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Journal articles on the topic 'Perfect Bayesian Equilibrium'

Author: Grafiati

Published: 4 June 2021

Last updated: 9 February 2022

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1

Fudenberg, Drew, and Jean Tirole. "Perfect Bayesian equilibrium and sequential equilibrium." Journal of Economic Theory 53, no. 2 (April 1991): 236–60. http://dx.doi.org/10.1016/0022-0531(91)90155-w.

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2

Bajoori, Elnaz, János Flesch, and Dries Vermeulen. "Behavioral perfect equilibrium in Bayesian games." Games and Economic Behavior 98 (July 2016): 78–109. http://dx.doi.org/10.1016/j.geb.2016.06.002.

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3

González-Díaz, Julio, and Miguel A. Meléndez-Jiménez. "On the notion of perfect Bayesian equilibrium." TOP 22, no. 1 (November 6, 2011): 128–43. http://dx.doi.org/10.1007/s11750-011-0239-z.

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4

Bonanno, Giacomo. "Exploring the Gap between Perfect Bayesian Equilibrium and Sequential Equilibrium." Games 7, no. 4 (November 10, 2016): 35. http://dx.doi.org/10.3390/g7040035.

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5

Qin, Cheng-Zhong, and Xintong Yang. "On the equivalence of rational expectations equilibrium with perfect Bayesian equilibrium." Economic Theory 69, no. 4 (April 11, 2019): 1127–46. http://dx.doi.org/10.1007/s00199-019-01192-w.

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6

Gibbons, Robert. "An Introduction to Applicable Game Theory." Journal of Economic Perspectives 11, no. 1 (February 1, 1997): 127–49. http://dx.doi.org/10.1257/jep.11.1.127.

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This paper offers an introduction to game theory for applied economists. The author gives simple definitions and intuitive examples of four kinds of games and their corresponding solution concepts: Nash equilibrium in static games of complete information; subgame-perfect Nash equilibrium in dynamic games of complete information; Bayesian Nash equilibrium in static games with incomplete (or 'private') information; and perfect Bayesian (or sequential) equilibrium in dynamic games with incomplete information. The main theme of the paper is that there are important differences among the games but important similarities among the solution concepts.

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7

Clark, Daniel, and Drew Fudenberg. "Justified Communication Equilibrium." American Economic Review 111, no. 9 (September 1, 2021): 3004–34. http://dx.doi.org/10.1257/aer.20201692.

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Justified communication equilibrium (JCE) is an equilibrium refinement for signaling games with cheap-talk communication. A strategy profile must be a JCE to be a stable outcome of nonequilibrium learning when receivers are initially trusting and senders play many more times than receivers. In the learning model, the counterfactual “speeches” that have been informally used to motivate past refinements are messages that are actually sent. Stable profiles need not be perfect Bayesian equilibria, so JCE sometimes preserves equilibria that existing refinements eliminate. Despite this, it resembles the earlier refinements D1 and NWBR, and it coincides with them in co-monotonic signaling games. (JEL C70, D82, D83, J23, M51)

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Bonanno, Giacomo. "AGM-consistency and perfect Bayesian equilibrium. Part II: from PBE to sequential equilibrium." International Journal of Game Theory 45, no. 4 (September 29, 2015): 1071–94. http://dx.doi.org/10.1007/s00182-015-0506-6.

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9

Glycopantis, Dionysius, Allan Muir, and Nicholas C. Yannelis. "Non-implementation of rational expectations as a perfect Bayesian equilibrium." Economic Theory 26, no. 4 (November 2005): 765–91. http://dx.doi.org/10.1007/s00199-004-0585-2.

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10

Bonanno, Giacomo. "AGM-consistency and perfect Bayesian equilibrium. Part I: definition and properties." International Journal of Game Theory 42, no. 3 (July 27, 2011): 567–92. http://dx.doi.org/10.1007/s00182-011-0296-4.

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LUCHIAN, Andrei, Horațiu MOGA, and Razvan BOBOC. "COMPUTING OF PERFECT BAYESIAN EQUILIBRIUM INVOLVED IN RADIO-JAMMING WARFARE BASED ON INCOMPLETE INFORMATION DYNAMIC GAMES WITH KNOWN CHANCE p." SCIENTIFIC RESEARCH AND EDUCATION IN THE AIR FORCE 21, no. 1 (October 8, 2019): 61–67. http://dx.doi.org/10.19062/2247-3173.2019.21.9.

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12

Palacio, Luis A., Alexandra Cortés-Aguilar, and Manuel Muñoz-Herrera. "The Strategic Role of Nonbinding Communication." Journal of Applied Mathematics 2015 (2015): 1–11. http://dx.doi.org/10.1155/2015/910614.

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This paper studies the conditions that improve bargaining power using threats and promises. We develop a model of strategic communication, based on theconflict game with perfect information, in which a noisycommitment messageis sent by a better-informed sender to a receiver who takes an action that determines the welfare of both. Our model captures different levels of aligned-preferences, for which classical games such asstag hunt,hawk-dove, andprisoner’s dilemmaare particular cases. We characterise the Bayesian perfect equilibrium with nonbinding messages undertruth-telling beliefsandsender’s bargaining powerassumptions. Through our equilibrium selection we show that the less conflict the game has, the more informative the equilibrium signal is and less credibility is necessary to implement it.

