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Article
Publication date: 13 June 2019

Ünsal Sığrı and Hakan Karabacak

This paper aims to manage better the conflicts in labor disputes by improving the understanding of mediation dynamics from a game-theoretical perspective.

Abstract

Purpose

This paper aims to manage better the conflicts in labor disputes by improving the understanding of mediation dynamics from a game-theoretical perspective.

Design/methodology/approach

Signaling game model is adapted to a hypothetical labor dispute based on the legislative regulations on the mandatory mediation system in Turkey.

Findings

The paper determines mediation equilibria in which both players get positive payoffs. Analysis of the mediation equilibria helps to improve the understanding about the litigation and mediation dynamics depending on the variables. The variables are clearly separated from each other due to their reverse effects on strategy choices of the parties. Mediation payoff and litigation cost are characterized by their incentive effects on mediation preferences, whereas mediation fee and litigation payoff are characterized by their disincentive effect. While increasing amounts of incentive variables strengthen the mediation tendency of the employee, increasing amounts of disincentive variables reveal the opposite effect. Furthermore, the analysis also indicates that if the litigation payoff is too small to recover litigation costs, accepting the mediation becomes the optimal strategy. This prediction is contrary to that of traditional game-theoretic litigation/settlement models, in which small-claim disputes typically cannot be settled.

Practical implications

The assumption that the mediation fee is not a part of the litigation cost eliminates the disincentive effect of mediation fee and makes it neutral on the strategy choice of employee.

Originality/value

This paper first analyzes the strategic role of mediation in labor disputes by using a signaling game. Despite its mediation focus, the paper also provides practical insights for litigation.

Details

International Journal of Conflict Management, vol. 30 no. 3
Type: Research Article
ISSN: 1044-4068

Keywords

Article
Publication date: 1 April 2019

Bruno Chiarini and Elisabetta Marzano

Crime games cannot be simply read with mixed strategies. These strategies are inconclusive of how the players act rationally. This is undeniably true for the crime of tax…

Abstract

Purpose

Crime games cannot be simply read with mixed strategies. These strategies are inconclusive of how the players act rationally. This is undeniably true for the crime of tax evasion, where dishonest taxpayers are rational agents, motivated by the comparison of payoffs, when considering the risk of non-compliance. The purpose of this paper is to illustrate that in the presence of a small “private disturbance” of the players’ payoff, the Nash equilibrium in mixed strategies provides us with the necessary information on equilibria in pure strategies that will be played.

Design/methodology/approach

In tax-evasion games, an equilibrium must necessarily be interpreted in pure strategies, and the only way to do this is to insert some private information into the game and reinterpret it in a Bayesian scheme. We show that taxpayers’ private,subjective considerations on the effective implementation of the penalty and the revenue agency’s private information on the cost of monitoring and conviction can lead to Bayesian equilibria in pure strategies. The present paper takes issue with this Bayesian equilibrium and the implications for comparative-statics results.

Findings

In this context, tougher sentencing deters crime, although, as the Italian experience teaches, the necessary condition required is the certainty of punishment and the ability of the government to enforce it. The equilibrium strategies with incomplete information reveal whether it is convenient for the two agents to maintain their “private disturbance” as private information or, on the contrary, it is convenient to expect it to be “common knowledge.”

Originality/value

A distinct set of studies has adopted a game theoretic approach and shows that the standard economic approach to crime deterrence inspired by Gary Beker’s seminal paper might be flawed. See, among others, Saha and Poole (2000), Tsebelis (1989) and Andreozzi (2010). This paper shows that a greater severity of the penalty and a higher certainty of punishment (a lower possibility of appealing against sanctions and no discounts on due penalties) necessarily lead to a unique Bayesian equilibrium without evasion.

Details

Journal of Financial Crime, vol. 26 no. 2
Type: Research Article
ISSN: 1359-0790

Keywords

Book part
Publication date: 23 September 2009

Arnout van de Rijt and Michael W. Macy

Individual rationality sometimes leads to collectively irrational outcomes, a fundamental problem in the social and life sciences that has attracted sustained attention…

Abstract

Individual rationality sometimes leads to collectively irrational outcomes, a fundamental problem in the social and life sciences that has attracted sustained attention from experimentalists in sociology, psychology, biology, and economics. But what is it about individual rationality that sometimes gets us into trouble? Is the problem the egoistic pursuit of individual self-interest? Or does the problem with individual rationality lie elsewhere? To find an answer, this chapter closely examines the theoretical and experimental literature on social dilemmas, to see how researchers identify the source of the problem. The review suggests that the prevailing theory wrongly points to egoism as the problem. Failing to do what is best for everyone can also happen among rational altruists, and sometimes egoism is needed to prevent it. The chapter concludes by pointing to what we believe is the fundamental problem – a tension not between individual self-interest and collective welfare, but between individual autonomy and collective interdependence.

