IDEAS home Printed from https://ideas.repec.org/a/spr/inrvec/v62y2015i1p23-39.html

A Bayesian potential game to illustrate heterogeneity in cost/benefit characteristics

Author

Listed:
  • Arsen Palestini

  • Ilaria Poggio

Abstract

We employ the theory of Bayesian potential games to characterize pure-strategy equilibria of a Bayesian game with finite type structures, taking into account the cost/benefit features of agents. Building on a standard model of oligopolistic competition also applicable to environmental issues such as profit maximization in presence of an externality affecting all players, we rely on types to describe their heterogeneity. When the damage functions are additively separable, the potential provides necessary and sufficient conditions to ensure monotonicity of pure strategies. Copyright Springer-Verlag Berlin Heidelberg 2015

Suggested Citation

  • Arsen Palestini & Ilaria Poggio, 2015. "A Bayesian potential game to illustrate heterogeneity in cost/benefit characteristics," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 62(1), pages 23-39, March.
    • Handle: RePEc:spr:inrvec:v:62:y:2015:i:1:p:23-39
    DOI: 10.1007/s12232-014-0221-9
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s12232-014-0221-9
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s12232-014-0221-9?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Branzei, Rodica & Mallozzi, Lina & Tijs, Stef, 2003. "Supermodular games and potential games," Journal of Mathematical Economics, Elsevier, vol. 39(1-2), pages 39-49, February.
    2. Edward Cartwright & Myrna Wooders, 2009. "On purification of equilibrium in Bayesian games and expost Nash equilibrium," International Journal of Game Theory, Springer;Game Theory Society, vol. 38(1), pages 127-136, March.
    3. Indrajit Ray & Sonali Gupta, 2013. "Coarse correlated equilibria in linear duopoly games," International Journal of Game Theory, Springer;Game Theory Society, vol. 42(2), pages 541-562, May.
    4. Van Zandt, Timothy & Vives, Xavier, 2007. "Monotone equilibria in Bayesian games of strategic complementarities," Journal of Economic Theory, Elsevier, vol. 134(1), pages 339-360, May.
    5. Voorneveld, Mark, 2000. "Best-response potential games," Economics Letters, Elsevier, vol. 66(3), pages 289-295, March.
    6. Fioravante Patrone & Lucia Pusillo & Stef Tijs, 2007. "Multicriteria games and potentials," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer;Sociedad de Estadística e Investigación Operativa, vol. 15(1), pages 138-145, July.
    7. Marc Germain & Philippe Toint & Henry Tulkens & Aart Zeeuw, 2006. "Transfers to Sustain Dynamic Core-Theoretic Cooperation in International Stock Pollutant Control," Springer Books, in: Parkash Chander & Jacques Drèze & C. Knox Lovell & Jack Mintz (ed.), Public goods, environmental externalities and fiscal competition, chapter 0, pages 251-274, Springer.
    8. Brânzei, R. & Mallozzi, L. & Tijs, S.H., 2003. "Supermodular games and potential games," Other publications TiSEM 87c16860-0596-4448-808d-c, Tilburg University, School of Economics and Management.
    9. Einy, Ezra & Haimanko, Ori & Moreno, Diego & Shitovitz, Benyamin, 2010. "On the existence of Bayesian Cournot equilibrium," Games and Economic Behavior, Elsevier, vol. 68(1), pages 77-94, January.
    10. David McAdams, 2003. "Isotone Equilibrium in Games of Incomplete Information," Econometrica, Econometric Society, vol. 71(4), pages 1191-1214, July.
    11. Giovanni Facchini & Freek van Megen & Peter Borm & Stef Tijs, 1997. "Congestion Models And Weighted Bayesian Potential Games," Theory and Decision, Springer, vol. 42(2), pages 193-206, March.
    12. Sandholm, William H., 2007. "Pigouvian pricing and stochastic evolutionary implementation," Journal of Economic Theory, Elsevier, vol. 132(1), pages 367-382, January.
    13. Germain, Marc & Tulkens, Henry & Magnus, Alphonse, 2010. "Dynamic core-theoretic cooperation in a two-dimensional international environmental model," Mathematical Social Sciences, Elsevier, vol. 59(2), pages 208-226, March.
    14. Einy, Ezra & Moreno, Diego & Shitovitz, Benyamin, 2003. "The value of public information in a Cournot duopoly," Games and Economic Behavior, Elsevier, vol. 44(2), pages 272-285, August.
    15. Patrone, F. & Pusillo, L. & Tijs, S.H., 2007. "Multicriteria games and potentials," Other publications TiSEM 47a4248e-bbe4-4037-99f1-f, Tilburg University, School of Economics and Management.
    16. Erik J. Balder, 1996. "Remarks on Nash equilibria for games with additively coupled payoffs (*)," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 9(1), pages 161-167.
    17. Breton, Michele & Zaccour, Georges & Zahaf, Mehdi, 2006. "A game-theoretic formulation of joint implementation of environmental projects," European Journal of Operational Research, Elsevier, vol. 168(1), pages 221-239, January.
    18. Takashi Ui, 2009. "Bayesian potentials and information structures: Team decision problems revisited," International Journal of Economic Theory, The International Society for Economic Theory, vol. 5(3), pages 271-291, September.
