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.

Sizing reserves within a landscape: the roles of villagers' reactions and the ecological-socioeconomic setting

Traditionally, siting and sizing decisions for parks and reserves reflected ecological characteristics but typically failed to consider ecological costs created from displaced resource collection, welfare costs on nearby rural people, and enforcement costs. Using a spatial game-theoretic model that incorporates the interaction of socioeconomic and ecological settings, we show how incorporating more recent mandates that include rural welfare and surrounding landscapes can result in very different optimal sizing decisions. The model informs our discussion of recent forest management in Tanzania, reserve sizing and siting decisions, estimating reserve effectiveness, and determining patterns of avoided forest degradation in Reduced Emissions from Deforestation and Forest Degradation programs.

Insiders, outsiders, and the role of local enforcement in forest management: an example from Tanzania

In low-income countries, both nearby local villagers, “insiders”, and non-locals, “outsiders”, extract products from protected forests even though their actions are illegal. Forest managers typically combine enforcement and livelihood projects offered to nearby communities to reduce this illegal activity, but with limited budgets cannot deter all extraction. We develop a game theoretic model of a forest manager's decision interacting with the extraction decisions of insiders and outsiders. Our analysis suggests that, depending on the relative ecological damage caused by each group, budget-constrained forest managers may reduce total forest degradation by legalizing “insider” extraction in return for local villagers' involvement in enforcement activities against outsiders.

Investigating the effects of predator removal and habitat management on nest success and breeding population size of a farmland passerine: a case study

Passerines are especially vulnerable to predation at the pre-independence stage. Although the role of nest success in British farmland passerine declines is contentious, improvement in nest success through sympathetic management could play a role in their reversal. Because habitat is known to interact with predation, management options for mitigation will need to consider effects of nest predation. We present results from an observational study of a population of Common Blackbird Turdus merula on a farm which has experienced a range of agri-environment and game-management options, including a period with nest predator control, as a case study to address some of these issues. We used an information theoretic model comparison procedure to look for evidence of interactions between habitat and nest predation, and then asked whether habitat management and nest predator abundances could explain population trends at the site through their effects on nest success. Interactions were detected between measures of predator abundance and habitat variables, and these varied with nest stage - habitat within the vicinity of the nest appeared to be important at the egg stage, and nest-placement characteristics were important at the nestling stage. Although predator control appeared to have a positive influence on Blackbird breeding population size, the non-experimental set-up meant we could not eliminate other potential explanations. Variation in breeding population size did not appear to be influenced by variation in nest success alone. Our study demonstrates that observational data can only go so far in detection of such effects, and we discuss how it might be taken further. Agri-environment and game-management techniques are likely to influence nest predation pressure on farmland passerines, but the patterns, mechanisms and importance to population processes remain not wholly understood.

Investigating the effects of predator removal and habitat management on nest success and breeding population size of a farmland passerine: a case study

Passerines are especially vulnerable to predation at the pre-independence stage. Although the role of nest success in British farmland passerine declines is contentious, improvement in nest success through sympathetic management could play a role in their reversal. Because habitat is known to interact with predation, management options for mitigation will need to consider effects of nest predation. We present results from an observational study of a population of Common Blackbird Turdus merula on a farm which has experienced a range of agri-environment and game-management options, including a period with nest predator control, as a case study to address some of these issues. We used an information theoretic model comparison procedure to look for evidence of interactions between habitat and nest predation, and then asked whether habitat management and nest predator abundances could explain population trends at the site through their effects on nest success. Interactions were detected between measures of predator abundance and habitat variables, and these varied with nest stage - habitat within the vicinity of the nest appeared to be important at the egg stage, and nest-placement characteristics were important at the nestling stage. Although predator control appeared to have a positive influence on Blackbird breeding population size, the non-experimental set-up meant we could not eliminate other potential explanations. Variation in breeding population size did not appear to be influenced by variation in nest success alone. Our study demonstrates that observational data can only go so far in detection of such effects, and we discuss how it might be taken further. Agri-environment and game-management techniques are likely to influence nest predation pressure on farmland passerines, but the patterns, mechanisms and importance to population processes remain not wholly understood.

Performance and prediction: Bayesian modelling of fallible choice in chess

Evaluating agents in decision-making applications requires assessing their skill and predicting their behaviour. Both are well developed in Poker-like situations, but less so in more complex game and model domains. This paper addresses both tasks by using Bayesian inference in a benchmark space of reference agents. The concepts are explained and demonstrated using the game of chess but the model applies generically to any domain with quantifiable options and fallible choice. Demonstration applications address questions frequently asked by the chess community regarding the stability of the rating scale, the comparison of players of different eras and/or leagues, and controversial incidents possibly involving fraud. The last include alleged under-performance, fabrication of tournament results, and clandestine use of computer advice during competition. Beyond the model world of games, the aim is to improve fallible human performance in complex, high-value tasks.

