Department of Economics
Permanent URI for this collection
Browse
Browsing Department of Economics by Type "Conference Paper"
Now showing 1 - 3 of 3
Results Per Page
Sort Options
Item Open Access Common knowledge and state-dependent equilibria(Springer, Berlin, Heidelberg, 2012) Dalkıran, Nuh Aygun; Hoffman, M.; Paturi, R.; Ricketts, D.; Vattani, A.Many puzzling social behaviors, such as avoiding eye contact, using innuendos, and insignificant events that trigger revolutions, seem to relate to common knowledge and coordination, but the exact relationship has yet to be formalized. Herein, we present such a formalization. We state necessary and sufficient conditions for what we call state-dependent equilibria - equilibria where players play different strategies in different states of the world. In particular, if everybody behaves a certain way (e.g. does not revolt) in the usual state of the world, then in order for players to be able to behave a different way (e.g. revolt) in another state of the world, it is both necessary and sufficient for it to be common p-believed that it is not the usual state of the world, where common p-belief is a relaxation of common knowledge introduced by Monderer and Samet [16]. Our framework applies to many player r-coordination games - a generalization of coordination games that we introduce - and common (r,p)-beliefs - a generalization of common p-beliefs that we introduce. We then apply these theorems to two particular signaling structures to obtain novel results. © 2012 Springer-Verlag.Item Open Access Cournot competition in networked markets(ACM, 2014) Bimpikis, K.; Ehsani, S.; İlkılıç, RahmiThe paper considers a model of competition among firms that produce a homogeneous good in a networked environment. A bipartite graph determines which subset of markets a firm can supply to. Firms compete a la Cournot and decide how to allocate their production output to the markets they are directly connected to. We assume that markets have inverse linear demand and firms have quadratic production costs. First, we show that the resulting Cournot game has a unique equilibrium for any given network and provide a characterization of the production quantities at equilibrium. Our results identify a close connection between the equilibrium outcome and supply paths in the underlying network structure. In particular, we show that whether two firms see their output in different markets as strategic substitutes or complements depends critically on the paths between those markets in the line graph induced by the original bipartite network. Armed with a characterization of the equilibrium supply decisions, we explore the effect of changes in the network structure on firms' profits and consumer welfare. First, we study the question of a firm entering a new market. We show that entry may not be beneficial for either the firm or the consumers as such a move affects the entire vector of production quantities. The firm might face a more aggressive competition in its original markets due to its entry to a new market. Moreover, the effect on other firms and consumers also depends on their location in the network. This is in stark contrast with standard results in Cournot oligopoly where entry implies more competition in the market and thus higher consumer welfare. Similarly, the effect of a merger between two firms on profits and overall welfare largely depends on the structure of competition in the original Cournot market. In particular, we show that insights from analyzing mergers in a single market do not carry over in a networked environment. Market concentration indices are insufficient to correctly account for the network effect of a merger and one should not restrict attention to the set of markets that the firms participating in the merger supply to. Finally, we study the operations of a cartel including the entire set of firms. We show that the cartel maximizes its profits by appropriately segmenting the markets among its members so that a firm supplies solely to the ones allocated to it, and we provide an algorithm that computes the optimal production quantities for each firm in the cartel. © 2014 Authors.Item Open Access Equitable stable matchings under modular assessment(ACM, 2023-07-09) Alkan, A.; Yıldız, Kemal