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13

Kabiraj, Tarun, and Uday Bhanu Sinha. "Outsourcing under incomplete information." Indian Growth and Development Review 10, no. 1 (April 10, 2017): 3–15. http://dx.doi.org/10.1108/igdr-03-2017-0014.

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Purpose The purpose of this paper is to show that outsourcing can occur as outcome of a separating or pooling perfect Bayesian equilibrium although it is not profitable under complete information. Therefore, asymmetric information can itself be a reason for outsourcing. Design/methodology/approach The present paper constructs a model of two firms interacting in the product market under asymmetric information where one firm has private information about its technological capability, and it has the option to produce inputs in-house or buy inputs from an input market. However, using outsourced inputs involves a fixed cost at the plant level. The model solves for perfect Bayesian equilibrium. Findings There are situations when under complete information, outsourcing of the input will not occur, but, under incomplete information, either only the low-cost type or both high and low-cost types will go for outsourcing, and there always exist reasonable beliefs supporting these equilibria. In particular, when the fixed cost is neither too small not too large, a separating equilibrium occurs in which the low-cost type outsources inputs from the input market but the high-cost type produces in-house; hence, outsourcing signals the firm’s type. Outsourcing by only the high-cost type firm will never occur in equilibrium. Originality/value That incomplete or asymmetric information can itself be a reason for strategic outsourcing is never identified in the literature. The present paper is an attempt to fill this gap and raise the issue of outsourcing in an incomplete information environment.

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Grover, Charu, and Sangeeta Bansal. "Imperfect certification and eco-labelling of products." Indian Growth and Development Review 12, no. 3 (November 11, 2019): 288–314. http://dx.doi.org/10.1108/igdr-04-2018-0039.

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Purpose This paper aims to investigate the role of certification in providing information and reducing market inefficiencies when the “certification process is imperfect”. In the setting, eco-labels imperfectly signal environmental product quality to consumers where the error in the process of certification could be either Type 1 or Type 2 error. The paper examines firms' incentive to get certified, equilibrium quantities and profits. The authors use perfect Bayesian equilibrium concept for the analysis. They then examine conditions for separating and pooling equilibrium to exist and welfare implications of certification process. Design/methodology/approach The paper uses a vertical product differentiated model where firms are competing in quantities. Consumers are unable to observe the environmental quality of the product. To signal the product quality to consumers, firms may adopt certification by a third party. Using a framework where certification process is imperfect, the paper derives conditions for Perfect Bayesian separating and pooling equilibrium to exist. Findings The paper shows that the existence of separating and pooling equilibrium depends on the certification fee. A separating equilibrium, where one firm seeks certification and other firm does not seek certification exists for an intermediate value of certification fee. A pooling equilibrium, where both firms seek certification, exists only when the certification fee is sufficiently small. The paper shows conditions for the certification fee for which welfare will be higher under separating equilibrium as compared to pooling equilibrium and analyses welfare implications for subsidy policy for the certification fee. Originality/value The paper contributes to the literature by examining the role of labelling under imperfect certification.

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15

Mensch, Jeffrey. "On the existence of monotone pure-strategy perfect Bayesian equilibrium in games with complementarities." Journal of Economic Theory 187 (May 2020): 105026. http://dx.doi.org/10.1016/j.jet.2020.105026.

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16

Yu, Hai Dong, Ying Zou, and Fang Liu. "Implementation Mechanism of Automated Reconciliation for Web Services Protocols." Advanced Engineering Forum 2-3 (December 2011): 604–7. http://dx.doi.org/10.4028/www.scientific.net/aef.2-3.604.

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The paper mainly researched the game actions among partners in complex interactions supported by Web Service. It studied web service provider’s implementation decision satisfied with perfect Bayesian equilibrium thus results a controllable equilibrium route in voluntary implementation. It also contributes to the problem of voluntary implementation when the planner is also a player and finds out the full characterization of it. So the implementation mechanism can always get the reconciliation of web service, which is able to effectively facilitate dynamic interactions among trading partners in a peer to peer mode.

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17

Jiang, Yanqing, Jian Yuan, and Mengmeng Zeng. "A Game Theoretic Study of Enterprise Mergers and Acquisitions: The Case of RJR Nabisco Being Acquired by KKR." Business and Management Studies 2, no. 2 (May 9, 2016): 21. http://dx.doi.org/10.11114/bms.v2i2.1552.

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There are both macro- and micro-level studies concerning enterprise mergers and acquisitions (M&A). Past studies have focused on M&A valuation, utility of the M&A motives and the strategic behavior during of the M&A process. Few game theory methods in the application of M&A stay mostly in the analysis of Nash equilibrium under the complete information static game. This paper thus aims to analyze the M&A behavior of enterprises within the framework of incomplete information dynamic game, combined with sub-game perfect Nash equilibrium of complete information dynamic game and Bayesian Nash equilibrium of incomplete information.

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18

Wand, Jonathan. "Comparing Models of Strategic Choice: The Role of Uncertainty and Signaling." Political Analysis 14, no. 1 (2006): 101–20. http://dx.doi.org/10.1093/pan/mpi017.

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Testing the fit of competing equilibrium solutions to extensive form games crucially depends on assumptions about the distribution of player types. To illustrate the importance of these assumptions for differentiating standard statistical models of strategic choice, I draw on a game previously analyzed by Lewis and Schultz (2003). The differences that they highlight between a pair of perfect Bayesian equilibrium and quantal response equilibrium models are not produced by signaling and updating dynamics as claimed, but are instead produced by different assumptions about the distribution of player types. The method of analysis developed and the issues raised are applicable to a broad range of structural models of conflict and bargaining.

