Essays On Reputations And Dynamic Games
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Essays On Reputations And Dynamic Games
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Author : Ju Hu
language : en
Publisher:
Release Date : 2016
Essays On Reputations And Dynamic Games written by Ju Hu and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016 with categories.
This dissertation consists of three essays on reputations and dynamic games. I investigate how incomplete information, Bayesian Learning and strategic behavior interplay in different dynamic settings. In Chapter 1, I study reputation effects between a long-lived seller and different short-lived buyers where buyers enter the market at random times and only observe a coarse public signal about past transactions. The signal measures the difference between the number of good and bad outcomes in a biased way: a good outcome is more likely to increase the signal than a bad outcome to decrease it. The seller has a short-run incentive to shirk, but makes high profits if it were possible to commit to high effort. I show if there is a small but positive chance that the seller is a commitment type who always exerts high effort and if information bias is large, equilibrium behavior of the seller exhibits cyclic reputation building and milking. The seller exerts high effort at some values of the signals in order to increase the chance of reaching a higher signal and build reputation. Once the seller builds up his reputation through reaching a high enough signal, he exploits it by shirking. In chapter 2, I study the reputation effect in which a long-lived player faces a sequence of uninformed short-lived players and the uninformed players receive informative but noisy exogenous signals about the type of the long-lived player. I provide an explicit lower bound on all Nash equilibrium payoffs of the long-lived player. The lower bound shows when the exogenous signals are sufficiently noisy and the long-lived player is patient, he can be assured of a payoff strictly higher than his minmax payoff. In Chapter 3 I study optimal dynamic monopoly pricing when a monopolist sells a product with unknown quality to a sequence of short-lived buyers who have private information about the quality. Because past prices and buyers' purchase behavior convey information about private signals, they jointly determine the public belief about the quality of the monopolist's product. The monopolist is essentially doing experimentation in the market because every price charged generates not only current period profit but also additional information about the quality. I focus on information structures with a continuum of signals. Under a mild regularity condition on information structures, I show that in equilibrium, the optimal price is an increasing function of the public beliefs. In addition, I fully characterize information cascade sets in terms of information structure. I find that the standard characterization in terms of boundedness of information structure in the social learning literature no longer holds in the presence of a monopoly. In fact, whether herding occurs or not depends more on the values of the conditional densities of the signals at the lowest signal.
Essays On Dynamic Games And Reputations
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Author : Di Pei (Ph. D.)
language : en
Publisher:
Release Date : 2018
Essays On Dynamic Games And Reputations written by Di Pei (Ph. D.) and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018 with categories.
This thesis consists of three essays on dynamic games with incomplete information. In Chapter 1, I study reputation effects when individuals have persistent private information that matters for their opponents' payoffs. I examine a repeated game between a patient informed player and a sequence of myopic uninformed players. The informed player privately observes a persistent state, and is either a strategic type who can flexibly choose his actions or is one of the several commitment types that mechanically plays the same action in every period. Unlike the canonical models on reputation effects, the uninformed players' payoffs depend on the state. This interdependence of values introduces new challenges to reputation building, namely, the informed player could face a tradeo between establishing a reputation for commitment and signaling favorable information about the state. My results address the predictions on the informed player's payoff and behavior that apply across all Nash equilibria. When the stage game payoffs satisfy a monotone-supermodularity condition, I show that the informed long-run player can overcome the lack-of-commitment problem and secure a high payoff in every state and in every equilibrium. Under a condition on the distribution over states, he will play the same action in every period and maintain his reputation for commitment in every equilibrium. If the payoff structure is unrestricted and the probability of commitment types is small, then the informed player's return to reputation building can be low and can provide a strict incentive to abandon his reputation. In Chapter 2, I study the dynamics of an agent's reputation for competence when the labor market's information about his performance is disclosed by an intermediary who cannot commit. I show that this game admits a unique Markov Perfect Equilibrium (MPE). When the agent is patient, his effort is inverse U-shaped, while the rate of information disclosure is decreasing over time. I illustrate the inefficiencies of the unique MPE by comparing it with the equilibrium in the benchmark scenario where the market automatically observes all breakthroughs. I characterize a tractable subclass of non-Markov Equilibria and explain why allowing players to coordinate on payoff-irrelevant events can improve eciency on top of the unique MPE and the exogenous information benchmark. When the intermediary can commit, her optimal Markov disclosure policy has a deadline, after which no breakthrough will be disclosed. However, deadlines are not incentive compatible in the game without commitment, illustrating a time inconsistency problem faced by the intermediary. My model can be applied to professional service industries, such as law and consulting. My results provide an explanation to the observed wage and promotion patterns in Baker, Gibbs and Holmström (1994). In Chapter 3, I study repeated games in which a patient long-run player (e.g. a rm) wishes to win the trust of some myopic opponents (e.g. a sequence or a continuum of consumers) but has a strict incentive to betray them. Her benet from betrayal is persistent over time and is her private information. I examine the extent to which persistent private information can overcome this lack-of-commitment problem. My main result characterizes the set of payoffs a patient long-run player can attain in equilibrium. Interestingly, every type's highest equilibrium payoff only depends on her true benet from betrayal and the lowest possible benet in the support of her opponents' prior belief. When this lowest possible benet vanishes, every type can approximately attain her Stackelberg commitment payoff. My finding provides a strategic foundation for the (mixed) Stackelberg commitment types in the reputation models, both in terms of the highest attainable payoff and in terms of the commitment behaviors. Compared to the existing approaches that rely on the existence of crazy types that are either irrational or have drastically dierent preferences, there is common knowledge of rationality in my model, and moreover, players' ordinal preferences over stage game outcomes are common knowledge.
