International Game Theory Review

The level-$k$ model is a workhorse in behavioral game theory. For comparisons across experiments and predictions in future studies, it is crucial to assess the empirical distribution of $k$-levels. We present a revelation game suitable for this purpose. In a labor market context, workers can choose to reveal their productivity at a cost, and players’ strategies reveal their level of reasoning in terms of a $k$-level. We find that the most frequently observed reasoning levels are $k=2$ and $k=3$. In our game roughly 30% of the players are $k\le 1$ and 25% are $k\ge 4$. We compare our results to other experiments that identify level-$k$ distribution, foremost to the money request (or 11–20) game. Despite various differences to the 11–20 game, our revelation game suggests a very similar distribution of level-$k$ types.

In this paper, we study a duopoly model in which two symmetric firms exploit the same public renewable resource as an input for the production of a homogeneous good. We consider the case where the firms are provided with public incentives in order to prevent the resource exhaustion in a finite time horizon which coincides with the harvesting-license period. As a consequence, we consider a differential game in finite time horizon and compute the Open Loop and linear Feedback Nash Equilibria of the game. We study the social welfare and the optimal incentives polices derived from the solutions.

This paper investigates how behavior evolves in a society with a social hierarchy consisting of high and low positions. Agents first collectively negotiate for high positions through a political institution. Next, each high position agent is matched with a low position agent to engage in some asymmetric pairwise interaction, which generates economic outcomes for the two agents. These economic outcomes in turn influence the evolution of agents’ behavior. We find that this evolutionary process induces Pareto-enhancing behavior by high position agents but Pareto-damaging behavior by low position agents. We take this result into a production–redistribution game in which a low position agent exerts effort to produce and a high position agent decides how to redistribute the output. We show that inefficient work effort and a positive transfer are evolutionarily stable.

In this paper, we consider the dynamic setting of Stackelberg oligopoly TU-games in $\gamma$-characteristic function form. Any deviating coalition produces an output at a first period as a leader and then, outsiders simultaneously and independently play a quantity at a second period as followers. We assume that the inverse demand function is linear and that firms operate at constant but possibly distinct marginal costs. First, we show that the core of any Stackelberg oligopoly TU-game always coincides with the set of imputations. Second, we provide a necessary and sufficient condition, depending on the heterogeneity of firms’ marginal costs, under which the core is nonempty.

We show that a proportional taxation redistribution rule regarding heterogeneity among members of a society is implied by four axioms: efficiency, total wealth monotonicity, contribution monotonicity and additivity. Moreover, we offer another axiomatization with dropping additivity. Our rule is an extension of [Casajus, A. [2015] Monotonic distribution of performance-based allocations: A case for proportional taxation, Theor. Econ. 10, 887–892]’s redistribution rule in which each member of a society is identified only with his/her income.

We introduce a new sequential game, where each player has a limited resource that he needs to spend on increasing the probability of winning each stage, but also on maintaining the assets that he has won in the previous stages. Thus, the players’ strategies must take into account that winning at any given stage negatively affects the chances of winning in later stages. Whenever the initial resources of the players are not too small, we present explicit strategies for the players, and show that they are a Nash equilibrium, which is unique in an appropriate sense.

This paper formulates a new approach to analyze infinite horizon dynamic games with uncertainties and unknowns in the players’ future payoff structures. In many game situations, the game horizon would last for an indefinitely long period and one has to consider them as infinite horizon games. Existing infinite horizon dynamic games often rely on the assumption of time-invariant game structures for the derivation of equilibrium solutions. However, many events in the considerably far future are intrinsically unknown. In this paper, information about the players’ future payoffs will be revealed as the game proceeds. Making use of the newly obtained information, the players revise their strategies accordingly, and the process will continue indefinitely. This new approach for the analysis of infinite horizon dynamic games via information updating provides a more realistic and practical alternative to the study of infinite horizon dynamic games.