Table of Contents

Centrality Rewarding Shapley and Myerson Values for Undirected Graph Games

Anna Khmelnitskaya, St.-Petersburg State University
Gerard van der Laan, VU University Amsterdam - Faculty of Economics and Business Administration
Dolf Talman, Tilburg University - Department of Econometrics & Operations Research

Novel Rituals Inculcate Intergroup Bias: Evidence from the Trust Game and Neurophysiology

Nicholas M Hobson, University of Toronto
Francesca Gino, Harvard University - Harvard Business School
Michael I. Norton, Harvard Business School - Marketing Unit
Michael Inzlicht, University of Toronto

Optimal Monetary Policy in a Collateralized Economy

Gary B. Gorton, Yale School of Management, National Bureau of Economic Research (NBER)
Ping He, Tsinghua University, SEM

Second-Party and Third-Party Punishment in a Public Goods Experiment

Yan Zhou, Harbin Institute of Technology
Peiran Jiao, University of Oxford - Nuffield College
Qilin Zhang, The University of Hong Kong - Faculty of Business and Economics

China's Bold Strategy for Semiconductors – Zero-Sum Game or Catalyst for Cooperation?

Dieter Ernst, East-West Center, Centre for International Governance Innovation (CIGI)


"Centrality Rewarding Shapley and Myerson Values for Undirected Graph Games" Free Download
CentER Discussion Paper Series No. 2016-035

ANNA KHMELNITSKAYA, St.-Petersburg State University
GERARD VAN DER LAAN, VU University Amsterdam - Faculty of Economics and Business Administration
DOLF TALMAN, Tilburg University - Department of Econometrics & Operations Research

In this paper we introduce two values for cooperative games with communication graph structure. For cooperative games the shapley value distributes the worth of the grand coalition amongst the players by taking into account the worths that can be obtained by any coalition of players, but does not take into account the role of the players when communication between players is restricted. Existing values for communication graph games as the Myerson value and the average tree solution only consider the worths of connected coalitions and respect only in this way the communication restrictions. The two values take into account the position of a player in the graph. The first one respects centrality, but not the communication abilities of any player. The second value reflects both centrality and the communication ability of each player. That implies that in unanimity games players that do not generate worth but are needed to connect worth generating players are treated as those latter players, and simultaneously players that are more central in the graph get bigger shares in the worth than players that are less central. For both values an axiomatic characterization is given on the class of connected cycle-
free graph games.

"Novel Rituals Inculcate Intergroup Bias: Evidence from the Trust Game and Neurophysiology" Free Download

NICHOLAS M HOBSON, University of Toronto
FRANCESCA GINO, Harvard University - Harvard Business School
MICHAEL I. NORTON, Harvard Business School - Marketing Unit
MICHAEL INZLICHT, University of Toronto

Long-established rituals in pre-existing cultural groups have been linked to the cultural evolution of large-scale group cooperation. Here we show the causal effect of novel rituals – arbitrary hand and body gestures enacted in a stereotypical and repeated fashion – on the development of intergroup bias in newly formed groups. In four studies, participants practiced novel rituals at home for one week (Experiments 1, 2, and 4) or once in the lab (Experiment 3), and then were divided into minimal ingroups and outgroups in the laboratory. Behavioral and neurophysiological results revealed that novel rituals are capable of generating intergroup bias, but only when certain psychological features are present: in order to inculcate intergroup bias, novel rituals must be sufficiently elaborate and repeated over time. Together, our results suggest psychological consequences of novel rituals: they promote ingroup cohesion, but at the expense of the outgroup.