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19

YU, GANG, ZHAOHAN SHENG, and TIAOJUN XIAO. "AN EFFECTIVE ALGORITHM FOR COMPUTING EQUILIBRIUM OUTCOME OF A CLASS OF SIGNALING GAMES." International Journal of Information Technology & Decision Making 01, no. 02 (June 2002): 209–28. http://dx.doi.org/10.1142/s0219622002000130.

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In this paper, we study the class of signaling games in which a unique perfect Bayesian Nash equilibrium outcome satisfying the Intuitive Criterion exists. We first describe the models of signaling games and lay out the definition of equilibrium and some basic assumptions. We then prove three basic theorems leading to the proof of the main theorem that gives sufficient conditions under which a signaling game has a unique outcome. The proof of the main theorem also leads to a method for computing the equilibrium outcome. We formally present the algorithm and illustrate its application through a numerical example. Finally, we apply our algorithm to enterprise management decision-making.

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20

Yang, Yanbing, Biao Zhang, Bin Liu, and Haiyan Xie. "Study on Dynamic Game Between Banks and Medium-Small Enterprise Based on Perfect Bayesian Equilibrium." Advanced Science Letters 6, no. 1 (March 15, 2012): 874–77. http://dx.doi.org/10.1166/asl.2012.2320.

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21

Liu, Liang, Lei Zhang, Shan Liao, Jiayong Liu, and Zhenxue Wang. "A generalized approach to solve perfect Bayesian Nash equilibrium for practical network attack and defense." Information Sciences 577 (October 2021): 245–64. http://dx.doi.org/10.1016/j.ins.2021.06.078.

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22

Sun, Ching-Jen. "Dynamic Price Discrimination with Customer Recognition." B.E. Journal of Theoretical Economics 14, no. 1 (January 1, 2014): 217–50. http://dx.doi.org/10.1515/bejte-2013-0048.

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AbstractThis paper studies a general two-period model of product line pricing with customer recognition. Specifically, we consider a monopolist who can sell vertically differentiated products over two periods to heterogeneous consumers. Each consumer demands one unit of the product in each period. In the second period, the monopolist can condition the price–quality offers on the observed purchasing behavior in the first period. In this setup, the monopolist can price discriminate consumers in two dimensions: by quality as well as by purchase history. We fully characterize the monopolist’s optimal pricing strategy when there are two types of consumers. When the type space is a continuum, we show that there is no fully separating equilibrium, and some properties of the optimal contracts (price–quality pairs) are characterized within the class of partitional perfect Bayesian equilibria.

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23

Angrisani, Marco, Antonio Guarino, Philippe Jehiel, and Toru Kitagawa. "Information Redundancy Neglect versus Overconfidence: A Social Learning Experiment." American Economic Journal: Microeconomics 13, no. 3 (August 1, 2021): 163–97. http://dx.doi.org/10.1257/mic.20180394.

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We study social learning in a continuous action space experiment. Subjects, acting in sequence, state their beliefs about the value of a good after observing their predecessors’ statements and a private signal. We compare the behavior in the laboratory with the Perfect Bayesian Equilibrium prediction and the predictions of bounded rationality models of decision-making: the redundancy of information neglect model and the overconfidence model. The results of our experiment are in line with the predictions of the overconfidence model and at odds with the others’. (JEL C91, D12, D82, D83)

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24

Duggan, John. "A Folk Theorem for Repeated Elections with Adverse Selection." Political Science Research and Methods 2, no. 2 (June 2, 2014): 213–42. http://dx.doi.org/10.1017/psrm.2014.4.

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This article establishes a folk theorem for a model of repeated elections with adverse selection: when citizens (voters and politicians) are sufficiently patient, arbitrary policy paths through arbitrarily large regions of the policy space can be supported by a refinement of perfect Bayesian equilibrium. Politicians are policy motivated (so office benefits cannot be used to incentivize policy choices), the policy space is one-dimensional (limiting the dimensionality of the set of utility imputations), and politicians’ preferences are private information (so punishments cannot be targeted to a specific type). The equilibrium construction relies critically on differentiability and strict concavity of citizens’ utility functions. An extension of the arguments allows policy paths to depend on the office holder's type, subject to incentive compatibility constraints.

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25

Zhao, Yi, and Dong Li. "Equilibrium Signal and Purchase Decision in China’s IPO Net Roadshow: A Dynamic Game Approach." Discrete Dynamics in Nature and Society 2016 (2016): 1–13. http://dx.doi.org/10.1155/2016/6327308.

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The net roadshow has been dominant in China’s IPO (initial public offerings) roadshow structure. Considering the dynamic game with incomplete information between the issuer and investor during China’s IPO net roadshow, the quality of the letter of intent is presented as a discrete signal in this paper in accordance with China’s IPO net roadshow characteristics. A signaling game model is established to conclude the issuer’s equilibrium signal and the investor’s purchase action. The issuer disguised a letter of intent to uplift its quality if the disguising cost per share stands below the bidding spread. If the investor judges the letter of intent as high-quality, the basis of purchase is that the opportunity cost per share is less than the expectation on the intrinsic value of the IPO stock. Otherwise the investor rejects purchasing on the condition that the opportunity cost outnumbers the valuation of intrinsic value. In conclusion, there exist unique separating equilibrium and pooling equilibrium as a perfect Bayesian Nash equilibrium, and the existence and uniqueness of their equilibrium domains have been verified by numerical simulation. Finally, the comprehensive empirical studies have validated only one separating and pooling equilibrium existing in China’s real-world IPO market.

