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1 – 10 of 474Peter Arcidiacono, Patrick Bayer, Federico A. Bugni and Jonathan James
Many dynamic problems in economics are characterized by large state spaces which make both computing and estimating the model infeasible. We introduce a method for approximating…
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Many dynamic problems in economics are characterized by large state spaces which make both computing and estimating the model infeasible. We introduce a method for approximating the value function of high-dimensional dynamic models based on sieves and establish results for the (a) consistency, (b) rates of convergence, and (c) bounds on the error of approximation. We embed this method for approximating the solution to the dynamic problem within an estimation routine and prove that it provides consistent estimates of the modelik’s parameters. We provide Monte Carlo evidence that our method can successfully be used to approximate models that would otherwise be infeasible to compute, suggesting that these techniques may substantially broaden the class of models that can be solved and estimated.
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The author develops a bilateral Nash bargaining model under value uncertainty and private/asymmetric information, combining ideas from axiomatic and strategic bargaining theory…
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The author develops a bilateral Nash bargaining model under value uncertainty and private/asymmetric information, combining ideas from axiomatic and strategic bargaining theory. The solution to the model leads organically to a two-tier stochastic frontier (2TSF) setup with intra-error dependence. The author presents two different statistical specifications to estimate the model, one that accounts for regressor endogeneity using copulas, the other able to identify separately the bargaining power from the private information effects at the individual level. An empirical application using a matched employer–employee data set (MEEDS) from Zambia and a second using another one from Ghana showcase the applied potential of the approach.
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In this article, we consider the nonparametric identification of Markov dynamic games models in which each firm has its own unobserved state variable, which is persistent over…
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In this article, we consider the nonparametric identification of Markov dynamic games models in which each firm has its own unobserved state variable, which is persistent over time. This class of models includes most models in the Ericson and Pakes (1995) and Pakes and McGuire (1994) framework. We provide conditions under which the joint Markov equilibrium process of the firms’ observed and unobserved variables can be nonparametrically identified from data. For stationary continuous action games, we show that only three observations of the observed component are required to identify the equilibrium Markov process of the dynamic game. When agents’ choice variables are discrete, but the unobserved state variables are continuous, four observations are required.
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Alexandros Vasios Sivvopoulos and Mark Van Boening
This experiment analyzes multi-offer versions of the signaling and screening litigation games, as well as a bilateral multi-offer litigation game. A plaintiff has either a low or…
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This experiment analyzes multi-offer versions of the signaling and screening litigation games, as well as a bilateral multi-offer litigation game. A plaintiff has either a low or a high claim on an uninformed defendant, and the two negotiate in an attempt to reach a pre-trial settlement. Trial is costly, and settlement generates surplus over which the two parties can bargain. In the signaling game, the defendant has the power to make the offer, while the plaintiff makes the offer in the screening game. Previous experiments on single-offer games find that disputes occur even when offers contain surplus not predicted under the theory, and fairness appears to be important in explaining deviations from theory. This research examines whether renegotiation in the form of successive sequential offers can yield efficiency gains via lower dispute rates. There are four main findings. One, under the one-sided multi-offer structure the excess dispute rate is 23 percentage-points lower in the screening game, and the high-offer dispute rate is 31 percentage-points lower in signaling game. The bilateral game yields an additional 15 percentage-point reduction in the high-offer dispute rate, but excess disputes persist. Two, in these games, proposers take advantage of the multi-offer opportunity and make around three to four offers per negotiation. Three, across games the surplus in a fair offer remains constant at about one-sixth of the surplus, but the empirical benchmark from which this is measured varies according to which player has the power to make the offer. In the one-sided games, the benchmark is the respective zero-surplus endpoint, but in the bilateral game the benchmark is the surplus midpoint. Fourth, dynamic behavior plays an important but complex role in observed outcomes. Multi-offer mechanisms may be alternatives to costly information transmission mechanisms like disclosure or discovery.