    19. Philip J. Reny, 2011. "On the Existence of Monotone Pure‐Strategy Equilibria in Bayesian Games," Econometrica, Econometric Society, vol. 79(2), pages 499-553, March.
    20. Peleg, Bezalel, 1998. "Almost all equilibria in dominant strategies are coalition - proof," Economics Letters, Elsevier, vol. 60(2), pages 157-162, August.
    21. Herve Moulin & Indrajit Ray & Sonali Sen Gupta, 2013. "Coarse Correlated Equilibria in an Abatement Game," Discussion Papers 13-11, Department of Economics, University of Birmingham.
    22. Monderer, Dov & Shapley, Lloyd S., 1996. "Potential Games," Games and Economic Behavior, Elsevier, vol. 14(1), pages 124-143, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lina Mallozzi, 2013. "An application of optimization theory to the study of equilibria for games: a survey," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 21(3), pages 523-539, September.
    2. Peter Duersch & Jörg Oechssler & Burkhard Schipper, 2014. "When is tit-for-tat unbeatable?," International Journal of Game Theory, Springer;Game Theory Society, vol. 43(1), pages 25-36, February.
    3. Peter Duersch & Jörg Oechssler & Burkhard Schipper, 2014. "When is tit-for-tat unbeatable?," International Journal of Game Theory, Springer;Game Theory Society, vol. 43(1), pages 25-36, February.
    4. Ewerhart, Christian, 2017. "The lottery contest is a best-response potential game," Economics Letters, Elsevier, vol. 155(C), pages 168-171.
    5. Oriol Carbonell-Nicolau & Richard P. McLean, 2018. "On the Existence of Nash Equilibrium in Bayesian Games," Mathematics of Operations Research, INFORMS, vol. 43(2), pages 100-129, February.
    6. D. Dragone & L. Lambertini & A. Palestini, 2008. "A Class of Best-Response Potential Games," Working Papers 635, Dipartimento Scienze Economiche, Universita' di Bologna.
    7. Fioravante Patrone & Lucia Pusillo & Stef Tijs, 2007. "Multicriteria games and potentials," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer;Sociedad de Estadística e Investigación Operativa, vol. 15(1), pages 138-145, July.
    8. Francesco Caruso & Maria Carmela Ceparano & Jacqueline Morgan, 2024. "Bilevel Nash Equilibrium Problems: Numerical Approximation Via Direct-Search Methods," Dynamic Games and Applications, Springer, vol. 14(2), pages 305-332, May.
    9. Prokopovych, Pavlo & Yannelis, Nicholas C., 2023. "On monotone pure-strategy Bayesian-Nash equilibria of a generalized contest," Games and Economic Behavior, Elsevier, vol. 140(C), pages 348-362.
    10. Prokopovych, Pavlo & Yannelis, Nicholas C., 2019. "On monotone approximate and exact equilibria of an asymmetric first-price auction with affiliated private information," Journal of Economic Theory, Elsevier, vol. 184(C).
    11. Luciano De Castro, 2012. "Correlation of Types in Bayesian Games," Discussion Papers 1556, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    12. Peter Duersch & Jörg Oechssler & Burkhard Schipper, 2012. "Pure strategy equilibria in symmetric two-player zero-sum games," International Journal of Game Theory, Springer;Game Theory Society, vol. 41(3), pages 553-564, August.
    13. Jonathan Spiteri & Jonathan James & Michele Belot, 2018. "A Computer-Based Incentivized Food Basket Choice Tool: Presentation and Evaluation," Department of Economics Working Papers 69/18, University of Bath, Department of Economics.
    14. Alan Beggs & A.W. Beggs, 2011. "Regularity and Stability in Monotone Bayesian Games," Economics Series Working Papers 587, University of Oxford, Department of Economics.
    15. Bajoori, Elnaz & Vermeulen, Dries, 2019. "Equilibrium selection in interdependent value auctions," Mathematical Social Sciences, Elsevier, vol. 98(C), pages 47-56.
    16. Mensch, Jeffrey, 2021. "Rational inattention and the monotone likelihood ratio property," Journal of Economic Theory, Elsevier, vol. 196(C).
    17. Pavlo Prokopovych & Nicholas C. Yannelis, 2022. "On nondegenerate equilibria of double auctions with several buyers and a price floor," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 73(2), pages 625-654, April.
    18. repec:eid:wpaper:37904 is not listed on IDEAS
    19. Francesco Caruso & Maria Carmela Ceparano & Jacqueline Morgan, 2020. "Best response algorithms in ratio-bounded games: convergence of affine relaxations to Nash equilibria," CSEF Working Papers 593, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    20. Einy, Ezra & Haimanko, Ori, 2023. "Pure-strategy equilibrium in Bayesian potential games with absolutely continuous information," Games and Economic Behavior, Elsevier, vol. 140(C), pages 341-347.
    21. Olivier Armantier & Jean-Pierre Florens & Jean-Francois Richard, 2008. "Approximation of Nash equilibria in Bayesian games," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 23(7), pages 965-981.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:inrvec:v:62:y:2015:i:1:p:23-39. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.