NEP-HPE 2012-09-16, 12 papers

NEP: New Economics Papers
History and Philosophy of Economics

Edited by:	Erik Thomson
University of Manitoba
Issue date:	2012-09-16
Papers:	12

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In this issue we have:

1. Too smart to be selfish? Measures of cognitive ability, social preferences, and consistency Chen, Chia-Ching; Chiu, I-Ming; Smith, John; Yamada, Tetsuji
2. Representations Of Positive Projections On Lipschitz Vector Omer Edhan
3. The Effect of Perspective on Unethical Behavior Amos Schurr; Ilana Ritov; Yaakov Kareev; Judith Avrahami
4. Continuous-time Stochastic Games Abraham Neyman
5. On the Convergence to Nash Bargaining Solution for Endogenous Bargaining Protocols Herings P. Jean-Jacques; Britz Volker; Predtetchinski Arkadi
6. Continuous-Time Stochastic Games of Fixed Duration Yehuda (John) Levy
7. An experimental study of mixed strategy equilibria in simultaneous price-quantity games Daniel Cracau; Benjamin Franz
8. Time as a Medium of Reward in Three Social Preference Experiments Noussair, C.N.; Stoop, J.T.R.
9. Values of Exact Market Games Omer Edhan
10. Spectrum Value for Coalitional Games Mikel Alvarez-Mozos; Ziv Hellman; Eyal Winter
11. The Strategic Impact of Higher-Order Beliefs Yi-Chun Chen; Alfredo Di Tillio; Eduardo Faingold; Siyang Xiong
12. Sovereign Debt Restructurings 1950 – 2010: Literature Survey, Data, and Stylized Facts Christoph Trebesch; Michael G Papaioannou; Udaibir S. Das

Contents.

1. Too smart to be selfish? Measures of cognitive ability, social preferences, and consistency
   

   Date:	2012-09-05
   By:	Chen, Chia-Ching Chiu, I-Ming Smith, John Yamada, Tetsuji
   URL:	http://d.repec.org/n?u=RePEc:pra:mprapa:41078&r=hpe
   Although there is an increasing interest in examining the relationship between cognitive ability and economic behavior, less is known about the relationship between cognitive ability and social preferences. We investigate the relationship between consequential measures of cognitive ability and measures of social preferences. We have data on a series of small-stakes dictator-type decisions, known as Social Value Orientation (SVO), in addition to choices in a larger-stakes dictator game. We also have access to the grade point averages (GPA) and SAT (formerly referred to as the Scholastic Aptitude Test) outcomes of our subjects. We find that subjects who perform better on the Math portion of the SAT are more generous in both the dictator game and the SVO measure. By contrast we find that subjects with a higher GPA are more selfish in the dictator game and more generous according to the SVO. We also find some evidence that the subjects with higher GPA and higher SAT outcomes offer more consistent responses. Our results involving GPA and social preferences complement previous work which employ measures of cognitive ability which are sensitive to the intrinsic motivation of the subject. Our results involving SAT scores are without precedent in the literature and suggest that measures of cognitive ability, which are less sensitive to the intrinsic motivation of the subject, are positively related to generosity.
   Keywords:	dictator game; Social Value Orientation; altruism; intelligence
   JEL:	D64

2. Representations Of Positive Projections On Lipschitz Vector
   

   Date:	2012-08
   By:	Omer Edhan
   URL:	http://d.repec.org/n?u=RePEc:huj:dispap:dp624&r=hpe
   Among the single-valued solution concepts studied in cooperative game theory and economics, those which are also positive projections play an important role. The value, semivalues, and quasivalues of a cooperative game are several examples of solution concepts which are positive projections. These solution concepts are known to have many important applications in economics. In many applications the specific positive projection discussed is represented as an expectation of marginal contributions of agents to «random" coalitions. Usually these representations are used to characterize positive projections obeying certain additional axioms. It is thus of interest to study the representation theory of positive projections and its relation with some common axioms. We study positive projections defined over certain spaces of nonatomic Lipschitz vector measure games. To this end, we develop a general notion of «calculus" for such games, which in a manner extends the notion of the Radon-Nykodim derivative for measures. We prove several representation results for positive projections, which essentially state that the image of a game under the action of a positive projection can be represented as an averaging of its derivative w.r.t. some vector measure. We then introduce a specific calculus for the space $\mathcal{CON}$ generated by concave, monotonically nondecreasing, and Lipschitz continuous functions of finitely many nonatomic probability measures. We study in detail the properties of the resulting representations of positive projections on $\mathcal{CON}$ and especially those of values on $\mathcal{CON}$. The latter results are of great importance in various applications in economics.