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Viktoriya Semeshenko, Mirta B. Gordon, Jean-Pierre Nadal and Denis Phan
Alexander Kritikos and Friedel Bolle
This paper suggests to combine different kind of “other-regarding” preferences as an approach to fair behavior which is observed in controlled experiments. We assert that…
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This paper suggests to combine different kind of “other-regarding” preferences as an approach to fair behavior which is observed in controlled experiments. We assert that participants in two-person experiments have a good will capital which may be described by altruistic preferences. These preferences guide a large fraction of participants when they have to make distributional choices in one-stage games. We further show that in games with more than one stage the previous action of the other person may cause reciprocal feelings in addition to the altruistic preferences. A friendly (unfriedly) act of the other person may increase (decrease) the good will capital of the participants. Upon these findings, we conclude that a combination of altruism and reciprocity is able to describe the variety of behavior in several experiments despite their differing strategic context.
Steffen Andersen, Glenn W. Harrison, Morten I. Lau and E. Elisabet Rutström
We review the use of behavior from television game shows to infer risk attitudes. These shows provide evidence when contestants are making decisions over very large stakes, and in…
Abstract
We review the use of behavior from television game shows to infer risk attitudes. These shows provide evidence when contestants are making decisions over very large stakes, and in a replicated, structured way. Inferences are generally confounded by the subjective assessment of skill in some games, and the dynamic nature of the task in most games. We consider the game shows Card Sharks, Jeopardy!, Lingo, and finally Deal Or No Deal. We provide a detailed case study of the analyses of Deal Or No Deal, since it is suitable for inference about risk attitudes and has attracted considerable attention.
Frans van Winden, Mirre Stallen and K. Richard Ridderinkhof
Purpose – This chapter addresses the nature, formalization, and neural bases of (affective) social ties and discusses the relevance of ties for health economics. A social tie is…
Abstract
Purpose – This chapter addresses the nature, formalization, and neural bases of (affective) social ties and discusses the relevance of ties for health economics. A social tie is defined as an affective weight attached by an individual to the well-being of another individual (‘utility interdependence’). Ties can be positive or negative, and symmetric or asymmetric between individuals. Characteristic of a social tie, as conceived of here, is that it develops over time under the influence of interaction, in contrast with a trait like altruism. Moreover, a tie is not related to strategic behavior such as reputation formation but seen as generated by affective responses.
Methodology/approach – A formalization is presented together with some supportive evidence from behavioral experiments. This is followed by a discussion of related psychological constructs and the presentation of suggestive existing neural findings. To help prepare the grounds for a model-based neural analysis some speculations on the neural networks involved are provided, together with suggestions for future research.
Findings – Social ties are not only found to be important from an economic viewpoint, it is also shown that they can be modeled and related to neural substrates.
Originality/value of the chapter – By providing an overview of the economic research on social ties and connecting it with the broader behavioral and neuroeconomics literature, the chapter may contribute to the development of a neuroeconomics of social ties.
Björn Sjöblom and Karin Aronsson
Purpose – The aim of the present chapter is to analyse episodes of dispute and conflict in co-located computer gaming. The main purpose is to extend prior research on…
Abstract
Purpose – The aim of the present chapter is to analyse episodes of dispute and conflict in co-located computer gaming. The main purpose is to extend prior research on dispute-interaction to a computer mediated setting.
Methodology – Naturally occurring multiplayer computer gaming was video recorded in Internet cafés (28 hours). A single case was selected that involved a series of escalating disputes over the course of 45 minutes of gaming. The social interaction involved – of two 16-year-old boys playing World of Warcraft – was analysed using conversation analytical procedures.
Findings – The sequential analyses show how the two players engaged in disputes at the points where one or both of the players’ avatars had been killed. The players held each other accountable for their in-game performance, and avatar death was a central event in which gaming competence was contested, often in outright confrontations. Such disputes, where each player attempted to present the other as inferior, were used for negotiating player identities in what Goffman (1967) has called character contests. In gaming, players thus risk losing the game as well as their social standings. Disputes were also linked to the variable stakes of the game: with more at stake, players were more likely to escalate conflicts to the point of even quitting the game altogether.
Originality – The chapter shows how disputes are central components in adolescents’ computer gaming, and how they both structure the players’ intersubjective understanding of the game, and how they play a role in local identity work.
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