scholarly journals A Game-Free Microfoundation of Mutual Optimism

Games ◽  
2019 ◽  
Vol 10 (4) ◽  
pp. 37 ◽  
Author(s):  
Marco Serena
Keyword(s):  
Expected Payoffs ◽  
Mutual Optimism

One of the most widely accepted explanations for why wars occur despite its Pareto-suboptimality is mutual optimism: if both sides expect to gain a lot by fighting, war becomes inevitable. The literature on mutual optimism typically assumes mutually optimistic beliefs and shows that, under such an assumption, war may occur despite its Pareto-suboptimality. In a war–peace model, we show that, if players neglect the correlation between other players’ actions and their types—a well-established concept in economics—then players’ expected payoffs from war increase relative to conventional informational sophistication predictions, hence providing a microfoundation of mutual optimism.

The benefits of international cooperation under climate uncertainty: a dynamic game analysis

2018 ◽  
Vol 23 (4) ◽  
pp. 452-477
Author(s):  
Xiao-Bing Zhang ◽  
Magnus Hennlock
Keyword(s):  
Global Warming ◽  
International Cooperation ◽  
Dynamic Game ◽  
Stochastic Dynamic ◽  
Game Analysis ◽  
Climate Uncertainty ◽  
Expected Payoffs

AbstractThis paper investigates the benefits of international cooperation under uncertainty about global warming through a stochastic dynamic game. We analyze the benefits of cooperation both for the case of symmetric and asymmetric players. It is shown that the players’ combined expected payoffs decrease as climate uncertainty becomes larger, whether or not they cooperate. However, the benefits from cooperation increase with climate uncertainty. In other words, it is more important to cooperate when facing higher uncertainty. At the same time, more transfers will be needed to ensure stable cooperation among asymmetric players.

scholarly journals Evolution of social learning when high expected payoffs are associated with high risk of failure

2011 ◽  
Vol 8 (64) ◽  
pp. 1604-1615 ◽  
Author(s):  
Michal Arbilly ◽  
Uzi Motro ◽  
Marcus W. Feldman ◽  
Arnon Lotem
Keyword(s):  
High Risk ◽  
Social Learning ◽  
Risk Aversion ◽  
Individual Risk ◽  
Individual Experience ◽  
Agent Based ◽  
Risk Of Failure ◽  
Expected Payoffs ◽  
Maladaptive Behaviours ◽  
Optimal Behaviour

In an environment where the availability of resources sought by a forager varies greatly, individual foraging is likely to be associated with a high risk of failure. Foragers that learn where the best sources of food are located are likely to develop risk aversion, causing them to avoid the patches that are in fact the best; the result is sub-optimal behaviour. Yet, foragers living in a group may not only learn by themselves, but also by observing others. Using evolutionary agent-based computer simulations of a social foraging game, we show that in an environment where the most productive resources occur with the lowest probability, socially acquired information is strongly favoured over individual experience. While social learning is usually regarded as beneficial because it filters out maladaptive behaviours, the advantage of social learning in a risky environment stems from the fact that it allows risk aversion to be circumvented and the best food source to be revisited despite repeated failures. Our results demonstrate that the consequences of individual risk aversion may be better understood within a social context and suggest one possible explanation for the strong preference for social information over individual experience often observed in both humans and animals.

scholarly journals THE E-MAIL GAME REVISITED — MODELING ROUGH INDUCTIVE REASONING

2007 ◽  
Vol 09 (02) ◽  
pp. 323-339 ◽  
Author(s):  
UWE DULLECK
Keyword(s):  
Information Structure ◽  
Common Knowledge ◽  
Inductive Reasoning ◽  
Rational Behavior ◽  
To Come ◽  
Boundedly Rational Behavior ◽  
Expected Payoffs ◽  
E Mail

I study the robustness of Rubinstein's (1989) E-Mail Game results by varying the information that players can utilize. The article follows one of Morris' (2002) reactions to the E-Mail game "that one should try to come up with a model of boundedly rational behavior that delivers predictions that are insensitive to whether there is common knowledge or a large number of levels of knowledge". Players in my model are presumed to use 'rough inductive reasoning' because they cannot utilize exact information. The information structure in the E-Mail game is generalized and the conditions are characterized under which Rubinstein's results hold. I find that rough inductive reasoning generates a payoff dominant equilibrium where the expected payoffs change continuously (instead of discretely) in the probability of "faulty" communication.

Citizen Duty and the Ethical Power of Communities: Mixed-Method Evidence from East Asia

2018 ◽  
Vol 50 (3) ◽  
pp. 1047-1065 ◽  
Author(s):  
Aram Hur
Keyword(s):  
South Korea ◽  
East Asia ◽  
Political Theory ◽  
Statistical Modeling ◽  
Mixed Method ◽  
The State ◽  
Nation State ◽  
Ethical Obligation ◽  
Method Evidence ◽  
Expected Payoffs

Why do citizens choose to comply in democracies, even when coercion is limited? Existing answers focus on contractual trust or expected payoffs. I show that a different pathway exists in the ethical pull of the nation. A large literature in political theory argues that special communities, such as the nation, can instill an ethical obligation to the collective welfare, even in the absence of formal rules. I argue that when the identities of one’s nation and the state are seen as closely linked, this national obligation is politicized towards the state and motivates a sense of citizen duty to comply. Through statistical modeling and a pair of experiments in South Korea versus Taiwan – two otherwise similar democracies that contrast in nation-state linkage – I show that this ethical pathway is likely real and highly contextual. The findings help us better understand the varied bases of citizen compliance in democracies.

