Civilization and the evolution of short sighted agents

We model an assurance game played within a population with two types of individuals -- short-sighted and foresighted. Foresighted people have a lower discount rate than short sighted people. These phenotypes interact with each other. We define the persistent interaction of foresighted people with other foresighted people as a critical element of civilization while the interaction of short sighted people with other short sighted people as critical to the failure of civilization. We show that whether the short sighted phenotype will be an evolutionary stable strategy (and thus lead to the collapse of civilization) depends on the initial proportion of short sighted people relative to people with foresight as well as their relative discount rates. Further we explore some comparative static results that connect the probability of the game continuing and the relative size of the two discount rates to the likelihood that civilization will collapse.society; breakdown; evolution; replicator; dynamic; process; civilization; conflict; institution

War with Iran: Will brinkmanship deter Iran from building the bomb?

This paper applies a standard model of brinkmanship as a way of analyzing the likelihood that Iran will respond to the threat of war by capitulating on its nuclear weapons ambitions. We find that it is always possible to generate such a threat as long as Iranian payoffs are non negative. Further, the upper limit on the threat depends on how deeply the international community feels about a nuclear armed Iran relative to its own costs from a possible war. We do not claim that this paper has any great theoretical insight -- however it is an analytical narrative that may help focus the attention of policy makers on the parameters that drive the success, or failure, of brinkmanship in the Iranian context.Iran; war; nuclear; brinkmanship

Silence is golden: communication, silence, and cartel stability

This paper studies how cartel stability is influenced by asymmetric information and communication about demand. Firms in a cartel face fluctuating demand in a repeated game framework. In each period, one randomly chosen firm knows current demand. In this context we consider two different equilibria -- one where the informed firm communicates its information to its partners and another where it does not. We show that cartels are extremely unstable when the informed firm communicates with the uninformed firms. However, when the informed firm does not communicate with the uninformed firms cartels can be as stable as when there are no demand fluctuations at all

War with Iran: Will brinkmanship deter Iran from building the bomb?

This paper applies a standard model of brinkmanship as a way of analyzing the likelihood that Iran will respond to the threat of war by capitulating on its nuclear weapons ambitions. We find that it is always possible to generate such a threat as long as Iranian payoffs are non negative. Further, the upper limit on the threat depends on how deeply the international community feels about a nuclear armed Iran relative to its own costs from a possible war. We do not claim that this paper has any great theoretical insight -- however it is an analytical narrative that may help focus the attention of policy makers on the parameters that drive the success, or failure, of brinkmanship in the Iranian context

A Decision Analysis Approach To Solving the Signaling Game

Decision analysis has traditionally been applied to choices under uncertainty involving a single decision maker. Game theory has been applied to solving games of strategic interaction between two or more players. Building upon recent work of van Binsbergen and Marx (2007. Exploring relations between decision analysis and game theory. Decision Anal. 4(1) 32–40.), this paper defines a modified decision-theoretic approach to solving games of strategic interaction between two players. Using this method, the choices of the two players are modeled with separate decision trees comprised entirely of chance nodes. Optimal policies are reflected in the probabilities in the decision trees of each player. In many cases, the optimal strategy for each player can be obtained by rolling back the opponent’s decision tree. Results are demonstrated for the multi-stage signaling game, which is difficult to model using decision nodes to represent strategies,as in the approach of van Binsbergen and Marx

Silence is golden: communication, silence, and cartel stability

This paper studies how cartel stability is influenced by asymmetric information and communication about demand. Firms in a cartel face fluctuating demand in a repeated game framework. In each period, one randomly chosen firm knows current demand. In this context we consider two different equilibria -- one where the informed firm communicates its information to its partners and another where it does not. We show that cartels are extremely unstable when the informed firm communicates with the uninformed firms. However, when the informed firm does not communicate with the uninformed firms cartels can be as stable as when there are no demand fluctuations at all

Civilization and the evolution of short sighted agents

We model an assurance game played within a population with two types of individuals -- short-sighted and foresighted. Foresighted people have a lower discount rate than short sighted people. These phenotypes interact with each other. We define the persistent interaction of foresighted people with other foresighted people as a critical element of civilization while the interaction of short sighted people with other short sighted people as critical to the failure of civilization. We show that whether the short sighted phenotype will be an evolutionary stable strategy (and thus lead to the collapse of civilization) depends on the initial proportion of short sighted people relative to people with foresight as well as their relative discount rates. Further we explore some comparative static results that connect the probability of the game continuing and the relative size of the two discount rates to the likelihood that civilization will collapse

Civilization and the evolution of short sighted agents

We model an assurance game played within a population with two types of individuals -- short-sighted and foresighted. Foresighted people have a lower discount rate than short sighted people. These phenotypes interact with each other. We define the persistent interaction of foresighted people with other foresighted people as a critical element of civilization while the interaction of short sighted people with other short sighted people as critical to the failure of civilization. We show that whether the short sighted phenotype will be an evolutionary stable strategy (and thus lead to the collapse of civilization) depends on the initial proportion of short sighted people relative to people with foresight as well as their relative discount rates. Further we explore some comparative static results that connect the probability of the game continuing and the relative size of the two discount rates to the likelihood that civilization will collapse

Snatched secrets: Cybercrime and trade secrets modelling a firm's decision to report a theft of trade secrets

Cybercrime and economic espionage are increasing problems for firms. We build on US FBI policy to frame the interaction between a cybercrime victim firm and a government security agency. We bring together several strands in the literature to model the strategies of the firm, which has suffered a cyber breach and theft of trade secrets, and the government security agency, which must investigate and prosecute crimes. We investigate the interactions between these two players, in which the firm has private information about its cybersecurity investment. This investment level is unknown to the security agency, which must nonetheless decide how to prioritize reported crime. We model this asymmetric information problem within a game theoretic signaling framework derived from Becker's work in crime and punishment. We suggest that such a framework can inform policy to encourage security investments by firms and more efficient resource utilization by security agencies. We particularly focus on an illustrative stylized example to highlight how our modelling approach can be helpful. In this example we compare two worlds; one where all security breaches become public knowledge and another where only reported breaches become public knowledge. We then formulate two potentially testable Hypotheses and several implications of these Hypotheses. Case studies and a policy analysis further highlight how our framework plays out in reality

Famous First Bubbles: The Fundamentals of Early Manias, by Garber, P.M. Cambridge, New York: MIT Press, 2000, 175 pp., $24.95 (cloth).

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