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ABSTRACT The state of the art of rendering fiat money valuable is either to impose a boundary condition or to make the boundary condition unimportant through an infinite sequence of markets so as to circumvent backward induction. We show... more
ABSTRACT The state of the art of rendering fiat money valuable is either to impose a boundary condition or to make the boundary condition unimportant through an infinite sequence of markets so as to circumvent backward induction. We show fiat exchange may nevertheless arise in finite economies if agents have incomplete information about their relative position in the trade cycle or when the barter and autarky equilibria of the one-shot trading round support a monetary equilibrium with repeated trades. Copyright 2002, Oxford University Press.
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Research Interests: Economics, Political Economy, Political Participation, Political Science, Politics, and 15 moreEconomic Justice, Economic Theory, Law and Economics, Auctions, Latin American Economic History, Lobbying, Politicians, Legislation, United States, Business Politics, Economic Models, Economic Model, Payment, Campaign Contribution, and Economic Rent
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This paper studies electoral competition in a model of redistributive politics with deterministic voting and heterogeneous voter loyalties to political parties. We construct a natural measure of party strength based on the sizes and... more
This paper studies electoral competition in a model of redistributive politics with deterministic voting and heterogeneous voter loyalties to political parties. We construct a natural measure of party strength based on the sizes and intensities of a party’s loyal voter segments and demonstrate how party behavior varies with the two parties’ strengths. In equilibrium, parties target or poach a strict subset of the opposition party’s loyal voters: offering those voters a high expected transfer, while freezing out the remainder with a zero transfer. The size of the subset of opposition voters frozen out and, consequently, the level of inequality in utilities generated by a party’s equilibrium redistribution schedule is increasing in the opposition party’s strength. We also construct a measure of political polarization that is increasing in the sum and symmetry of the parties’ strengths, and find that the expected ex-post inequality in utilities of the implemented policy is increasing in political polarization.
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ABSTRACT We examine the implications of replacing the Cournot market clearing assumption with Bertrand-Edgeworth behavior when production is time-consuming. The benchmark is Saloner's result that when two firms simultaneously... more
ABSTRACT We examine the implications of replacing the Cournot market clearing assumption with Bertrand-Edgeworth behavior when production is time-consuming. The benchmark is Saloner's result that when two firms simultaneously choose quantities in each of two periods before the market clears, every point on the outer envelope of the reaction functions between the Stackelberg outcomes is sustainable in equilibrium (Saloner, 1987). We demonstrate that in a symmetric Bertrand-Edgeworth duopoly, for small capacity costs, except for the leader-follower points, none of the points on the outer envelope of the best responses lying in the mixed strategy region are sustainable in equilibrium.
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Research Interests: Business and Oligopolies
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The institutional structure of conflict plays an important role in determining the degree to which scarce resources are dissipated throughout the course of a conflict. We consider conflicts where players simultaneously expend scarce... more
The institutional structure of conflict plays an important role in determining the degree to which scarce resources are dissipated throughout the course of a conflict. We consider conflicts where players simultaneously expend scarce resources in order to obtain a rent, and specifically focus on the role of whether the rent is a pure transfer across players from an initial status quo , or whether the rent potentially yields a weak Pareto improvement upon the status quo —cases we refer to respectively as rent-seeking and rent-sharing . Modeling conflict as an all-pay auction with ties, resource expenditures are treated as non-recoverable bids where a player obtains the complete rent by exceeding the other player’s bid by a given differential. Otherwise, the rent is evenly split (i.e. no transfer under rent-seeking , and an improvement on the status quo for both players under rent-sharing ). We experimentally compare the rent-seeking and rent-sharing paradigms for two bid differentials...
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... Dan Kovenock: email kovenock@chapman.edu ‡Sudipta Sarangi: email sarangi@lsu.edu §Matt Wiser: email mwiser1@lsu.edu 1 Page 2. 1 Introduction ... The players are conventionally labeledBlack and White. Each player alternates claiming an... more
... Dan Kovenock: email kovenock@chapman.edu ‡Sudipta Sarangi: email sarangi@lsu.edu §Matt Wiser: email mwiser1@lsu.edu 1 Page 2. 1 Introduction ... The players are conventionally labeledBlack and White. Each player alternates claiming an unclaimed cell of the board. ...
