Iterated dominance and iterated best response in experimental "p-beauty contests"

Picture a thin country 1000 miles long, running north and south, like Chile. Several natural attractions are located at the northern tip of the country. Suppose each of n resort developers plans to locate a resort somewhere on the country's coast (and all spots are equally attractive). After all the resort locations are chosen, an airport will be built to serve tourists, at the average of all the locations including the natural attractions. Suppose most tourists visit all the resorts equally often, except for lazy tourists who visit only the resort closest to the airport; so the developer who locates closest to the airport gets a fixed bonus of extra visitors. Where should the developer locate to be nearest to the airport? The surprising game-theoretic answer is that all the developers should locate exactly where the natural attractions are. This answer requires at least one natural attraction at the northern tip, but does not depend on the fraction of lazy tourists or the number of developers (as long as there is more than one)

From Self-Interest Motives to Justice Motives The Challenges of Some Experimental Results

WOS:000256153600006 (Nº de Acesso Web of Science)This article begins by presenting experimental evidence that remains unexplained by standard and utility-extended economic models: experimental subjects tend to honor their promises even on occasions when an assessment of consequences asks them to defect; subjects voluntarily contribute to collective goods, and this contribution is highly conditional on others contributing as well; subjects evaluate and value the intentions behind actions as well as the consequences of actions. Arguments are sought for in moral philosophy that would more plainly explain the collected experimental evidence and that would help economists revise their explanatory frames. The hypothesis advanced is that the observed behavior may be interpreted as resulting from the moral strength of indignation and justice norms

Three alternative (?) stories on the late 20th-century rise of game theory

The paper presents three different reconstructions of the 1980s boom of game theory and its rise to the present status of indispensable tool-box for modern economics. The first story focuses on the Nash refinements literature and on the development of Bayesian games. The second emphasizes the role of antitrust case law, and in particular of the rehabilitation, via game theory, of some traditional antitrust prohibitions and limitations which had been challenged by the Chicago approach. The third story centers on the wealth of issues classifiable under the general headline of "mechanism design" and on the game theoretical tools and methods which have been applied to tackle them. The bottom lines are, first, that the three stories need not be viewed as conflicting, but rather as complementary, and, second, that in all stories a central role has been played by John Harsanyi and Bayesian decision theory.game theory; mechanism design; refinements of Nash equilibrium; antitrust law; John Harsanyi

The Scope of the Hypothesis of Bayesian Equilibrium

What behavior can be explained as the Bayes equilibrium of some game? The main finding is almost anything. Given any Bayesian (coordination) game with positive priors and given any vector of nondominated strategies, there is an increasing transformation of each utility function such that the given vector of strategies is a Bayes (Nash) equilibrium of the transformed game. Any nondominated behavior can be rationalized as Bayes equilibrium behavior. Some comments on the implications of these results for game theory are included

Interview of Peter J. Hammond [pre-print]

Following an initiative of Social Choice and Welfare, this is the result of an interview conducted by email exchange during the period from July 2017 to February 2018, with minor adjustments later in 2018. Apart from some personal history, topics discussed include: (i) social choice, especially with interpersonal comparisons of utility; (ii) utilitarianism, including Harsanyi’s contributions; (iii) consequentialism in decision theory and in ethics; (iv) the independence axiom for decisions under risk; (v) welfare economics under uncertainty; (vi) incentive compatibility and strategy-proof mechanisms, especially in large economies; (vii) Pareto gains from trade, and from migration; (viii) cost–benefit analysis and welfare measurement; (ix) the possible future of normative economics

The economics of the space station

Space exploration and development are naturally conducted on the cutting edge of science and technology. Such efforts inevitably involve decisions made in the presence of extensive uncertainty. For some projects, particularly those which involve the creation and maintenance of an infrastructure, the emphasis is switching from specific engineering goals (for example, a man on the moon by 1969) to more diffuse, continuing, multiple-dimensional goals. This is especially true of the space station, which is envisioned as both a vital link in the exploration of the planets and a major facility for the advancement of commercial efforts in space. The combination of uncertainty and diffuse, long-term goals fundamentally alters the viability and validity of traditional economic and engineering approaches to the management of large public research and development projects. It has become popular to call into question the recent management of continuing projects like the space shuttle or major new weapons systems. We must, however, recognize that cost overruns, gold plating and other forms of apparent mismanagement are usually not the result of individual venality and misbehavior but only the natural outcomes of the existing organizational rules of the game. Just as the performance of an engineering design is guided by the laws of physics, the performance of an organizational design is guided by the laws of behavior. This fact means that to improve performance we cannot simply add more or better manpower; rather, we must look for new organizational solutions. There are many ad hoc opinions about how to do this; what I propose is a more systematic, scientific approach. This paper examines some of the economic and management issues which must be addressed if the space station is to effectively and efficiently pursue the myriad goals that have been chosen for it. I characterize and evaluate in a somewhat stylized fashion three possible policies: an "engineering" approach, an "economics" approach, and a systematic custom design approach. I will use the space station as an example to highlight some of the major economic issues facing large-scale multipurpose research and development efforts, the analytical capabilities we now have to address these issues, and the (non-engineering) research that needs to be done to advance the successful long-term development of space

Spartan Daily, June 4, 1934

Volume 22, Issue 138https://scholarworks.sjsu.edu/spartandaily/2174/thumbnail.jp

Coordination in Organizations: A Game-Theoretic Perspective

Classic literature on organizations recognizes that the paramount function of an organization is the coordination of physical and human assets to produce a good or service (e.g., Barnard, 1938; Chisholm, 1989; Schein, 1985). Coordination in this early literature was defined broadly, as for example by Mooney (1947, p. 5): "Coordination therefore, is the orderly arrangement of group effort, to provide unity of action in the pursuit of a common purpose." Mooney argues further that coordination is the first principle of organization and that any other organizational principles "are simply principles through which coordination operates and thus becomes effective" (p. 5). The landmark work of Thompson (1967) distinguished kinds of interdependence that give rise to coordination problems and ways in which coordination might occur - for example, by standardization, planning, or mutual adjustment. Coordination also plays a central role in recent thinking about the economics of internal organization (Becker & Murphy, 1992; Milgrom & Roberts, 1992), the history of business organization (Lamoreaux & Raff, 1995, esp. p. 5), core competencies in business strategy, mutualism and legitimation in organizational evolution, macroeconomics (Cooper & John, 1988), and other fields