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Konrad, Kai A., and Florian Morath. "Escalation in conflict games: on beliefs and selection." Experimental Economics 23, no. 3 (November 19, 2019): 750–87. http://dx.doi.org/10.1007/s10683-019-09630-1.

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AbstractWe study learning and selection and their implications for possible effort escalation in a simple game of dynamic property rights conflict: a multi-stage contest with random resolve. Accounting for the empirically well-documented heterogeneity of behavioral motives of players in such games turns the interaction into a dynamic game of incomplete information. In contrast to the standard benchmark with complete information, the perfect Bayesian equilibrium features social projection and type-dependent escalation of efforts caused by learning. A corresponding experimental setup provides evidence for type heterogeneity, for belief formation and updating, for self-selection and for escalation of efforts in later stages.

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송봉주. "The Analysis of Korean Economy Using a Perfect Bayesian Equilibrium in Game Theory: Application on North Korea Denuclearization." Credit Card Review 12, no. 4 (December 2018): 45–65. http://dx.doi.org/10.35348/ccr.2018.12.4.003.

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Lobel, Ilan, and Renato Paes Leme. "Dynamic Contracting under Positive Commitment." Proceedings of the AAAI Conference on Artificial Intelligence 33 (July 17, 2019): 2101–8. http://dx.doi.org/10.1609/aaai.v33i01.33012101.

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We consider a firm that sells products that arrive over time to a buyer. We study this problem under a notion we call positive commitment, where the seller is allowed to make binding positive promises to the buyer about items arriving in the future, but is not allowed to commit not to make further offers to the buyer in the future. We model this problem as a dynamic game where the seller chooses a mechanism at each period subject to a sequential rationality constraint, and characterize the perfect Bayesian equilibrium of this dynamic game. We prove the equilibrium is efficient and that the seller’s revenue is a function of the buyer’s ex ante utility under a no commitment model. In particular, all goods are sold in advance to the buyer at what we call the positive commitment price.

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Whang, Taehee. "Empirical Implications of Signaling Models: Estimation of Belief Updating in International Crisis Bargaining." Political Analysis 18, no. 3 (2010): 381–402. http://dx.doi.org/10.1093/pan/mpq014.

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Signaling models are ubiquitous in political science. An essential characteristic of these models is that actors can update their beliefs about their opponents. An actor observes the behavior of his opponent, and this behavior functions as a signal that allows the actor to learn more about his opponent's true “type.” As a result, the actor is able to adapt his own behavior. Current statistical models of strategic choice based on perfect Bayesian equilibrium, however, allow for very little, if any, belief updating. I explain why current models allow for little updating and offer in their stead a new, fully strategic choice estimator that calculates the correct amount of belief updating.

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Castro, Luis E., and Nazrul I. Shaikh. "Optimal Advertisement Spending in a Duopoly with Incomplete Information." International Journal of Business Analytics 5, no. 3 (July 2018): 1–21. http://dx.doi.org/10.4018/ijban.2018070101.

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This article presents the relationship between a firm's advertisement spending and sales in a duopoly when information about the competitors' advertisement spending is unavailable. The competitive interaction between the firms has been modeled as imperfect information Cournot and Stackelberg games and the conditions for subgame perfect Bayesian Nash equilibrium are presented. The results suggest that when the firms are similar in size and advertisement effectiveness, both firms are better off sharing their advertising plans with each other. On the other hand, when one of the firms is a market leader, the follower may profit from the leader's advertisement spending and so is better off keeping the leader guessing. A practical approach to estimate the optimum advertisement budget based on the expected values of the competitors' historic advertising spending is presented as well.

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OIKONOMOU, V. K., and J. JOST. "PERIODIC STRATEGIES II: GENERALIZATIONS AND EXTENSIONS." Advances in Complex Systems 23, no. 02 (March 2020): 2050005. http://dx.doi.org/10.1142/s0219525920500058.

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At a mixed Nash equilibrium, the payoff of a player does not depend on her own action, as long as her opponent sticks to his. In a periodic strategy, a concept developed in a previous paper [V. K. Oikonomou and J. Jost, Periodic strategies: A new solution concept and an algorithm for nontrivial strategic form games, Adv. Compl. Syst. 20(5) (2017) 1750009], in contrast, the own payoff does not depend on the opponent’s action. Here, we generalize this to multi-player simultaneous perfect information strategic form games. We show that also in this class of games, there always exists at least one periodic strategy, and we investigate the mathematical properties of such periodic strategies. In addition, we demonstrate that periodic strategies may exist in games with incomplete information; we shall focus on Bayesian games. Moreover, we discuss the differences between the periodic strategies formalism and cooperative game theory. In fact, the periodic strategies are obtained in a purely non-cooperative way, and periodic strategies are as cooperative as the Nash equilibria are. Finally, we incorporate the periodic strategies in an epistemic game theory framework, and discuss several features of this approach.

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Hsieh, Chih-Sheng, Lung-Fei Lee, and Vincent Boucher. "Specification and estimation of network formation and network interaction models with the exponential probability distribution." Quantitative Economics 11, no. 4 (2020): 1349–90. http://dx.doi.org/10.3982/qe944.

