The Efficiency, Equity and Politics of Emission Permit Trading.

This paper illustrates that an international permit trading system may hurt relatively poor countries by making associated economic activities unaffordable. A model is constructed in which the free market solution is Pareto inefficient as a result of pollution. The introduction of tradable permits allows pollution to be internalised, and brings about an increase in the total social surplus. But when incomes vary, this may not lead to a Pareto improvement; those in poor countries stop the polluting activity because they cannot afford to do otherwise.TRADE ; EFFICIENCY ; POVERTY ; POLLUTION

Some First Results for Noncooperative Pregames : Social Conformity and Equilibrium in Pure Strategies.

We introduce the framework of noncooperative pregames and demonstrate that for all games with sufficiently many players, there exists approximate (E) Nash equilibria in pure strategies. Moreover, an equilibrium can be selected with the property that most players choose the same strategies as all other players with similar attributes. More precisely, there is an integer K, depending on E but not on the number of players so that any sufficiently large society can be partitioned into fewer than K groups, or cultures, consisting of similar players, and all players in the same group play the same pure strategy. In ongoing research we are extending the model to cover a broader class of situations, including incomplete information.GAMES ; INFORMATION ; STRATEGIC PLANNING

Arbitrage and Equilibrium in Economies with Externalities.

We introduce consumption externalities into a general equilibrium model with arbitrary consumption sets. To treat the problem of existence of equilibrium, a condition of no unbounded arbitrage, extending the condition of Page (1987) and Page and Wooders (1993, 1996) is defined. It is proven that this condition is sufficient for the existence of an equilibrium and both necessary and sufficient for compactness of the set of rational allocations.CONSUMPTION ; EXTERNALITIES ; ARBITRAGE

On the nonemptiness of approximate cores of large games

We provide a new proof of the nonemptiness of approximate cores of games with many players of a finite number of types. Earlier papers in the literature proceed by showing that, for games with many players, equal-treatment cores of their “balanced cover games,” which are nonempty, can be approximated by equal-treatment \varepsilon ? -cores of the games themselves. Our proof is novel in that we develop a limiting payoff possibilities set and rely on a fixed point theorem

Majoritarian Blotto contests with asymmetric battlefields: an experiment on apex games

We investigate a version of the classic Colonel Blotto game in which individual battlefields may have different values. Two players allocate a fixed discrete budget across battlefields. Each battlefield is won by the player who allocates the most to that battlefield. The player who wins the battlefields with highest total value receives a constant winner payoff, while the other player receives a constant loser payoff. We focus on apex games, in which there is one large and several small battlefields. A player wins if he wins the large and any one small battlefield, or all the small battlefields. For each of the games we study, we compute an equilibrium and we show that certain properties of equilibrium play are the same in any equilibrium. In particular, the expected share of the budget allocated to the large battlefield exceeds its value relative to the total value of all battlefields, and with a high probability (exceeding 90% in our treatments) resources are spread over more battlefields than are needed to win the game. In a laboratory experiment, we find that strategies that spread resources widely are played frequently, consistent with equilibrium predictions. In the treatment where the asymmetry between battlefields is strongest, we also find that the large battlefield receives on average more than a proportional share of resources. In a control treatment, all battlefields have the same value and our findings are consistent with previous experimental findings on Colonel Blotto games

Nonlinear and Multiplayer Evolutionary Games

Classical evolutionary game theory has typically considered populations within which randomly selected pairs of individuals play games against each other, and the resulting payoff functions are linear. These simple functions have led to a number of pleasing results for the dynamic theory, the static theory of evolutionarily stable strategies, and the relationship between them. We discuss such games, together with a basic introduction to evolutionary game theory, in Sect. 5.1. Realistic populations, however, will generally not have these nice properties, and the payoffs will be nonlinear. In Sect. 5.2 we discuss various ways in which nonlinearity can appear in evolutionary games, including pairwise games with strategy-dependent interaction rates, and playing the field games, where payoffs depend upon the entire population composition, and not on individual games. In Sect. 5.3 we consider multiplayer games, where payoffs are the result of interactions between groups of size greater than two, which again leads to nonlinearity, and a breakdown of some of the classical results of Sect. 5.1. Finally in Sect. 5.4 we summarise and discuss the previous sections

Existence of Share Equilibrium in Symmetric Local Public Good Economies * A. van den Nouweland

Abstract Share equilibrium was introduced in van den Nouweland and Wooders (2011) as an extension of ratio equilibrium to local public good economies. In that paper, we took an axiomatic approach to motivate share equilibrium. In the current paper we consider questions related to the existence of share equilibrium and we derive a necessary and sufficient condition for the existence of share equilibrium in symmetric economies. Along the way, we develop a deeper understanding of the possible variation in share equilibrium by considering when symmetric players necessarily have the same share indices in equilibrium