On regulation with zero–determinant strategies

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Barlo, Mehmet and İmren, Sura (2016) On regulation with zero–determinant strategies. [Working Paper / Technical Report] Sabanci University ID:UNSPECIFIED

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The regulation of two players is modeled as an iterated game with no discounting where first two players (two countries providing carbon emissions) also interact with a regulator (an independent regulator responsible for controlling the carbon emission levels by imposing punishments). In our setting, employing a zero-determinant (ZD) strategy, the regulator gains a unilateral advantage to enforce a linear relation between the expected payoffs of players. We identify two conditions and prove that the first guarantees the existence of a ZD strategy while the second ensures the existence of an optimal one. Furthermore, we propose an intuitive and simple cost structure in order to enable the regulator to employ an uncomplicated ZD strategy and attain a maximal ZD payoff.

Item Type:Working Paper / Technical Report
Uncontrolled Keywords:Iterated Prisoners’ Dilemma, Zero–Determinant Strategies, Regulation
Subjects:H Social Sciences > HB Economic Theory > HB135-147 Mathematical economics. Quantitative methods
H Social Sciences > HB Economic Theory
ID Code:30727
Deposited By:Mehmet Barlo
Deposited On:04 Nov 2016 10:15
Last Modified:04 Nov 2016 10:15

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