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We model network formation and interactions under a unified framework by considering that individuals anticipate the effect of network structure on the utility of network interactions when choosing links. There are two advantages of this modeling approach: first, we can evaluate whether network interactions drive friendship formation or not. Second, we can control for the friendship selection bias on estimated interaction effects. We provide microfoundations of this statistical model based on the subgame perfect equilibrium of a two‐stage game and propose a Bayesian MCMC approach for estimating the model. We apply the model to study American high school students' friendship networks using the Add Health dataset. From two interaction variables, GPA and smoking frequency, we find that the utility of interactions in academic learning is important for friendship formation, whereas the utility of interactions in smoking is not. However, both GPA and smoking frequency are subject to significant peer effects.

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33

Liu, Xiaohu, Hengwei Zhang, Yuchen Zhang, Lulu Shao, and Jihong Han. "Active Defense Strategy Selection Method Based on Two-Way Signaling Game." Security and Communication Networks 2019 (November 29, 2019): 1–14. http://dx.doi.org/10.1155/2019/1362964.

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Most network security research studies based on signaling games assume that either the attacker or the defender is the sender of the signal and the other party is the receiver of the signal. The attack and defense process is commonly modeled and analyzed from the perspective of one-way signal transmission. Aiming at the reality of two-way signal transmission in network attack and defense confrontation, we propose a method of active defense strategy selection based on a two-way signaling game. In this paper, a two-way signaling game model is constructed to analyze the network attack and defense processes. Based on the solution of a perfect Bayesian equilibrium, a defense strategy selection algorithm is presented. The feasibility and effectiveness of the method are verified using examples from real-world applications. In addition, the mechanism of the deception signal is analyzed, and conclusions for guiding the selection of active defense strategies are provided.

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Shao, Haipeng, Miaoran Zhang, Tao Feng, and Yifan Dong. "A Discretionary Lane-Changing Decision-Making Mechanism Incorporating Drivers’ Heterogeneity: A Signalling Game-Based Approach." Journal of Advanced Transportation 2020 (October 7, 2020): 1–16. http://dx.doi.org/10.1155/2020/8892693.

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This paper attempts to propose a discretionary lane-changing decision-making model based on signalling game in the context of mixed traffic flow of autonomous and regular vehicles. The effects of the heterogeneity among different drivers and the endogeneity of same drivers in lane-changing behaviours, e.g., aggressive or conservative, are incorporated through the specification of different payoff functions under different scenarios. The model is calibrated and validated using the NGSIM dataset with a bilevel calibration framework, including two kinds of methods, genetic algorithm and perfect Bayesian equilibrium. Comparative results based on simulation show that the signalling game-based model outperforms the traditional space-based lane-changing model in the sense that the proposed model yields relatively stable reciprocal of time to collision and higher success rate of lane-changing under different traffic densities. Finally, a sensitivity analysis is performed to test the robustness of the proposed model, which indicates that the signalling game-based model is stable to the varying ratios of driver type.

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LUONGO, ORLANDO, and DAMIANO TOMMASINI. "MODELING DARK ENERGY THROUGH AN ISING FLUID WITH NETWORK INTERACTIONS." International Journal of Modern Physics D 23, no. 03 (February 24, 2014): 1450023. http://dx.doi.org/10.1142/s0218271814500230.

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We show that the dark energy (DE) effects can be modeled by using an Ising perfect fluid with network interactions, whose low redshift equation of state (EoS), i.e. ω0, becomes ω0 = -1 as in the ΛCDM model. In our picture, DE is characterized by a barotropic fluid on a lattice in the equilibrium configuration. Thus, mimicking the spin interaction by replacing the spin variable with an occupational number, the pressure naturally becomes negative. We find that the corresponding EoS mimics the effects of a variable DE term, whose limiting case reduces to the cosmological constant Λ. This permits us to avoid the introduction of a vacuum energy as DE source by hand, alleviating the coincidence and fine tuning problems. We find fairly good cosmological constraints, by performing three tests with supernovae Ia (SNeIa), baryonic acoustic oscillation (BAO) and cosmic microwave background (CMB) measurements. Finally, we perform the Akaike information criterion (AIC) and Bayesian information criterion (BIC) selection criteria, showing that our model is statistically favored with respect to the Chevallier–Polarsky–Linder (CPL) parametrization.

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36

Tarziján, Jorge. "Limit pricing with complementary goods." Journal of Modelling in Management 6, no. 2 (July 5, 2011): 215–24. http://dx.doi.org/10.1108/17465661111149593.

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PurposeThis paper aims to examine the equilibrium limit price charged by a producer trying to deter the entry of a firm that can choose one of the two markets of complementary goods.Design/methodology/approachThe authors model a dynamic game of incomplete information solved using a “perfect Bayesian equilibrium” approach.FindingsIt is shown that an incumbent will be willing to spend more resources – i.e. charge a lower limit price – to deter entry into its market as products become more complementary. This is because additional benefits are gained from entry deterrence by facing a more competitive market in the complementary product. The additional benefits of entry deterrence are shown to be a function of the degree of complementarity between goods.Practical implicationsA managerial implication of this article is that firms are willing to compete more fiercely to send an entrant to the other's incumbent market as the degree of complementarity between goods increases. An interesting conclusion that is derived from the above analysis is that managers should invest to understand the interdependences (e.g. complementarities) of the goods they sell, since the strategic variables chosen to compete may be affected by them, in some cases in a non‐trivial way.Social implicationsFrom a public policy perspective, the main contribution of this paper is to point out that regulators who analyze predatory pricing, or other (probably) illegal “low‐price strategies”, should consider the degree of complementarity between goods and its effect on pricing.Originality/valueAs far as the authors' knowledge goes, there are no other papers that analyze entry decisions involving multiple markets of complementary goods.

