10,264 research outputs found
Noncooperative Collusion and Price Wars with Individual Demand Fluctuations
We analyze whether noncooperative collusive equilibria are harder to sustain when individual demand levels are not fixed but are able to fluctuate. To do this, we extend a Bertrand type model of price competition to allow for fluctuating market shares when prices are equal. We find that, the larger the market share fluctuations may be, the higher the discount factor should be to sustain a collusive equilibrium in trigger strategies. The intuition behind this is fairly straightforward. When individual demand in the collusive state is suddenly low, the gains from collusion go down. Moreover, the firm with the low demand can capture a larger share of the market by deviating from the collusive strategy. The incentive to deviate therefore becomes larger when the individual market share decreases. We also look at the existence of a specific type of semi-collusive equilibrium when individual market shares are either common knowledge or private knowledge. We find that there exist equilibria in which competitive periods (price wars) occur with probability 1 and on the equilibrium path.mathematical economics;
The Implications of Pricing on Social Learning
We study the implications of endogenous pricing for learning and welfare in
the classic herding model . When prices are determined exogenously, it is known
that learning occurs if and only if signals are unbounded. By contrast, we show
that learning can occur when signals are bounded as long as non-conformism
among consumers is scarce. More formally, learning happens if and only if
signals exhibit the vanishing likelihood property introduced bellow. We discuss
the implications of our results for potential market failure in the context of
Schumpeterian growth with uncertainty over the value of innovations
Bargaining Mechanisms for One-Way Games
We introduce one-way games, a framework motivated by applications in
large-scale power restoration, humanitarian logistics, and integrated
supply-chains. The distinguishable feature of the games is that the payoff of
some player is determined only by her own strategy and does not depend on
actions taken by other players. We show that the equilibrium outcome in one-way
games without payments and the social cost of any ex-post efficient mechanism,
can be far from the optimum. We also show that it is impossible to design a
Bayes-Nash incentive-compatible mechanism for one-way games that is
budget-balanced, individually rational, and efficient. To address this negative
result, we propose a privacy-preserving mechanism that is incentive-compatible
and budget-balanced, satisfies ex-post individual rationality conditions, and
produces an outcome which is more efficient than the equilibrium without
payments. The mechanism is based on a single-offer bargaining and we show that
a randomized multi-offer extension brings no additional benefit.Comment: An earlier, shorter version of this paper appeared in Proceedings of
the Twenty-Fourth International joint conference on Artificial Intelligence
(IJCAI) 201
An Optimal Game Theoretical Framework for Mobility Aware Routing in Mobile Ad hoc Networks
Selfish behaviors are common in self-organized Mobile Ad hoc Networks
(MANETs) where nodes belong to different authorities. Since cooperation of
nodes is essential for routing protocols, various methods have been proposed to
stimulate cooperation among selfish nodes. In order to provide sufficient
incentives, most of these methods pay nodes a premium over their actual costs
of participation. However, they lead to considerably large overpayments.
Moreover, existing methods ignore mobility of nodes, for simplicity. However,
owing to the mobile nature of MANETs, this assumption seems unrealistic. In
this paper, we propose an optimal game theoretical framework to ensure the
proper cooperation in mobility aware routing for MANETs. The proposed method is
based on the multi-dimensional optimal auctions which allows us to consider
path durations, in addition to the route costs. Path duration is a metric that
best reflects changes in topology caused by mobility of nodes and, it is widely
used in mobility aware routing protocols. Furthermore, the proposed mechanism
is optimal in that it minimizes the total expected payments. We provide
theoretical analysis to support our claims. In addition, simulation results
show significant improvements in terms of payments compared to the most popular
existing methods
Innovation, Rent Extraction, and Integration in Systems Markets
We consider innovation incentives in markets where final goods comprise two strictly complementary components, one of which is monopolized. We focus on the case in which the complementary component is competitively supplied, and in which innovation is important. We explore ways in which the monopoly may have incentives to confiscate efficiency rents in the competitive sector, thus weakening or destroying incentives for independent innovation. We discuss how these problems are affected if the monopolist integrates into the competitive sector.
Price-Matching Guarantees
Are price-matching guarantees anticompetitive? This paper examines the incentives for price-matching guarantees in markets where information about prices is costly. Under some conditions the conventional explanation of price-matching announcements as facilitating collusion finds support, and is even strengthened. But our model provides an additional explanation for the practice. A price-matching guarantee may be a credible and easily understood means of communicating to uninformed consumers that a firm is low-priced. The credibility of the signal to uninformed consumers is assured by the behaviour of informed consumers. We contrast the testable implications of our model with those of the anticompetitive theories and discuss supportive evidence from an illustrative sample of retailers.
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