International Society of Dynamic Games

Dynamic Games and Applications Seminar

A Dynamic Analysis of Criminal Networks

February 15, 2024 11:00 AM — 12:00 PM (Montreal time)

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We take a novel approach based on differential games to the study of criminal networks. We extend the static crime network game (Ballester et al., 2006, 2010) to a dynamic setting where criminal activities negatively impact the accumulation of total wealth in the economy. We derive a Markov Perfect Equilibrium, which is unique within the class of strategies considered, and show that, unlike in the static crime network game, the vector of equilibrium crime efforts is not necessarily proportional to the vector of Bonacich centralities. Next, we conduct a comparative dynamic analysis with respect to the network size, the network density, and the marginal expected punishment, finding results in contrast with those arising in the static crime network game. We also shed light on a novel issue in the network theory literature, i.e., the existence of a voracity effect. Finally, we study the problem of identifying the optimal target in the population of criminals when the planner’s objective is to minimize aggregate crime at each point in time. Our analysis shows that the key player in the dynamic and the static setting may differ, and that the key player in the dynamic setting may change over time. (with Paola Labrecciosa and Agnieszka Rusinowska)

Dynamic Games and Applications Seminar

Impacts of Different Contracts and Policy Constraints in a Distributional Robust Approach

February 8, 2024 11:00 AM — 12:00 PM (Montreal time)

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This research tackles decentralized supply channels and proposes comprehensive solution algorithms for multi-periodic bilevel equilibrium problems. The supply channel consists of two members, an upstream member (manufacturer) and a downstream member (retailer), who assume the roles of leader and follower, respectively, in a Stackelberg game. The primary objective of the channel is to effectively manage dynamic demand, which is dependent on price history, within a multi-period time frame. Due to the price history effect on the uncertain demand, the problem turns out to be highly nested. We present a channel facing dynamic and price-dependent demand, where the demand information is incomplete, and the only information provided is the mean and the standard deviation of the demand. To address this challenge, a distributional-robust (DR) approach is proposed, which provides a lower bound on the channel’s expected profit for the problem with known distribution. We consider both periodic contracts (a subgame perfect solution) and single contract (covering all periods simultaneously). The leader’s expected payoff of a single contract, logically, is not lower than the subgame perfect result. For the follower on the other hand, we did not observe any counterexample to demonstrate that he may be worse off by using a single contract. The algorithm optimally addresses concerns related to corrective actions. It incorporates pollution capacity constraints, pollution tax, and a cap-and-trade system. Moreover, a buyback contract influence, to share the risk of leftovers optimally, is evaluated. (joint work with Leif Kristoffer Sandal)

Dynamic Games and Applications Seminar

Insurance choices and emission taxation

February 1, 2024 11:00 AM — 12:00 PM (Montreal time)

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We analyze a duopoly composed of a clean and a dirty firm. The dirty one has to pay an emission tax. Both firms face a random loss that is a function of the dirty firm’s output. The firms can reduce the risk by stipulating an insurance contract and choosing a coinsurance rate. The game develops in three stages: 1) strategy selection, 2) output choices, 3) insurance decisions. We find that not only taxation but also insurance, under some conditions, can favor a green transition.