Nash Outcome Research Articles

Trade wars and trade disputes: The role of equity and political support

AbstractRecent theoretical and quantitative analysis of trade wars is grounded in a relatively narrow treatment of optimal tariff theory and noncooperative Nash equilibria. The lynchpin of this approach is the assumption that trade policy makers are rational and have a simple well‐established objective function to optimize. We argue that the preferred specification of this objective function ignores inequality at its peril. We work with a quantitative trade model, introducing a comprehensive tariff‐space grid search new to the literature. This allows us to explicitly check for the presence of multiple Nash outcomes. We show that including income inequality—a primary focus of the earlier literature—as a determinant of social welfare can substantially change noncooperative Nash outcomes. We also show that the optimal tariff of the US falls by half when the social welfare function includes inequality as an objective. Hence, the economic outcomes of actual trade wars may be very different from what recent estimates grounded in optimal tariff theory would suggest.

Targeting senescent hepatocytes using the thrombomodulin-PAR1 inhibitor vorapaxar ameliorates NAFLD progression.

Senescent hepatocytes accumulate in parallel with fibrosis progression during NASH. The mechanisms that enable progressive expansion of nonreplicating cell populations and the significance of that process in determining NASH outcomes are unclear. Senescing cells upregulate thrombomodulin-protease-activated receptor-1 (THBD-PAR1) signaling to remain viable. Vorapaxar blocks the activity of that pathway. We used vorapaxar to determine if and how THBD-PAR1 signaling promotes fibrosis progression in NASH. We evaluated the THBD-PAR1 pathway in liver biopsies from patients with NAFLD. Chow-fed mice were treated with viral vectors to overexpress p16 in hepatocytes and induce replicative senescence. Effects on the THBD-PAR1 axis and regenerative capacity were assessed; the transcriptome of p16-overexpressing hepatocytes was characterized, and we examined how conditioned medium from senescent but viable (dubbed "undead") hepatocytes reprograms HSCs. Mouse models of NASH caused by genetic obesity or Western diet/CCl 4 were treated with vorapaxar to determine effects on hepatocyte senescence and liver damage. Inducing senescence upregulates the THBD-PAR1 signaling axis in hepatocytes and induces their expression of fibrogenic factors, including hedgehog ligands. Hepatocyte THBD-PAR1 signaling increases in NAFLD and supports sustained hepatocyte senescence that limits effective liver regeneration and promotes maladaptive repair. Inhibiting PAR1 signaling with vorapaxar interrupts this process, reduces the burden of 'undead' senescent cells, and safely improves NASH and fibrosis despite ongoing lipotoxic stress. The THBD-PAR1 signaling axis is a novel therapeutic target for NASH because blocking this pathway prevents accumulation of senescing but viable hepatocytes that generate factors that promote maladaptive liver repair.

Trust-based duopoly secure game models for cooperative relay networks

In a cooperative communication relay network, secure data transmission from source to the intended destination via relay nodes is an important issue. The eavesdropper or an adversary could tap the information from the link and hence maintaining secrecy is crucial. For confidential communication, we have taken into account the degree of trust, which would indeed help the source to select the best relay for forwarding data more efficiently and reliably without concerning on the eavesdropping attack. Also, unlike other works till date, we have developed duopoly game secure models to corroborate that the relay's profit gets higher with higher degree of trust in cooperative relay network. The utility of relays is evaluated for various duopoly-economic game modelling schemes and it is shown that there is decrease in the profit of relays with higher relay to eavesdropper SNR. We have demonstrated that the strategic variable choice as price or output in an oligopoly market theory, can dramatically impact the Nash outcome.

Game analysis on constructing the model of an international carbon emissions trading model

Constructing a model for international carbon emissions trading is an effective method to curb global warming through a market mechanism. Although the international carbon emissions market generates substantial profits, the relevant trading mechanism has been far from perfect. The perfect mechanism for international carbon emissions trading should be a revealing preference game. In other words, only if all players in this game truly show their information and preferences can the Nash outcome be Pareto efficient and fair. China should actively participate in the international carbon emissions trading game; promote efficiency, justice, rationality, and the quality of being manipulation-free in the carbon emissions market; and play a more important role in perfecting the international carbon emissions trading mechanism.

Trust-based duopoly secure game models for cooperative relay networks

In a cooperative communication relay network, secure data transmission from source to the intended destination via relay nodes is an important issue. The eavesdropper or an adversary could tap the information from the link and hence maintaining secrecy is crucial. For confidential communication, we have taken into account the degree of trust, which would indeed help the source to select the best relay for forwarding data more efficiently and reliably without concerning on the eavesdropping attack. Also, unlike other works till date, we have developed duopoly game secure models to corroborate that the relay's profit gets higher with higher degree of trust in cooperative relay network. The utility of relays is evaluated for various duopoly-economic game modelling schemes and it is shown that there is decrease in the profit of relays with higher relay to eavesdropper SNR. We have demonstrated that the strategic variable choice as price or output in an oligopoly market theory, can dramatically impact the Nash outcome.

