Game-theoretic Study Research Articles

Resolving the Trust Predicament: A Quantum Game-theoretic Approach

Developing a good theoretical understanding of the role of trust in IR (such as in the events leading to the end of the Cold War) is still an open problem. Most game-theoretic studies of trust do not go beyond the limitations of an (ontologically) individualistic paradigm, thus assuming a pre-defined set of individual strategies. Yet, it is a fact that the predicament of collective trust is empirically resolved in many situations. This paper suggests a new game-theoretic approach—Quantum Game Theory (QGT)—to understand and explain how the predicament of trust is resolved. In a quantum game of trust the actors play the game by simultaneously collectively reconstructing the strategic environment in such a way as to become mutually strategically entangled. Quantum strategic entanglement allows trust to emerge between the two actors without assuming a need for signaling, prior “contract” type of arrangement, or any form of third-party communication. The paper develops and solves such a model of quantum game of trust

An information-theoretic and game-theoretic study of timing channels

This paper focuses on jammed timing channels. Pure delay jammers with a maximum delay constraint, an average delay constraint, or a maximum buffer size constraint are explored, for continuous-time or discrete-time packet waveforms. Fluid waveform approximations of each of these classes of waveforms are employed to aid in analysis. Channel capacity is defined and an information-theoretic game based on mutual information rate is studied. Min-max optimal jammers and max-min optimal input processes are sought. Bounds on the min-max and max-min mutual information rates are described, and numerical examples are given. For maximum-delay-constrained (MDC) jammers with continuous-time packet waveforms, saddle-point input and jammer strategies are identified. The capacity of the maximum-delay constrained jamming channel with continuous-time packet waveforms is shown to equal the mutual information rate of the saddle point. For MDC jammers with discrete-time packet waveforms, saddle-point strategies are shown to exist. Jammers which have quantized batch departures at regular intervals are shown to perform well. Input processes with batches at regular intervals perform well for MDC or maximum-buffer-size-constrained jammers.

A Game-Theoretical Study of Alternative Policies in China: Can Locally Initiated Investment Expansion Be Regulated?

Investment competition between local governments is a well-reported phenomenon accompanying the stage of economic take-off in China. Thus it is of important practical significance to investigate how the central bank can effectively realise its objectives in the context of such a competition when the approach to monetary policy evolves from a reliance on direct controls to a mix of direct and indirect regulations. This paper is a theoretical attempt to construct an interregional investment competition model framed in three different financial settings, and then to compare these alternative financial policies in terms of macroeconomic stabilisation. It is found that administrative controls and indirect regulations each has its strengths and weaknesses due to the existence of investment competition. This perhaps explains why it is unwise for China to jump in one step to the position that the central bank basically applies indirect monetary instruments to achieve macroeconomic management.

The effects of the business cycle on oligopoly coordination: Evidence from the U.S. rayon industry

Recent game-theoretic studies of the effects of the business cycle on oligopoly coordination predict that coordination is weakest when demand is high and expected future profit is lower. An empirical model that uses a conjectural elasticity term to measure the degree of coordination is developed to test for these two effects. The rayon industry of the 1930s is one that exhibited significantly non-competitive conduct that appears to have varied, in degree, with fluctuations in demand. Application of the empirical model to data from this industry produces results that support the predictions of recent theoretical models.

Deployment of robotic agents in uncertain environments: game theoretic rules and simulation studies

The coordination of intelligent, interacting, agents is rapidly gaining importance as such systems are deployed under diverse conditions. When robots are used in teams rather than as individuals, their coordination can become more critical for system performance than their individual capabilities. The deployment strategies and communication modes play an important role in the coordination of these teams.This paper examines a Game Theoretic deployment approach to robotic teams in an unstructured environment. A simulation model is developed and used to compare the performance of gaming rules with a non-anticipatory deterministic deployment rule. The initial Game Theoretic rule can be enhanced to exhibit both locally and globally adaptive characteristics. The new rule outperforms both the deterministic algorithm and the straightforward game-theoretic rule. This is achieved by adapting to trends in local regions in the environment as well as anticipating global eventualities.

