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Full-Text Articles in Social and Behavioral Sciences
Competing For Customers In A Social Network (R), Pradeep Dubey, Rahul Garg, Bernard De Meyer
Competing For Customers In A Social Network (R), Pradeep Dubey, Rahul Garg, Bernard De Meyer
Cowles Foundation Discussion Papers
There are many situations in which a customer’s proclivity to buy the product of any firm depends not only on the classical attributes of the product such as its price and quality, but also on who else is buying the same product. Under quite general circumstances, it turns out that customers’ influence on each other dynamically converges to a steady state. Thus we can model these situations as games in which firms compete for customers located in a “social network.” A canonical example is provided by competition for advertisement on the web. Nash Equilibrium (NE) in pure strategies exist in …
The Allocation Of A Prize (R), Pradeep Dubey, Siddhartha Sahi
The Allocation Of A Prize (R), Pradeep Dubey, Siddhartha Sahi
Cowles Foundation Discussion Papers
Consider agents who undertake costly effort to produce stochastic outputs observable by a principal. The principal can award a prize deterministically to the agent with the highest output, or to all of them with probabilities that are proportional to their outputs. We show that, if there is sufficient diversity in agents’ skills relative to the noise on output, then the proportional prize will, in a precise sense, elicit more output on average, than the deterministic prize. Indeed, assuming agents know each others’ skills (the complete information case), this result holds when any Nash equilibrium selection, under the proportional prize, is …