An economic model of regime change: Freedom as a public good

This paper analyses regime change via a peaceful revolution. Under these circumstances, peaceful manifestations of unrest reach a point at which the prevailing political system collapses and is replaced by a system which provides more freedom. Such regime change occurred in East Germany, Czechoslovakia, Bulgaria. It is shown that the successful quest for freedom may be explained as a dynamic game. The game has a unique strong equilibrium — that is, a Nash equilibrium robust against mass defections — which arises in consequence of a trigger strategy which is similar to the Tit-For-Tat strategy in a repeated Prisoners' Dilemma.     

Experiencing impartiality to invoke fairness in the n-PD: Some experimental results

Subjects play a 5-person Prisoner's Dilemma both from an impartial point of view and in a regular fashion to determine whether 1) Concerns for fairness increase cooperative behavior; 2) Play of a Prisoner's Dilemma from an impartial point of view results in significantly higher levels of cooperation than does normal play; 3) Concern for fairness has greater explanatory force in explaining cooperation in impartial plays of the Prisoner's Dilemma than in normal plays; and 4) Experience with impartial play of a Prisoner's Dilemma sensitizes subjects to normative imperatives and results in higher levels of cooperation in subsequent normal plays of Prisoner's Dilemmas. The first and second hypotheses are supported, the third is inverted, and the fourth is not supported. Concern for fairness is demonstrated to play a complex role in explaining cooperative behavior in regular plays of the game. An earlier version was presented at the Annual meetings of the Public Choice Society, 1993 Monteleone Hotel, New Orleans; 20 March 1993.     

Binary Games as Models of Public Goods Provision*

Problems of public goods provision are categorized according to attributes of the good to be provided, and properties of the group of potential beneficiaries. It is argued that not all such problems are Prisoner's Dilemmas. Other games of interest include Chicken, the Volunteer's Dilemma, a variant of the Assurance Came and several others. Which particular model is relevant in a given context depends critically on the specific characteristics of the situation under consideration.     

Introducing “Cooperative Push”: How Inefficient Environmental Policy (Sometimes!) Protects the Global Commons Better

In this paper we argue that the incentive structures of the gamesnations play in international environmental negotiations dependupon the choice of environmental policy instruments. Bargainingon the use of some instrument (e.g. an effluent charge) mayput the players into a dilemma game (like Chicken). Negotiationsto apply a different instrument (say, an emission reductionquota) may lead to a cooperation game (like Stag Hunt). The higherthe incentive to cooperate in the type of game which is built upby a specific instrument, the higher is this instrument's``cooperative push''. Of course, comparing two instruments,the one with the higher cooperative push might well be the lessefficient one. In this Paper, we analyse a situation where thehigher cooperative push of an instrument overcompensates thisinstrument's lower efficiency: Aggregate welfare withbilateral cooperation (the equilibrium of Stag Hunt) is higher than withunilateral cooperation (the equilibrium of the Chicken game).The question remains whether sovereign countries decide to playStag Hunt ending up in the welfare superior equilibrium. It isshown below that they do not in an uncoordinated optimising setting.However, we develop a particular frame where the proposedsolution meets the criteria of individual rationality,stability and fairness. It thereby establishes the politically mostdesired result – international cooperation.     

Rent-seeking behaviour of retaliating agents

This paper has examined a rent-seeking game where the players take a more sophisticated approach to evaluating the potential strategies and counter-strategies of their rivals than in the standard Nash case. We have derived the conditions for the existence of symmetric and nonsymmetric equilibria for the game and derived the properties of these equilibria. Three results merit repeating. First, we find that rent dissipation will not, in general, be complete. Second, and in contrast to much of the traditional literature, we find that the socially optimal result of zero rent-seeking is sometimes a feasible equilibrium outcome for our game. Finally, there exist rent-seeking configurations in which the best play of one of the rivals is to withdraw from the game or, alternatively stated, where it is not optimal for a rival to contest the rent by entering the game. In these nonsymmetric cases it would appear that Tullock's conjecture about the value of preemptive moves remains valid. This is true even when the strategies and counter-strategies available to the players are much more complex than in the traditional Nash approach.As a final point we raise the issue of whether or not it is reasonable to suppose that the players in rent-seeking games will take their strategy and counter-strategy sets to be as large as we have assumed in this paper. Players may well make their moves and counter-moves based upon rules of thumb or other considerations that effectively bound the strategy sets of the players. As well, it may be useful to consider games where players, upon entering the game, commit themselves to a given level of expenditures. Many of these issues are considered in a related paper by the authors.     

Social Capital and Endogenous Preferences

In this paper we analyze whether social capital can emerge endogenously from a process of preference evolution. We define social capital as preferences that promote voluntary cooperation in a one-shot Prisoner’s Dilemma game. We investigate how the endogenous preferences depend on the amount of information individuals have about each other’s preferences. When there is sufficiently much information, maximal social capital emerges. In general, the level of social capital varies positively with the amount of information. Our results may add to an understanding of the factors that determine a society’s ability to generate cooperative outcomes.     