"Optimal Monetary Policy in a Collateralized Economy" Fee Download
NBER Working Paper No. w22599

GARY B. GORTON, Yale School of Management, National Bureau of Economic Research (NBER)
PING HE, Tsinghua University, SEM

In the last forty or so years the U.S. financial system has morphed from a mostly insured retail deposit-based system into a system with significant amounts of wholesale short-term debt that relies on collateral, and in particular Treasuries, which have a convenience yield. In the new economy the quality of collateral matters: when Treasuries are scarce, the private sector produces (imperfect) substitutes, mortgage-backed and asset-backed securities (MBS). When the ratio of MBS to Treasuries is high, a financial crisis is more likely. The central bank’s open market operations affect the quality of collateral because the bank exchanges cash for Treasuries (one kind of money for another). We analyze optimal central bank policy in this context as a dynamic game between the central bank and private agents. In equilibrium, the central bank sometimes optimally triggers recessions to reduce systemic fragility.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at

"Second-Party and Third-Party Punishment in a Public Goods Experiment" Free Download

YAN ZHOU, Harbin Institute of Technology
PEIRAN JIAO, University of Oxford - Nuffield College
QILIN ZHANG, The University of Hong Kong - Faculty of Business and Economics

We experimentally investigate whether third-party punishment is more effective than second-party punishment to increase public goods contribution. In our experiment, third parties first played the standard public goods game and then made punishment decisions as independent bystanders. We find that third parties punished more frequently, severely, and less antisocially, resulting in a higher contribution level than that driven by second party punishment. The third party’s exaggerated emotion towards free riders is proposed to explain their superior punishment effectiveness.

"China's Bold Strategy for Semiconductors – Zero-Sum Game or Catalyst for Cooperation?" Free Download
East-West Center Working Papers: Innovation and Economic Growth Series, No. 9, September 2016

DIETER ERNST, East-West Center, Centre for International Governance Innovation (CIGI)

This paper explores whether China's bold strategy for semiconductors will give rise to a zero-sum game or whether it will enhance cooperation that will benefit from increased innovation in China.

As the world's largest producer and exporter of electronic products, China is by far the top market for integrated circuits (ICs), accounting for nearly a third of global demand. Yet its ability to design and produce this critical input remains seriously constrained. Despite decades and many billions of dollars of state-led investment, China's domestic production of semiconductors covers less than 13% of the country's demand.

As a result, China's IC trade deficit has more than doubled since 2005, and now has surpassed crude oil to become China's biggest import item. To correct this unsustainable imbalance, China seeks to move from catching up to forging ahead in semiconductors through progressive import substitution. The "National Semiconductor Industry Development Guidelines (Guidelines)" and the "Made in China 2025" (MIC 2025) plan were published by China's State Council in June 2014 and May 2015, respectively. Both plans are backed by huge investments and a range of support policies covering intellectual property, cybersecurity, procurement, standards, rules of competition (through the "Anti-Monopoly Law"), and the negotiation of trade agreements, like the Information Technology Agreement. The objective is to strengthen simultaneously advanced manufacturing, product development and innovation capabilities in China's semiconductor industry as well as in strategic industries that are heavy consumers of semiconductors.

Until recently, China has focused primarily on logic semiconductors and mixed-signal integrated circuits for mobile communication equipment (including smart phones), and on the assembly, testing and packaging of chips. Since the start of the 13th FYP, China's semiconductor industry strategy now covers a much broader range of products and value chain stages, while at the same time increasing the depth and sophistication of its industrial upgrading efforts. This important new development is at the center of this paper.

Based on a review of policy documents and interviews with China-based industry experts, I will describe key policy initiatives and stakeholders involved in the current strategy; highlight important recent adjustments in the strategy to broaden China's semiconductor product mix; and assess the potential for success of China's ambitious efforts to diversify into memory semiconductors, analog semiconductors, and new semiconductor materials (compound semiconductors). The chances for success are real, giving rise to widespread worries in the US and across Asia that China's bold strategy for semiconductors may result in a zero-sum game with disruptive effects on markets and value chains. However, Chinese semiconductor firms still have a long way to go to catch up with global industry leaders. Hence, global cooperation to integrate China into the semiconductor value chain makes more sense than ever, both for the incumbents and for China.


About this eJournal

This eJournal distributes working and accepted paper abstracts of empirical and theoretical papers on game theory, defined as the study of the strategic interaction among rational agents in competitive and cooperative environments, and bargaining theory, defined as a situation in which two or more players have a common interest to co-operate, but have conflicting interests over exactly how to co-operate. The topics in this eJournal include all of the subjects in Section C7 of the JEL classification system.

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