J. Jude Kline

Research Joint Ventures and the Cost Paradox

We consider the impact of the cost paradox on the likelihood of cooperative firms to use a cost reducing Research Joint Venture (RJV) to increase research levels when spillovers are large.

Minimum memory for equivalence between ex- ante optimality and time-consistency

Abstract I give a necessary and sufficient condition on memory of a player in an extensive game for equivalence between ex ante optimality and time-consistency (for all payoff assignments). The condition is called A-loss recall and requires that each loss of a players memory can be traced back to some loss of memory of his own action. A-loss recall is also shown to be a necessary and sufficient condition for the existence of a time-consistent strategy (for all payoff assignments) if the player is conscious-minded. Journal of Economic Literature Classification Numbers: C72, D80.

Behavior strategies, mixed strategies and perfect recall

When perfect recall is not satisfied, the informational contents of mixed and behavior strategies differ and are more than what the information partition describes. First, we consider two kinds of additional information strategies may carry, and show that such information leads to theperfect recall refinement of a given information partition. This does not, however, imply that the strategies compensate fully for the lack of perfect recall. We give a necessary and sufficient condition on an information partition, calledA-loss, for the informational content of mixed strategies to fully compensate for the lack of perfect recall. The informational content of behavior strategies never fully compensates.

Quantity Competition with Access Fees

We analyze an oligopoly model where firms choose both quantities and access fees. Per unit prices are determined endogenously to equate quantity demanded with quantity supplied at each firm. In a Nash equilibrium of the game played by firms, the per unit prices equal marginal cost and access fees may or may not extract all consumer surplus. As the number of firms increases, access fees fall below net consumer surplus and toward zero. Existence is guaranteed if Marshallian consumer surplus is not too concave. With open entry, quantity competition with access fees may be less efficient than without access fees.

A Matter of Interpretation: Ambiguous Contracts and Liquidated Damages

We consider the optimality of liquidated damages contracts in a setting of contractual ambiguity and potential for disputes. We show that when parties are ambiguity averse enough, they will optimally choose liquidated damages contracts and sacrifice risk sharing opportunities.

Information structures and decentralizability of equilibria

SummaryDecentralizability with respect to an equilibrium concept means that those equilibria for an extensive game and its agent normal form game coincide for any given payoffs. We consider decentralizability of Nash equilibrium, subgame perfect equilibrium, and perfect equilibrium. For each equilibrium concept we give a necessary and sufficient condition on the information structure of an extensive game for decentralizability to hold. When it holds it does not matter if agents with the same objectives decide independently or have someone coordinate their actions.

Heterogeneous or Homogeneous Quantity Competition

We consider when homogeneous goods quantity competition models are payoff equivalent to heterogeneous goods models. When they are equivalent, changes in some cost parameters are equivalent to changes in some demand parameters. Going from homogeneous models to heteregeneous models is always possible, but the converse is not easy. We characterize when the converse is possible for linearly separable and multiplicatively separable heterogeneous models. These results have implications that blur the distinction between process and product innovation.

A simple analysis of the US emission permits auctions

We examine a stylized version of EPA auctions when agents know the list of values of sellers and buyers. There are inefficient equilibria where no goods are traded and efficient equilibria where all exchange occurs at a uniform price. We also provide examples under incomplete information when the uniform price equilibrium holds and when it does not hold

Efficiency and equilibria in complementary teams: A comment

Abstract We argue that Visiles (1994) claim that the moral hazard in the teams problem depends on the assumption that the inputs are (perfect) substitutes is incorrect. Discontinuities in the marginal product curves, not complementarity of the inputs, allows the moral hazard problem to be avoided in Vislies perfect complements example.

Inductive Game Theory: A Simulation Study of Learning a Social Situation

Inductive game theory (IGT) aims to explore sources of beliefs of a person in his individual experiences from behaving in a social situation. It has various steps, each of which already involves a lot of different aspects. A scenario for IGT was spelled out in Kaneko-Kline [15]. So far, IGT has been studied chiefly in theoretical manners, while some other papers targeted applications and conducted an experimental study. In this chapter, we undertake a simulation study of a player’s learning about some details of a social situation. First, we give a brief overview of IGT, and its differences from the extant game theories. Then, we explain several points pertinent to our simulation model.