Formulating generalised 'goal games' against nature: An illustration from decision-making under uncertainty in agriculture

The games-against-nature approach to the analysis of uncertainty in decision-making relies on the assumption that the behaviour of a decision-maker can be explained by concepts such as maximin, minimax regret, or a similarly defined criterion. In reality, however, these criteria represent a spectrum and, the actual behaviour of a decision-maker is most likely to embody a mixture of such idealisations. This paper proposes that in game-theoretic approach to decision-making under uncertainty, a more realistic representation of a decision-maker's behaviour can be achieved by synthesising games-against-nature with goal programming into a single framework. The proposed formulation is illustrated by using a well-known example from the literature on mathematical programming models for agricultural-decision-making. (c) 2005 Elsevier Inc. All rights reserved.

Are conventions solutions to uncertainty? Contrasting visions of social coordination

In recent years, there has been an increase in research on conventions motivated by the game-theoretic contributions of the philosopher David Lewis. Prior to this surge in interest, discussions of convention in economics had been tied to the analysis of John Maynard Keynes's writings. These literatures are distinct and have very little overlap. Yet this confluence of interests raises interesting methodological questions. Does the use of a common term, convention, denote a set of shared concerns? Can we identify what differentiates the game theoretic models from the Keynesian ones? This paper maps out the three most developed accounts of convention within economics and discusses their relations with each other in an attempt to provide an answer.

Using bargaining-game theory for negotiating concession period for BOT-type contract

This paper extends the build-operate-transfer (BOT) concession model (BOTCcM) to a new method for identifying a concession period by using bargaining-game theory. Concession period is one of the most important decision variables in arranging a BOT-type contract, and there are few methodologies available for helping to determine the value of this variable. The BOTCcM presents an alternative method by which a group of concession period solutions are produced. Nevertheless, a typical weakness in using BOTCcM is that the model cannot recommend a specific time span for concessionary. This paper introduces a new method called BOT bargaining concession model (BOTBaC) to enable the identification of a specific concession period, which takes into account the bargaining behavior of the two parties concerned in engaging a BOT contract, namely, the investor and the government concerned. The application of BOTBaC is demonstrated through using an example case.

Development and experimental identification of a biomechanical model of the trunk for functional electrical stimulation control in paraplegia

Objectives. Theoretic modeling and experimental studies suggest that functional electrical stimulation (FES) can improve trunk balance in spinal cord injured subjects. This can have a positive impact on daily life, increasing the volume of bimanual workspace, improving sitting posture, and wheelchair propulsion. A closed loop controller for the stimulation is desirable, as it can potentially decrease muscle fatigue and offer better rejection to disturbances. This paper proposes a biomechanical model of the human trunk, and a procedure for its identification, to be used for the future development of FES controllers. The advantage over previous models resides in the simplicity of the solution proposed, which makes it possible to identify the model just before a stimulation session ( taking into account the variability of the muscle response to the FES). Materials and Methods. The structure of the model is based on previous research on FES and muscle physiology. Some details could not be inferred from previous studies, and were determined from experimental data. Experiments with a paraplegic volunteer were conducted in order to measure the moments exerted by the trunk-passive tissues and artificially stimulated muscles. Data for model identification and validation also were collected. Results. Using the proposed structure and identification procedure, the model could adequately reproduce the moments exerted during the experiments. The study reveals that the stimulated trunk extensors can exert maximal moment when the trunk is in the upright position. In contrast, previous studies show that able-bodied subjects can exert maximal trunk extension when flexed forward. Conclusions. The proposed model and identification procedure are a successful first step toward the development of a model-based controller for trunk FES. The model also gives information on the trunk in unique conditions, normally not observable in able-bodied subjects (ie, subject only to extensor muscles contraction).

“Financial alchemy” or a zero sum game? Real estate finance, securitisation and the UK property market

Following the US model, the UK has seen considerable innovation in the funding, finance and procurement of real estate in the last decade. In the growing CMBS market asset backed securitisations have included $2.25billion secured on the Broadgate office development and issues secured on Canary Wharf and the Trafford Centre regional mall. Major occupiers (retailer Sainsbury’s, retail bank Abbey National) have engaged in innovative sale & leaseback and outsourcing schemes. Strong claims are made concerning the benefits of such schemes – e.g. British Land were reported to have reduced their weighted cost of debt by 150bp as a result of the Broadgate issue. The paper reports preliminary findings from a project funded by the Corporation of London and the RICS Research Foundation examining a number of innovative schemes to identify, within a formal finance framework, sources of added value and hidden costs. The analysis indicates that many of the gains claimed conceal costs – in terms of market value of debt or flexibility of management – while others result from unusual firm or market conditions (for example utilising the UK long lease and the unusual shape of the yield curve). Nonetheless, there are real gains resulting from the innovations, reflecting arbitrage and institutional constraints in the direct (private) real estate market

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.

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.