Eyal Winter

Hebrew University of Jerusalem | HUJI

Flow goods (like electricity) are sold through auctions in a dynamic framework. An important design question is the frequency of such auctions. We use a simple dynamic auction model in continuous time to answer this question. We focus on the relationship between the persistency of bidders’ valuations and the optimal choice of frequency. If the sell...

The reconcilability of actions and beliefs in inter-country relationships, either in business or politics, is of vital importance as incorrect beliefs on foreigners’ behavior can have serious implications. We study a typical inter-country interaction by means of a controlled laboratory investment game experiment in Germany, Israel and Palestine inv...

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Although lying (bear false witness) is explicitly prohibited in the Decalogue and a focus of interest in philosophy and theology, more recently the behavioral and neural mechanisms of deception are gaining increasing attention from diverse fields especially economics, psychology and neuroscience. Despite the considerable role of heredity in explain...

We model mental states as part of an equilibrium notion. In a mental equilibrium each player “selects” an emotional state that determines the player’s preferences over the outcomes of the game. These preferences typically differ from the players’ material preferences. The emotional states interact to play a Nash equilibrium and, in addition, each p...

In this paper we analyze a principal's optimal monitoring strategies in a team environment. In doing so we study the interaction between formal monitoring and informal (peer) monitoring. We show that if the technology satisfies complementarity, peer monitoring substitutes for the principal's monitoring. However, if the technology satisfies substitu...

We study the complexity required for the implementation of multi-agent contracts under a variety of solution concepts. A contract is a mapping from strategy profiles to outcomes. Practical implementation of a contract requires it to be ''simple'', an illusive concept that needs to be formalized. A major source of complexity is the burden involving...

Assuming a ‘spectrum’ or ordering of the players of a coalitional game, as in a political spectrum in a parliamentary situation, we consider a variation of the Shapley value in which coalitions may only be formed if they are connected with respect to the spectrum. This results in a naturally asymmetric power index in which positioning along the spe...

We study a combinatorial variant of the classical principal-agent model. In our setting a principal wishes to incentivize a team of strategic agents to exert costly effort on his behalf. Agentsʼ actions are hidden and the principal observes only the outcome of the team, which depends stochastically on the complex combinations of the efforts by the...

This paper studies different methods of assigning a good to budget-constrained agents. Schemes that assign the good randomly and allow resale may outperform the competitive market in terms of Utilitarian efficiency. The socially optimal mechanism involves random assignment at a discount—an in-kind subsidy—and a cash incentive to discourage low-valu...

We present here the concept of rational emotions: Emotions may be directly controlled and utilized in a conscious, analytic fashion, enabling an individual to size up a situation, to determine that a certain "mental state" is strategically advantageous and adjust accordingly. Building on the growing body of literature recognizing the vital role of...

The traditional premise of criminal law is that criminals who are convicted of similar crimes under similar circumstances ought to be subject to identical sentences. This article provides an efficiency-based rationale for discriminatory sentencing, i.e., establishes circumstances under which identical crimes ought to be subject to differential sent...

Conventional wisdom suggests that an increase in monetary incentives should induce agents to exert higher effort. In this paper, however, we demonstrate that this may not hold in team settings. In the context of sequential team production with positive externalities between agents, incentive reversal might occur: an increase in monetary incentives...

We run an experiment in which students of different European nationalities are matched in groups of five and repeatedly choose with whom within their group they want to play a trust game. Participants observe of each other age, gender, nationality and number of siblings. The region of origin, "North" or "South" is a major determinant of success in...

Veto power consists of the right of one or more players to unilaterally block decisions but without the ability to unilaterally secure their preferred outcome. Our experiment shows that (i)committees with a veto player take longer to reach decisions (are less efficient) and generate less consensus than without a veto player, (ii)veto power substant...

We consider homogeneous two-sided markets, in which connected buyer-seller pairs bargain and trade repeatedly. In this infinite market game with exogenous matching probabilities and a common discount factor, we prove the existence of equilibria in stationary strategies. The equilibrium payoffs are given implicitly as a solution to a system of linea...

We model situations in which a principal provides incentives to a group of agents to participate in a project (such as a social event or a commercial activity). Agents'bene…ts from participation depend on the identity of other participating agents. We assume bilateral externalities and characterize the optimal incentive mechanism. We show that the...

A class of voting procedures based on repeated ballots and elimination of one candidate in each round is shown to always induce an outcome in the top cycle and is thus Condorcet consistent, when voters behave strategically. This is an important class as it covers multi-stage, sequential elimination extensions of all standard one-shot voting rules (...

