This page contains working papers on pure and applied game theory.
Economic Institutions and Stability: A Network Approach
by Robert P. Gilles, Emiliya Lazarova and Pieter H.M. Ruys
September 2011
Abstract:
We consider a network economy in which economic agents are connected within a structure of value-generating relationships. Agents are assumed to be able to participate in three types of economic activities: autarkic self-provision; binary matching interactions; and multi-person cooperative collaborations. We introduce two concepts of stability and provide sufficient and necessary conditions on the prevailing network structure for the existence of stable assignments, both in the absence of externalities from cooperation as well as in the presence of size-based externalities. We show that institutional elements such as the emergence of socioeconomic roles and hierarchical leadership structures are necessary for establishing stability and as such support and promote stable economic development.
Local Conventions in Game Play in an Evolving Dual Social Network Framework
by Zhengzheng Pan and Robert P. Gilles
December 2010
Abstract:
People usually perform economic interactions within the social setting of a small group, while they obtain relevant information from a broader source. We capture this feature with a dynamic interaction model based on two separate social networks. Individuals play a coordination game in an interaction network, while updating their strategies using information from a separate influence network through which information is disseminated. In each time period, the interaction and influence networks co-evolve, and the individuals’ strategies are updated through a modified naive learning process. We show that both network structures and players’ strategies always reach a steady state, in which players form fully connected groups and converge to local conventions. We also analyze the influence exerted by a minority group of strongly opinionated players on these outcomes.