scholarly journals Hybrid Assessment Scheme Based on the Stern- Judging Rule for Maintaining Cooperation under Indirect Reciprocity

Games ◽  
2020 ◽  
Vol 11 (1) ◽  
pp. 13 ◽  
Author(s):  
Isamu Okada ◽  
Hitoshi Yamamoto ◽  
Satoshi Uchida
Keyword(s):  
Game Theory ◽  
Evolutionary Game Theory ◽  
Evolutionary Game ◽  
Assessment System ◽  
Threshold Probability ◽  
Public And Private ◽  
Indirect Reciprocity ◽  
Assessment Systems ◽  
Notice Board ◽  
Expected Payoffs

Intensive studies on indirect reciprocity have explored rational assessment rules for maintaining cooperation and several have demonstrated the effects of the stern-judging rule. Uchida and Sasaki demonstrated that the stern-judging rule is not suitable for maintaining cooperative regimes in private assessment conditions while a public assessment system has been assumed in most studies. Although both assessment systems are oversimplified and society is most accurately represented by a mixture of these systems, little analysis has been reported on their mixture. Here, we investigated how much weight on the use of information originating from a public source is needed to maintain cooperative regimes for players adopting the stern-judging rule when players get information from both public and private sources. We did this by considering a hybrid-assessment scheme in which players use both assessment systems and by using evolutionary game theory. We calculated replicator equations using the expected payoffs of three strategies: unconditional cooperation, unconditional defection, and stern-judging rule adoption. Our analysis shows that the use of the rule helps to maintain cooperation if reputation information from a unique public notice board is used with more than a threshold probability. This hybrid-assessment scheme can be applied to other rules, including the simple-standing rule and the staying rule.

FIN 48 and Tax Compliance

2010 ◽  
Vol 85 (5) ◽  
pp. 1721-1742 ◽  
Author(s):  
Lillian F. Mills ◽  
Leslie A. Robinson ◽  
Richard C. Sansing
Keyword(s):  
Tax Compliance ◽  
Economic Effects ◽  
Business Community ◽  
Financial Accounting ◽  
Financial Accounting Standards Board ◽  
Publicly Traded ◽  
Fin 48 ◽  
Tax Benefits ◽  
The Government ◽  
Expected Payoffs

ABSTRACT: We develop a model to examine the effects of Financial Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48), on the strategic interaction between publicly traded corporate taxpayers and the government. Several of our findings contradict conjectures voiced by members of the business community regarding the economic effects of implementing FIN 48. Specifically, taxpayers with strong facts obtain higher expected payoffs from uncertain tax benefits and some disclosed liabilities understate the expected tax liability. Consistent with the common conjectures, however, some taxpayers are more likely to be audited or are deterred from entering into transactions that generate uncertain tax benefits because of FIN 48.

Mutual Optimism and War

2007 ◽  
Vol 51 (4) ◽  
pp. 738-754 ◽  
Author(s):  
Mark Fey ◽  
Kristopher W. Ramsay
Keyword(s):  
Mutual Optimism

Endogenous Two-Sided Markets with Repeated Transactions

2010 ◽  
Vol 10 (1) ◽  
Author(s):  
Arnold Polanski ◽  
Eyal Winter
Keyword(s):  
Linear Equations ◽  
Market Game ◽  
System Of Linear Equations ◽  
Stable Component ◽  
Formation Stage ◽  
Matching Mechanism ◽  
Expected Payoffs ◽  
Link Formation ◽  
Existence Of Equilibria ◽  
Two Sided Markets

We consider homogeneous two-sided markets, in which connected buyer-seller pairs bargain and trade repeatedly. In this infinite market game with exogenous matching probabilities and a common discount factor, we prove the existence of equilibria in stationary strategies. The equilibrium payoffs are given implicitly as a solution to a system of linear equations. Then, we endogenize the matching mechanism in a link formation stage that precedes the market game. When agents are sufficiently patient and link costs are low, we provide an algorithm to construct minimally connected networks that are pairwise stable with respect to the expected payoffs in the trading stage. The constructed networks are essentially efficient and consist of components with a constant buyer-seller ratio. The latter ratio increases (decreases) for a buyer (seller) that deletes one of her links in a pairwise stable component.

scholarly journals Information Acquisition in a War of Attrition

2014 ◽  
Vol 6 (2) ◽  
pp. 37-78 ◽  
Author(s):  
Kyungmin Kim ◽  
Frances Zhiyun Xu Lee
Keyword(s):  
Acquisition Cost ◽  
Information Acquisition ◽  
Symmetric Equilibrium ◽  
War Of Attrition ◽  
Expected Payoffs

We consider a war of attrition where the players can learn about a state that determines their payoffs at stochastic deadline. We study how the incentives to acquire information depend on the (un) verifiability of information and its implications for efficiency. Unverifiability creates distortions (strategic delay in concession or duplication in information acquisition), but encourages information acquisition. In our model, provided that the information acquisition cost is small, these two effects cancel each other out and the players' expected payoffs in symmetric equilibrium are identical whether information is verifiable or not. We also show that shortening deadlines may prolong the conflict. (JEL C72, D82, D83)

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