Cooperation in PD Games: Fear, Greed, and History of Play

The impact of the cardinal relationships amongpecuniary payoffs, and of social history and reputation, on thechoice of strategies in four one-shot Prisoner's Dilemma games isexperimentally examined. The results suggest that normalized payoffvalues linked to ``fear'' and ``greed'' are important as predictorsof behavior in the PD games. Success in coordinating on the payoffdominant equilibrium in previous plays of coordination games alsoincreases the probability of cooperative play in the PD games. Theeffect of past play is strongest when individuals are matchedrepeatedly with the same person in previous play, as contrasted tobeing matched randomly with another player.     

博弈问题的哲学分析

自纳什以来,非合作博弈理论已经广泛应用于经济学、政治学、社会学、生物学等领域.本文从哲学角度分析了博弈中的理性和合作问题,试图指出,博弈论关于理性和合作的理解是非常单薄的,基本上局限于经济学的理解,而这可能误解人类行为.     

Playing the game: corporate social responsibility and the games industry

This paper provides an exploratory review of both the corporate social responsibility (CSR) agendas and achievements being publicly addressed by the world's leading games companies, and offers some wider reflections on the ways these companies are constructing and pursuing CSR strategies. The paper begins with a short discussion of the origins and characteristics of CSR and a thumbnail sketch of games and the games industry. The empirical material for the paper is drawn from the CSR material posted on the Internet by the world's top 10 games companies. The findings reveal that although the majority of the top 10 games companies provide some information on their approach to CSR, only a minority claim to be integrating CSR into their core business activities. Although the companies emphasize their commitment to promoting responsible gaming, they offer little if any commentary on what many critics see as the potentially damaging human consequences of the irresponsible development and playing of games. The majority of the top 10 games companies also address a wide range of impacts within the marketplace, the workplace, the environment and communities in which they operate. Although the leading games companies generally adopt a positive stance towards CSR, the independent external assessment of the reporting process is limited. More generally, the paper offers some critical reflections on the CSR agenda currently being pursued by the games industry. The paper provides an overview and some reflections on the CSR agenda being pursued by some of the world's leading games companies, and as such, it will interest academics in business and management, and information systems and media departments, a range of people working in management positions within the games industry and those professionals who work with the industry. Copyright © 2013 John Wiley & Sons, Ltd.     

Hangin' ten: The common-pool resource problem of surfing

Surfers face a common-pool resource problem, similar to that faced by fishers. Although the ocean shore is a common-pool resource, each wave is a private good. Coordination is essential if a surfers' dilemma is to be avoided. I model this situation as a two-person, two stage game. I show that for many cases the subgame perfect equilibrium is socially optimal. In other cases, the equilibrium is not optimal. I argue that for these cases a surfers' etiquette has evolved in response to this dilemma. A first-to-the curl, first-in-right rule ameliorates but does not fully resolve the dilemma. In addition, a locals-only policy, a policy in violation of the surfers' etiquette, may be a rational response to a growth of inexperienced surfers on the waves.     

Understanding and cooperation in social dilemmas

Cooperation in public dilemmas (and in externality dilemmas generally) is sometimes explained as a function of players' experience with the game: The more experience, the less cooperation. Experience, however, can produce both knowledge about how others will play the game (in particular, that they will defect) and improved understanding of the incentive structure of the game. We report data from two different experiments showing at best only a slight relationship between understanding the incentive structure of the game and cooperation. Inferences from the ‘experience’ finding that cooperation is based on misunderstanding of game incentives, therefore, seem misplaced.     

Veto games: Spatial committees under unanimity rule

There exists a large literature on two-person bargaining games and distribution games (or divide-the-dollar games) under simple majority rule, where in equilibrium a minimal winning coalition takes full advantage over everyone else. Here we extend the study to an n-person veto game where players take turns proposing policies in an n-dimensional policy space and everybody has a veto over changes in the status quo. Briefly, we find a Nash equilibrium where the initial proposer offers a policy in the intersection of the Pareto optimal set and the Pareto superior set that gives everyone their continuation values, and punishments are never implemented. Comparing the equilibrium outcomes under two different agendas – sequential recognition and random recognition – we find that there are advantages generated by the order of proposal under the sequential recognition rule. We also provide some conditions under which the players will prefer to rotate proposals rather than allow any specific policy to prevail indefinitely.     

