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Participation games: Market entry, coordination, and the beautiful blonde

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Author Info

  • Anderson, Simon P.
  • Engers, Maxim

Abstract

We find the Nash equilibria for monotone n-player symmetric games where each player chooses whether to participate. Examples include market entry games, coordination games, and the bar-room game depicted in the movie 'A Beautiful Mind'. The symmetric Nash equilibrium involves excessive participation (a common property resource problem) if participants’ payoffs are decreasing (in the number of participants), and insufficient participation if payoffs are increasing. With decreasing payoffs there can be many equilibria, but with increasing payoffs there are only three. Some comparative static properties of changing one player’s participation payoffs are counter-intuitive, especially with more than two players.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 63 (2007)
Issue (Month): 1 (May)
Pages: 120-137

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Handle: RePEc:eee:jeborg:v:63:y:2007:i:1:p:120-137

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  1. Jacob K. Goeree & Charles A. Holt, 2001. "Ten Little Treasures of Game Theory and Ten Intuitive Contradictions," American Economic Review, American Economic Association, vol. 91(5), pages 1402-1422, December.
  2. Crawford, Vincent P, 1974. "Learning the Optimal Strategy in a Zero-Sum Game," Econometrica, Econometric Society, vol. 42(5), pages 885-91, September.
  3. Federico Ciliberto & Elie Tamer, 2009. "Market Structure and Multiple Equilibria in Airline Markets," Econometrica, Econometric Society, vol. 77(6), pages 1791-1828, November.
  4. Vickrey, William S. & Anderson, Simon P. & Braid, Ralph M., 1999. "Spatial competition, monopolistic competition, and optimum product diversity," International Journal of Industrial Organization, Elsevier, vol. 17(7), pages 953-963, October.
  5. Sundali, James A. & Rapoport, Amnon & Seale, Darryl A., 1995. "Coordination in Market Entry Games with Symmetric Players," Organizational Behavior and Human Decision Processes, Elsevier, vol. 64(2), pages 203-218, November.
  6. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
  7. Anderson, Simon P. & Goeree, Jacob K. & Holt, Charles A., 2001. "Minimum-Effort Coordination Games: Stochastic Potential and Logit Equilibrium," Games and Economic Behavior, Elsevier, vol. 34(2), pages 177-199, February.
  8. Crawford, Vincent P., 1985. "Learning behavior and mixed-strategy Nash equilibria," Journal of Economic Behavior & Organization, Elsevier, vol. 6(1), pages 69-78, March.
  9. Andrew Sweeting, 2005. "Coordination Games, Multiple Equilibria and the Timing of Radio Commercials," 2005 Meeting Papers 490, Society for Economic Dynamics.
  10. Andrew Cohen & Ron Borzekowski, 2005. "Estimating Strategic Complementarities in Credit Union’s Outsourcing Decisions," Computing in Economics and Finance 2005 410, Society for Computational Economics.
  11. Dan Lovallo & Colin Camerer, 1999. "Overconfidence and Excess Entry: An Experimental Approach," American Economic Review, American Economic Association, vol. 89(1), pages 306-318, March.
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Cited by:
  1. Pim Heijnen, 2009. "On the probability of breakdown in participation games," Social Choice and Welfare, Springer, vol. 32(3), pages 493-511, March.
  2. Pietro Dindo & Jan Tuinstra, 2011. "A Class of Evolutionary Models for Participation Games with Negative Feedback," Computational Economics, Society for Computational Economics, vol. 37(3), pages 267-300, March.
  3. Frank, Joshua & Sohn, Saeyoon, 2011. "A behavioral economic analysis of excess entry in arts labor markets," The Journal of Socio-Economics, Elsevier, vol. 40(3), pages 265-273, May.
  4. Christian Schultz, 2007. "Transparency and Product Variety," CIE Discussion Papers 2007-13, University of Copenhagen. Department of Economics. Centre for Industrial Economics.

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