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37

Pu, Xiao, Bi Zhe Wang, Yi Ting Chen, and Hong Guang Cheng. "Analysis of Multi-Stage and Dynamic Incomplete Information Game Model for EIA System in China." Advanced Materials Research 113-116 (June 2010): 1336–41. http://dx.doi.org/10.4028/www.scientific.net/amr.113-116.1336.

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Environmental impact assessment (EIA) system has gradually developed in China while several problems still exist in the ecological environment protection implementation as the obstacles. This paper summarized the regular EIA process of China and picked up the stakeholders basis of case analyzing. A multi-stage and dynamic incomplete information game model was established to investigate the interactions among government, enterprises and EIA organizations and explain strategy selection of EIA participants according to perfect Bayesian equilibrium theory and scenario analysis. Furthermore, a suggestion was proposed to improve effectiveness of EIA system in China after discussing the present demerit. Results showed that in a short term, government and enterprises tended to choose evading EIA for their private benefits. But in a long run, they would be willing to take EIA because environmental deterioration would seriously affect their economic benefits. Thus they had to pursuit social benefits firstly instead. The public played a silent role as a victim in EIA system of China currently, caused by present beneficial balance of government, enterprises and EIA organizations. Some countermeasures must be brought out to develop the public participation regulation in the management system in order to break that balance and improve the effectiveness of EIA.

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Fang, Debin, and Qiyu Ren. "Optimal Decision in a Dual-Channel Supply Chain under Potential Information Leakage." Symmetry 11, no. 3 (March 1, 2019): 308. http://dx.doi.org/10.3390/sym11030308.

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The growing tendency for suppliers to encroach on the retailers’ market has forced the retailers, being independent entities, to distort shared information to maintain their information superiority. Previous studies on asymmetric information assumed that retailers share information truthfully or that demand satisfies a two-point distribution, which does not always conform to the reality of the dual-channel supply chain. Considering the potential information leakage problem, this paper studied the optimal strategies of the participants and focused on the strategic information management of the dual-channel supply chain. By introducing the retailers’ adverse selection behavior, a sequential game model under general uncertain demand was established, which replaced the classic high-low demand model. The perfect Bayesian Nash equilibrium was characterized, which depended on stochastic demand disturbance, product heterogeneity, supply chain structure, and market investigation cost. The results showed that asymmetric information made the supply chain management inefficient. When the demand disturbance was within the threshold, the retailer distorted order quantity to maintain the information advantage under potential information leakage, and information acquisition was not always good for the retailer—in some cases due to adverse selection problems. A numerical example and a sensitivity analysis were done to validate the model. Our work provides participants in the dual-channel supply chain with decision-making support and direction for improving information management.

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39

Battigalli, Pierpaolo. "Strategic Independence and Perfect Bayesian Equilibria." Journal of Economic Theory 70, no. 1 (July 1996): 201–34. http://dx.doi.org/10.1006/jeth.1996.0082.

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Devanur, Nikhil R., Yuval Peres, and Balasubramanian Sivan. "Perfect Bayesian Equilibria in repeated sales." Games and Economic Behavior 118 (November 2019): 570–88. http://dx.doi.org/10.1016/j.geb.2019.01.001.

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Chen, Mingchun, Zhiying Liu, and Chaoliang Ma. "Early bird or versioning." Asia Pacific Journal of Marketing and Logistics 32, no. 3 (July 18, 2019): 769–92. http://dx.doi.org/10.1108/apjml-12-2018-0529.

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Purpose Crowdfunding, especially reward-based crowdfunding, has quickly evolved into a commonly used vehicle for innovating entrepreneurs to develop their products. Many crowdfunding platforms allow creators maximum flexibility in terms of the prices and rewards offered in a project to gain sufficient capital. However, creators need to understand how to design project rewards and how to select a pricing strategy, in addition to whether the creator should spend resources on designing multiple rewards of varying quality. The purpose of this paper is to address these issues by answering whether and why there are significant differences in the application of early-bird and versioning pricing strategies in crowdfunding. Design/methodology/approach This paper develops a two-stage dynamic game model with incomplete information, proposes a corollary calculated by analyzing a perfect Bayesian equilibrium, and then tests Corollary 1 by empirical analysis. Findings Contrary to the findings of other studies, the results show that an early-bird pricing strategy is likely better than a versioning pricing strategy for earning greater revenue in a crowdfunding context, on average. This finding means that creators do not have to spend as much in designing rewards of various qualities; rather, they should only provide multiple price options for high-quality rewards. However, if the heterogeneity of target backers’ valuations and the quality difference between two types of products are adequately high, a versioning pricing strategy may be a good choice for creators. Practical implications This paper provides a reference for creators regarding the selection of pricing strategies and the design of reward quality when launching crowdfunding projects. Originality/value This paper explains an interesting and practical issue in the design of reward quality and the selection of a pricing strategy after fully considering the role of the crowdfunding all-or-nothing mechanism and special backer behavior.