This paper shows that workers can affect the productivity of their coworkers based on income maximization considerations, rather than relying on behavioral considerations such as peer pressure, social norms, and shame. We show that a worker's effort has a positive effect on the effort of coworkers if they are complements in production, and a negati...

This paper examines the occurrence and fragility of information cascades in laboratory experiments. One group of low informed subjects make predictions in sequence. In a matched pairs design, another set of high informed subjects observe the decisions of the first group and make predictions. According to the theory of information cascades (Bikhchan...

This study explores the ways in which information about other individual's action affects one's own behavior in a dictator game. The experimental design discriminates behaviorally between three possible effects of recipient's within-game reputation on the dictator's decision: Reputation causing indirect reciprocity, social influence, and identifica...

We model situations in which a principal provides incentives to a group of agents to participate in a project (such as a social event or a commercial activity). Agents'bene…ts from participation depend on the identity of other participating agents. We assume bilateral externalities and characterize the optimal incentive mechanism. Using a graph-the...

We consider games in characteristic function form where the worth of a group of players depends on the numbers of players of each of a finite number of types in the group. The games have bounded essential coalition sizes: all gains to co- operation can be achieved by coalitions bounded in absolute size (although larger coalitions are permitted they...

We model situations in which a principal provides incentives to a group of agents to participate in a project (such as a social event or a commercial activity). Agents' benefits from participation depend on the identity of other participating agents. We assume bilateral exter-nalities and characterize the optimal incentive mechanism. Using a graph-...

Corruption in the public sector erodes tax compliance and leads to higher tax evasion. Moreover, corrupt public officials abuse their public power to extort bribes from the private agents. In both types of interaction with the public sector, the private agents are bound to face uncertainty with respect to their disposable incomes. To analyse effect...

A class of sequential elimination voting eliminating candidates one-at-a-time based on repeated ballots is superior to well-known single-round and semi-sequential elimination voting rules: if voters are strategic the former will induce the Condorcet winner in unique equilibrium, whereas the latter may fail to select it. In addition, when there is n...

This paper presents an experimental study of the effects of polls on voters’ welfare. The analysis shows that polls have a different effect on closely divided and lopsided divided electorates. The data show that in closely divided electorates (and only for these electorates) the provision of information on the voters’ distribution of preferences si...

In this paper we report a trilateral trust game with players from Germany, Israel and Palestine. The main finding is that no systematic discrimination among participants from and towards specific countries is detected. However, significantly different levels of trust and reciprocity exist in the different national cultures. A second important resul...

This study explores the ways in which information about other individual's action affects one's own behavior in a dictator game. The experimental design discriminates behaviorally between three possible effects of recipient's within-game reputation on the dictator's decision: Reputation causing indirect reciprocity, social influence, and identifica...

I study optimal incentive schemes in organizations where agents perform their tasks sequentially. I consider a model in which agents' effort decisions are mapped into the probability of the project's success. An optimal investment-inducing mechanism allocates rewards to agents so as to induce all of them to exert effort in equilibrium at minimal co...

This paper studies the effects that the revelation of information on the electorate's preferences has on voters' turnout decisions. The experimental data show that closeness in the division of preferences induces a significant increase in turnout. Moreover, for closely divided electorates (and only for these electorates) the provision of informatio...

This article studies the effect of transparency among peers on the principal's cost of providing incentives. Using directed graphs to represent peer information, we show that under complementarity the cost of providing incentives is decreasing with the level of transparency within the organization. We also investigate the role of the architecture o...

This study explores the ways in which information about other individual's action affects one's own behavior in a dictator game. The experimental design discriminates behaviorally between three possible effects of recipient's within-game reputation on the dictator's decision: Reputation causing indirect reciprocity, social influence, and identifica...

This paper examines peer effects between workers in the same firm. We de- part from the existing literature by showing that peer effects can be based on income maximization considerations stemming from the underlying technological production function, rather than relying on psychological considerations between workers such as peer pressure, social...

Gradual bargaining is represented by an agenda: a family of increasing sets of joint utilities, parameterized by time. A solution for gradual bargaining specifies an agreement at each time. We axiomatize an ordinal solution, i.e., one that is covariant with order-preserving transformations of utility. It can be viewed as the limit of step-by-step b...

This Paper discovers significant differences between southern and northern Europeans in a dynamic version of the ‘trust game’ played by Ph.D. students from different nationalities at the European University Institute. Our version of the trust game allows subjects to choose the receivers to whom they make transfers. Southerners are discriminated aga...