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Server farms constitute the heart of any e-commerce site. This paper evaluates the performance of server farm systems for handling real-time transactions. The paper uses a simulated environment to implement server farms and tests the... more
Server farms constitute the heart of any e-commerce site. This paper evaluates the performance of server farm systems for handling real-time transactions. The paper uses a simulated environment to implement server farms and tests the performance for various design policies and ...
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Success in adversarial environments often requires investment into additional resources in order to improve one’s competitive position. But, can intentionally decreasing one’s own competitiveness ever provide strategic benefits in such... more
Success in adversarial environments often requires investment into additional resources in order to improve one’s competitive position. But, can intentionally decreasing one’s own competitiveness ever provide strategic benefits in such settings? In this paper, we focus on characterizing the role of “concessions” as a component of strategic decision making. Specifically, we investigate whether a player can gain an advantage by either conceding budgetary resources or conceding valuable prizes to an opponent. While one might näıvely assume that the player cannot, our work demonstrates that – perhaps surprisingly – concessions do offer strategic benefits when made correctly. In the context of General Lotto games, we first show that neither budgetary concessions nor value concessions can be advantageous to either player in a 1-vs.-1 scenario. However, in settings where two players compete against a common adversary, we find opportunities for one of the two players to improve her payoff b...
We examine a modified 2 × 2 game of Hex in which the winner of each cell is determined by a Tullock contest. The player establishing a winning path of cells in the game wins a fixed prize. Examining the polar cases of all cells being... more
We examine a modified 2 × 2 game of Hex in which the winner of each cell is determined by a Tullock contest. The player establishing a winning path of cells in the game wins a fixed prize. Examining the polar cases of all cells being contested simultaneously versus all four cells being contested sequentially, we show that there is an increase in the total expected payoff for the players in the sequential case. We identify conditions under which players have identical and non-identical expected payoffs when the contest order is pre-specified. We also examine dissipation for random order contests. We thus provide a canonical model of a multibattle contest in which complementarities between battlefields are heterogeneous across both battlefields and players
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This paper examines conflicts in which performance is measured by the players' success or failure in multiple component conflicts, commonly termed "battlefields." In multi-battlefield conflicts, behavioral linkages across... more
This paper examines conflicts in which performance is measured by the players' success or failure in multiple component conflicts, commonly termed "battlefields." In multi-battlefield conflicts, behavioral linkages across battlefields depend both on the technologies of conflict within each battlefield and the nature of economies or diseconomies in how battlefield outcomes and costs aggregate in determining payoffs in the overall conflict. JEL Classification: C72, D74, H56
In 2005, the Democratic National Committee adopted the 50-state strategy in lieu of the strategy of focusing solely on battleground states. The rationale given for this move is that campaign expenditures are durable outlays that impact... more
In 2005, the Democratic National Committee adopted the 50-state strategy in lieu of the strategy of focusing solely on battleground states. The rationale given for this move is that campaign expenditures are durable outlays that impact both current and future campaigns. This paper investigates the optimality of the 50-state strategy in a simple dynamic game of campaign resource allocation in which expenditures act as a form of investment. Neither the 50-state nor the battleground-states strategy is likely to arise in equilibrium. Instead, parties employ a modified battleground-states strategy in which they stochastically target non-battleground states. JEL Classification: D72, C7
Maintaining the security of critical infrastructure networks is vital for a modern economy. This paper examines a game-theoretic model of attack and defense of a network in which the defender's objective is to maintain network... more
Maintaining the security of critical infrastructure networks is vital for a modern economy. This paper examines a game-theoretic model of attack and defense of a network in which the defender's objective is to maintain network connectivity and the attacker's objective is to destroy a set of nodes that disconnects the network. The conflict at each node is modeled as a contest in which the player that allocates the higher level of force wins the node. Although there are multiple mixed-strategy equilibria, we characterize correlation structures in the players' multivariate joint distributions of force across nodes that arise in all equilibria. For example, in all equilibria the attacker utilizes a stochastic 'guerrilla warfare' strategy in which a single random [minimal] set of nodes that disconnects the network is attacked. JEL Classification: C7, D74
This paper examines a game-theoretic model of attack and defense of multiple networks of targets in which there exist intra-network strategic complementarities among targets. The defender's objective is to successfully defend all of... more
