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Game Mining: How to Make Money from those about to Play a Game

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  • James W. Bono
  • David H. Wolpert

Abstract

It is known that a player in a noncooperative game can benefit by publicly re- stricting their possible moves before start of play. We show that, more generally, a player may benefit by publicly committing to pay an external party an amount that is contingent on the game's outcome. We explore what happens when external parties (who we call game miners) discover this fact and seek to profit from it by entering an outcome-contingent contract with the players. We analyze various bargaining games between miners and players for determining such an outcome- contingent contract. We establish restrictions on the strategic settings in which a game miner can profit, and bounds on the game miner's profit given various structured bargaining games. These bargaining games include playing the players against one another, as well as allowing the players to pay the miner(s) for exclu- sivity and first-mover advantage. We also establish that when all players can enter contracts with miners, to guarantee the existence of equilibria it is necessary to assume that players can randomize over the contracts they make.

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Bibliographic Info

Paper provided by American University, Department of Economics in its series Working Papers with number 2009-10.

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Date of creation: Aug 2009
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Handle: RePEc:amu:wpaper:2009-10

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Web page: http://www.american.edu/cas/economics/

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  1. van Damme, Eric & Hurkens, Sjaak, 1996. "Commitment Robust Equilibria and Endogenous Timing," Games and Economic Behavior, Elsevier, vol. 15(2), pages 290-311, August.
  2. Renou, Ludovic, 2009. "Commitment games," Games and Economic Behavior, Elsevier, vol. 66(1), pages 488-505, May.
  3. Fershtman, Chaim, 1985. "Managerial incentives as a strategic variable in duopolistic environment," International Journal of Industrial Organization, Elsevier, vol. 3(2), pages 245-253, June.
  4. Adam Tauman Kalai & Ehud Kalai & Dov Samet, 2007. "Voluntary Commitments Lead to Efficiency," Discussion Papers 1444, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  5. Michael L. Katz, 1991. "Game-Playing Agents: Unobservable Contracts as Precommitments," RAND Journal of Economics, The RAND Corporation, vol. 22(3), pages 307-328, Autumn.
  6. Hamilton, J.H. & Slutsky, S.M., 1988. "Endogenous Timing In Duopoly Games: Stackelberg Or Cournot Equilibria," Papers 88-4, Florida - College of Business Administration.
  7. Romano, Richard & Yildirim, Huseyin, 2005. "On the endogeneity of Cournot-Nash and Stackelberg equilibria: games of accumulation," Journal of Economic Theory, Elsevier, vol. 120(1), pages 73-107, January.
  8. Kalai, Ehud & Smorodinsky, Meir, 1975. "Other Solutions to Nash's Bargaining Problem," Econometrica, Econometric Society, vol. 43(3), pages 513-18, May.
  9. Chaim Fershtman & Kenneth L. Judd & Ehud Kalai, 1990. "Observable Contracts: Strategic Delegation and Cooperation," Discussion Papers 879, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  10. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
  11. Vickers, John, 1985. "Delegation and the Theory of the Firm," Economic Journal, Royal Economic Society, vol. 95(380a), pages 138-47, Supplemen.
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