Market Game Research Articles

Decentralized Pricing and the equivalence between Nash and Walrasian equilibrium

We introduce, in the standard exchange economy model, market games in which agents use private prices as strategies. We give conditions on the game form that ensure that the only strict Nash equilibria of the game are the competitive equilibria of the underlying economy. This equivalence result has two main corollaries. First, it adds to the evidence that competitive equilibria can be strategically stable even in small economies. Second, it implies that competitive equilibria have good local stability properties under a large class of evolutionary learning dynamics.

Endogenous Public Information and Welfare in Market Games

Endogenous Public Information and Welfare in Market Games

중국 온라인게임 산업의 게임사용자 재구매 행위 결정요인에 관한 연구 : 온라인평가의 조절효과 분석

Despite a great performance of Korean online game in Chinese online game market, Korean companies were faced with decreasing market positions in China from 2006. To overcome this problem, I will suggest a research model about determinant of repurchase behavior of on-line game user and moderation effect of online review. Data collected from questionnaire survey were used in empirical analysis on research hypothesis through moderated multiple regression method. There are several conclusions as such; first, perceived value and loyalty of consumer have great positive relationships with repurchase behavior. Second, online review has positive direct influence on repurchase behavior and moderation effect of relationships among them. Third, game company has great efforts to develop online games and game contents which were guaranteed before in price, quality, information, and accurate consideration of online review.

Information aggregation in a large multi-stage market game

A three-stage market-game mechanism is devised that is simple (actions are quantities and outcomes are determined by arithmetic operations that do not depend on details of the economy) and achieves efficiency in a two-divisible-good, pure-exchange setting with potential information-aggregation. After an entry stage, agents make offers which are provisional for all but a small, randomly selected group. Then, those offers are announced, and everyone else makes new offers with payoffs determined by a Shapley–Shubik market game. For a finite and large number of players, there exists an almost ex post efficient equilibrium. Conditions for uniqueness are also provided.

Values of vector measure market games and their representations

We offer a representation result for values of vector measure market games, proving that the value of a game is an “average of marginals”. As a direct result we obtain that the Mertens value is the unique continuous value on the space of vector measure market games, and the unique value on the space of Lipschitz vector measure market games.

From the Myth of Level Playing Fields to the Reality of a Finite Planet: Comment on "A Global Social Support System: What the International Community Could Learn From the United States' National Basketball Association's Scheme for Redistribution of New Talent".

Despite the mythology that the global economy with its trade rules creates a 'level playing field,' international trade has never involved 'level players.' The inequalities in outcomes generated by the more powerful winning more frequently has led to innovative ideas for ex post redistribution to make the matches between the players both fairer, and in the analogy to basketball used by the authors, more interesting and even more competitive. The proposal for a Global Social Protection Fund, financed by a small tax on the winners to enhance social protection spending for the losers, presumably increasing the latter's capabilities to compete more effectively in the global market game, is one such idea. It has much to commend it. Several problems, however, stand in its way, apart from those inherent within nations themselves and to which the authors give some attention. First, much global trade is now intra-firm rather than international, making calculations of which nations win or lose exceedingly difficult. Second, tax havens persist without the transparency and global regulatory oversights that would allow a better rendering of where winnings are stashed. Third, pre-distribution inequalities (those arising from market activities before government tax and transfer measures apply) are still increasing as labour's power to wrestle global capital into some ameliorative social contract diminishes. Fourth, there are finite limits to a planet on the cusp of multiple environmental crises. These problems do not diminish the necessity of alternative policy playbooks such as the proposed Fund, but point to the need to embrace the new Sustainable Development Goals (SDGs) as a single set, such that economic growth for the bottom half of humanity includes deep structural reforms to both pre-distribution and redistribution, if the targets for environmental survival are to be met.

Dictator monopolies and essential goods: experimental evidence

Monopolists set prices and if the good is unessential this may place the consumer in an uncomfortable position. But if the good is essential the consumer faces a pay-to-live or -die choice. Dictator and ultimatum games are superficially similar in that one game offers the right of refusal, while the other does not. The dictator monopoly is, however, not a game, and behaviour could be radically different in the market environment versus game environment. We recast the dictator game as a dictator monopoly experiment and find that the fairness characteristic of the game evaporates quickly as rounds progress.