3. The Effect of Perspective on Unethical Behavior
   

   Date:	2012-08
   By:	Amos Schurr Ilana Ritov Yaakov Kareev Judith Avrahami
   URL:	http://d.repec.org/n?u=RePEc:huj:dispap:dp620&r=hpe
   In two experiments, we explored how the perspective through which individuals view their decisions influences their moral behavior. To do this we employed a computerized “Is that the answer you had in mind?” trivial-pursuit style game. The game challenges individuals’ integrity because cheating during play cannot be detected. Perspective, whether local or global, was manipulated: In Experiment 1 the choice procedure was used to evoke a local or an integrative perspective of one’s choices, whereas in Experiment 2, perspective was manipulated through priming. Across all the experiments, we observed that when given an incentive to cheat, the adoption of a local perspective increased cheating, as evidenced by overall higher reported success rates. These findings have clear implications for explaining and controlling behavior in other situations (e.g., exercising, dieting) in which the perspective one takes is a matter of choice.

4. Continuous-time Stochastic Games
   

   Date:	2012-08
   By:	Abraham Neyman
   URL:	http://d.repec.org/n?u=RePEc:huj:dispap:dp616&r=hpe
   Every continuous-time stochastic game with finitely many states and actions has a uniform and limiting-average equilibrium payoff.

5. On the Convergence to Nash Bargaining Solution for Endogenous Bargaining Protocols
   

   Date:	2012
   By:	Herings P. Jean-Jacques Britz Volker Predtetchinski Arkadi (METEOR)
   URL:	http://d.repec.org/n?u=RePEc:dgr:umamet:2012030&r=hpe
   We consider non-cooperative multilateral bargaining games with endogenous bargaining protocols.Under an endogenous protocol, the probability with which a player becomes the proposer in a roundof bargaining depends on the identity of the player who previously rejected. An important exampleis the frequently studied rejector-becomes-proposer protocol. We focus on subgame perfectequilibria in stationary strategies which are shown to exist and to be efficient. Equilibriumproposals do not depend on the probability to proposeconditional on the rejection by another player, though equilibrium acceptance sets do depend onthese probabilities. Next we consider the limit, as the bargaining friction vanishes. In case noplayer has a positive probability to propose conditional on his rejection, each player receiveshis utopia payoff conditional on being recognized and equilibrium payoffs are in general Paretoinefficient. Otherwise, equilibrium proposals of all players converge to a weighted NashBargaining Solution, where the weights are determined by the probability to propose conditional ona rejection.
   Keywords:	microeconomics ;

6. Continuous-Time Stochastic Games of Fixed Duration
   

   Date:	2012-08
   By:	Yehuda (John) Levy
   URL:	http://d.repec.org/n?u=RePEc:huj:dispap:dp617&r=hpe
   We study non-zero-sum continuous-time stochastic games, also known as continuous-time Markov games, of fixed duration. We concentrate on Markovian strategies. We show by way of example that equilibria need not exist in Markovian strategies, but they always exist in Markovian public-signal correlated strategies. To do so, we develop criteria for a strategy profile to be an equilibrium via differential inclusions, both directly and also by modeling continuous-time stochastic as differential games and using the Hamilton-Jacobi-Bellman equations. We also give an interpretation of equilibria in mixed strategies in continuous-time, and show that approximate equilibria always exist.

7. An experimental study of mixed strategy equilibria in simultaneous price-quantity games
   

   Date:	2012-08
   By:	Daniel Cracau (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg) Benjamin Franz (Mathematical Institute, University of Oxford)
   URL:	http://d.repec.org/n?u=RePEc:mag:wpaper:120017&r=hpe
   We study oligopoly games with firms competing in prices and quantities at the same time. We systematically compare our experimental results to the theoretical predictions using the mixed strategy equilibria for linear demand functions. For the duopoly game, we observe that the mixed strategy equilibrium predicts average outcomes better than Cournot and Bertrand do. Subjects’ price choices are mainly between marginal cost and monopoly level but do not follow the equilibrium distribution. Although average prices and profits are above theoretical values, we do not observe a high level of collusion as expected in the literature. By comparing simulations based on the mixed strategy equilibrium to our experimental outcomes, we conclude that in this game price setting can be explained by strategic reaction to preceding round results. In contrast to the equilibrium prediction, we observe a decrease in prices and negative average profits for the triopoly game.
   Keywords:	Price-Quantity Competition; Mixed Strategy Equilibria; Experimental Economics; Learning Direction Theory
   JEL:	D43

