{"title":"Axiomatizations of Dutta-Ray’s Egalitarian Solution on the Domain of Convex Games","authors":"P. Calleja, Francesc Llerena, Peter Sudhölter","doi":"10.2139/ssrn.3577521","DOIUrl":"https://doi.org/10.2139/ssrn.3577521","url":null,"abstract":"We show that on the domain of convex games, Dutta-Ray's egalitarian solution is characterized by core selection, aggregate monotonicity, and bounded richness, a new property requiring that the poorest players cannot be made richer within the core. Replacing \"poorest\" by \"poorer\" allows to eliminate aggregate monotonicity. Moreover, strengthening core selection into bilateral consistency a la Davis and Maschler, and Pareto optimality into individual rationality and bilateral consistency a la Hart and Mas-Colell, we obtain alternative and stylized axiomatic approaches.","PeriodicalId":322168,"journal":{"name":"Human Behavior & Game Theory eJournal","volume":"64 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-04-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127290130","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Index Theory for Strategic-Form Games With an Application to Extensive-Form Games","authors":"Lucas Pahl","doi":"10.2139/ssrn.3536752","DOIUrl":"https://doi.org/10.2139/ssrn.3536752","url":null,"abstract":"Whenever equivalent mixed strategies of a player are identified (topologically) in a normal-form game, the resulting space may not be a simplex anymore but is a general polytope. We show that an index/degree theory of equilibria can be developed in full generality for games in which the strategy sets of the players are general polytopes and their payoff functions are multiaffine. Index and degree theories work as a tool that helps identify equilibria that are robust to payoff perturbations of the game. Because the strategy set of each player is the result of the identification of equivalent mixed strategies, the resulting polytope is of lower dimension than the original mixed strategy simplices. This, together with an index theory, has algorithmic applications for checking for robustness of equilibria as well as finding equilibria in extensive-form games.","PeriodicalId":322168,"journal":{"name":"Human Behavior & Game Theory eJournal","volume":"44 3 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-02-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133815773","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Requiem for a Nudge: Framing Effects in Nudging Honesty","authors":"Eugen Dimant, Gerben A. van Kleef, Shaul Shalvi","doi":"10.2139/ssrn.3416399","DOIUrl":"https://doi.org/10.2139/ssrn.3416399","url":null,"abstract":"We examine framing effects in nudging honesty in the spirit of the growing norm-nudge literature by utilizing a high-powered and pre-registered study. Across four treatments, participants received one random truthful norm-nudge that emphasized 'moral suasion' based on either what other participants previously did (empirical message) or approved of doing (normative message) and varied in the framing (positive or negative) in which it was presented. Subsequently, participants repeatedly played the 'mind game' in which they were first asked to think of a number, then roll a digital die, and then reported whether the two numbers coincide, in which case a bonus was paid. Hence, whether or not the report was truthful remained unobservable to the experimenters. We find compelling null effects with tight confidence intervals showing that none of the norm-nudge interventions worked. A follow-up experiment reveals the reason for these convincing null-effects: the information norm-nudges did not actually change norms. Notably, our secondary results suggest that a substantial portion of individuals misremembered norm-nudges such that they conveniently supported deviant behavior. This subset of participants indeed displayed significantly higher deviance levels, a behavior pattern in line with literature on motivated misremembering and belief distortion. We discuss the importance of this high-powered null finding for the flourishing norm-nudge literature and derive policy implications.","PeriodicalId":322168,"journal":{"name":"Human Behavior & Game Theory eJournal","volume":"136 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-02-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133613773","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Cooperation in Queueing Systems","authors":"Yaroslav Rosokha, Chen Wei","doi":"10.2139/ssrn.3526505","DOIUrl":"https://doi.org/10.2139/ssrn.3526505","url":null,"abstract":"We study a social dilemma in a single-queue system in which human servers have discretion over the effort with which to process orders that arrive stochastically. We show theoretically that the efficient outcome in the form of high effort can be sustained in the subgame perfect equilibrium if the interactions are long term (even when each server has a short-term incentive to free ride and provide low effort). In addition, we show that queue visibility plays an important role in the type of strategies that can sustain high-effort equilibrium. In