Distinguished Fellow: Honoring Roy Radner

Roy Radner has been elected a Distinguished Fellow of the American Economic Association. To illustrate the Radner style, I have chosen the example of his turnpike theorem, even though this is not quite illustrative of his central concerns. I shall follow this with a brief survey of his contributions to general equilibrium theory and the theory of rational expectations equilibrium. I shall then turn to his work on teams, and conclude with one of his more game-theoretic studies of organizations and private information.

Playing Games with the Law

* Assistant Professor, Northwestern University School of Law; Research Fellow, American Bar Foundation. B.A., Yale University; J.D., Yale Law School; Ph.D. (Economics), Massachusetts Institute of Technology. Avery Katz and Daryl Warder provided helpful comments. 1. Franklin M. Fisher, Games Economists Play. A Noncooperative View, 20 RANDJ. ECON. 113, 113 (1989). Fisher's description of the ascendancy is echoed by other economists. See, e.g., Carl Shapiro, The Theory of Business Strategy, 20 RANDJ. ECON. 125, 125 (1989) (This new wave of [industrial organization] research consists almost exclusively of game-theoretic studies of behavior and performance in imperfectly competitive markets.). 2. A casual glance at any issue of the leading microeconomic journals such as RandJournal of Economics or Review of Economic Studies will reveal several game theory articles. See, e.g., Joseph Farrell & Garth Saloner, Standardization, Compatibility, and Innovation, 16 RANDJ. ECON. 70 (1985); Drew Fudenberg & Jean Tirole, Sequential Bargaining with Incomplete Information, 50 REV. ECON. STUD. 221 (1983). 3. Nobel Prize winning economist Paul Anthony Samuelson formalized the marginalist method of utility and profit maximization. See PAUL ANTHONY SAMUELSON, FOUNDATIONS OF ECONOMIC ANALYSIS (1947). 4. The new game theory is dominated by a closely knit group of co-authors which includes David Kreps, Eric Maskin, Roger Myerson, Garth Saloner, Jean Tirole, and Robert Wilson. These theorists often collaborate, and the history of game-theoretic advances turns on the axes of their academic institutions: Stanford, M.I.T., Northwestern, and Harvard. See, e.g., David M. Kreps, Paul Milgrom, John Roberts & Robert Wilson, Rational Cooperation in the Finitely Repeated Prisoners' Dilemma, 27J. ECON. THEORY 245 (1982); Eric Maskin & Jean Tirole, Correlated Equilibria and Sunspots, 43 J. ECON. THEORY 364 (1987).

The Theory of Business Strategy

* The field of industrial organization has been transformed during the past twenty years. In the 1950s and 1960s, I.O. was predominantly an empirical field with little theory to guide either industry analysis or cross-section regression studies. During the 1980s, by contrast, there has been an intense flurry of activity in I.O. devoted to the development of new theory. This new wave of research consists almost exclusively of game-theoretic studies of behavior and performance in imperfectly competitive markets. In his companion piece Franklin Fisher argues that the game-theoretic approach to industrial organization has been unsuccessful. My aim here is to provide one participant's view of what industrial organization economists have learned from the recent theoretical research and where the field of industrial organization should go during the 1990s.

COALITION ANALYSIS WITH FUZZY SETS

After noting several limiting features and procedural disadvantages of typical game theoretic studies of coalition formation, a new measurement procedure based on fuzzy set theory is described. A generalized Tanimoto coefficient measuring attitudinal similarity provides the fundamental basis for location and analysis of potential coalitions in a group decision‐making task. The results of a pilot study using fuzzy preference matrices and α‐level sets to determine the existence and structural evolution of coalitions over time are presented. Finally, some conjectures concerning the definition and future study of coalitions are advanced.

Quantitative Aspects of the Economic Growth of Nations: VIII. Distribution of Income by Size

Quantitative Aspects of the Economic Growth of Nations: VIII. Distribution of Income by Size