Social Games: Matching and the Play of Finitely Repeated Games

We examine a new class of games, which we call social games, where players not only choose strategies but also choose with whom they play. A group of players who are dissatisfied with the play of their current partners can join together and play a new equilibrium. This imposes new refinements on equilibrium play, where play depends on the relative populations of players in different roles, among other things. We also examine finite repetitions of games where players may choose to rematch in any period. Some equilibria of fixed-player repeated games cannot be sustained as equilibria in a repeated social game. Conversely, the set of repeated matching (or social) equilibria also includes some plays that are not part of any subgame perfect equilibrium of the corresponding fixed-player repeated games. We explore existence under different equilibrium definitions, as well as the relationship to renegotiation-proof equilibrium. It is possible for repeated matching equilibria to be completely distinct from renegotiation-proof equilibria, and even to be Pareto inefficient.Social games, Matching, Games, Repeated games, Renegotiation

The Egalitarian Sharing Rule in Provision of Public Projects

In this note we consider a society that partitions itself into disjoint jurisdictions, each choosing a location of its public project and a taxation scheme to finance it. The set of public project is multi-dimensional, and their costs could vary from jurisdiction to jurisdiction. We impose two principles, egalitarianism, that requires the equalization of the total cost for all agents in the same jurisdiction, and efficiency, that implies the minimization of the aggregate total cost within jurisdiction. We show that these two principles always yield a core-stable partition but a Nash stable partition may fail to exist.Jurisdictions, Stable partitions, Public projects, Egalitarianism

Dynamic Effects on the Stability of International Environmental Agreements

In terms of the number of signatories, one observes both large and small international environmental agreements. The theoretical literature, based on game theory, discusses different concepts and mechanisms for the stability of coalitions and has reached the conclusion that, under farsightedness, both large and small stable coalitions can occur. In the context of a repeated game, this implies that large stable coalitions can also be sustained over time by a simple trigger mechanism, for large enough discount factors. However, if changes in time implement changes in state, this conclusion does not hold anymore: only small stable coalitions can be sustained.IEA’s, Coalitional stability, Dynamics

Applications of Negotiation Theory to Water Issues

The purpose of the paper is to review the applications of non-cooperative bargaining theory to water related issues – which fall in the category of formal models of negotiation. The ultimate aim is that to, on the one hand, identify the conditions under which agreements are likely to emerge, and their characteristics; and, on the other hand, to support policy makers in devising the “rules of the game” that could help obtain a desired result. Despite the fact that allocation of natural resources, especially of trans-boundary nature, has all the characteristics of a negotiation problem, there are not many applications of formal negotiation theory to the issue. Therefore, this paper first discusses the non-cooperative bargaining models applied to water allocation problems found in the literature. Particular attention will be given to those directly modelling the process of negotiation, although some attempts at finding strategies to maintain the efficient allocation solution will also be illustrated. In addition, this paper will focus on Negotiation Support Systems (NSS), developed to support the process of negotiation. This field of research is still relatively new, however, and NSS have not yet found much use in real life negotiation. The paper will conclude by highlighting the key remaining gaps in the literature.Negotiation theory, Water, Agreeements, Stochasticity, Stakeholders

Self-Evaluation Applied Mathematics 2003-2008 University of Twente

This report contains the self-study for the research assessment of the Department of Applied Mathematics (AM) of the Faculty of Electrical Engineering, Mathematics and Computer Science (EEMCS) at the University of Twente (UT). The report provides the information for the Research Assessment Committee for Applied Mathematics, dealing with mathematical sciences at the three universities of technology in the Netherlands. It describes the state of affairs pertaining to the period 1 January 2003 to 31 December 2008

Dynamic Controllability with Overlapping targets: A Generalization of the Tinbergen-Nash Theory of Economic Policy

We generalize some recent results developed in static policy games with multiple players, to a dynamic context. We find that the classical theory of economic policy can be usefully applied to a strategic context of difference games: if one player satisfies the Golden Rule, then either all other players’ policies are ineffective with respect to the dynamic target variables shared with that player; or no Nash Feedback Equilibrium can exist, unless they all share target values for those variables. We extend those results to the case where there are also non-dynamic targets, to show that policy effectiveness (a Nash equilibrium) can continue to exist if some players satisfy the Golden Rule but target values differ between players in the non-dynamic targets. We demonstrate the practical importance of these results by showing how policy effectiveness (a policy equilibrium) can appear or disappear with small variations in the expectations process or policy rule in a widely used model of monetary policy.Policy games, Policy ineffectiveness, Static controllability, Existence of equilibria, Nash feedback equilibrium

