Characterizing the Feasible Payoff Set of OLG Repeated Games

We study the set of feasible payoffs of OLG repeated games. We first provide a complete characterization of the feasible payoffs. Second, we provide a novel comparative statics of the feasible payoff set with respect to players' discount factor and the length of interaction. Perhaps surprisingly, the feasible payoff set becomes smaller as the players' discount factor approaches to one

Social dilemmas among unequals

This is the author accepted manuscript. The final version is available from Nature Research via the DOI in this record.Direct reciprocity is a powerful mechanism for evolution of cooperation, based on repeated interactions. It requires that interacting individuals are sufficiently equal, such that everyone faces similar consequences when they cooperate or defect. Yet inequality is ubiquitous among humansand is generally considered to undermine cooperation and welfar. Most previous models of reciprocity neglect inequality. They assume that individuals are the same in all relevant aspects. Here we introduce a general framework to study direct reciprocity among unequals. Our model allows for multiple sources of inequality. Subjects can differ in their endowments, their productivities, and in how much they benefit from public goods. We find that extreme inequality prevents cooperation. But if subjects differ in productivity, some endowment inequality can be necessary for cooperation to prevail. Our mathematical predictions are supported by a behavioral experiment where we vary the subjects’ endowments and their productivities. We observe that overall welfare is maximized when the two sources of heterogeneity are aligned, such that more productive individuals receive higher endowments. In contrast, when endowments and productivities are misaligned, cooperation quickly breaks down. Our findings have implications for policy-makers concerned with equity, efficiency, and public goods provisioning.European Research Council Start GrantGraph GamesAustrian Science Fund (FWF)Office of Naval ResearchJohn Templeton FoundationISTFELLOW program

Valuating Payoff Streams under Unequal Discount Factors

We study repeated prize allocation problem when the discount factors f the agents are not equal. It is shown that the feasible set of payoffs is not well behaved. In particular, it is not convex as it contains holes and caves. The Pareto frontier is everywhere discontinuous and there is an open subset of discount factors such that the feasible set is totally disconnected.payoffs, differentiated discount factor, repeated games

Persistence of power: Repeated multilateral bargaining with endogenous agenda setting authority

We extend a simple repeated, multilateral bargaining model to allow successful agenda setters to hold on to power as long as they maintain the support of a majority of other committee members. Theoretically and experimentally, we compare this Endogenous Power environment with a standard Random Power environment in which agenda setters are appointed randomly each period. Although the theoretical analysis predicts that the two environments are outcome equivalent, the experimental analysis shows substantial differences in behavior and outcomes across the games. The Endogenous Power environment results in the formation of more stable coalitions, less-equitable budget allocations, the persistence of power across periods, and higher long-run inequality than the Random Power environment. We present evidence that the stationary equilibrium refinements traditionally used in the literature fail to predict behavior in either game

Advances in negotiation theory : bargaining, coalitions, and fairness

Bargaining is ubiquitous in real life. It is a major dimension of political and business activities. It appears at the international level, when governments negotiate on matters ranging from economic issues (such as the removal of trade barriers), to global security (such as fighting against terrorism) to environmental and related issues (such as climate change control). What factors determinethe outcomes of such negotiations? What strategies can help reach an agreement? How should the parties involved divide the gains from cooperation? With whom will one make alliances? The authors address these questions by focusing on a noncooperative approach to negotiations, which is particularly relevant for the study of international negotiations. By reviewing noncooperative bargaining theory, noncooperative coalition theory, and the theory of fair division, they try to identify the connections among these different facets of the same problem in an attempt to facilitate progress toward a unified framework.Economic Theory&Research,Social Protections&Assistance,Environmental Economics&Policies,Scientific Research&Science Parks,Science Education

Advances in Negotiation Theory: Bargaining, Coalitions and Fairness

Bargaining is ubiquitous in real-life. It is a major dimension of political and business activities. It appears at the international level, when governments negotiate on matters ranging from economic issues (such as the removal of trade barriers), to global security (such as fighting against terrorism) to environmental and related issues (e.g. climate change control). What factors determine the outcome of negotiations such as those mentioned above? What strategies can help reach an agreement? How should the parties involved divide the gains from cooperation? With whom will one make alliances? This paper addresses these questions by focusing on a non-cooperative approach to negotiations, which is particularly relevant for the study of international negotiations. By reviewing noncooperative bargaining theory, non-cooperative coalition theory, and the theory of fair division, this paper will try to identify the connection among these different facets of the same problem in an attempt to facilitate the progress towards a unified framework.Negotiation theory, Bragaining, Coalitions, Fairness, Agreements