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The value of technology improvements in games with externalities: A fresh look at offsetting behavior

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  • Hoy, Michael
  • Polborn, Mattias K.

Abstract

We model the effect of safety technology improvements in a symmetric game in which each player's payoff depends on his own precaution and the other players' average precaution. We derive conditions under which an improved technology increases or decreases players' equilibrium utilities.

Suggested Citation

  • Hoy, Michael & Polborn, Mattias K., 2015. "The value of technology improvements in games with externalities: A fresh look at offsetting behavior," Journal of Public Economics, Elsevier, vol. 131(C), pages 12-20.
    • Handle: RePEc:eee:pubeco:v:131:y:2015:i:c:p:12-20
    DOI: 10.1016/j.jpubeco.2015.08.011
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    2. Talamàs, Eduard & Vohra, Rakesh, 2020. "Free and perfectly safe but only partially effective vaccines can harm everyone," Games and Economic Behavior, Elsevier, vol. 122(C), pages 277-289.
    3. Adriani, Fabrizio & Ladley, Dan, 2021. "Social distance, speed of containment and crowding in/out in a network model of contagion," Journal of Economic Behavior & Organization, Elsevier, vol. 190(C), pages 597-625.
    4. Annette Hofmann & Casey Rothschild, 2019. "On the efficiency of self-protection with spillovers in risk," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 44(2), pages 207-221, September.
    5. Eduard Talamàs & Rakesh Vohra, 2018. "Go Big or Go Home: A Free and Perfectly Safe but Only Partially Effective Vaccine Can Make Everyone Worse Off," PIER Working Paper Archive 18-006, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 15 Jan 2018.
    6. P. Battiston & M. Menegatti, 2022. "Interaction in Prevention: A General Theory and an Application to COVID-19 Pandemic," Economics Department Working Papers 2022-EP02, Department of Economics, Parma University (Italy).

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    More about this item

    Keywords

    Offsetting behavior; Moral hazard;

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D6 - Microeconomics - - Welfare Economics
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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