We propose two sequential mechanisms for efficient production of public goods. Our analysis differs from the existing literature in allowing for the presence of multiple public goods and in also being ‘simple’. While both mechanisms ensure efficiency, the payoffs in the first mechanism are asymmetric, being sensitive to the order in which agents mo...

We analyze an independent private values model where a number of objects are sold in sequential first- and second-price auctions. Bidders have unit demand and their valuation for an object is decreasing in the rank number of the auction in which it is sold. We derive efficient equilibria if prices are announced after each auction or if no informati...

Optimal incentive mechanisms may require that agents are rewarded differentially even when they are completely identical and are induced to act the same. We demonstrate this point by means of a simple incentive model where agents’ decisions about effort exertion is mapped into a probability that the project will succeed. We give necessary and suffi...

Corruption in the public sector erodes tax compliance and leads to higher tax evasion. Moreover, corrupt public officials abuse their public power to extort bribes from the private agents. In both types of interaction with the public sector, the private agents are bound to face uncertainty with respect to their disposable incomes. To analyse effect...

Consumer prices in many markets are persistently dispersed both across retail outlets and over time. While the cross sectional distribution of prices is stable, individual stores change their position in the distribution over time. It is a challenge to model oligopolistic price adjustment to capture these features of consumer markets. In belief bas...

This chapter surveys some of the literature in game theory that has emerged from Shapley's seminal paper on the Value. The survey includes both contributions which offer different interpretations of the Shapley value as well as several different ways to characterize the value axiomatically. The chapter also surveys some of the literature that gener...

We analyze a model of network formation where the costs of link formation are publicly known but individual benefits are not known to the social planner. The objective is to design a simple mechanism ensuring efficiency, budget balance, and equity. We propose two mechanisms towards this end; the first ensures efficiency and budget balance but not e...

We use a laboratory experiment to study the extent to which investors’ choices are affected by limited loss deduction in income taxation. We first compare investment behavior in the no tax baseline to a tax control setting, in which the income from investments is taxed. We find that investors significantly reduce their risk-taking as predicted by t...

This paper presents a model of group formation based on the assumption that individuals prefer to associate with people similar to them. It is shown that, in general, if the number of groups that can be formed is bounded, then a stable partition of the society into groups may not exist. (A partition is defined as stable if none of the individuals w...

We treat a class of multi-person bargaining mechanisms based on games in coalitional form. For this class of games we identify properties of non-cooperative solution concepts, which are necessary and sufficient for the equilibrium outcomes to coincide with the core of the underlying coalitional form game. We view this result as a non-cooperative ax...

The paper explores the consequences of assuming that players involved in a complex perfect-information game perceive the situation as one of incomplete information, in the sense that, at any given decision node, players are certain about the structure of the game tree only within a limited horizon. Our main result says that there are valuations of...

We analyze an independent private values model where a number of objects are sold in sequential first- and second-price auctions. Bidders have unit demand and their valuation for an object is decreasing in the rank number of the auction to which it is sold. Whether prices are announced after each auction or if no information is given to bidders, we...

We consider a model of hierarchical organizations in which agents have the option of reducing the probability of failure by investing towards their decisions. A mechanism specifies a distribution of sanctions in case of failure across the levels of the hierarchy. It is said to be investment-inducing if it induces all agents to invest in equilibrium...

The primitives of a bargaining problem consist of a set, S, of feasible utility pairs and a disagree- ment point in it. The idea is that the set S is induced by an underlying set of physical outcomes which, for the purposes of the analysis, can be abstracted away. In a very influential paper Nash (1950) gives an axiomatic characterization of what i...

We characterize the Nash bargaining solution replacing the axiom of Independence of Irrelevant Alternatives with three independent axioms: Independence of Non-Individually Rational Alternatives, Twisting and Disagreement Point Convexity. We give a non-cooperative bargaining interpretation to this last axiom.

Tacit coordination in large groups is studied in an iterated market entry game with complete information and multiple market capacities that are varied randomly from period to period. On each period, each player must decide independently whether to enter any of the markets, and if entering, which of the two markets to enter. Across symmetric and as...

Tacit coordination in large groups is studied in an iterated market entry game with complete information and multiple market capacities that are varied randomly from period to period. On each period, each player must decide independently whether to enter any of the markets, and if entering, which of the two markets to enter. Across symmetric and as...