Order-Driven Markets are Almost Competitive

This article studies a market game under uncertainty in which agents may submit multiple limit and market orders. When agents know their preferences at all states, the competitive equilibrium can be supported as a Nash equilibrium of the market game, that is, agents behave as if they were price takers. Therefore, if the associated competitive economy has a fully revealing rational expectations equilibrium, then so does the market game. This resolves the puzzle that agents behave as if prices were given, even though prices aggregate private information, at least for this “private values” case. Necessary conditions for Nash equilibrium show that the resulting allocation cannot deviate too far from a competitive equilibrium. When agents do not know their preferences at some states, though, a characterization result shows that the Nash equilibria of the market game tend to be far from competitive. (author's abstract)

Fixed fee licensing for cost-reducing technologies: Should innovators reveal their private information?

In the process of licensing their technology to downstream firms, innovators often get some information on the firms’ cost reductions. Revealing this information to the market influences the market game, and thereby the licensees’ willingness to pay. We analyze the innovator’s optimal information provision with fixed fee licensing. Our main result is that the innovator should reveal the number of licenses, but should keep silent on the cost reductions of licensees. The intuition is that the innovator’s profit depends only on the willingness to pay of the critical firm which only just buys a license, and this firm benefits if the number of firms is revealed, but nothing is learned on the actual cost distribution.

The equivalence of convex and concave transport cost in a circular spatial model with and without zoning

This article depicts a location game in a circular market. The equivalence results between a convex and a concave transport cost are reexamined by assuming an arbitrary length. In contrast to previous research the solution found shows that the equivalence relationship depends on the space length. Furthermore, the analysis is extended to a circular model with unitary length and zoning. In this case equivalence does not hold. Moreover, non-existence of equilibrium is shown under strictly linear quadratic functions. Surprisingly, equilibrium exists for a concave quadratic function but not for a convex quadratic function.

Laboratory Experiments in Teaching Public Economics and Policy

Abstract This paper deals with classroom experiments in economics, which have been derived from laboratory experiments. These experiments cover a broad range of topics, from strictly economic ones (like market games or auctions) to those with overlaps to other domains such as public policy. The paper discusses different methodologies of research and classroom experiments, introduces the benefits of the latter and presents a concrete teaching experiment used in public economics courses at the Faculty of Economics and Administration of Masaryk University. Another link between economic experiments and public policy is outlined here as well, namely the importance of experimental results for public policy makers.

Mechanisms of Densification of the City in the Neoliberal Economy - a Case Study: the Surroundings of the Eastern Part of the Former Airport Runway Rakowice-Czyżyny in Cracow

Abstract The article is a case study of land use planning in the surroundings of the eastern side of the runway of the former airport Rakowice-Czyżyny in Cracow. The area was chosen because it is an example reflecting the history of many urban spaces that are well connected externally, well equipped in infrastructure, and favourably located in the city. They are now the scene of an intense market game, which arrogates to itself the almost unlimited right to determine the land use. Therefore, a study was conducted to verify the knowledge in that field. The analysis was based, inter alia, on differentiated source materials (including historical ones), a survey of press materials (mostly local ones), interviews with residents, the field analysis carried out in the research area and data analysis (primary market of real estate). The chosen example allowed the authors to confirm the theorems on the growing threats to the spatial order in a situation of struggle between supporters of neoliberal urbanism and broadly defined new urbanism. The latter cannot exist without spatial planning but since1990 in Poland we have been able to observe a crisis in this area. It leads to chaotic, too concentrated development in urban areas. This demonstrates that while the criticism of the new urbanism is in some dimensions justified, it cannot be used to legalize voluntary land development. This possibility of social and political permission for arbitrariness generates an “appetite” for space understood primarily as an economic good.

Implementing Efficient Market Structures: The Role of Information Transmission

We extend the literature on the implementation of efficient market structures to private information on marginal costs. We consider a setting with an incumbent and two potential entrants whose costs can be either high or low. By setting the license fee appropriately, the regulator can induce truth-telling by the potential entrants, and can then implement the welfare-maximizing market structure. We distinguish between a disclosure policy , where the regulator reveals the types of entrants before the market game is played, and a concealment policy , where he keeps silent about types. While the concealment policy is predominant in practice, we show that the disclosure policy leads to higher social welfare.

