On cheap talk in games

It has been proved in many studies that cheap talk has great influence on the players' choices of strategies in games. But the effect of cheap talk has still not been properly evaluated in game theory. Based on a novel game model with parameters denoting how one player cares for the other''s payoff, we can take the relations between players into account in games and extend the use of games theory. In this study the effect of cheap talk was analyzed by using the new game model.

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

Game theory

game theory

Online Dispute Resolution Through the Lens of Bargaining and Negotiation Theory: Toward an Integrated Model

[Excerpt] In this article we apply negotiation and bargaining theory to the analysis of online dispute resolution. Our principal objective is to develop testable hypotheses based on negotiation theory that can be used in ODR research. We have not conducted the research necessary to test the hypotheses we develop; however, in a later section of the article we suggest a possible methodology for doing so. There is a vast literature on negotiation and bargaining theory. For the purposes of this article, we realized at the outset that we could only use a small part of that literature in developing a model that might be suitable for empirical testing. We decided to use the behavioral theory of negotiation developed by Richard Walton and Robert McKersie, which was initially formulated in the 1960s. This theory has stood the test of time. Initially developed to explain union-management negotiations, it has proven useful in analyzing a wide variety of disputes and conflict situations. In constructing their theory, Walton and McKersie built on the contributions and work of many previous bargaining theorists including economists, sociologists, game theorists, and industrial relations scholars. In this article, we have incorporated a consideration of the foundations on which their theory was based. In the concluding section of the article we discuss briefly how other negotiation and bargaining theories might be applied to the analysis of ODR

Non-cooperative Games

Non-cooperative games are mathematical models of interactive strategic decision situations.In contrast to cooperative models, they build on the assumption that all possibilities for commitment and contract have been incorporated in the rules of the game.This contribution describes the main models (games in normal form, and games in extensive form), as well as the main concepts that have been proposed to solve these games.Solution concepts predict the outcomes that might arise when the game is played by "rational" individuals, or after learning processes have converged.Most of these solution concepts are variations of the equilibrium concept that was proposed by John Nash in the 1950s, a Nash equilibrium being a combination of strategies such that no player can improve his payoff by deviating unilaterally.The paper also discusses the justifications of these concepts and concludes with remarks about the applicability of game theory in contexts where players are less than fully rational.noncooperative games

The Hold-Up Problem and Incomplete Contracts: A Survey of Recent Topics in Contract Theory

This article provides a non-technical survey on recent topics in the theory of contracts. The hold-up problem is presented and the incomplete contracts approach is discussed. Emphasis is put on conceptual problems and open questions that await further research.Contract Theory; Hold-Up Problem; Incomplete Contracts

Paradoxes versus formalism in economics. Evidence from the early years of game theory and experimental economics

This paper argues that the acceptance of two recent methodological advances in economics, namely game theory and laboratory experimentation, was affected by the history dependence constraining the formalization of economics. After an early period in which the two methods were coolly received by economists because their applications challenged some basic hypotheses of mainstream economics, their subsequent acceptance was the result of the corroboration of those same hypotheses. However, the recent emergence of some paradoxes has finally revealed that the effectiveness of game theory and experimental techniques in economics is improved when descriptively implausible and normatively unsatisfactory assumptions such as the centrality of individual maximization in decision theory and the definition of rationality as consistency in preferences are revised.paradoxes, game theory, experiments, individual maximization, economic rationality

Stability and Equilibrium Selection in a Link Formation Game

In this paper we use a non cooperative equilibrium selection approach as a notion of stability in link formation games. Specifically, we follow the global games approach first introduced by Carlsson and van Damme (1993), to study the robustness of the set of Nash equilibria for a class of link formation games in strategic form with supermodular payoff functions. Interestingly, the equilibrium selected is in conflict with those predicted by the traditional cooperative refinements. Moreover, we get a conflict between stability and efficiency even when no such conflict exists with the cooperative refinements. We discuss some practical issues that these different theoretical approaches raise in reality. The paper also provides an extension of the global game theory that can be applied beyond network literature.Global Games, Equilibrium Selection, Networks.