We analyze a model of network formation where the costs of forming links are publicly known but an individual's benefits are not know to the social planner. The objective is to design a mechanism which not only ensures that an efficient network always forms in equilibrium but also ensures that the resulting net payoffs to the agents are equitable.

For excludable public goods, we propose simple mechanisms to uniquely implement a (core) stable and efficient production and cost-sharing outcome: consumers are asked to announce sequentially their minimal requested level of public good and a subscription towards its production. In one mechanism the subscriptions depend on the order of moves. In a...

We propose a model of gradual bargaining in the spirit of the Nash axiomatic theory. In this model the underlying set of payoff opportunities expands continuously with time. Unlike Nash's solution that predicts a single agreement for each bargaining problem, our solution yields a continuous path of agreements--one for each point in time. It emerges...

We study noncooperative multilateral bargaining games, based on underlying TU games, in which coalitions can renegotiate their agreements. We distinguish between models in which players continue to bargain after implementing agreements (“reversible actions”) and models in which players who implement agreements must leave the game (“irreversible act...

We propose a non-cooperative bargaining approach to the problem of collective decision making in committees by modelling this process as a sequential bargaining game. The main objective of the paper is to discuss the formation of the agenda in multi-issue committees, and its relation to the importance of the issues. We start by asserting that in th...

In an epistemic framework due to Aumann we characterize the condition on the rationality of the players that is both necessary and sufficient to imply backward induction in perfect information games in agent form. This condition requires each player to know that the players are rational at later, but not at previous, decision nodes.

IF THE SENDER'S PREFERENCES are monotonic in the Receiver's action, then it is known that the Sender reveals its type in every sequential equilibrium of a Sender-Receiver game with verifiable messages (see, e.g., Milgrom (1981)). Monotonicity is a natural condition in social situations such as buyer-seller relationships; but there are obviously oth...

We review two experiments in which the intergroup prisoner’s dilemma (IPD) team-game was compared with a single-group prisoner’s dilemma (PD). The first experiment compared the games when played once. We found that although the IPD and PD games are strategically equivalent, subjects were more likely to cooperate in the intergroup than in the single...

The consequences of veto power in committees is analyzed using the approach of noncooperative bargaining theory. It is first shown that in equilibrium nonveto players do not share in the benefits gained by the decision making of the committee, that is, in every equilibrium outcome of the bargaining game, nonveto players earn zero. Some measures for...

The principle of balanced contributions has appeared repeatedly in the literature on the Shapley value. This principle is akin to the reciprocity properties shared by almost all cooperative solution concepts. We provide a new axiomatization for the level structure value. This axiomatization has the advantage that it can be applied to many important...

This paper discusses the relationship between coalitional stability and the robustness of bargaining outcomes to the bargaining procedure. We consider a class of bargaining procedures described by extensive form games, where payoff opportunities are given by a characteristic function (cooperative) game. The extensive form games differ on the probab...

We report an experiment in which the Intergroup Prisoner's Dilemma (IPD) game was contrasted with a structurally identical (single-group) Prisoner's Dilemma (PD). The games were played repeatedly for 40 rounds. We found that subjects were initially more likely to cooperate in the IPD game than in the PD game. However, cooperation rates decreased as...

This paper considers a model of society [script S] with a finite number of individuals, n, a finite set off alternatives, Omega, effective coalitions that must contain an a priori given number q of individuals. Its purpose is to extend the Nakamura Theorem (1979) to the quota games where individuals are allowed to form groups of size q which are sm...

We study a noncooperative game of coalition formation, based on an underlying game in coalitional form. We introduce order independent equilibria (OIE). A strategy profile is an OIE if, for any specification of first movers in the sequential game, it remains an equilibrium and leads to the same payoff. Our results are: (1) Payoffs in OIE that use p...

This paper addresses the issue of consumers' welfare using an axiomatic approach, and avoiding the assumption of utility maximization. We take here the demand function as a primitive, and construct a measure for the consumers' welfare from a change of prices. This is done by imposing a set of axioms on this measure which uniquely determines it.

In this paper we analyze a simple non-cooperative bargaining model for coalition formation and payoff distribution for games in coalitional form. We show that under our bargaining regime a cooperative game is core-implementable if and only if it possesses the property of increasing returns to scale for cooperation, i.e. the game is convex. This off...

A multi-person bargaining model based on sequential demands is studied for coalitional games with increasing returns to scale for cooperation. We show that for such games, the (subgame perfect) equilibrium behavior leads to a payoff distribution which approaches the Shapley value as the money unit approaches 0. Subgame consistency and strategic equ...

