Pure Strategy Equilibria (pure + strategy_equilibrium)

Distribution by Scientific Domains


Selected Abstracts


HOTELLING'S BEACH WITH LINEAR AND QUADRATIC TRANSPORTATION COSTS: EXISTENCE OF PURE STRATEGY EQUILIBRIA,

AUSTRALIAN ECONOMIC PAPERS, Issue 1 2007
ALAIN EGLI
In Hotelling type models consumers have the same transportation cost function. We deviate from this assumption and introduce two consumer types. Some consumers have linear transportation costs, while the others have quadratic transportation costs. If at most half the consumers have linear transportation costs, a subgame perfect equilibrium in pure strategies exists for all symmetric locations. Furthermore, no general principle of differentiation holds. With two consumer types, the equilibrium pattern ranges from maximum to intermediate differentiation. The degree of product differentiation depends on the fraction of consumer types. [source]


Single Crossing Properties and the Existence of Pure Strategy Equilibria in Games of Incomplete Information

ECONOMETRICA, Issue 4 2001
Susan Athey
This paper analyzes a class of games of incomplete information where each agent has private information about her own type, and the types are drawn from an atomless joint probability distribution. The main result establishes existence of pure strategy Nash equilibria (PSNE) under a condition we call the single crossing condition (SCC), roughly described as follows: whenever each opponent uses a nondecreasing strategy (in the sense that higher types choose higher actions), a player's best response strategy is also nondecreasing. When the SCC holds, a PSNE exists in every finite-action game. Further, for games with continuous payoffs and a continuum of actions, there exists a sequence of PSNE to finite-action games that converges to a PSNE of the continuum-action game. These convergence and existence results also extend to some classes of games with discontinuous payoffs, such as first-price auctions, where bidders may be heterogeneous and reserve prices are permitted. Finally, the paper characterizes the SCC based on properties of utility functions and probability distributions over types. Applications include first-price, multi-unit, and all-pay auctions; pricing games with incomplete information about costs; and noisy signaling games. [source]


Strategic Auditing: An Incomplete Information Model

JOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 5-6 2001
Peter Cheng
This paper presents a stylized model of the strategy game between the auditor and the client. The client is assumed to have either good or bad inherent risk in her reporting system. She chooses a reporting effort level to maintain the accounting records and data management depending on her type of inherent risk. The auditor chooses a high or low level of audit procedures. A high level of auditing procedures will reveal the client's type and effort from which the auditor can decide either to qualify the financial statements or to issue a clean report. The client and the auditor are assumed to move simultaneously. Pure strategy equilibria are derived for all the undominated strategies between the auditor and the client in the region of the model that is more similar to the Fellingham and Newman (1985) model. Unlike their model in which a high auditing level is never a pure strategy in equilibrium, we obtain pure strategy equilibria for high auditing levels. [source]


On the Existence of Pure Strategy Monotone Equilibria in Asymmetric First-Price Auctions

ECONOMETRICA, Issue 4 2004
Philip J. Reny
We establish the existence of pure strategy equilibria in monotone bidding functions in first-price auctions with asymmetric bidders, interdependent values, and affiliated one-dimensional signals. By extending a monotonicity result due to Milgrom and Weber (1982), we show that single crossing can fail only when ties occur at winning bids or when bids are individually irrational. We avoid these problems by considering limits of ever finer finite bid sets such that no two bidders have a common serious bid, and by recalling that single crossing is needed only at individually rational bids. Two examples suggest that our results cannot be extended to multidimensional signals or to second-price auctions. [source]


Strategic Auditing: An Incomplete Information Model

JOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 5-6 2001
Peter Cheng
This paper presents a stylized model of the strategy game between the auditor and the client. The client is assumed to have either good or bad inherent risk in her reporting system. She chooses a reporting effort level to maintain the accounting records and data management depending on her type of inherent risk. The auditor chooses a high or low level of audit procedures. A high level of auditing procedures will reveal the client's type and effort from which the auditor can decide either to qualify the financial statements or to issue a clean report. The client and the auditor are assumed to move simultaneously. Pure strategy equilibria are derived for all the undominated strategies between the auditor and the client in the region of the model that is more similar to the Fellingham and Newman (1985) model. Unlike their model in which a high auditing level is never a pure strategy in equilibrium, we obtain pure strategy equilibria for high auditing levels. [source]


Probabilistic Voting and Accountability in Elections with Uncertain Policy Constraints

JOURNAL OF PUBLIC ECONOMIC THEORY, Issue 1 2007
ADAM MEIROWITZ
We consider accountability in repeated elections with two long-lived parties that have distinct policy preferences and different levels of valence. In each period the government faces a privately observed feasibility constraint and selects a publicly observed policy vector. While pure strategy equilibria do not exhibit tight control on government policy making, complete control is possible in mixed strategies. In optimal equilibria voters use reelection functions which depend on policy in a manner that causes the governing party to internalize voter preferences. In these optimal equilibria the voters use different reelection functions for different parties. [source]


Price competition with elastic traffic

NETWORKS: AN INTERNATIONAL JOURNAL, Issue 3 2008
Asuman Ozdaglar
Abstract In this paper, we present a combined study of price competition and traffic control in a congested network. We study a model in which service providers own the routes in a network and set prices to maximize their profits, while users choose the amount of flow to send and the routing of the flow according to Wardrop's principle. When utility functions of users are concave and have concave first derivatives, we characterize a tight bound of 2/3 on efficiency in pure strategy equilibria of the price competition game. We obtain the same bound under the assumption that there is no fixed latency cost, i.e., the latency of a link at zero flow is equal to zero. These bounds are tight even when the numbers of routes and service providers are arbitrarily large. 2008 Wiley Periodicals, Inc. NETWORKS, 2008 [source]


Asymmetric Equilibria in a Model with Costly Voting

JOURNAL OF PUBLIC ECONOMIC THEORY, Issue 1 2007
FRANCESCO DE SINOPOLI
Most of the voting models limit their analysis to the investigation of symmetric equilibria where "similar" voters make "similar" voting decisions. In this paper we examine the validity of this restriction in a model with costly plurality voting. We first show that in any pure strategy equilibrium every two individuals who have the same preferences and participate in elections, would vote for the same candidate. However, this result does not hold for mixed strategies equilibria. [source]


Network Competition and Access Charge Rules

THE MANCHESTER SCHOOL, Issue 1 2002
Toker Doganoglu
This paper presents a model of two competing local telecommunications networks which are mandated to interconnect. After negotiating the access charges, the companies engage in price competition. Given the prices, each consumer selects a network and determines the consumption of phone calls. Using a discrete/continuous consumer choice model, it is shown that a pure strategy equilibrium exists quite generally and satisfies desirable properties. This equilibrium can be implemented by a simple rule that sets the access charges at a common discount from the retail prices. It requires no information and the discount factor is chosen by the companies through negotiations. Finally, if the networks are highly substitute, the retail prices obtained by imposing this rule will approximate the efficient prices. [source]