scholarly journals Community Structure and Market Outcomes: A Repeated Games-in-Networks Approach

2012 ◽  
Vol 4 (1) ◽  
pp. 32-69 ◽  
Author(s):  
Itay P Fainmesser
Keyword(s):  
Community Structure ◽  
Asymmetric Information ◽  
Repeated Games ◽  
Discount Factor ◽  
Market Outcomes ◽  
Incomplete Knowledge ◽  
Large Market ◽  
Trade Relationships ◽  
Incentive Constraints ◽  
Rule Out

Consider a large market with asymmetric information, in which sellers have the option to “cheat” their buyers, and buyers decide whether to repurchase from different sellers. We model active trade relationships as links in a buyer-seller network and study repeated games in such networks. Endowing sellers with incomplete knowledge of the network, we derive conditions that determine whether a network is consistent with cooperation between every buyer and seller that are connected. Three network features reduce the minimal discount factor sufficient for cooperation: moderate and balanced competition, sparseness, and segregation. Incentive constraints are binding and rule out efficient networks. (JEL C73, D82, D85, Z13)

scholarly journals Classroom Games: A Market for Lemons

1999 ◽  
Vol 13 (1) ◽  
pp. 205-214 ◽  
Author(s):  
Charles A Holt ◽  
Roger Sherman
Keyword(s):  
Asymmetric Information ◽  
Market Failure ◽  
Quality Standards ◽  
Full Information ◽  
Information Market ◽  
Market Outcomes ◽  
Market Prices ◽  
Total Surplus ◽  
Quality Grade ◽  
Low Levels

The incentives that arise in markets with asymmetric information are illustrated in the classroom exercise presented here. Student sellers choose both a quality ‘grade’ and a price for their products. Initially, both prices and grades for all sellers are posted, and buyers select from these offerings. In this full-information setup, the market prices and grades quickly reach efficient levels that maximize total surplus. Next, although sellers continue to choose grades and prices, only prices (not grades) are posted for buyers to see when they shop. The grades and prices then fall to inefficiently low levels. The observed market outcomes in this exercise can stimulate useful discussion of asymmetric information, market failure, and remedies such as quality standards and warranties.

scholarly journals Exposure to Transit Migration, Public Attitudes and Entrepreneurship

2020 ◽  
Author(s):  
Cevat Giray Aksoy ◽  
Nicolás Ajzenman ◽  
Sergei Guriev
Keyword(s):  
Public Attitudes ◽  
Mass Transit ◽  
Economic Behavior ◽  
Entrepreneurial Activity ◽  
Market Outcomes ◽  
Mass Migration ◽  
Travelling Time ◽  
Transit Migration ◽  
In Transit ◽  
Rule Out

Does exposure to mass migration affect economic behavior, attitudes and beliefs of natives in transit countries? In order to answer this question, we use a unique locality-level panel from the 2010 and 2016 rounds of the Life in Transition Survey and data on the main land routes taken by migrants in 18 European countries during the refugee crisis in 2015. To capture the exogenous variation in natives’ exposure to transit migration, we construct an instrument that is based on the distance of each locality to the optimal routes that minimize travelling time between the main origin and destination cities. We first show that the entrepreneurial activity of natives falls considerably in localities that are more exposed to mass transit migration, compared to those located further away. We then explore the mechanisms and find that our results are likely to be explained by a decrease in the willingness to take risks as well as in the confidence in institutions. We also document an increase in the anti-migrant sentiment while attitudes towards other minorities remained unchanged. We rule out the possibility of out-migration of natives or of trade-related shocks (potentially confounded with the mass-transit migration) affecting our results. Using locality-level luminosity data, we also rule out any effect driven by changes in economic activity. Finally, we find no statistically significant effects on other labor market outcomes, such as unemployment or labor force participation.

AN n-PERSON RUBINSTEIN BARGAINING GAME

2009 ◽  
Vol 11 (01) ◽  
pp. 111-115 ◽  
Author(s):  
PÄR TORSTENSSON
Keyword(s):  
Subgame Perfect Equilibrium ◽  
Bargaining Game ◽  
Discount Factor ◽  
Bargaining Model ◽  
Perfect Equilibrium ◽  
Large Discount ◽  
Alternating Offers ◽  
Rule Out

When Herrero (1985) extends Rubinstein's (1982) alternating-offers bargaining model to the case of three or more players any agreement can be supported as a subgame perfect equilibrium (SPE) outcome, given a sufficiently large discount factor. We show that this is not the case when players demand shares for themselves instead of proposing agreements to each other. Although it is possible to rule out agreements, the majority remains to be SPE outcomes.

Zero-determinant strategies under observation errors in repeated games

2020 ◽  
Author(s):  
Azumi Mamiya ◽  
Genki Ichinose
Keyword(s):  
Repeated Games ◽  
Prisoner's Dilemma ◽  
Real Life ◽  
Prisoner’S Dilemma ◽  
Deep Understanding ◽  
Discount Factor ◽  
Threshold Values ◽  
Two Factors ◽  
Repeated Prisoner’S Dilemma ◽  
Payoff Relationships

Zero-determinant (ZD) strategies are a novel class of strategies in the repeated prisoner’s dilemma (RPD) game discovered by Press and Dyson. This strategy set enforces a linear payoff relationship between a focal player and the opponent regardless of the opponent’s strategy. In the RPD game, games with discounting and observation errors represent an important generalization, because they are better able to capture real life interactions which are often noisy. However, they have not been considered in the original discovery of ZD strategies. In some preceding studies, each of them has been considered independently. Here, we analytically study the strategies that enforce linear payoff relationships in the RPD game considering both a discount factor and observation errors. As a result, we first reveal that the payoffs of two players can be represented by the form of determinants as shown by Press and Dyson even with the two factors. Then, we search for all possible strategies that enforce linear payoff relationships and find that both ZD strategies and unconditional strategies are the only strategy sets to satisfy the condition. We also show that neither Extortion nor Generous strategies, which are subsets of ZD strategies, exist when there are errors. Finally, we numerically derive the threshold values above which the subsets of ZD strategies exist. These results contribute to a deep understanding of ZD strategies in society.

The effect of asymmetric information on product market outcomes

2017 ◽  
Vol 123 (2) ◽  
pp. 357-376 ◽  
Author(s):  
Matthew T. Billett ◽  
Jon A. Garfinkel ◽  
Miaomiao Yu
Keyword(s):  
Asymmetric Information ◽  
Product Market ◽  
Market Outcomes
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