PS-135-MSDC-0602 K, a PPAR-gamma sparing modulator of the mitochondrial pyruvate carrier, improves NASH outcome in a diet-induced animal model of non-alcoholic steatohepatitis

PS-135-MSDC-0602 K, a PPAR-gamma sparing modulator of the mitochondrial pyruvate carrier, improves NASH outcome in a diet-induced animal model of non-alcoholic steatohepatitis

On the first mover advantage in Stackelberg quantity games

In economic models, “sales equals production” is typically treated as an identity and not as an equilibrium outcome. This distinction, however, matters when production is sequential because of off-equilibrium path behavior. This paper shows that the first mover advantage in the standard Stackelberg oligopoly game in quantities may be reduced when “sales equals production” is no longer treated as an identity. Moving first does not per se produce a strategic advantage. It is only first moves that are sufficiently costly that produce this advantage. With costless production, the advantage disappears completely and the Cournot–Nash outcome is obtained.

Climate change control: the Lindahl solution

The main purpose of this paper is to evaluate different burden sharing rules with respect to abatement of carbon emissions. We evaluate seven different rules both in terms of their redistributive impact and by the extent to which they realize the aim of optimal abatement. We show that the Lindahl solution, where the burden sharing rule of carbon abatement is determined by each region’s willingness to pay, is to be preferred above the non-cooperative Nash outcome. Poor regions however would prefer the social planner outcome with a global permit market, because then the burden sharing rule has a secondary role of income redistribution by means of transfers from rich to poor, on top of its primary role of assigning abatement burdens. Based on these findings, we argue that in order to control global greenhouse gas emissions, the level of individual country emission abatement effort should be a function of their willingness to pay to curb climate change, rather than their historical emissions or ability to abate.

Distributed Bargaining in Dyadic-Exchange Networks

This paper considers dyadic-exchange networks in which individual agents autonomously form coalitions of size two and agree on how to split a transferable utility. Valid results for this game include stable (if agents have no unilateral incentive to deviate), balanced (if matched agents obtain similar benefits from collaborating), or Nash (both stable and balanced) outcomes. We design provably correct continuous-time algorithms to find each of these classes of outcomes in a distributed way. Our algorithmic design to find Nash bargaining solutions builds on the other two algorithms by having the dynamics for finding stable outcomes feeding into the one for finding balanced ones. Our technical approach to establish convergence and robustness combines notions and tools from optimization, graph theory, nonsmooth analysis, and Lyapunov stability theory and provides a useful framework for further extensions. We illustrate our results in a wireless communication scenario where single-antenna devices have the possibility of working as 2-antenna virtual devices to improve channel capacity.

Battle for Climate and Scarcity Rents: Beyond the Linear-Quadratic Case.

Industria imports oil, produces final goods and wishes to mitigate global warming. Oilrabia exports oil and buys final goods from the other country. Industria uses the carbon tax to impose an import tariff on oil and steal some of Oilrabia’s scarcity rent. Conversely, Oilrabia has monopoly power and sets the oil price to steal some of Industria’s climate rent. We analyze the relative speeds of oil extraction and carbon accumulation under these strategic interactions for various production function specifications and compare these with the efficient and competitive outcomes. We prove that for the class of HARA production functions, the oil price is initially higher and subsequently lower in the open-loop Nash equilibrium than in the efficient outcome. The oil extraction rate is thus initially too low and in later stages too high. The HARA class includes linear, loglinear and semi-loglinear demand functions as special cases. For non-HARA production functions, Oilrabia may in the open-loop Nash equilibrium initially price oil lower than the efficient level, thus resulting in more oil extraction and climate damages. We also contrast the open-loop Nash and efficient outcomes numerically with the feedback Nash outcomes. We find that the optimal carbon tax path in the feedback Nash equilibrium is flatter than in the open-loop Nash equilibrium. It turns out that for certain demand functions using the carbon tax as an import tariff may hurt consumers’ welfare as the resulting user cost of oil is so high that the fall in welfare wipes out the gain from higher tariff revenues.

