Strategic disclosure of random variables

Strategic disclosure of random variables

0.00 Avg rating0 Votes
Article ID: iaor20108331
Volume: 209
Issue: 1
Start Page Number: 73
End Page Number: 82
Publication Date: Feb 2011
Journal: European Journal of Operational Research
Authors: ,
Abstract:

We consider a game G n played by two players. There are n independent random variables Z 1,…,Z n , each of which is uniformly distributed on [0,1]. Both players know n, the independence and the distribution of these random variables, but only player 1 knows the vector of realizations z ≔(z 1,…,z n ) of them. Player 1 begins by choosing an order zk1,…,zkn of the realizations. Player 2, who does not know the realizations, faces a stopping problem. At period 1, player 2 learns zkn. If player 2 accepts, then player 1 pays zk1 euros to player 2 and play ends. Otherwise, if player 2 rejects, play continues similarly at period 2 with player 1 offering zk2 euros to player 2. Play continues until player 2 accepts an offer. If player 2 has rejected n-1 times, player 2 has to accept the last offer at period n. This model extends problem, which assumes a non-strategic player 1. We examine different types of strategies for the players and determine their guarantee-levels. Although we do not find the exact max‐min and min‐max values of the game G n in general, we provide an interval I n =[a n ,b n ] containing these such that the length of I n is at most 0.07 and converges to 0 as n tends to infinity. We also point out strategies, with a relatively simple structure, which guarantee that player 1 has to pay at most b n and player 2 receives at least a n . In addition, we completely solve the special case G 2 where there are only two random variables. We mention a number of intriguing open questions and conjectures, which may initiate further research on this subject.

Reviews

Required fields are marked *. Your email address will not be published.