particular, we show that limiting feedback about the current state of the queue is beneficial if servers are patient enough. We conduct two controlled lab experiments to test the theoretical predictions and find that effort is increasing in the expected duration of the interaction. We also find that visibility has a strong impact on the strategies that human subjects use to provide effort in a dynamic setting. We discuss implications for managers and firms that are trying to improve service systems.","PeriodicalId":322168,"journal":{"name":"Human Behavior & Game Theory eJournal","volume":"48 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-01-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127766286","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Disentangling Risk-Aversion and Loss Aversion in First-Price Auctions: An Empirical Approach","authors":"Dong-Hyuk Kim, Anmol Ratan","doi":"10.2139/ssrn.3522274","DOIUrl":"https://doi.org/10.2139/ssrn.3522274","url":null,"abstract":"We develop a model which combines general risk-averse preferences with anticipated loss aversion to explain bidding behavior in the first-price auction, where both risk-aversion and loss aversion induce ‘overbidding.’ We then show that the nonparametric utility function and loss aversion coefficient are point-identified by the experiment data with exogenous variation in the number of bidders. Moreover, we develop a structural method with a flexible utility function based on Bernstein polynomials. Our method predicts the data well and the counterfactual analysis shows that loss aversion explains 85 ∼ 90% of overbidding in the data.","PeriodicalId":322168,"journal":{"name":"Human Behavior & Game Theory eJournal","volume":"24 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-12-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127217336","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Chunli Cheng, Christian Hilpert, Aidin Miri Lavasani, Mick Schaefer
{"title":"Surrender Contagion in Life Insurance","authors":"Chunli Cheng, Christian Hilpert, Aidin Miri Lavasani, Mick Schaefer","doi":"10.2139/ssrn.3497366","DOIUrl":"https://doi.org/10.2139/ssrn.3497366","url":null,"abstract":"This paper incorporates contagious surrender behavior into the valuation and risk management of participating life insurance contracts, allowing for structural default of the insurance company. The insurance pool features a financially sophisticated (professional) policyholder and many retail (non-professional) policyholders. A surrender-history-dependent intensity process is introduced to capture the non-professionals’ contagious surrender behavior. While contagion aligns the non-professionals’ surrender behavior with the optimal surrender of the professional, it jeopardizes the non-professionals’ financial position in favor of equity holders as a strict regulatory intervention or a risky investment strategy is imposed.","PeriodicalId":322168,"journal":{"name":"Human Behavior & Game Theory eJournal","volume":"8 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-12-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127548530","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Jason Brown, Patrick R. Martin, Geoffrey B. Sprinkle, Dan Way
{"title":"The Effects of Return on Investment and Residual Income Measures on Risk-Taking in Capital Investment Decisions","authors":"Jason Brown, Patrick R. Martin, Geoffrey B. Sprinkle, Dan Way","doi":"10.2139/ssrn.3516062","DOIUrl":"https://doi.org/10.2139/ssrn.3516062","url":null,"abstract":"We conduct an experiment to examine the separate and interactive effects of individuals’ risk preferences and two commonly-used performance measures – return on investment (ROI) and residual income (RI) – on the riskiness of capital investment decisions. We predict and find that the use of ROI as a performance measure leads to riskier choices as compared to RI, and that this effect tends to be concentrated in relatively more risk-averse individuals. We also provide process evidence that reveals some of the ways in which performance measures affect individuals’ decisions. Our results are consistent with theory from psychology (security-potential/aspiration theory), in that ROI potentially induces more risk-taking by enabling individuals to more easily satisfy aspirations for a positive performance measure outcome than RI, thus freeing them to focus more on striving for high outcomes. Collectively, our results contribute to literature examining the effects of accounting information and performance measures on managers’ risk-taking behavior.","PeriodicalId":322168,"journal":{"name":"Human Behavior & Game Theory eJournal","volume":"11 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"120946090","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Actively Using Passive Sectors to Generate Alpha Using the VIX","authors":"Michael Gayed","doi":"10.2139/ssrn.3718824","DOIUrl":"https://doi.org/10.2139/ssrn.3718824","url":null,"abstract":"A significant amount of academic research has documented momentum within and across broad sectors of the stock market