An Open Source Based Data Warehouse Architecture to Support Decision Making in the Tourism Sector

In this paper an alternative Tourism oriented Data Warehousing architecture is proposed which makes use of the most recent free and open source technologies like Java, Postgresql and XML. Such architecture's aim will be to support the decision making process and giving an integrated view of the whole Tourism reality in an established context (local, regional, national, etc.) without requesting big investments for getting the necessary software.Tourism, Data warehousing architecture

How Consistent are Alternative Short-Term Climate Policies with Long-Term Goals?

Choosing long-term goals is a key issue in the climate policy agenda. Targets should be easily measurable and feasible, but also effective in damage control. Once goals are set globally, given the uncertainty affecting long-term strategies and region-specific preferences for different policy instruments, policies will be better represented by a diversified portfolio to be revised over time, rather than “once and forever” decisions. It therefore becomes crucial to understand to what extent different strategies (or policy portfolios) are consistent with long-term targets, that is, when they imply emission paths which do not irreversibly diverge from globally set goals. The present paper aims to investigate emission paths implied by plausible policy scenarios against those derived by imposing alternative long-term targets, comparing, for example, differences in peak periods. Plausible policy scenarios are for instance Kyoto-type targets with or without participation by the U.S. and/or by developing countries. Different long-term targets considered focus on stabilisation of CO2 concentrations, radiative forcing and the increase in atmospheric temperature relative to pre-industrial levels. In order to account for the uncertainty surrounding the climate cycle, for each long-term goal multiple paths of emission - the most probable, the optimistic and the pessimistic ones - are considered in the comparison exercise. Comparative analysis is performed using a newly developed version of the FEEM-RICE model, a regional economy-climate model of optimal economic growth which is based on Nordhaus and Boyer’s RICE model crucially extended in order to account for induced technical change. In particular, both carbon and energy intensity are affected by a new endogenous variable – Technical Progress – which captures both the role of Learning by Researching and of Learning by Doing. These are in turn determined by the optimal levels of Research and Development and of Emission Abatement.Climate policy, Long-term climate targets, Climate sensitivity uncertainty, Capping radiative forcing

Stabilization of Capacitated Matching Games

An edge-weighted, vertex-capacitated graph G is called stable if the value of a maximum-weight capacity-matching equals the value of a maximum-weight fractional capacity-matching. Stable graphs play a key role in characterizing the existence of stable solutions for popular combinatorial games that involve the structure of matchings in graphs, such as network bargaining games and cooperative matching games. The vertex-stabilizer problem asks to compute a minimum number of players to block (i.e., vertices of G to remove) in order to ensure stability for such games. The problem has been shown to be solvable in polynomial-time, for unit-capacity graphs. This stays true also if we impose the restriction that the set of players to block must not intersect with a given specified maximum matching of G. In this work, we investigate these algorithmic problems in the more general setting of arbitrary capacities. We show that the vertex-stabilizer problem with the additional restriction of avoiding a given maximum matching remains polynomial-time solvable. Differently, without this restriction, the vertex-stabilizer problem becomes NP-hard and even hard to approximate, in contrast to the unit-capacity case. Finally, in unit-capacity graphs there is an equivalence between the stability of a graph, existence of a stable solution for network bargaining games, and existence of a stable solution for cooperative matching games. We show that this equivalence does not extend to the capacitated case.Comment: 14 pages, 3 figure

A Climate-Change Policy Induced Shift from Innovations in Energy Production to Energy Savings

We develop an endogenous growth model with capital, labor and energy as production factors and three productivity variables that measure accumulated innovations for energy production, energy savings, and neutral growth. All markets are complete and perfect, except for research, for which we assume that the marginal social value exceeds marginal costs by factor four. The model constants are calibrated so that the model reproduces the relevant trends over the 1970-2000 period. The model contains a simple climate module, and is used to assess the impact of Induced Technological Change (ITC) for a policy that aims at a maximum level of atmospheric CO2 concentration (450 ppmv). ITC is shown to reduce the required carbon tax by about a factor 2, and to reduce costs of such a policy by about factor 10. Numerical simulations show that knowledge accumulation shifts from energy production to energy saving technology.Induced technological change, Environmental taxes, Partial equilibrium