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Balkenborg, Dieter, Christoph Kuzmics, and Josef Hofbauer. "The Refined Best Reply Correspondence and Backward Induction." German Economic Review 20, no. 1 (February 1, 2019): 52–66. http://dx.doi.org/10.1111/geer.12136.

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Abstract Fixed points of the (most) refined best reply correspondence, introduced in Balkenborg et al. (2013), in the agent normal form of extensive form games with perfect recall have a remarkable property. They induce fixed points of the same correspondence in the agent normal form of every subgame. Furthermore, in a well-defined sense, fixed points of this correspondence refine even trembling hand perfect equilibria, while, on the other hand, reasonable equilibria that are not weak perfect Bayesian equilibria are fixed points of this correspondence.

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Beggs, Alan W. "Dependence and Uniqueness in Bayesian Games." B.E. Journal of Theoretical Economics 13, no. 1 (January 1, 2013): 1–25. http://dx.doi.org/10.1515/bejte-2012-0012.

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Abstract: This paper studies uniqueness of equilibrium in symmetric Bayesian games. It shows that if signals are highly but not perfectly dependent, then players play their risk-dominant actions for all but a vanishing set of signal realizations. In contrast to the literature on global games, noise is not assumed to be additive. Dependence is modeled using the theory of copulas.

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Ouyang, Yi, Hamidreza Tavafoghi, and Demosthenis Teneketzis. "Dynamic Games With Asymmetric Information: Common Information Based Perfect Bayesian Equilibria and Sequential Decomposition." IEEE Transactions on Automatic Control 62, no. 1 (January 2017): 222–37. http://dx.doi.org/10.1109/tac.2016.2544936.

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SCOTTI, MASSIMO. "INSIDER TRADING UNDER DISCRETENESS." International Journal of Theoretical and Applied Finance 14, no. 05 (August 2011): 757–71. http://dx.doi.org/10.1142/s0219024911006528.

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This paper analyzes a version of the static Kyle's (1985) model of insider trading where both the distribution of the liquidation value of the risky asset and the distribution of the order flow of noise traders are discrete. We derive necessary and sufficient conditions for the existence of perfect Bayesian equilibria where the insider's strategy is increasing in the value of the asset, and show that such equilibria can be constructed if and only if the variance of the asset is not too extreme. The results in this paper are relevant in contexts where a discrete version of the static Kyle's (1985) model might be a convenient modelling choice.

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Vasal, Deepanshu, Abhinav Sinha, and Achilleas Anastasopoulos. "A Systematic Process for Evaluating Structured Perfect Bayesian Equilibria in Dynamic Games With Asymmetric Information." IEEE Transactions on Automatic Control 64, no. 1 (January 2019): 81–96. http://dx.doi.org/10.1109/tac.2018.2809863.

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Boleslavsky, Raphael, and Christopher Cotton. "Grading Standards and Education Quality." American Economic Journal: Microeconomics 7, no. 2 (May 1, 2015): 248–79. http://dx.doi.org/10.1257/mic.20130080.

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We consider school competition in a Bayesian persuasion framework. Schools compete to place graduates by investing in education quality and by choosing grading policies. In equilibrium, schools strategically adopt grading policies that do not perfectly reveal graduate ability to evaluators. We compare outcomes when schools grade strategically to outcomes when evaluators perfectly observe graduate ability. With strategic grading, grades are less informative, and evaluators rely less on grades and more on a school's quality when assessing graduates. Consequently, under strategic grading, schools have greater incentive to invest in quality, and this can improve evaluator welfare. (JEL D82, I21, I23)

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Chen, Han Ping, and Qing Chang. "Revelation of US OTCBB Disclosure System to Chinese Over-the-Counter Market Disclosure." Applied Mechanics and Materials 427-429 (September 2013): 2940–45. http://dx.doi.org/10.4028/www.scientific.net/amm.427-429.2940.

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Integrated Bayesian and Nash equilibrium model, using game theory mathematical calculation method, we researched the game between the government and the market maker in the U.S. OTCBB information disclosure. We concluded that government should strengthen management of the information disclosure mechanism, improve the information disclosure is the key to resolve the problem of asymmetric information, OTCBB information disclosure policies and measures need to be perfected. According to this, we researched the contents of U.S. OTCBB information disclosure and its characteristics, also we analysis the information disclosure system of the U.S. OTCBB experience and Its Enlightenment to China and use for reference.

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Ristic, Bojan, and Dejan Trifunovic. "Horizontal mergers and weak and strong competition commissions." Ekonomski anali 59, no. 202 (2014): 69–106. http://dx.doi.org/10.2298/eka1402069r.

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In this paper we analyse the horizontal merger of companies in an already concentrated industry. The participants in mergers are obliged to submit notification to the Competition Commission but they also have the option of rejecting the merger. At the time of the notification submission the participants do not know whether the Commission is strong or weak, and they can complain to the Court if the Commission prohibits the merger. We model the strategic interaction between Participants and Commission in a dynamic game of incomplete information and determine weak perfect Bayesian equilibria. The main finding of our paper is that Participants will base their decision to submit notification on their belief in a weak Commission decision and will almost completely ignore the possibility of a strong Commission decision. We also provide a detailed examination of one case from Serbian regulatory practice, which coincides with the results of our game theoretical model.

