Poisson voting games under proportional rule

We analyze strategic voting under proportional rule and two parties, embedding the basic spatial model into the Poisson framework of population uncertainty. We prove that there exists a unique Nash equilibrium. We show that it is characterized by a cutpoint in the policy space that is always located between the average of the two parties’ positions and the median of the distribution of voters’ types. We also show that, as the expected number of voters goes to infinity, the equilibrium converges to that of the case with deterministic population size.

Ethical marketing strategies: the unique Nash equilibrium

Purpose Can industrial marketers afford to choose unethical strategies? To answer this question, this study aims to use game theory to analyze whether an industrial marketer choosing and implementing an unethical strategy is successful in maximizing her market share across her strategies. Design/methodology/approach The competition between two industrial marketers is modeled as a strategic game for the market share of a product that is identical in all attributes except the production process. Each industrial marketer’s objective is to choose to implement either the ethical or the unethical production process to maximize her market share. Findings The study finds that both industrial marketers choosing to implement ethical strategies is the unique Nash equilibrium of the game. That is, an industrial marketer choosing to implement an unethical strategy in the production process will be unsuccessful in maximizing her market share when both the industrial marketers are rational. Research limitations/implications The study contributes to the literature on industrial marketing ethics, particularly that on product ethics, by showing that industrial marketers gain market share if they choose ethical strategies. Practical implications The study has implications for industrial marketing executives, as organizational consumers are increasingly aware of the strategies of industrial marketers. Failure to implement ethical strategies will cause industrial marketers to forgo their best possible market shares. Originality/value This study’s novelty lies in using a game theoretic approach to demonstrate the positive implications of ethical strategies for industrial marketers.

Efficiency and Equilibrium in Network Games: An Experiment

The tension between efficiency and equilibrium is a central feature of economic systems. We examine this trade-off in a network game with a unique Nash equilibrium in which agents can achieve a higher payoff by following a “collaborative norm”. Subjects establish and maintain a collaborative norm in the circle, but the norm weakens with the introduction of one hub connected to everyone in the wheel. In complex and asymmetric networks of 15 and 21 nodes, the norm disappears and subjects’ play converges to Nash. We provide evidence that subjects base their decisions on their degree, rather than the overall network structure.

Every normal-form game has a Pareto-optimal nonmyopic equilibrium

It is well known that Nash equilibria may not be Pareto-optimal; worse, a unique Nash equilibrium may be Pareto-dominated, as in Prisoners’ Dilemma. By contrast, we prove a previously conjectured result: every finite normal-form game of complete information and common knowledge has at least one Pareto-optimal nonmyopic equilibrium (NME) in pure strategies, which we define and illustrate. The outcome it gives, which depends on where play starts, may or may not coincide with that given by a Nash equilibrium. We use some simple examples to illustrate properties of NMEs—for instance, that NME outcomes are usually, though not always, maximin—and seem likely to foster cooperation in many games. Other approaches for analyzing farsighted strategic behavior in games are compared with the NME analysis.

Consortium Blockchain based Reputation Incentive Mechanism for Recommendation System

Recommendation systems have been widely used in many e-commerce services, but it is difficult to gather enough participants to supply their recommendations. Moreover, participants in the system may make malicious recommendations, which will affect the accuracy of recommendation results. In order to provide better recommendation service for users, incentive mechanisms are needed to attract more participants in recommendation and curb their malicious behaviors. In this paper, we propose a consortium blockchain based reputation incentive mechanism for recommendation systems(CRIM). Firstly, the monetary rewards are used to attract participants and motivate them to take part in the recommendation. Secondly, we design the incentive mechanism with reputation which is attached to the rewards. Honest participants will gain more rewards while malicious participants will be penalized. Meanwhile, we adopt the Stackelberg game to maximize the utility of participants, and prove that the mechanism can reach a unique Nash equilibrium. Thirdly, the decentralization and immutability of blockchain can guarantee the credibility and security of the stored data, thus ensuring the openness and transparency of the recommendation. Finally, we implement the system for education resources recommendation and conduct experiments, and the results demonstrate that our incentive mechanism is effective and has significant performance when compared with other incentive mechanisms.

An FBSDE approach to market impact games with stochastic parameters

<p style='text-indent:20px;'>In this study, we have analyzed a market impact game between <i>n</i> risk-averse agents who compete for liquidity in a market impact model with a permanent price impact and additional slippage. Most market parameters, including volatility and drift, are allowed to vary stochastically. Our first main result characterizes the Nash equilibrium in terms of a fully coupled system of forward-backward stochastic differential equations (FBSDEs). Our second main result provides conditions under which this system of FBSDEs has a unique solution, resulting in a unique Nash equilibrium. </p>

Investment Choice with Managerial Incentive Schemes

In this paper, we show that firms might get an additional strategic benefit from using marginal-cost-reducing investments in conjunction with strategic delegation. While both these instruments allow firms to “aggressively” participate in product market competition, we show that they act as substitutes or complements depending on whether they are chosen simultaneously or sequentially. Given that the use of such instruments is inseparably linked with a Prisoner’s Dilemma kind of situation, our analysis shows a way to mitigate at least to some extent such effects, through their simultaneous use. We find that the unique Nash equilibrium of the game with commitment comprises both players choosing the instruments simultaneously. In case the instruments are chosen without commitment, an asymmetric equilibrium is shown to exist in addition to the simultaneous protocol, yielding unequal payoffs.

Economic Analysis of Accident Law: A New Liability Rule that Induces Socially Optimal Behaviour in Case of Limited Information

In accident law, we seek a liability rule that will induce both the parties to adopt socially optimal levels of precaution. Economic analysis, however, shows that none of the commonly used liability rules induce both parties to adopt optimal levels, if courts have access only to ‘Limited Information’ on. In such a case, it has also been established (K. (2006). Efficiency of liability rules: a reconsideration. J. Int. Trade Econ. Dev. 15: 359–373) that no liability rule based on cost justified untaken precaution as a standard of care can be efficient. In this paper, we describe a two-step liability rule: the rule of negligence with the defence of relative negligence. We prove that this rule has a unique Nash equilibrium at socially optimal levels of care for the non-cooperative game, and therefore induces both parties to adopt socially optimal behaviour even in case of limited information.