The efficiency of the non-profit enterprise: constitutional ideology, conformist preferences and reputation

According to one thesis the non profit enterprise (in short NPE) is able to attract ideological entrepreneurs and workers (Rose-Ackerman 1996). In fact I prove that without the ideological element, a simple game between the entrepreneur, worker and beneficiary is condemned to an opportunistic equilibrium, beneficial to the internal members of the organization but detrimental to the beneficiary. Thus the NPE does not better than its for profit counterpart. In my model ideologues, both entrepreneurs and workers, share a principle of justice seen as the constitutional ideology of the NPE, agreed upon in an hypothetical ex ante bargaining game. The constitutional principle provides an independent source of motivation (a source of utility) of the players, in so far as they believe in the reciprocity of conformity to the ideology by all the participants. I call this conformity-based utility “ideological”, and I see it as the representation of a preference for expected conformity to the given constitutional principle. The philosophical underpinnings of this reform of the players' utility functions in worked out by distinguishing two concepts of preferences of the Self: consequentialist preferences and conformist preferences. The latter are preferences for those actions that are part of states of affairs described in terms of interdependent actions conforming to an abstract norm or principle, which become effective once the preferences' holder does expect that the other players do they part in that state of affairs and they do expect that himself do his part in the same state of affairs. What result is that a player's ideological utility depends on the expectation of deontological modes of behaviour followed by all the participants, himself included. On this basis it is possible to overcome personal incentives to embrace opportunistic behaviour, so that the proper Non-profit Enterprise emerges. It is proved that in the “social enterprise game” amongst the member of the organisation there exists an organisational equilibrium minimising transaction costs to the beneficiaries. At last, this equilibrium rests on the emergence of an expectations system of reciprocal conformity to the constitutional ideology. As the existence - not even the selection – of the internal organizational equilibrium rests heavily on the existence of the appropriate system of reciprocal expectation, the problem of how we can justify the emergence of the appropriate system of beliefs must be underlined. Here is where the explicit moral codes of the NPE enters the scene. I see the code of ethics as the building block for deriving a reputation equilibrium between the NPE as a whole and its external stakeholders within a repeated game, whose stage-game is the typical game of trust played under incomplete knowledge and unforeseen contingencies. At last the conformist-motivation model and the reputation model under unforeseen contingencies are shown to play together in a mutually supporting explanation of the efficiency of the NPE.

A Laplace's principle based approach for solving fuzzy matrix games

We introduce a solution for matrix games with fuzzy payoffs via the α -cuts and the introduction of Nature as a third player expressing the uncertainty involved in the game. The beliefs of players about the behavior of Nature are based on the Laplace’s principle of “insufficient reason”. Moreover, we provide a procedure for computing the introduced solution

Games for the Strategic Influence of Expectations

We introduce a new class of games where each player's aim is to randomise her strategic choices in order to affect the other players' expectations aside from her own. The way each player intends to exert this influence is expressed through a Boolean combination of polynomial equalities and inequalities with rational coefficients. We offer a logical representation of these games as well as a computational study of the existence of equilibria.Comment: In Proceedings SR 2014, arXiv:1404.041

Computing Nash equilibria and evolutionarily stable states of evolutionary games

Stability analysis is an important research direction in evolutionary game theory. Evolutionarily stable states have a close relationship with Nash equilibria of repeated games, which are characterized by the folk theorem. When applying the folk theorem, one needs to compute the minimax profile of the game in order to find Nash equilibria. Computing the minimax profile is an NP-hard problem. In this paper we investigate a new methodology to compute evolutionary stable states based on the level-k equilibrium, a new refinement of Nash equilibrium in repeated games. A level-k equilibrium is implemented by a group of players who adopt reactive strategies and who have no incentive to deviate from their strategies simultaneously. Computing the level-k equilibria is tractable because the minimax payoffs and strategies are not needed. As an application, this paper develops a tractable algorithm to compute the evolutionarily stable states and the Pareto front of n-player symmetric games. Three games, including the iterated prisoner’s dilemma, are analyzed by means of the proposed methodology

Game Theory Relaunched

The game is on. Do you know how to play? Game theory sets out to explore what can be said about making decisions which go beyond accepting the rules of a game. Since 1942, a well elaborated mathematical apparatus has been developed to do so; but there is more. During the last three decades game theoretic reasoning has popped up in many other fields as well - from engineering to biology and psychology. New simulation tools and network analysis have made game theory omnipresent these days. This book collects recent research papers in game theory, which come from diverse scientific communities all across the world; they combine many different fields like economics, politics, history, engineering, mathematics, physics, and psychology. All of them have as a common denominator some method of game theory. Enjoy