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Forges, Françoise. "INTERVIEW WITH JEAN-FRANÇOIS MERTENS (1946–2012)." Macroeconomic Dynamics 18, no. 8 (June 12, 2013): 1832–53. http://dx.doi.org/10.1017/s1365100513000114.

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Every game theorist knows of Mertens and Zamir (1985)'s universal beliefs space, which gives deep foundations to Harsanyi's model of Bayesian games, and Kohlberg and Mertens (1986)'s strategic stability, which is the first stone of a complete, axiomatic theory of selection among Nash equilibria. Some French mathematicians refer to the “Mertens–Zamir operator” when using techniques that Mertens and Zamir (1971) introduced to solve a class of repeated games with incomplete information. Readers of Macroeconomic Dynamics may instead have seen Mertens and Rubinchik's 2012 article “Intergenerational Equity and the Discount Rate for Policy Analysis.”The previous examples give just a slight idea of the scope of Jean-François Mertens's contributions, which also deal with general equilibrium, stochastic games, nonatomic cooperative games, and the strategic foundations of microeconomic theory. In his 2005 MD interview, Robert Aumann says, “A [. . .] person at CORE who has had a tremendous influence on game theory [. . .] is Jean-François Mertens. Mertens has done some of the deepest work in the discipline, some of it in collaboration with Israelis like my students Kohlberg, Neyman, and Zamir; he established a Belgian school of mathematical game theory that is marked by its beauty, depth, and sophistication.” The short interview that follows will definitely not account for the variety and the relevance of Jean-François's research achievements, but is typical of the way in which he talked about his work.Jean-François asked me to interview him for MD during the spring of 2010. We discussed by e-mail the topics that would be covered and on July 6, 2010, I came to Louvain-la-Neuve with a tape recorder. After lunch, Jean-François suggested that we have coffee on a terrace near the golf course and there, he patiently answered my questions, sometimes in French, sometimes in English, for about two hours. We planned to go on for at least another round but kept postponing the project. . . . When I saw Jean-François for the last time, in February 2012, I gave him the transcript of the July 2010 interview, but he hardly commented on it. He rather told me about an ongoing research article, “A Random Partitions Approach to the Value,” to be presented (by Abraham Neyman) as a “von Neumann lecture” at the World Congress of Game Theory in Istanbul in July 2012. At the same time, he was also completing, with Anna Rubinchik, the revision of a companion paper to the MD article referred to previously (“Equilibria in an Overlapping Generations Model with Transfer Policies and Exogenous Growth,” forthcoming in Economic Theory).Even if Jean-François did not proofread the transcript that follows, I cannot keep this material for myself. I am confident that those who have known Jean-François will take the interview, even incomplete, as an opportunity to remember his enthusiasm and his patience when he was talking about research. He would often start by identifying holes in obvious or well-known solutions to basic problems, and after a few audacious but illuminating shortcuts, would describe the most surprising achievements in everyday words. I hope that the interview will give an idea of Jean-François's approach to those who did not know him.Quite naturally, because MD was the planned outlet of the interview, we started by talking about the paper on the discount rate for policy analysis, which was already mentioned in the preceding. Jean-François made a number of informal comments, which usefully complement the MD article. He also explained how this paper led him and his coauthor to undertake a thorough analysis of overlapping generations economies in continuous time. This made a perfect transition to Jean-François's views on general equilibrium theory, his own work in this area, and his early career.The next step would be Jean-François's meeting with Bob Aumann, who introduced him to game theory. Jean-François pursued Aumann and Maschler's seminal work on infinitely repeated games with incomplete information, mostly with Shmuel Zamir. He went on with the existence of a value in stochastic games, another model of infinitely long games, which was introduced by Shapley in 1953. This research was undertaken with Abraham Neyman at the Institute of Advanced Studies in Jerusalem in 1980. Soon after, Mertens and Zamir started to review and complete all available results on repeated games in order to prepare a reference book on this topic. The material kept growing. Sylvain Sorin joined the team in the nineties and a draft appeared as a 1994 CORE discussion paper. However, in 2010, the book was still unpublished. . . the interview ends up with Jean-François's feelings about the project.As shown by the list of publications at the end, many important contributions of Jean-François Mertens to game theory and microeconomics are not even mentioned in the interview. During his stay at the Institute of Advanced Studies in Jerusalem in 1980, Jean-François not only worked with Abraham Neyman on stochastic games, but also had his first discussions with Elon Kohlberg on refinements of Nash equilibria. These would be followed by many others, at CORE and Harvard, until the famous Econometrica paper appeared in 1986. For the next 15 years or so, Jean-François further developed the theory of strategic stability, by himself and with his students.During the same period, Jean-François was also making progress on a completely different problem, the extension of the Shapley value to nonatomic cooperative games. Aumann and Shapley (1974) had made the first steps by proposing a value for smooth games. Jean-François proposed a complete answer to the problem in the eighties and, as already pointed out above, kept working on related topics until the very end.Even without entering into details, a description of Jean-François's more recent contributions would be beyond the scope of this short introduction. As the interview makes clear, Jean-François became more and more interested in the foundations of microeconomic theory. A typical example is his “limit price mechanism,” which can be loosely described as a double auction with several goods or as an extension of Shapley and Shubik's strategic market games. Another example is “relative utilitarianism,” which, as Jean-François explains in the interview, plays a crucial role in the determination of an appropriate social discount rate for the evaluation of long-term economic policies. Let us listen to him.

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