Browsing by Author "Park, In-Uck"
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Item Generic 4 x 4 Two Person Games Have At Most 15 Nash Equilibria(Center for Economic Research, Department of Economics, University of Minnesota, 1997-04) McLennan, Andrew; Park, In-UckThe maximal generic number of Nash equilibria for two person games in which the two agents each have four pure strategies is shown to be 15. In contrast to Keiding (1995), who arrives at this result by computer enumeration, our argument is based on a collection of lemmas that constrain the set of equilibria. Several of these pertain to any common number d of pure strategies for the two agents.Item Generic Finiteness of Equilibrium Outcome Distributions for Sender-Receiver Cheap-Talk Games(Center for Economic Research, Department of Economics, University of Minnesota, 1993-09) Park, In-UckThis paper establishes the generic finiteness of equilibrium outcome distributions for Sender-Receiver cheap-talk games. An equilibrium in a Sender-Receiver cheap-talk game is said to be in reduced form if every message is used by at least one type and no two messages provoke the same response. It is shown that, for a generic set of utilities on outcomes, a Sender-Receiver cheap-talk game has a finite number of reduced form equilibria. A corollary is that, for generic utilities, the set of probability distributions over outcomes generated by equilibria is finite. Because of the identification of terminal nodes for utility purposes, Sard's theorem is not applicable in the way it was used in Kreps and Wilson (1982), and a structurally different proof strategy is developed. Some additional characterization of the equilibria are obtained in the process of the proof.Item The Market for Liars: Reputation and Auditor Honesty(Center for Economic Research, Department of Economics, University of Minnesota, 2003-06) McLennan, Andrew; Park, In-UckIn the model there are two types of financial auditors with identical technology, one of which is endowed with a prior reputation for honesty. We characterize conditions under which there exists a "two-tier equilibrium" in which "reputable" auditors refuse bribes offered by clients for fear of losing reputation, while "disreputable" auditors accept bribes because even persistent refusal does not create a good reputation. The main findings are: (a) honest auditors charge higher fees, and have economic profits accruing to reputation; (b) as the fraction of auditors who are honest increases, the premium charged by reputable auditors eventually decreases, which diminishes the incentive to refuse bribes; (c) if the fraction of honest auditors exceeds an upper bound, there does not exist a two-tier equilibrium; (d) thus the reputation mechanism may be undermined by entry into the honest segment of the industry, if it is possible; (e) increasing auditor independence increases the upper bound.Item A Revealed-Preference Implication of Weighted Utility Decisions Under Uncertainty(Center for Economic Research, Department of Economics, University of Minnesota, 1993-09) Park, In-UckRevealed preference of the weighted utility theory of Chew (1983) is investigated in the same set-up as Green and Osband (1991) for expected utility theory; the structure of the partition of the state simplex according to the chosen act is examined. It is shown that the boundary between two partition elements generated by a weighted utility is the solution set to a quadratic equation. Moreover, except for special "symmetric" pairs of acts, weighted utilities in a generic set produce revealed preference partitions with non-affine boundaries, so that they are distinguishable from those of expected utilities which have affine boundaries according to Green and Osband.