Real options and game theoretical approaches to real estate development projects: multiple equilibria and the implications of different tie-breaking rules

This paper contributes to a fast growing literature which introduces game theory in the analysis of real option investments in a competitive setting. Specifically, in this paper we focus on the issue of multiple equilibria and on the implications that different equilibrium selections may have for the pricing of real options and for subsequent strategic decisions. We present some theoretical results of the necessary conditions to have multiple equilibria and we show under which conditions different tie-breaking rules result in different economic decisions. We then present a numerical exercise using the in formation set obtained on a real estate development in South London. We find that risk aversion reduces option value and this reduction decreases marginally as negative externalities decrease.

Formal theory building for the avalanche game: explaining counter-intuitive behaviour of a complex system using geometrical and human behavioural/physiological effects

In 'Avalanche', an object is lowered, players staying in contact throughout. Normally the task is easily accomplished. However, with larger groups counter-intuitive behaviours appear. The paper proposes a formal theory for the underlying causal mechanisms. The aim is to not only provide an explicit, testable hypothesis for the source of the observed modes of behaviour-but also to exemplify the contribution that formal theory building can make to understanding complex social phenomena. Mapping reveals the importance of geometry to the Avalanche game; each player has a pair of balancing loops, one involved in lowering the object, the other ensuring contact. For more players, sets of balancing loops interact and these can allow dominance by reinforcing loops, causing the system to chase upwards towards an ever-increasing goal. However, a series of other effects concerning human physiology and behaviour (HPB) is posited as playing a role. The hypothesis is therefore rigorously tested using simulation. For simplicity a 'One Degree of Freedom' case is examined, allowing all of the effects to be included whilst rendering the analysis more transparent. Formulation and experimentation with the model gives insight into the behaviours. Multi-dimensional rate/level analysis indicates that there is only a narrow region in which the system is able to move downwards. Model runs reproduce the single 'desired' mode of behaviour and all three of the observed 'problematic' ones. Sensitivity analysis gives further insight into the system's modes and their causes. Behaviour is seen to arise only when the geometric effects apply (number of players greater than degrees of freedom of object) in combination with a range of HPB effects. An analogy exists between the co-operative behaviour required here and various examples: conflicting strategic objectives in organizations; Prisoners' Dilemma and integrated bargaining situations. Additionally, the game may be relatable in more direct algebraic terms to situations involving companies in which the resulting behaviours are mediated by market regulations. Finally, comment is offered on the inadequacy of some forms of theory building and the case is made for formal theory building involving the use of models, analysis and plausible explanations to create deep understanding of social phenomena.

Good machine performance in Turing’s imitation game

In this paper we consider transcripts which originated from a practical series of Turing’s Imitation Game which was held on 23rd June 2012 at Bletchley Park, England. In some cases the tests involved a 3-participant simultaneous comparison of two hidden entities whereas others were the result of a direct 2-participant interaction. Each of the transcripts considered here resulted in a human interrogator being fooled, by a machine, into concluding that they had been conversing with a human. Particular features of the conversation are highlighted, successful ploys on the part of each machine discussed and likely reasons for the interrogator being fooled are considered. Subsequent feedback from the interrogators involved is also included

Game-theoretic aspects of international mergers: Theory and case studies

This paper studies the exclusion of potential competition as a motivating factor for international mergers. We propose a simple game-theoretic framework in order to discuss the conditions under which mergers that prevent reciprocal domestic competition will occur. Our analysis highlights the shortcomings of antitrust policies based on pre-merger/post-merger concentration comparisons. A review of several recent European cases suggests that actual merger policy often fails to consider potential competition.

An experiment on subjective game valuations

We report experimental results on a prisoners' dilemma implemented in a way which allows us to elicit incentive−compatible valuations of the game. We test the hypothesis that players' valuations coincide with their Nash equilibrium earnings. Our results offer significantly less support for this hypothesis than for the prediction of Dominant Strategy (DS) play.

