G32, Q14, Q51, Q54)

scholarly journals MEASUREMENT OF OPTION VALUES BY STATED CHOICE METHOD AND PROJECT APPRAISAL FOR LRT AND LOCAL RAILWAY

2011 ◽  
Vol 67 (5) ◽  
pp. 67_I_45-67_I_56
Author(s):  
Mitsuaki KAWABATA ◽  
Shoji MATSUMOTO ◽  
Kazushi SANO ◽  
Satoshi TSUCHIYA
Keyword(s):  
Stated Choice ◽  
Project Appraisal ◽  
Option Values ◽  
Choice Method
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