Networks of Relations

We model networks of relational (or implicit) contracts, exploring how sanctioning power and equilibrium conditions change under different network configurations and information transmission technologies. In our model, relations are the links, and the value of the network lies in its ability to enforce cooperative agreements that could not be sustained if agents had no access to other network members’ sanctioning power and information. We identify conditions for network stability and in-network information transmission as well as conditions under which stable subnetworks inhibit more valuable larger networks

Essays in Game Theory.

I study how to model various strategic interactions with incomplete information and how to properly analyze them. The first chapter of the dissertation suggests new solution concepts for incomplete information games that are preceded by communication opportunities (communication games). Second chapter, written with Tilman Borgers, studies type spaces that model incomplete information among players with a specific property: the independence property. Third chapter suggests a new behavioral model to study real world decision makers' behavior. In the first chapter, I suggest new solution concepts for communication games to solve the following problem: traditional equilibrium analysis for communication games does not properly explain uncertainties about players' communication strategies, and so it excludes plausible outcomes of communication games from the set of equilibrium outcomes. Thus, I define correlated cheap talk equilibrium and correlated communication equilibrium. Epistemic analysis shows that new definitions represent the common knowledge of the Bayesian rationality of players with a common prior for a given communication game. In the second chapter, we study common prior type spaces in which for each agent the agent's payoff type and the agent's belief type are independent. Such type spaces deserve attention as the polar opposites of common prior type spaces in which agents' beliefs determine their preferences - a class of type spaces whose special properties are much studied. We find a necessary and sufficient condition for the independence of each agent's payoff type and belief type. Different agents' payoff types must be independent. Agents may hold payoff irrelevant information that must be jointly independent of all agents' payoff types. In the third chapter, I suggest a modified cognitive hierarchy (CH) model. Players have cognitive types which characterize their iterative reasoning abilities. Players know the existence of higher type players. In order to estimate higher type players' choices, players use other players' past choice data. Players improve their estimation with more information. The new model improves the original CH model by Camerer, Ho and Chong (2004), the replicator dynamics, and the fictitious play in explaining experimental results of the repeated beauty contest game and explaining the repeated market entry game.PhDEconomicsUniversity of Michigan, Horace H. Rackham School of Graduate Studieshttp://deepblue.lib.umich.edu/bitstream/2027.42/133277/1/otj_1.pd

Three Essays on Behavioral and Experimental Economics

The focus of this dissertation is to understand how mental rules of thumb, cognitive biases, and individual differences can lead judgments and decisions to systematically deviate from the theoretical “optimal” choices. The first essay examines how a decision-maker’s subjective belief is determined by her risk preference in a coordination game. We conduct a laboratory experiment where the participants played a repeated, fixed-partner stag-hunt game. In the experiment, we elicited the participants’ subjective belief, risk aversion and cautiousness levels. Here, we confirm the findings from past studies that suggest that the traditional measure of risk aversion in economics cannot explain people’s behavior. Additionally, we find that the psychological concept of cautiousness plays a key role in determining the origin and the evolution of the decision-maker’s belief. Specifically, we find that cautiousness affects the way people form the mental representation of their partners. A decision-maker with a higher cautiousness level is less likely to believe that her partner will choose the risky option. When the stag-hunt game was played repeatedly, a high cautiousness level prevents the decision-maker from updating her belief effectively, and consequently impedes cooperation between the players. The second essay proposes and experimentally tests the hypothesis that cognitive dissonance associated with the context plays a key role in determining people’s decisions in economic experiments. We conduct a laboratory bribery game experiment where the cognitive dissonance levels are controlled using different treatments (familiar-context treatment, unfamiliar-context treatment, and context-free treatment). With the aid of an independent attitude survey, we find that people in the unfamiliar-context treatment and the context-free treatment experience the same cognitive dissonance level; meanwhile, we do not observe different behavior in the lab. We also find the familiar-context treatment triggers the most intensive cognitive dissonance level among all treatments where the subjects are much less likely to behave unethically. Our theory is able to unify the mixed results from past studies on the experimental context effects. In the third essay, using a unique data set from a sample of recent local college graduates in China, we investigate the effect of agreeableness on the respondents’ starting salary and perceived career satisfaction level. Results from our analyses indicates that agreeableness positively predict women’s starting salary. This effect is highly robust to change in model specifications. However, agreeableness does not impact the men’s starting salary. Our result here suggests that non-cognitive ability (such as personality traits) plays a vital role in determining labor market outcome. In addition, we find that agreeableness positively related with subjective job satisfaction level. But this result is not robust to changes in model specifications. When we add the respondents’ major as a control variable, the effect of agreeableness on job-satisfaction becomes negligible and not statistically significant. This result might suggest a self-sorted story when choosing major. Further examination is required to explore this possibility

Media And Information Literacy Curriculum For Teachers

Fulltext in: http://unesdoc.unesco.org/images/0019/001929/192971e.pd

A detail-free mediator

We present an extension to any finite complete information game with two players. In the extension, players are allowed to communicate directly and, additionally, send private messages to a simple, detail-free mediator, which, in turn, makes public announcements as a deterministic function of the private messages. The extension captures situations in which people engage in face-to-face communication and can observe the opponent's face during the conversation before choosing actions in some underlying game. We prove that the set of Nash equilibrium payoffs of the extended game approximately coincides with the set of correlated equilibrium payoffs of any underlying game