Essays On Reputation And Repeated Games
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Author : Benjamin Leonard Sperisen
language : en
Publisher:
Release Date : 2015
Essays On Reputation And Repeated Games written by Benjamin Leonard Sperisen and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015 with categories.
This dissertation consists of three essays on reputation and repeated games. Reputation models typically assume players have full memory of past events, yet in many applications this assumption does not hold. In the first chapter, I explore two different relaxations of the assumption that history is perfectly observed in the context of Ely and Välimäki's (2003) mechanic game, where reputation (with full history observation) is clearly bad for all players. First I consider "limited history," where short-run players see only the most recent T periods. For large T, the full history equilibrium behavior always holds due to an "echo" effect (for high discount factors); for small T, the repeated static equilibrium exists. Second I consider "fading history," where short-run players randomly sample past periods with probabilities that "fade" toward zero for older periods. When fading is faster than a fairly lax threshold, the long-run player always acts myopically, a result that holds more generally for reputation games where the long-run player has a strictly dominant stage game action. This finding suggests that reputational incentives may be too weak to affect long-run player behavior in some realistic word-of-mouth environments. The second chapter develops general theoretical tools to study incomplete information games where players observe only finitely many recent periods. I derive a recursive characterization of the set of equilibrium payoffs, which allows analysis of both stationary and (previously unexplored) non-stationary equilibria. I also introduce "quasi-Markov perfection," an equilibrium refinement which is a necessary condition of any equilibrium that is "non-fragile" (purifiable), i.e., robust to small, additively separable and independent perturbations of payoffs. These tools are applied to two examples. The first is a product choice game with 1-period memory of the firm's actions, obtaining a complete characterization of the exact minimum and maximum purifiable equilibrium payoffs for almost all discount factors and prior beliefs on an "honest" Stackelberg commitment type, which shows that non-stationary equilibria expand the equilibrium set. The second is the same game with long memory: in all stationary and purifiable equilibria, the long-run player obtains exactly the Stackelberg payoff so long as the memory is longer than a threshold dependent on the prior. These results show that the presence of the honest type (even for arbitrarily small prior beliefs) qualitatively changes the equilibrium set for any fixed discount factor above a threshold independent of the prior, thereby not requiring extreme patience. The third chapter studies the question of why drug trafficking organizations inflict violence on each other, and why conflict breaks out under some government crackdowns and not others, in a repeated games context. Violence between Mexican drug cartels soared following the government's anti-cartel offensive starting in 2006, but not under previous crackdowns. I construct a theoretical explanation for these observations and previous empirical research. I develop a duopoly model where the firms have the capacity to make costly attacks on each other. The firms use the threat of violence to incentivize inter-cartel cooperation, and under imperfect monitoring, violence occurs on the equilibrium path of a high payoff equilibrium. When a "corrupt" government uses the threat of law enforcement as a punishment for uncooperative behavior, violence is not needed as frequently to achieve high payoffs. When government cracks down indiscriminately, the firms may return to frequent violence as a way of ensuring cooperation and high payoffs, even if the crackdown makes drug trafficking otherwise less profitable.
Essays In Dynamic Games
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Author : Juan Escobar
language : en
Publisher:
Release Date : 2009
Essays In Dynamic Games written by Juan Escobar and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009 with categories.
Essays On Information In Dynamic Games And Mechanism Design
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Author : Daehyun Kim
language : en
Publisher:
Release Date : 2019
Essays On Information In Dynamic Games And Mechanism Design written by Daehyun Kim and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019 with categories.
This dissertation studies how asymmetric information between economic agents interacts with their incentive in dynamic games and mechanism design. Chapter 1 and Chapter 2 study this in mechanism design, especially focusing on robustness of mechanisms when a mechanism designer's knowledge on agents' belief and higher order beliefs is not perfect. In Chapter 1 we introduce a novel robustness notion into mechanism design, which we term confident implementation; and characterize confidently implementable social choice correspondences. In Chapter 2, we introduce another robust notion, p-dominant implementation where p [0, 1]N and N N is the number of agents, and fully characterize p-dominant implementable allocations in the quasilinear environment. Chapter 1 and Chapter 2 are related in the following way: for some range of p, a p-dominant implementable social choice correspondence is confidently implementable. In Chapter 3, we study information disclosure problem to manage reputation. To study this, we consider a repeated game in which there are a long-run player and a stream of short-run players; and the long-run player has private information about her type, which is either commitment or normal. We assume that the shot-run player only can observe the past K N periods of information disclosed by the long-run player. In this environment, we characterize the information disclosure behavior of the long-run player and also equilibrium dynamics whose shape critically depends on the prior.