The progress of the betting in a baseball game: A comment

In their article in the current issue of this journal, Sauer et al. compare the evolution of prices of in-game betting markets of baseball games to an empirical model of scoring based on the probability of various game events occurring. The authors correctly suggest this in-game betting market provides an opportunity to examine the efficiency of gambling markets, as the value of the security being examined can be known with a greater degree of precision than the fundamental value of securities being traded in general financial markets. While we appreciate the progress that has occurred, we believe that with some fairly simple changes, the authors may be able to improve the precision of their model to the point where a more powerful commentary on potential market efficiency could be developed. We offer suggestions on more precisely matching of the two sources of data, timing of the events, and dealing with games in which there is a clear pre-game favorite. We close with suggestions for extensions.     

Functional unpleasantness: the evolutionary logic of righteous resentment

Economics experiments and everyday experience cast doubt on the assumption that people are self-interested. In divide-the-dollar ultimatum games, participants turn down offers that would make them objectively better off. Similarly, drivers stuck in a traffic jam fume at cars cruising by on the shoulder. Many stuck drivers would punish the moving ones if they could, even at some cost to themselves. Such strategies appear irrational because they make the punisher worse off than accepting the situation or offer. We examine explanations for costly punishment and relax the presumption that punishers themselves prefer cooperation, using evolutionary game theory to show how uncooperative punishers can support cooperation.     

Vote trading: An experimental study

This essay reports the results of ninety 3-person and 5-person bargaining experiments using several alternative vote trading scenarios. These experiments are designed to test: (1) Riker and Brams' controversial hypothesis that vote trading can yield inferior outcomes as against the alternative hypothesis that vote trading induces ‘market-like’ efficiency in voting bodies; (2) the relative adequacy of several game theoretic solution concepts for vote trading games without a Condorcet winner (core); and, (3) the adequacy of the core itself. First, on the basis of eighteen experiments with binding commitments, we find some support for Riker and Brams' hypothesis: in nine trials, subjects first trade to a Pareto dominated outcome. In five of these trials, however, these outcomes are eventually displaced by Pareto efficient ones. Without binding commitments, however, we find little support for the ‘paradox of vote trading’ hypothesis. Specifically, while six of seven trials of a 3-person game yield ‘equitable’ outcomes, seventeen trials of several 5-person games without binding commitments strongly support the competitive solution as a cooperative game solution concept, and suggest that the V-set and M ₁ bargaining set are either redundant or useless. Seven trials each of six 5-person games with a condorcet winner (core), however, suggest that usual static solution concepts may be inadequate for treating games with any interesting degree of strategic complexity.     

Reputation Pays: Game Theory as a Tool for Analyzing Political Profit from Credibility*

The article provides a general account of information problems in politics and games, and an analytical exploration of reputation effects in politics in terms of game theory. It is shown. by three game theoretical examples, that reputation effects may in some circumstances lie of essential importance in determining optimal choices.     

Rewarding Policemen Increases Crime. Another Surprising Result from the Inspection Game

Inspection games are 2x2 games in which one playermust decide whether to inspect the other player, who in turnmust decide whether to infringe a norm or a regulation.Inspection games have a single, mixed strategy Nashequilibrium, which has counter-intuitive comparative staticsproperties. This result has been used by Tsebelis (1989) andHoller (1992) to show that the economic approach to lawenforcement is not likely to generate clear-cut predictions.In this paper I discuss a variant of the inspection game inwhich the inspector can act as a Stackelberg leader. I willalso show that this version of the inspection game hascounter-intuitive comparative statics properties. Inparticular, increasing inspector’s incentives to enforce thelaw increases the frequency of law infractions.     

War,pillage, and markets

Neoclassical economic theory has produced an extensive body of knowledge about market exchange based on cooperative relations: private property. This leads to an artificial dichotomy between cooperation and conflict though. It is best to view market exchange as lying along a continuum of conflict and cooperation. Conflict and cooperation are intertwined. From a game theoretic model of Hobbes' world, I show that a number of property rights structures are possible. Each is characterized as possessing varying degrees of conflict and cooperation. Finally, from a repeated game, I show how conflictual relations (mutual predation) may support more cooperative relations (private property). This new equilibrium is sub-game perfect.     

Of paradigms and power: British economic policy making since Thatcher

How do ruling policy paradigms persist over time and why do they often undergo significant internal ideational changes? While the impact of Peter Hall's approach to policy paradigms on the study of governance has been immense, there is a burgeoning consensus that a “Kuhnian” understanding of paradigms makes punctuated equilibrium style shifts the only game in town. While Hall's approach can account for inter‐paradigm change with reference to exogenous shocks, it does not allow for significant ideational shifts to occur intra‐paradigm. To remedy this, we place ideational power dynamics at the heart of the study of policy paradigms. We demonstrate the general applicability of our approach by examining the evolution of British macroeconomic policy‐making since 1990. We show how key policy‐makers were able to employ their institutional and ideational power to reinterpret and redefine the dominant neoliberal understanding of the economy to match their own specific ideas and policy priorities.