Testing threats in repeated games

Under most game-theoretic solution concepts, equilibrium beliefs are justified by off-equilibrium events. I propose an equilibrium concept for infinitely repeated games, called "Nash Equilibrium with Tests" (NEWT), according to which players can only justify their equilibrium beliefs with events that take place on the equilibrium path itself. In NEWT, players test every threat that rationalizes a future non-myopic action that they take. The tests are an integral part of equilibrium behavior. Characterization of equilibrium outcomes departs from the classical "folk theorems". The concept provides new insights into the impact of self-enforcement norms, such as reciprocity, on long-run cooperation. (c) 2004 Elsevier Inc. All rights reserved

Testing Threats in Repeated Games

I introduce a solution concept for infinite-horizon games, called “Nash equilibrium with added tests”, in which players optimize with respect to relevant threats only after having tested them before. Both the optimal response and the tests are part of equilibrium behavior. The concept is applied to repeated 2×2 games and yields the following results: 1) Sustained cooperation in games such as the Prisoner’s Dilemma is preceded by a “build up” phase, whose comparative statics are characterized. 2) Sustainability of long-run cooperation by means of familiar selfenforcement conventions varies with the payoff structure. E.g., “constructive reciprocity” achieves cooperation with minimal buildup time in the Prisoner’s Dilemma, yet it is inconsistent with long-run cooperation in Chicken. 3) Nevertheless, a “folk theorem” holds for this class of games.Game Theory, Prisoner's Dilemma

Directing the students’ mind games : A game theoretical view of the learning process

Experimental data consistently shows that the students’ beliefs about their own academic ability have a significant effect on their performance and their level of engagement. The aim of this paper is to offer an original game-theoretical model that supports and explains such empirical data: the student is modelled as being engaged in a game, in which his/her decisions on how much to study are affected by his/her self-efficacy beliefs or self-confidence. It is argued that if game theory is used to analyse such games, it is possible to gain insights that might otherwise be missed. One of the implications for practice is that the tutor is in a position to intervene in the interaction involving the student and the student’s own beliefs. Attempting to enhance the student’s self-confidence levels through feedback is likely to result in greater engagement and better performance, even in cases where the student’s current performance does not inspire very encouraging feed-backPeer reviewedFinal Published versio

Bargaining and Influence in Conflict Situations

[Excerpt] This chapter examines bargaining as an influence process through which actors attempt to resolve a social conflict. Conflict occurs when two or more interdependent actors have incompatible preferences and perceive or anticipate resistance from each other (Blalock 1989; Kriesberg 1982). Bargaining is a basic form of goal-directed action that involves both intentions to influence and efforts by each actor to carry out these intentions. Tactics are verbal and/or nonverbal actions designed to maneuver oneself into a favorable position vis-a-vis another or to reach some accommodation. Our treatment of bargaining subsumes the concept of negotiation (see Morley and Stephenson 1977). This chapter is organized around a conceptual framework that distinguishes basic types of bargaining contexts. We begin by introducing the framework and then present an overview of and analyze theoretical and empirical work on each type of bargaining context

Never retreat, never surrender: The bargaining power of commitment in the Hawk-Dove game

This paper studies experimentally the conditions that improve bargaining power using threats in a negotiation process. Following Schelling’s (1960) ideas we choose the hawk-dove game because is the simplest negotiation environment with inequity distribution in equilibrium. The analysis is focused on three essential elements of commitment: the possibility of a player to announce his own actions, the credibility of these messages and the experience acquired in the negotiation process. The empirical evidence shows that, in the first period, subjects do not realize the bargaining power of commitment. When the game is repeated and experience increases, subjects gradually understand the advantages of a threat, turning the payoffs into their favor. Credibility is also relevant for the relation, if subjects can choose their message, it is common to find strategic liars, and their rivals punish this behavior.Credible threats, negotiation, experiments

Renegotiation Proofness and Climate Agreements: Some Experimental Evidence

The notion of renegotiation-proof equilibrium has become a cornerstone in non-cooperative models of international environmental agreements. Applying this solution concept to the infinitely repeated N-person Prisoners' Dilemma generates predictions that contradict intuition as well as conventional wisdom about public goods provision. This paper reports the results of an experiment designed to test two such predictions. The first is that the higher the cost of making a contribution, the more cooperation will materialize. The second is that the number of cooperators is independent of group size. Although the experiment was designed to replicate the assumptions of the model closely, our results lend very little support to the two predictions.

Rational Samaritans, Strategic Moves, and Rule-Governed Behavior: Some Remarks on James Buchanan's "Samaritan's Dilemma"

Using James Buchanan's "Samaritan's Dilemma" as a basic example, this paper analyses the problems that have to be solved if strategic behavior is necessary to escape from dilemma situations by changing the opponents' incentives. These problems are addressed within one-shot games as well as repeated games. Furthermore, the implications resulting from the assumption of common knowledge of rationality are analyzed. By using the concept of finite automata to model strategies for supergames, the possible relations with evolutionary game theory are spelled out. -- Dieser Beitrag untersucht am Beispiel von James Buchanans "Samariter-Dilemma" die Probleme, die es zu lösen gilt, wenn "strategisches Verhalten" im Sinne der Veränderung von Handlungsanreizen durch glaubhafte Drohungen und Versprechen notwendig ist, um Dilemmasituationen zu vermeiden. Dabei werden neben den grundelgenden Strukturen "Einmalspiel" und "Superspiel" auch die Besonderheiten der Annahme von "common knowledge" analysiert, und mit dem Konzept der als finite Automaten abbildbaren Superspielstrategien Brücken zur evolutorischen Spieltheorie geschlagen.rationality,altruism,evolutionary stability,strategic moves