as a means of generating alpha over a passive benchmark. However, few studies approach sector allocation from a mean reversion perspective using the Chicago Board of Exchange (CBOE) Volatility Index (VIX) as the trigger. We find that positioning into defensive sectors during periods of low volatility for the stock market, and into cyclical sectors during periods of high volatility produces significant long-term alpha. Using this framework, we back-test a dollar neutral strategy documenting return differentials, and create a modified S&P 500 Index that over-weights and underweights cyclical and defensive sectors systematically based on VIX levels. Absolute and relative returns for a sector allocation strategy that uses VIX levels significantly outperforms a passive buy and hold approach by using mean reversion to generate alpha. We postulate that the approach likely works because of behavioral biases related to loss aversion and the disposition effect creating mispricing that are repeatable and exploitable during periods of extreme market stress.","PeriodicalId":322168,"journal":{"name":"Human Behavior & Game Theory eJournal","volume":"23 6 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-11-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133909479","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Decision-Making in Complex Households","authors":"Marcos A. Rangel, Duncan C. Thomas","doi":"10.3386/w26511","DOIUrl":"https://doi.org/10.3386/w26511","url":null,"abstract":"Extremely rich data on farm households in Burkina Faso are used to test whether resource are allocated Pareto efficiently. The complexity of household structures, including multi-generation and polygynous households, is taken into account to developing tests from theoretical models of behavior. Credible measures of bargaining power are constructed exploiting the fact that individuals within a household have well-defined property rights over the plots they own. Using data on consumption choices, we establish that in farm households headed by a monogamous couple (with no co-resident adult sons), resource allocations are consistent with efficiency. In more complex household structures, including polygynous households, efficiency in allocations is not rejected in models that allow more than two household members to have agency in decision-making. In contrast, tests for efficiency based on whether the same farm households maximize profits by equating marginal products across plots are rejected for all household types. Further, these same tests indicate individuals do not equate marginal products across their own plots. We conclude, therefore, that tests of models of resource allocation based on production-side decisions are likely to be misleading. In contrast, the consumption-side tests provide novel insights into the nature of decision-making within complex households.","PeriodicalId":322168,"journal":{"name":"Human Behavior & Game Theory eJournal","volume":"14 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131611101","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Robust Vehicle Pre-Allocation with Uncertain Covariates","authors":"Z. Hao, Long He, Zhenyu Hu, Jun Jiang","doi":"10.2139/ssrn.3509026","DOIUrl":"https://doi.org/10.2139/ssrn.3509026","url":null,"abstract":"Motivated by a leading taxi operator in Singapore, we consider the idle vehicle pre-allocation problem with uncertain demands and other uncertain covariate information such as weather. In this problem, the operator, upon observing its distribution of idle vehicles, proactively allocates the idle vehicles to serve future uncertain demands. With perfect information of demand distribution, the problem can be formulated as a stochastic transportation problem. Yet, the non-stationarity and spatial correlation of demands pose significant challenges in estimating its distribution accurately from historical data. We employ a novel distributionally robust optimization approach that can utilize covariate information as well as the moment information of demand to construct a scenario-wise ambiguity set. We further illustrate how the key parameters required by the new ambiguity set, such as the scenarios and their probabilities, can be estimated via multivariate regression tree. Although information about uncertain covariates provides no value when there is perfect knowledge of demand distribution, we show that it could alleviate the over-conservativeness of the robust solution. The resulting distributionally robust optimization problem can be exactly and tractably solved using linear decision rule technique. We further validate the performance of our solution via extensive numerical simulations, and a case study using trip and vehicle status data from our partner taxi operator, paired with the rainfall data from the Meteorological Service Singapore.","PeriodicalId":322168,"journal":{"name":"Human Behavior & Game Theory eJournal","volume":"14 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-10-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116999240","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}