Details

Altruism and Prosocial Behavior in Groups
Type: Book
ISBN: 978-1-84855-573-0

Book part
Publication date: 21 November 2014

Eduardo Melero

A model of reputation is developed to show how firms operating in concentrated sectors can use the sponsorship of general human capital investments to specifically trained…

Abstract

A model of reputation is developed to show how firms operating in concentrated sectors can use the sponsorship of general human capital investments to specifically trained workers as a device of commitment with prospective employees. Employees of firms that operate in concentrated sectors learn skills that are valuable only for a limited number of alternative employers. This gives monopsonistic power to the training firm over the trained workers. Anticipating it, potential employees will be reluctant to work for the firm unless the employer is able to commit oneself’ must be turned back to ‘herself. I argue that human resource policies including the provision of general human capital to workers reduce employers’ commitment costs. Evidence from two representative samples of workers from Spain and the United Kingdom show that, consistent with the predictions of the model, firms from more concentrated sectors are more likely to sponsor their employees’ education.

Details

International Perspectives on Participation
Type: Book
ISBN: 978-1-78441-169-5

Keywords

Book part
Publication date: 16 January 2014

Martin Sefton and Ping Zhang

We compare allocation rules in uniform price divisible-good auctions. Theoretically, a “standard allocation rule (STANDARD)” and a “uniform allocation rule (UNIFORM)”…

Abstract

Purpose

We compare allocation rules in uniform price divisible-good auctions. Theoretically, a “standard allocation rule (STANDARD)” and a “uniform allocation rule (UNIFORM)” admit different types of low-price equilibria, which are eliminated by a “hybrid allocation rule (HYBRID).” We use a controlled laboratory experiment to compare the empirical performances of these allocation rules.

Design/methodology/approach

We conduct three-bidder uniform price divisible-good auctions varying the different allocation rules (standard, uniform, or hybrid) and whether or not explicit communication between bidders is allowed. For the case where explicit communication is allowed we also study six-bidder auctions.

Findings

We find that prices are similar across allocation rules. Under all three allocation rules, prices are competitive when bidders cannot explicitly communicate. With explicit communication, prices are collusive, and we observe collusive prices even when collusive agreements are broken. Collusive agreements are particularly fragile when the gain from a unilateral deviation is larger, and an implication of this is that collusive agreements are more robust under STANDARD.

Research limitations/implications

We do not find conclusive evidence of differences in performance among allocation rules. However, there is suggestive evidence that STANDARD may be more vulnerable to collusion.

Originality/value

Divisible-good uniform price auctions are used in financial markets, but it is not possible to use naturally occurring data to test how alternatives to the standard format would perform. Using laboratory methods we provide an initial test of alternative allocation rules.

Details

Experiments in Financial Economics
Type: Book
ISBN: 978-1-78350-141-0

Keywords

Book part
Publication date: 30 December 2013

Liu Taoxiong and Hu Angang

This chapter develops a growth model of a country under a Hobbesian environment with international conflicts in which national defense is the only way to prevent external…

Abstract

This chapter develops a growth model of a country under a Hobbesian environment with international conflicts in which national defense is the only way to prevent external predation. The long run growth path is determined by the equilibrium of a dynamic game with three players: the external predator, the government, and the family. The equilibrium growth path has three phases: submissive equilibrium, tolerant equilibrium, and full-protected equilibrium. Different defense strategies result in different growth prospects, and sustainable growth will endogenously induce adjustment of defense strategies.

Details

Cooperation for a Peaceful and Sustainable World Part 2
Type: Book
ISBN: 978-1-78190-655-2

Article
Publication date: 7 June 2011

Emmanuel M. Tadjouddine

As agent‐based systems are increasingly used to model real‐life applications such as the internet, electronic markets or disaster management scenarios, it is important to…

Abstract

Purpose

As agent‐based systems are increasingly used to model real‐life applications such as the internet, electronic markets or disaster management scenarios, it is important to study the computational complexity of such usually combinatorial systems with respect to some desirable properties. The purpose of this paper is to consider two computational models: graphical games encoding the interactions between rational and selfish agents; and weighted directed acyclic graphs (DAG) for evaluating derivatives of numerical functions. The author studies the complexity of a certain number of search problems in both models.

Design/methodology/approach

The author's approach is essentially theoretical, studying the problem of verifying game‐theoretic properties for graphical games representing interactions between self‐motivated and rational agents, as well as the problem of searching for an optimal elimination ordering in a weighted DAG for evaluating derivatives of functions represented by computer programs.