Endogenizing leadership and tax competition: Externalities and public good provision

This paper analyzes the issue of leadership when two jurisdictions are engaged in tax competition and capital tax revenues are used to finance the provision of local public goods. For that purpose we consider a timing game between the two asymmetric jurisdictions. On the first stage jurisdictions decide to move early or late and on the second stage they choose their tax rates. If jurisdictions differ with respect to population sizes or with respect to preferences for public goods, the Subgame perfect equilibria (SPE) are the two sequential Stackelberg outcomes. If jurisdictions differ with respect to productivities or with respect to capital endowments, the SPE are (i) the two sequential Stackelberg outcomes, (ii) the simultaneous Nash outcome at which both jurisdictions move early or (iii) the single sequential Stackelberg outcome at which the more productive or capital-poorer jurisdiction leads. The differences between the SPE (i)–(iii) are explained with the help of the externalities caused by the jurisdictions' tax rates.

Battle for Climate and Scarcity Rents: Beyond the Linear-Quadratic Case

Industria imports oil, produces final goods and wishes to mitigate global warming. Oilrabia exports oil and buys final goods from the other country. Industria uses the carbon tax to impose an import tariff on oil and steal some of Oilrabia’s scarcity rent. Conversely, Oilrabia has monopoly power and sets the oil price to steal some of Industria’s climate rent. We analyze the relative speeds of oil extraction and carbon accumulation under these strategic interactions for various production function specifications and compare these with the efficient and competitive outcomes. We prove that for the class of HARA production functions the oil price is initially higher and subsequently lower in the open-loop Nash equilibrium than in the efficient outcome. The oil extraction rate is thus initially too low and in later stages too high. The HARA class includes linear, loglinear and semi-loglinear demand functions as special cases. For non-HARA production functions Oilrabia may in the open-loop Nash equilibrium initially price oil lower than the efficient level, thus resulting in more oil extraction and climate damages. We also contrast the open-loop Nash and efficient outcomes numerically with the feedback Nash outcomes. We find that the optimal carbon tax path in the feedback Nash equilibrium is flatter than in the open-loop Nash equilibrium. It turns out that for certain demand functions using the carbon tax as an import tariff may hurt consumers’ welfare as the resulting user cost of oil is so high that the fall in welfare wipes out the gain from higher tariff revenues.

Trade Retaliation in a Monetary-Trade Model

We explore how outcomes of trade policy retaliation (Nash tariff games) are affected when trade simultaneously takes places geographically across countries and through time via financial intermediation. In such models, deficits and surpluses in goods trade are endogenously determined, and retaliatory trade policy towards goods can affect these and monetary trade models show different retaliatory trade outcomes from conventional goods only models. We use a general equilibrium goods trade model, which also captures trade through time in the form of inside money as used in macro literature on one good overlapping generations models. In this model, the deficit or surplus of any country in goods trade is endogenous determined. Optimal trade policy differs from that in a conventional goods only trade model in that countries which run trade deficits in goods will have more strategic power through tariff policy (and surplus countries less) than in models with balanced trade. We calibrate such a model to China's trade with the rest of the world and explore two country tariff games using 2005 data. Results show the significant impacts on Nash outcomes of endogenizing the Chinese trade surplus in the model in this way.

On the Emergence and Evolution of Economic Complexity

This paper examines the emergence and evolution of economic complexity, defined as large-scale specialization and exchange (LSSE), within the context of a simple coordination game in which communication and coordination costs (institutions) are modeled explicitly. The commonly held view that complexity in the form of LSSE (pre- and post-industrial society) emerged and evolved spontaneously (i.e. as a Nash outcome) is examined critically. Specifically, it is shown that spontaneous-occurring LSSE equilibria are less likely than coordination-based ones (i.e. with a third party). Various communication and coordination strategies (CCSs) are examined, the results of which are then used to examine three complexity-increasing periods, namely ancient Mesopotamia and the first and second industrial revolutions. It is argued that in addition to technological innovations, all three were characterized by important institutional innovations (CCS) including the birth of laisser-faire and the rise of the modern-day, vertically- and horizontally-integrated industrial conglomerate.

Coevolutionary Genetic Algorithms for Establishing Nash Equilibrium in Symmetric Cournot Games

We use coevolutionary genetic algorithms to model the players' learning process in several Cournot models and evaluate them in terms of their convergence to the Nash Equilibrium. The “social-learning” versions of the two coevolutionary algorithms we introduce establish Nash Equilibrium in those models, in contrast to the “individual learning” versions which, do not imply the convergence of the players' strategies to the Nash outcome. When players use “canonical coevolutionary genetic algorithms” as learning algorithms, the process of the game is an ergodic Markov Chain; we find that in the “social” cases states leading to NE play are highly frequent at the stationary distribution of the chain, in contrast to the “individual learning” case, when NE is not reached at all in our simulations; and finally we show that a large fraction of the games played are indeed at the Nash Equilibrium.

