Random Dictatorship Domains

Published in Games and Economic Behavior https://doi.org/10.1016/j.geb.2014.03.017</p

Direct externalities, specific performance and renegotiation design

This paper examines how the model of De Fraja [Games and Economic Behavior, 1999] can be amended after Che [Games and Economic Behavior, 2000] negative result. We mainly show that the optimal level of investments can be obtained with the specific performance contract considered by De Fraja if the renegotiation process does not follow the Hart-Moore procedure but allocates an extreme bargaining power.incomplete contract hold-up

Economic Games Quantify Diminished Sense of Guilt in Patients with Damage to the Prefrontal Cortex

Damage to the ventromedial prefrontal cortex (VMPFC) impairs concern for other people, as reflected in the dysfunctional real-life social behavior of patients with such damage, as well as their abnormal performances on tasks ranging from moral judgment to economic games. Despite these convergent data, we lack a formal model of how, and to what degree, VMPFC lesions affect an individual's social decision-making. Here we provide a quantification of these effects using a formal economic model of choice that incorporates terms for the disutility of unequal payoffs, with parameters that index behaviors normally evoked by guilt and envy. Six patients with focal VMPFC lesions participated in a battery of economic games that measured concern about payoffs to themselves and to others: dictator, ultimatum, and trust games. We analyzed each task individually, but also derived estimates of the guilt and envy parameters from aggregate behavior across all of the tasks. Compared with control subjects, the patients donated significantly less and were less trustworthy, and overall our model found a significant insensitivity to guilt. Despite these abnormalities, the patients had normal expectations about what other people would do, and they also did not simply generate behavior that was more noisy. Instead, the findings argue for a specific insensitivity to guilt, an abnormality that we suggest characterizes a key contribution made by the VMPFC to social behavior

Trust, Reciprocity and Rules

In the absence of enforceable contracts, many economic and personal interactions rely on trust and reciprocity. Research shows that although this reliance often works well, sometimes it breaks down. Simple rules mandating minimum standards on reciprocation prevent the most egregious trust violations, but may also undermine behavior that would have otherwise produced higher overall economic welfare. We test the efficacy of exogenously imposed minimum return rules using experimental trust games. We find that rules fail to increase trust and trustworthiness. Thus low minimum standards significantly decrease economic welfare. Although sufficiently restrictive rules restore welfare, trust and trustworthy behavior never returns.trust games, experiments, reputation, information, reciprocity

Ten Little Treasures of Game Theory and Ten Intuitive Contradictions

This paper reports laboratory data for a series of two-person games that are played only once. These games span the standard categories: static and dynamic games with complete and incomplete information. For each game, the treasure is a treatment for which behavior conforms quite nicely to the predictions of the Nash equilibrium or relevant refinement. In each case we change a key payoff parameter in a manner that does not alter the equilibrium predictions, but this theoretically neutral payoff change has a major (often dramatic) effect on observed behavior. These contradictions are generally consistent with simple economic intuition and with a model of iterated noisy introspection for one-shot games.Nash equilibrium, noncooperative games, experiments, bounded rationality, introspection

Endogenous Formation of Competing Partnership with Moral Hazard

Published as an article in: Games and Economic Behavior, 2003, vol. 44, issue 1, pages 183-194.endogenous coalition formation, moral hazard, partnerships

Communication channels and induced behavior

This paper reports recent findings on the effects of cheap talk communication on behavior. It exemplifies how different communication channels influence decisions in various games and information environments and addresses possible consequences for the design of real-world economic environments.communication, economic experiment, bargaining, public good

A computer scientist looks at game theory

I consider issues in distributed computation that should be of relevance to game theory. In particular, I focus on (a) representing knowledge and uncertainty, (b) dealing with failures, and (c) specification of mechanisms.Comment: To appear, Games and Economic Behavior. JEL classification numbers: D80, D8

Altruism and Social Integration

Also published as Working Paper DFAEII 2009-05 and as an article in: Games and Economic Behavior, 2010, vol. 69, issue 2, pages 249-257.altruism, centrality, social network experiments