Findings

A certain class of games has been identified for which Nash or Bayesian Nash equilibria can be verified in polynomial time; then, it has been shown that verifying a dominant strategy equilibrium is non‐deterministic polynomial (NP)‐complete even for normal form games. Finally, it has been shown that the optimal vertex elimination ordering for weighted DAGs is NP‐complete.

Originality/value

This paper presents a general framework for graphical games. The presented results are novel and illustrate how modeling real‐life scenarios involving intelligent agents can lead to computationally hard problems while showing interesting cases that are tractable.

Details

International Journal of Intelligent Computing and Cybernetics, vol. 4 no. 2
Type: Research Article
ISSN: 1756-378X

Keywords

Book part
Publication date: 17 March 2010

Anna Gunnthorsdottir, Roumen Vragov and Jianfei Shen

Purpose and approach – We examine theoretically and experimentally how unequal abilities to contribute affect incentives and efficiency when players compete for membership…

Abstract

Purpose and approach – We examine theoretically and experimentally how unequal abilities to contribute affect incentives and efficiency when players compete for membership in stratified groups based on the contributions they make. Players have either a low or a high endowment. Once assigned to a group based on their group contribution, players share equally in their group’s collective output. Depending on the parameters, the mechanism has several distinct equilibria that differ in efficiency.

Findings – Somewhat counter to conventional expectation our theoretical analysis indicates that as long as certain assumptions are satisfied, efficiency increases rather than decreases the more abilities to contribute differ. The analysis also suggests various follow-up experiments about equilibrium selection, tacit coordination, and the effect of unequal abilities in systems with endogenous grouping. We conduct an experiment that shows that subjects tacitly coordinate the mechanism’s asymmetric payoff-dominant equilibrium with precision; this precision is robust to a change in the structure and complexity of the game.

Implications – The results suggest that people respond to merit-based grouping in a natural way and that competitive contribution-based grouping encourages public contributions even when abilities to contribute differ, which is the case in all communities and societies.

Details

Charity with Choice
Type: Book
ISBN: 978-1-84950-768-4

Article
Publication date: 2 October 2007

Ana Paula Martins

The purpose of this paper is to suggest possible extensions of the baseline Rubinstein sequential bargaining structure – applied to the negotiation of stationary…

Abstract

Purpose

The purpose of this paper is to suggest possible extensions of the baseline Rubinstein sequential bargaining structure – applied to the negotiation of stationary infinitely termed contracts – that incorporate a direct reference to the “ideal” utilities of the players. This is a feature of the Kalai‐Smorodinsky cooperative solution – even if not of the generalized Nash maximand; it is usually not encountered in non‐cooperative equilibria.

Design/methodology/approach

First, it is argued that different bargaining protocols than conventionally staged are able to incorporate temporary all‐or (and)‐nothing splits of the pie. Scenarios are advanced where such episodes are interpreted either as – out of bargaining – war or unilateral appropriation events, or free experience contracts. Second, some modifications to the Rubinstein infinite horizon paradigm are experimented with, allowing for mixed strategies under alternate offers, and matching or synchronous decisions in a simultaneous (yet, discrete) bargaining environment. Solutions are derived where the reference to the winner‐takes‐it‐all outcome arises as a parallel – out‐of‐the‐protocol – outside option to the status quo point. In some cases, the limiting maximand for instantaneous bargaining was derived.

Findings

Rubinstein's optimal periodic division in a closed contract remained robust to most of the settings.

Originality/value

Presents possible extensions of the baseline Rubinstein sequential bargaining structure.

Details

International Journal of Social Economics, vol. 34 no. 11
Type: Research Article
ISSN: 0306-8293

Keywords

Article
Publication date: 1 April 2005

Ana Paula Martins

Aims to analyse the labour market outcome when there are two unions in the industry, representing heterogeneous workers – imperfect substitutes in production.

Abstract

Purpose

Aims to analyse the labour market outcome when there are two unions in the industry, representing heterogeneous workers – imperfect substitutes in production.

Design/methodology/approach

Competition between union policies are viewed in terms of both employment and wage strategies. Results for substitutes and complements are inspected. Attention is given to the strategic behaviour of the unions, towards one another and/or the employer side. Cooperation is modelled using the Nash‐maximand approach.

Findings

Gathers some notes and enlargements to the standard collective bargaining problem in which unions maximise utility. Extends the framework to model union competition behaviour for jobs and/or employment that reproduces the standard market product analysis of imperfect competition. Focuses on heterogeneous labour.

Research limitations/implications

The analysis concentrates on the case of union duopoly, but can easily be enlarged to the n‐union setting – which is left for further investigation.

Originality/value

A simple analytical example with Stone‐Geary union utility functions and a linear labour demand system is forwarded.

Details

International Journal of Social Economics, vol. 32 no. 4
Type: Research Article
ISSN: 0306-8293

Keywords

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