Optimal Control And Differential Games
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Author : Georges Zaccour
language : en
Publisher: Springer Science & Business Media
Release Date : 2012-12-06
Optimal Control And Differential Games written by Georges Zaccour and has been published by Springer Science & Business Media this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012-12-06 with Business & Economics categories.
Optimal control and differential games continue to attract strong interest from researchers interested in dynamical problems and models in management science. This volume explores the application of these methodologies to new as well as to classical decision problems in management sciences and economics. In Part I, optimal control and dynamical systems approaches are used to analyze problems in areas such as monetary policy, pollution control, relationship marketing, drug control, debt financing, and ethical behavior. In Part II differential games are applied to problems such as oligopolistic competition, common resource management, spillovers in foreign direct investments, marketing channels, incentive strategies, and the computation of Markov perfect Nash equilibria. Optimal Control and Differential Games is an excellent reference for researchers and graduate students covering a wide range of emerging and revisited problems in management science.
Essays On Dynamic Games
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Author : Rahul Deb
language : en
Publisher:
Release Date : 2010
Essays On Dynamic Games written by Rahul Deb and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010 with categories.
Essays On Dynamic Games
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Author : Puduru Viswanadha Reddy
language : en
Publisher:
Release Date : 2011
Essays On Dynamic Games written by Puduru Viswanadha Reddy and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011 with categories.
Essays On Repeated Games And Reputations
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Author : Ayçca Özdoḡan
language : en
Publisher:
Release Date : 2010
Essays On Repeated Games And Reputations written by Ayçca Özdoḡan and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010 with categories.
Three Essays On Dynamic Games
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Author : Asaf Plan
language : en
Publisher:
Release Date : 2010
Three Essays On Dynamic Games written by Asaf Plan and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010 with categories.
Chapter 1: This chapter considers a new class of dynamic, two-player games, where a stage game is continuously repeated but each player can only move at random times that she privately observes. A player's move is an adjustment of her action in the stage game, for example, a duopolist's change of price. Each move is perfectly observed by both players, but a foregone opportunity to move, like a choice to leave one's price unchanged, would not be directly observed by the other player. Some adjustments may be constrained in equilibrium by moral hazard, no matter how patient the players are. For example, a duopolist would not jump up to the monopoly price absent costly incentives. These incentives are provided by strategies that condition on the random waiting times between moves; punishing a player for moving slowly, lest she silently choose not to move. In contrast, if the players are patient enough to maintain the status quo, perhaps the monopoly price, then doing so does not require costly incentives. Deviation from the status quo would be perfectly observed, so punishment need not occur on the equilibrium path. Similarly, moves like jointly optimal price reductions do not require costly incentives. Again, the tempting deviation, to a larger price reduction, would be perfectly observed. This chapter provides a recursive framework for analyzing these games following Abreu, Pearce, and Stacchetti (1990) and the continuous time adaptation of Sannikov (2007). For a class of stage games with monotone public spillovers, like differentiated-product duopoly, I prove that optimal equilibria have three features corresponding to the discussion above: beginning at a "low" position, optimal, upward moves are impeded by moral hazard; beginning at a "high" position, optimal, downward moves are unimpeded by moral hazard; beginning at an intermediate position, optimally maintaining the status quo is similarly unimpeded. Corresponding cooperative dynamics are suggested in the older, non-game-theoretic literature on tacit collusion. Chapter 2: This chapter shows that in finite-horizon games of a certain class, small perturbations of the overall payoff function may yield large changes to unique equilibrium payoffs in periods far from the last. Such perturbations may tie together cooperation across periods in equilibrium, allowing substantial cooperation to accumulate in periods far from the last. Chapter 3: A dynamic choice problem faced by a time-inconsistent individual is typically modeled as a game played by a sequence of her temporal selves, solved by SPNE. It is recognized that this approach yields troublesomely many solutions for infinite-horizon problems, which is often attributed to the existence of implausible equilibria based on self-reward and punishment. This chapter presents a refinement applicable within the special class of strategically constant (SC) problems, which are those where all continuation problems are isomorphic. The refinement requires that each self's strategy be invariant, here that implies history-independence under the isomorphism. I argue that within the class of SC problems, this refinement does little more than rule out self-reward and punishment. The refinement substantially narrows down the set of equilibria in SC problems, but in some cases allows plausible equilibria that are excluded by other refinement approaches. The SC class is limited, but broader than it might seem at first.