305 research outputs found

    Theories of coalitional rationality

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    This paper generalizes the concept of best response to coalitions of players and offers epistemic definitions of coalitional rationalizability in normal form games. The best response of a coalition is defined to be a correspondence from sets of conjectures to sets of strategies. From every best response correspondence it is possible to obtain a definition of the event that a coalition is rational. It requires that if it is common certainty among players in the coalition that play is in some subset of the strategy space then they confine their play to the best response set to those conjectures. A strategy is epistemic coalitionally rationalizable if it is consistent with rationality and common certainty that every coalition is rational. A characterization of this set of strategies is provided for best response correspondences that satisfy four properties: monotonicity, a weak form of Pareto-optimality and two consistency requirements with individual best responses. Special attention is devoted to a correspondence that leads to a solution concept that is generically equivalent to the iteratively defined concept of coalitional rationalizability (Ambrus [04]).noncooperative games, coalition agreements, rationalizability, epistemic solution concept

    Exclusive vs Overlapping Viewers in Media Markets

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    This paper investigates competition for advertisers in media markets when viewers can subscribe to multiple channels. A central feature of the model is that channels are monopolists in selling advertising opportunities toward their exclusive viewers, but they can only obtain a competitive price for advertising opportunities to multi-homing viewers. Strategic incentives of firms in this setting are different than those in former models of media markets. If viewers can only watch one channel, then firms compete for marginal consumers by reducing the amount of advertising on their channels. In our model, channels have an incentive to increase levels of advertising, in order to reduce the overlap in viewership. We take an account of the differences between the predictions of the two types of models and find that our model is more consistent with recent developments in broadcasting markets. We also show that if channels can charge subscription fees on viewers, then symmetric firms can end up in an asymmetric equilibrium in which one collects all or most of its revenues from advertisers, while the other channel collects most of its revenues via viewer fees.

    Network Markets and Consumer Coordination

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    This paper analyzes pricing decisions and competition in network markets, assuming that groups of consumers can coordinate their choices when it is in their interest, if coordination does not require communication. It is shown that multiple asymmetric networks can coexist in equilibrium. A monopolist might operate multiple ex ante identical networks to price differentiate. In Bertrand competition different firms might target high reservation value consumers on different sides of the market. Firms can obtain positive profits in price competition. Product differentiation in equilibrium is endogenized by consumers' network choices. Enough heterogeneity in reservation values is necessary for existence of these asymmetric equilibria.two-sided markets, network externalities, platform competition, coordination

    Multi-sender cheap talk with restricted state spaces

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    This paper analyzes multi-sender cheap talk when the state space might be restricted, either because the policy space is restricted, or the set of rationalizable policies of the receiver is not the whole space. We provide a necessary and sufficient condition for the existence of a fully revealing perfect Bayesian equilibrium for any state space. We show that if biases are large enough and are not of similar directions, where the notion of similarity depends on the shape of the state space, then there is no fully revealing perfect Bayesian equilibrium. The results suggest that boundedness, as opposed to dimensionality, of the state space plays an important role in determining the qualitative implications of a cheap talk model. We also investigate equilibria that satisfy a robustness property, diagonal continuity.Cheap talk, two senders, multidimensional state space

    Exclusive vs Overlapping Viewers in Media Markets

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    This paper investigates competition for advertisers in media markets when viewers can subscribe to multiple channels. A central feature of the model is that channels are monopolists in selling advertising opportunities toward their exclusive viewers, but they can only obtain a competitive price for advertising opportunities to multi-homing viewers. Strategic incentives of firms in this setting are different than those in former models of media markets. If viewers can only watch one channel, then firms compete for marginal consumers by reducing the amount of advertising on their channels. In our model, channels have an incentive to increase levels of advertising, in order to reduce the overlap in viewership. We take an account of the differences between the predictions of the two types of models and find that our model is more consistent with recent developments in broadcasting markets. We also show that if channels can charge subscription fees on viewers, then symmetric firms can end up in an asymmetric equilibrium in which one collects all or most of its revenues from advertisers, while the other channel collects most of its revenues via viewer fees.Media; Multihoming; Platform Competition; Two-Sided Markets

    Imperfect public monitoring with costly punishment - An experimental study

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    This paper experimentally investigates the effects of a costly punishment option on cooperation and social welfare in long finitely repeated public good contribution games. In a perfect monitoring environment increasing the severity of the potential punishment monotonically increases both contributions and the average net payoffs of subjects. In a more realistic imperfect monitoring environment, we find a U-shaped relationship between the severity of punishment and average net payoffs. Access to a standard punishment technology in this setting significantly decreases net payoffs, even in the long run. Access to a very severe punishment technology leads to roughly the same payoffs as with no punishment option, as the benefits of increased cooperation offset the social costs of punishing.public good contribution experiments; imperfect monitoring; welfare implications of costly punishment

    Network Markets and Consumer Coordination

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    This paper assumes that groups of consumers in network markets can coordinate their choices when it is in their best interest to do so, and when coordination does not require communication. It is shown that multiple asymmetric networks can coexist in equilibrium if consumers have heterogeneous reservation values. A monopolist provider might choose to operate multiple networks to price differentiate consumers on both sides of the market. Competing network providers might operate networks such that one of them targets high reservation value consumers on one side of the market, while the other targets high reservation value consumers on the other side. Firms can obtain positive profits in price competition. In these asymmetric equilibria product differentiation is endogenized by the network choices of consumers. Heterogeneity of consumers is necessary for the existence of this type of equilibrium.

    Rationalizing Choice with Multi-Self Models

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    This paper studies a class of multi-self decision-making models proposed in economics, psychology, and marketing. In this class, choices arise from the set-dependent aggregation of a collection of utility functions, where the aggregation procedure satisfies some simple properties. We propose a method for characterizing the extent of irrationality in a choice behavior, and use this measure to provide a lower bound on the set of choice behaviors that can be rationalized with n utility functions. Under an additional assumption (scale-invariance), we show that generically at most five "reasons" are needed for every "mistake."Multi-self models, Index of irrationality, IIA violations, Rationalizability
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