A noncooperative view on two airport cost sharing rules

In this paper we model cost allocations for airport problems by using cooperative game and noncooperative game approaches. We relate the cost allocations given by the nucleolus and the egalitarian allocation to those given by the Nash outcomes of the noncooperative game.

Trade Retaliation in a Monetary-Trade Model

We explore how outcomes of trade policy retaliation (Nash tariff games) are affected when trade simultaneously takes places geographically across countries and through time via financial intermediation. In such models deficits and surpluses in goods trade are endogenously determined, and retaliatory trade policy towards goods can affect these and monetary trade models show different retaliatory trade outcomes from conventional goods only models. We use a general equilibrium goods trade model which also captures trade through time in the form of inside money as used in macro literature on one good overlapping generations models. In this model the deficit or surplus of any country in goods trade is endogenous determined. Optimal trade policy differs from that in a conventional goods only trade model in that countries which run trade deficits in goods will have more strategic power through tariff policy (and surplus countries less) than in models with balanced trade. We calibrate such a model to China's trade with the rest of the world and explore two country tariff games using 2005 data. Results show the significant impacts on Nash outcomes of endogenizing the Chinese trade surplus in the model in this way.

Monetary and fiscal policy interactions in the EMU when cyclical conditions are uncertain

This paper examines economic policy interactions in the Economic and Monetary Union when the assessment of cyclical conditions in real time is surrounded by uncertainty. On the basis of a simple stylised model it shows that with a Nash-type of interaction different views about the output gap on the side of the policy players—the Council of the European Union, the European Commission and the European Central Bank—can give rise to excessive activism with policy players pushing economic variables into opposite directions. It argues that the costs of such policy conflicts can be reduced by agreeing on a common assessment of the cycle, by constraining policy variables, and/or by increasing the weight of fiscally conservative institutions. An alternative option to sidestep policy conflicts ensuing from diverging views of the cycle is to take policy decisions sequentially, as is the case in a Stackelberg-type of interaction. The paper shows that for a given misperception of the cycle, the impact on the policy instruments and on output and inflation are generally smaller in the Stackelberg equilibrium as compared to a Nash outcome. Alternative allocations of roles—that is leader versus follower—are discussed and assessed.

On the implementation of the L-Nash bargaining solution in two-person bargaining games

The “Nash program” initiated by Nash (Econometrica 21:128–140, 1953) is a research agenda aiming at representing every axiomatically determined cooperative solution to a game as a Nash outcome of a reasonable noncooperative bargaining game. The L-Nash solution first defined by Forgo (Interactive Decisions. Lecture Notes in Economics and Mathematical Systems, vol 229. Springer, Berlin, pp 1–15, 1983) is obtained as the limiting point of the Nash bargaining solution when the disagreement point goes to negative infinity in a fixed direction. In Forgo and Szidarovszky (Eur J Oper Res 147:108–116, 2003), the L-Nash solution was related to the solution of multiciteria decision making and two different axiomatizations of the L-Nash solution were also given in this context. In this paper, finite bounds are established for the penalty of disagreement in certain special two-person bargaining problems, making it possible to apply all the implementation models designed for Nash bargaining problems with a finite disagreement point to obtain the L-Nash solution as well. For another set of problems where this method does not work, a version of Rubinstein’s alternative offer game (Econometrica 50:97–109, 1982) is shown to asymptotically implement the L-Nash solution. If penalty is internalized as a decision variable of one of the players, then a modification of Howard’s game (J Econ Theory 56:142–159, 1992) also implements the L-Nash solution.

Robust Evolutionary Algorithm Design for Socio-Economic Simulation: A Correction

The original paper compared two com-monly used approaches to socio-economic simulation. In the first approach param-eter settings for the evolutionary algorithm are directly derived from the underlyingeconomic model while in the second approach to social learning parameter settingsare chosen so as to optimise evolutionary algorithm performance. Main conclusionsof the original paper are that the first approach may hinder the performance of theevolutionary algorithm and thereby hinder agent learning, that is, that social learn-ing evolutionary algorithms are able to overcome the so-called spite-effect and ob-tain high profit outcomes. These main conclusions are still confirmed when the er-ror in the mutation operator is corrected. However, the convergence behaviour ofsome of the individual runs differs significantly from the (incorrect) results pre-sented in the earlier papers. More specifically, in the corrected experiments we donot observe the same type of premature convergence in approach I. In this paperwe present the corrected results. The average convergence behaviour for the twoapproaches is shown in Fig. 1, where we see convergence to the higher profit Cour-not Nash outcome (at output 40) using approach II whereas approach I leads to thelower-profit competitive outcome (at output 50) for these set of EA parameters. Thecorrected results for the individual runs are shown in Fig. 2.