This paper examines a game-theoretic model of attack and defense of multiple networks of targets in which there exist intra-network strategic complementarities among targets. The defender's objective is to successfully defend all of the networks and the attacker's objective is to successfully attack at least one network of targets. In this context, our results highlight the importance of modeling asymmetric attack and defense as a conflict between "fully" strategic actors with endogenous entry and force expenditure decisions as well as allowing for general correlation structures for force expenditures within and across the networks of targets. JEL Classification: C7, D74
The military conflicts in Ukraine and Syria, conflict in Afghanistan and Iraq, the terrorist threat and the deterioration of international relationships, but also trade wars and other less violent forms of international conflict remind us... more
The military conflicts in Ukraine and Syria, conflict in Afghanistan and Iraq, the terrorist threat and the deterioration of international relationships, but also trade wars and other less violent forms of international conflict remind us of the continued role of conflict in the international sphere. This conference considers the dynamics of such conflicts, bringing together research from economics and political science that studies the factors why and how a conflict may escalate or cease the role of sanctions, the role of mediation, the role of ethnic and religious diversity, and the international institutions such as the United Nations or of
We characterize the unique Markov perfect equilibrium of a tug-of-war without exogenous noise, in which players have the opportunity to engage in a sequence of battles in an attempt to win the war. Each battle is an all-pay auction in... more
We characterize the unique Markov perfect equilibrium of a tug-of-war without exogenous noise, in which players have the opportunity to engage in a sequence of battles in an attempt to win the war. Each battle is an all-pay auction in which the player expending the greater resources wins. In equilibrium, contest eort concentrates on at most two adjacent states of the game, the "tipping states", which are determined by the contestants' relative strengths, their distances to final victory, and the discount factor. In these states battle outcomes are stochastic due to endogenous randomization. Both relative strength and closeness to victory increase the probability of winning the battle at hand. Patience reduces the role of distance in determining outcomes. Applications range from politics, economics and sports, to biology, where the equilibrium behavior finds empirical support: many species have developed mechanisms such as hierarchies or other organizational structures ...
In this article we examine the efect of private information and information externalities on the ex post eficiency of investment in oil exploration. We show that too much drilling tends to occur ifjirms believe that the area is likely to... more
In this article we examine the efect of private information and information externalities on the ex post eficiency of investment in oil exploration. We show that too much drilling tends to occur ifjirms believe that the area is likely to contain a sizeable pool of oil, and too little drilling occurs if the opposite is true. Bargaining with well-defined property rights to the information externality can eliminate underinvestment, but overinvestment remains a problem because firms have an incentive not to disclose their private information. 1.
In this note it is shown that, without certain restrictions on the coalitions that may form, the core of the overlapping generations model may be empty. The introduction of money, while expanding the trading possibilities, does not... more
In this note it is shown that, without certain restrictions on the coalitions that may form, the core of the overlapping generations model may be empty. The introduction of money, while expanding the trading possibilities, does not eliminate the problem. 1. The first theorem of welfare economics states that Walrasian equilibria are Pareto optimal. The overlapping generations model intro-duced by Samuelson (1958) provides an example in which this theorem fails. Shell (1975) has argued persuasively that the essential condition responsible for this failure is the ‘double infinity ’ of consumers and commodities. In this letter, we examine a second proposition in general equilibrium theory. We show that the set of Walrasian equilibria in an overlapping generations model may not belong to the core. In fact, we prove that the core may be empty. The basic reason for this result appears to be the ‘double infinity’ rather than the limited opportunities for intertemporal exchange. The introduc...
This article investigates the impact of the distribution of preferences on equilibrium behavior in conflicts that are modeled as all-pay auctions with identity-dependent externalities. In this context, we define centrists and radicals... more
This article investigates the impact of the distribution of preferences on equilibrium behavior in conflicts that are modeled as all-pay auctions with identity-dependent externalities. In this context, we define centrists and radicals using a willingness-to-pay criterion that admits preferences more general than a simple ordering on the line. Through a series of examples, we show that substituting the auction contest success function for the lottery contest success function in a conflict may alter the relative expenditures of centrists and radicals in equilibrium. Extremism, characterized by a higher per capita expenditure by radicals than centrists, may persist and lead to a higher aggregate expenditure by radicals, even when they are relatively small in number. Moreover, we show that centrists may in the aggregate expend zero, even if they vastly outnumber radicals. Our results demonstrate the importance of the choice of the institutions of conflict, as modeled by the contest succ...