The Kasparov-World Game

Kasparov-World, initiated by Microsoft and also sponsored by First USA, was a novel correspondence game played on the World Wide Web at one ply per day. This was the first time that any group had attempted to form on the Web and then solve shared problems against fixed, short-term deadlines. The first author first became involved in his role as a Web consultant, observing the dynamics and effectiveness of the group. These are fully described, together with observations on the technological contribution and the second author's post-hoc computation of some relevant Endgame Tables.

Impact of game bird release on the Adonis blue butterfly Polyommatus bellargus (Lepidoptera Lycaenidae) on chalk grassland

Polyommatus bellargus is a priority species of butterfly in the UK as a result of its scarcity and the rate of population decline over the last few years. In the UK, the species is associated with chalk grassland on hot, south-facing slopes suitable for the growth of the food plant Hippocrepis comosa. Shooting game birds is a popular pastime in the UK. Over 40 million game birds, principally Phasianus colchicus and Alectoris rufa, are bred and released into the countryside each year for shooting interests. There is a concern that the release of such a large number of non-native birds has an adverse effect on native wildlife. A study was carried out over a period of 3 years out to examine whether there was any evidence that A. rufa released into chalk grassland habitat negatively affects populations of P. bellargus. A comparison was made between sites where large numbers of A. rufa were released versus sites where no, or few, birds were released. The study involved the construction of exclosures in these sites to allow an examination of the number of butterflies emerging from H. comosa when the birds were excluded versus when the birds had free range across the area. Where birds were present the on-site vegetation was shorter than where they were absent indicating that the birds were definitely influencing habitat structure. However, the evidence that A. rufa was negatively influencing the number of adult butterflies emerging was not strong, although there was a largely non-significant tendency for higher butterfly emergence when the birds were excluded or absent.

Imbalanced functional link between executive control network and reward network explain the online-game seeking behaviors in Internet gaming disorder

Literatures have shown that Internet gaming disorder (IGD) subjects show impaired executive control and enhanced reward sensitivities than healthy controls. However, how these two networks jointly affect the valuation process and drive IGD subjects' online-game-seeking behaviors remains unknown. Thirty-five IGD and 36 healthy controls underwent a resting-states scan in the MRI scanner. Functional connectivity (FC) was examined within control and reward network seeds regions, respectively. Nucleus accumbens (NAcc) was selected as the node to find the interactions between these two networks. IGD subjects show decreased FC in the executive control network and increased FC in the reward network when comparing with the healthy controls. When examining the correlations between the NAcc and the executive control/reward networks, the link between the NAcc - executive control network is negatively related with the link between NAcc - reward network. The changes (decrease/increase) in IGD subjects' brain synchrony in control/reward networks suggest the inefficient/overly processing within neural circuitry underlying these processes. The inverse proportion between control network and reward network in IGD suggest that impairments in executive control lead to inefficient inhibition of enhanced cravings to excessive online game playing. This might shed light on the mechanistic understanding of IGD.

Dynamic game soundtrack generation in response to a continously varying emotional trajectory

Dynamic soundtracking presents various practical and aesthetic challenges to composers working with games. This paper presents an implementation of a system addressing some of these challenges with an affectively-driven music generation algorithm based on a second order Markov-model. The system can respond in real-time to emotional trajectories derived from 2-dimensions of affect on the circumplex model (arousal and valence), which are mapped to five musical parameters. A transition matrix is employed to vary the generated output in continuous response to the affective state intended by the gameplay.

Smug alert! Exploring self-licensing behaviour in a cheating game

We test experimentally a prediction of the ‘moral credit model’, in which committing a virtuous act creates moral credits that can license immoral behavior in a succeeding decision. We use a basic cheating experiment that was either preceded by a virtuous deed or not in a developing country context. We found that people who previously achieved a good deed cheat more. Gender and origin are also significant explicative variables for cheating.

Environmental agreements as a Hawk-Dove game with confirmed proposals

This paper aims at two different contributions to the literature on international environmental agreements. First, we model environmental agreements as a generic situation, characterized as a Hawk-Dove game with multiple asymmetric equilibria. Second, the article applies the theory on non-cooperative games with confirmed proposals, based on an alternating proposals bargaining protocol, as a way of overcoming the usual problems of coordination and bargaining failures in environmental agreement games, due to payoff asymmetry and equilibrium multiplicity.