8. Time as a Medium of Reward in Three Social Preference Experiments
   

   Date:	2012
   By:	Noussair, C.N. Stoop, J.T.R. (Tilburg University, Center for Economic Research)
   URL:	http://d.repec.org/n?u=RePEc:dgr:kubcen:2012068&r=hpe
   Abstract: We report results from three well-known experimental paradigms, where we use time, rather than money, as the salient component of subjects’ incentives. The three experiments, commonly employed to study social preferences, are the dictator game, the ultimatum game and the trust game. All subjects in a session earn the same participation fee, but their choices affect the time at which they are permitted to leave the laboratory, with decisions typically associated with greater own payoff translating into an earlier departure. The modal proposal in both the dictator and ultimatum games is an equal split of the waiting time. In the trust game, there is substantial trust and reciprocity. Overall, social preferences are evident in time allocation decisions. Received laboratory results from dictator, ultimatum, and trust games are robust to the change in reward medium, though there is some suggestive evidence that decisions are even more prosocial with respect to time than money.
   Keywords:	dictator game;ultimatum game;trust game;time.
   JEL:	C70

9. Values of Exact Market Games
   

   Date:	2012-09
   By:	Omer Edhan
   URL:	http://d.repec.org/n?u=RePEc:huj:dispap:dp627&r=hpe
   We prove that a single-valued solution of perfectly competitive TU economies underling nonatomic exact market games is uniquely determined as the Mertens value by four plausible value-related axioms. Since the Mertens value is always a core element, this result provides an axiomatization of the Mertens value as a core-selection. Previous works in this direction assumed the economies to be either di erentiable (e.g., Dubey and Neyman [9]) or of uniform nite-type (e.g., Haimanko [14]). Our work does not assume that, thus it contributes to the axiomatic study of payo s in perfectly competitive economies (or values of their derived market games) in general. In fact, this is the rst contribution in this direction.

10. Spectrum Value for Coalitional Games
    

    Date:	2012-08
    By:	Mikel Alvarez-Mozos Ziv Hellman Eyal Winter
    URL:	http://d.repec.org/n?u=RePEc:huj:dispap:dp618&r=hpe
    Assuming a `spectrum’ or ordering on the players of a coalitional game, as in a political spectrum in a parliamentary situation, we consider a variation of the Shapley value in which coalitions may only be formed if they are connected with respect to the spectrum. This results in a naturally asymmetric power index in which positioning along the spectrum is critical. We present both a characterisation of this value by means of properties and combinatoric formulae for calculating it. In simple majority games, the greatest power accrues to `moderate’ players who are located neither at the extremes of the spectrum nor in its centre. In supermajority games, power increasingly accrues towards the extremes, and in unaninimity games all power is held by the players at the extreme of the spectrum.

11. The Strategic Impact of Higher-Order Beliefs
    

    Date:	2012-09
    By:	Yi-Chun Chen (Dept. of Economics, National University of Singapore) Alfredo Di Tillio (IGIR and Dept. of Economics, Universita Luigi Bocconi) Eduardo Faingold (Cowles Foundation, Yale University) Siyang Xiong (Dept. of Economics, Rice University)
    URL:	http://d.repec.org/n?u=RePEc:cwl:cwldpp:1875&r=hpe
    Previous research has established that the predictions made by game theory about strategic behavior in incomplete information games are quite sensitive to the assumptions made about the players’ infinite hierarchies of beliefs. We evaluate the severity of this robustness problem by characterizing conditions on the primitives of the model — the players’ hierarchies of beliefs — for the strategic behavior of a given Harsanyi type to be approximated by the strategic behavior of (a sequence of) perturbed types. This amounts to providing characterizations of the strategic topologies of Dekel, Fudenberg, and Morris (2006) in terms of beliefs. We apply our characterizations to a variety of questions concerning robustness to perturbations of higher-order beliefs, including genericity of common priors, and the connections between robustness of strategic behavior and the notion of common p-belief of Monderer and Samet (1989).
    Keywords:	Games with incomplete information, Rationalizability, Higher-order beliefs, Robustness
    JEL:	C70

12. Sovereign Debt Restructurings 1950 – 2010: Literature Survey, Data, and Stylized Facts
    

    Date:	2012-08-14
    By:	Christoph Trebesch Michael G Papaioannou Udaibir S. Das
    URL:	http://d.repec.org/n?u=RePEc:imf:imfwpa:12/203&r=hpe
    This paper provides a comprehensive survey of pertinent issues on sovereign debt restructurings, based on a newly constructed database. This is the first complete dataset of sovereign restructuring cases, covering the six decades from 1950–2010; it includes 186 debt exchanges with foreign banks and bondholders, and 447 bilateral debt agreements with the Paris Club. We present new stylized facts on the outcome and process of debt restructurings, including on the size of haircuts, creditor participation, and legal aspects. In addition, the paper summarizes the relevant empirical literature, analyzes recent restructuring episodes, and discusses ongoing debates on crisis resolution mechanisms, credit default swaps, and the role of collective action clauses.
    Keywords:	Debt relief , Debt restructuring , Developing countries , Domestic debt , Emerging markets , Sovereign debt ,

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