This paper studies electoral competition in a model of redistributive politics with de-terministic voting and heterogeneous voter loyalties to political parties. We construct a natural measure of "party strength" based on the... more
This paper studies electoral competition in a model of redistributive politics with de-terministic voting and heterogeneous voter loyalties to political parties. We construct a natural measure of "party strength" based on the sizes and intensities of a party's loyal voter segments and demonstrate how party behavior varies with the two parties' strengths. In equilibrium, parties target or "poach" a strict subset of the opposition party's loyal voters: offering those voters a high expected transfer, while "freezing out" the remainder with a zero transfer. The size of the subset of opposition voters frozen out and, consequently, the level of inequality in utilities generated by a party's equilibrium redistribution schedule is increasing in the opposition party's strength. We also construct a measure of "political polarization" that is increasing in the sum and symmetry of the parties' strengths, and find that the expected ...
General rights Copyright and moral rights for the publications made accessible in the public portal are retained by the authors and/or other copyright owners and it is a condition of accessing publications that users recognise and abide... more
General rights Copyright and moral rights for the publications made accessible in the public portal are retained by the authors and/or other copyright owners and it is a condition of accessing publications that users recognise and abide by the legal requirements associated with these rights.? Users may download and print one copy of any publication from the public portal for the purpose of private study or research? You may not further distribute the material or use it for any profit-making activity or commercial gain? You may freely distribute the URL identifying the publication in the public portal Take down policy If you believe that this document breaches copyright, please contact us providing details, and we will remove access to the work immediately and investigate your claim. Download date: 09. mei. 2016
We characterize the unique Markov perfect equilibrium of a tug-of-war without exogenous noise, in which players have the opportunity to engage in a sequence of battles in an attempt to win the war. Each battle is an all-pay auction in... more
We characterize the unique Markov perfect equilibrium of a tug-of-war without exogenous noise, in which players have the opportunity to engage in a sequence of battles in an attempt to win the war. Each battle is an all-pay auction in which the player expending the greater resources wins. In equilibrium, contest effort concentrates on at most two adjacent states of the game, the "tipping states", which are determined by the contestants' relative strengths, their distances to final victory, and the discount factor. In these states battle outcomes are stochastic due to endogenous randomization. Both relative strength and closeness to victory increase the probability of winning the battle at hand. Patience reduces the role of distance in determining outcomes. Applications range from politics, economics and sports, to biology, where the equilibrium behavior finds empirical support: many species have developed mechanisms such as hierarchies or other organizational structure...
Maintaining the security of critical infrastructure networks is vital for a modern economy. This paper examines a game-theoretic model of attack and defense of a network in which the defender’s objective is to maintain network... more
Maintaining the security of critical infrastructure networks is vital for a modern economy. This paper examines a game-theoretic model of attack and defense of a network in which the defender’s objective is to maintain network connectivity and the attacker’s objective is to destroy a set of nodes that disconnects the network. The conflict at each node is modeled as a contest in which the player that allocates the higher level of force wins the node. Although there are multiple mixed-strategy equilibria, we characterize correlation structures in the players’ multivariate joint distributions of force across nodes that arise in all equilibria. For example, in all equilibria the attacker utilizes a stochastic ‘guerrilla warfare’ strategy in which a single random [minimal] set of nodes that disconnects the network is attacked.
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In this note, we characterize the full set of equilibria of the 2-firm patent race analyzed by Amaldoss and Jain (Management Science, 48(8), August 2002, pp. 972991). Contrary to Amaldoss and Jain’s (2002) claim, we show that the... more
In this note, we characterize the full set of equilibria of the 2-firm patent race analyzed by Amaldoss and Jain (Management Science, 48(8), August 2002, pp. 972991). Contrary to Amaldoss and Jain’s (2002) claim, we show that the equilibrium is not always unique and that the set of equilibria is non-robust to changes in the (discrete) set of available strategies. In some equilibria, the qualitative results are the reverse of those in the only equilibrium Amaldoss and Jain identify. Our findings have important implications for the analysis of the data from Amaldoss and Jain’s experiments, as well as other experiments appearing in the literature.
In our original comment, we showed that Hausken’s characterization of Nash equilibrium is invalid for much of the parameter space examined and provided necessary conditions for his solution to hold. Most of the comments in his reply are... more
In our original comment, we showed that Hausken’s characterization of Nash equilibrium is invalid for much of the parameter space examined and provided necessary conditions for his solution to hold. Most of the comments in his reply are either tangential or irrelevant. However, several of the claims made in the reply reveal continuing misunderstandings and gaps in his understanding. In this rejoinder, we briefly clarify the fundamental issues. JEL Classification: C72, D74, H56