The joint production of a single output from a single input by a group of potential users of a technology is usually analyzed in the literature using a "cooperative" approach. We provide an analysis for such economies by means of non-cooperative bargaining. Two bargaining models are analyzed, one based on demands the other on proposals. We show tha...

We provide a new axiomatization of the core of games in characteristic form. The games may have either finite sets of players or continuum sets of players and finite coalitions. Our research is based on Peleg's axiomatization for finite games and on the notions of measurement-consistent partitions and the f-core introduced by Kaneko and Wooders. Si...

This essay presents an overview of the prevailing theoretical literature on innovation, probes the adequacy of existing theory to guide policy regarding innovation, and sketches some directions for more fruitful theorizing. The focus is on the vast interindustry differences in rates of productivity growth, and other manifestations of differential r...

We present a generalization to the Harsanyi solution for non-transferable utility (NTU) games based on non-symmetry among the players. Our notion of non-symmetry is presented by a configuration of weights which correspond to players' relative bargaining power in various coalitions. We show not only that our solution (i.e., the bargaining position s...

The multilinear extension has been shown to be an effective tool for computing the Shapley value of an n-person game. We modify here the method for the multilinear extension to calculate the modified coalition structure value (CS-value) for such games.

The main aim of this paper is to study the power of legislators in the Lower House of the Czech Parliament in 1996–2004 with respect to power distribution and its uncertainty. A discrepancy between a-priori computed power indices and outcome of voting leads to necessity to reveal the possible source of uncertainty. This paper studies uncertainty in...

We introduce a solution function for Non-transferable Utility (NTU) games when prior coalition structure is given. This solution function generalizes both the Harsanyi solution function forNTU games and the Owen solution forTU games with coalition structure.

In a sequential bargaining model of coalition formation and payoff M division players form demands for their participation in a coalition. These M demands have some appealing, intuitive features. We characterize the sets of M semi-stable and stable demands vectors for general NTU games using M consistency requirements which relate the demands forme...

In a seminal paper, Ariel Rubinstein has shown that impatience implies determinateness of the two-person bargaining problem. In this note we show that this result depends also on the assumption that the set of alternatives is a continuum. If the pie can be divided only in finitely many different ways (for example, because the pie is an amount of mo...

This paper develops a value for side payments games when a cooperation description of the players is priorly given. This cooperation description (called “Levels Structure”) contains a sequence of levels of cooperative agreements, each represented by a coalition structure. The value developed is shown to be an extension of some well known values suc...

We use the approach of the reduced Game Property and its converse to characterize the sets of stable and semistable demand vectors. It is shown that although these two concepts are generally very different their axiomatizations are almost the same. Regarding the semistable demand vector we correspond to Selten (1981) Noncooperative model which pred...

The multilinear extension has been shown to be an effective tool for computing the Shapley value of an n-person game. We modify here the method of the multilinear extension to calculate the modified (coalition) value for such games.

The paper studies the effect of the information agents have about their peers' effort on the principal's cost of providing incentives. We use the analysis to address the issue of co-location in organizations, i.e., moving workers from private offices to open spaces or "war room- s".Using directed graphs to represent peer information we show how the...

We introduce emotions into an equilibrium notion. In a mental equilibrium each player "selects" an emotional state which determines the player's preferences over the outcomes of the game. These preferences typically differ from the players' material preferences. The emotional states interact to play a Nash equilibrium and in addition each player's...

We study optimal incentive schemes in organizations where agents are asymmetrically informed about each other's effort exertion. We consider a model in which agents' effort decisions are mapped into the probability of the project's success. An optimal investment inducing mechanism allocates rewards among agents so as to induce all of them to exert...

The authors are grateful to Ehud Kalai for important comments. We also thank the participants in workshop at the Washington University in St. Louis. The authors gratefully acknowledge financial support from the German-Israeli foundation (Winter), Krueger and Eshkol Centers at the Hebrew University, a grant from the Israel Foundations Trustees and t...

The paper studies the effect of transparency among peers on the principal's cost of providing incentives. Using directed graphs to represent peer information we show that under complementarity the cost of providing incentives is decreasing with the level of transparency within the organization. We also investigate the role of the architecture of th...

The weakest link voting selects a single winner from a number of candi-dates by successive eliminations. The voting takes place in rounds and in each round the candidate receiving the smallest number of votes – the weak-est link – is eliminated. If the voters vote strategically, the weakest link rule will select the Condorcet winner – when it exist...