The SM-nucleolus in glove market games

In the present paper we consider a special class of TU-games { glove market games. Using both analytical and algorithmic approaches we apply the SM-nucleolus { a comparably new solution concept that is based on the idea of the blocking power of a coalition { to this kind of games. We provide analytical formulae for calculation of the SMnucleolus. On the top of this, Potters’ algorithm for the prenucleolus has been adapted for nding the SM-nucleolus as well. Some examples are given and explained in the paper. Finally, we discuss similarity and dierences that the SM-nucleolus and dierent solution concepts of TU-games demonstrate for a class of glove market games.

The merger-paradox: A tournament-based solution

According to the well-known “merger paradox”, in a Cournot market game mergers are generally unprofitable unless most firms merge. The present paper proposes an optimal merger mechanism. With this mechanism mergers are never unprofitable, more profitable than in other known mechanisms, and in many cases welfare increasing. The proposed mechanism assumes that merged firms continue to operate as independent subsidiaries that are rewarded according to a simple and commonly observed relative performance measure.

Payoffs in exact TU economies

We prove that a single-valued solution of perfectly competitive TU economies underlying nonatomic exact market games is uniquely determined as the Mertens [23] 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 differentiable (e.g., Dubey and Neyman [11]) or of uniform finite-type (e.g., Haimanko [16]). Our work does not assume that, thus it contributes to the axiomatic study of payoffs in perfectly competitive economies (or values of their derived market games) in general. In fact, this is the first contribution in this direction.

Dynamic multilateral markets

We study dynamic multilateral markets, in which players’ payoffs result from intra-coalitional bargaining. The latter is modeled as the ultimatum game with exogenous (time-invariant) recognition probabilities and unanimity acceptance rule. Players in agreeing coalitions leave the market and are replaced by their replicas, which keeps the pool of market participants constant over time. In this infinite game, we establish payoff uniqueness of stationary equilibria and the emergence of endogenous cooperation structures when traders experience some degree of (heterogeneous) bargaining frictions. When we focus on market games with different player types, we derive, under mild conditions, an explicit formula for each type’s equilibrium payoff as the market frictions vanish.

Competitive outcomes and the inner core of NTU market games

We consider the inner core as a solution concept for cooperative games with non-transferable utility (NTU) and its relationship to payoffs of competitive equilibria of markets that are induced by NTU games. An NTU game is an NTU market game if there exists a market such that the set of utility allocations a coalition can achieve in the market coincides with the set of utility allocations the coalition can achieve in the game. In this paper, we introduce a new construction of a market based on a closed subset of the inner core which satisfies a strict positive separability. We show that the constructed market represents the NTU game and, further, has the given closed set as the set of payoff vectors of competitive equilibria. It turns out that this market is not uniquely determined, and thus, we obtain a class of markets. Our results generalize those relating to competitive outcomes of NTU market games in the literature.

Generation Expansion Planning of Distributed Generation Sources in an Energy Market Based on Monte-Carlo Simulation and Game Theory

This article proposes a new comprehensive solution for generation expansion planning (GEP) of renewables in a deregulated environment based on developing distributed generations (DGs) and renewable sources. In this presented solution, generation companies (GENCOs) will make their decisions according to their technical/economical expenses through a dynamic game in a competitive energy market. The GENCOs manage their capitals and investments by economical indices. The independent system operator (ISO) presents various types of incentives in a new progressive method to support renewables and DGs. Existence of effective incentives/penalties by the ISO leads to gain the best applicable strategy for the GEP issue. In order to ensure the possessing reliability of system in a satisfactory level, the research has used energy not supplied through the Monte-Carlo simulation technique. This article can be helpful for the countries which desire to schedule a comprehensive program for renewable/DG sources development and emission reduction.

A battle of informed traders and the market game foundations for rational expectations equilibrium

Potential manipulation of prices and convergence to rational expectations equilibrium is studied in a game without noise traders. Informed players with initially long and short positions (bulls and bears) seek to manipulate consumer expectations in opposite directions. In equilibrium, period 1 prices reveal the state, so manipulation is unsuccessful. Bears and uninformed consumers sell up to their short-sale limits in period 1. Bulls buy in period 1 but receive arbitrage losses. When the number of bulls and bears approaches infinity, the equilibrium converges to the REE. Without short-sale constraints there is a non-revealing equilibrium but no revealing equilibrium.