Microeconomics
http://lists.repec.orgmailman/listinfo/nep-mic
Microeconomics
2017-05-21
Dynamically Consistent Preferences Under Imprecise Probabilistic Information
http://d.repec.org/n?u=RePEc:hal:psewpa:halshs-01513820&r=mic
This paper extends decision theory under imprecise probabilistic information to dynamic settings. We explore the relationship between the given objective probabilistic information, an agent's subjective multiple priors, and updating. Dynamic consistency implies rectangular sets of priors at the subjective level. As the objective probabilistic information need not be consistent with rectangularity at the subjective level, agents might select priors outside the objective probabilistic information while respecting the support of the given set of priors. Under suitable additional axioms, the subjective set of priors belongs to the rectangular hull of the objective probabilistic information.
Frank Riedel
Jean-Marc Tallon
Vassili Vergopoulos
imprecision aversion,multiple priors,Imprecise information,dynamic consistency
2017-04
Preference Conditions for Invertible Demand Functions
http://d.repec.org/n?u=RePEc:san:wpecon:1708&r=mic
This paper identifies conditions on a utility-maximizing consumer’s preferences that are both necessary and sufficient for his demand function to be invertible in prices. The conditions in question are strict convexity, strict monotonicity and differentiability in the sense of Rubinstein (2006). It is further shown that such a demand function is continuous if and only if preferences have, in addition, smooth indifference sets. The latter condition is weaker than the standard notion of smooth preferences. We discuss some implications of these results for revealed preference theory, the “law of demand,” and market demand functions that can be generated by a representative agent.
Georgios Gerasimou
Self-consistency, consistency and cycles in non-partitional knowledge models
http://d.repec.org/n?u=RePEc:acb:cbeeco:2017-649&r=mic
This paper expands the correspondence model of knowledge to a framework where there is an objective and many subjective state spaces, one for each player. At every objective state, each player lists the subset of her subjective states that she considers possible. In this context, the question of ‘‘self-consistency’’ arises: given beliefs of a player, is it possible that all of these beliefs come from a common prior via Bayesian updating? This paper provides necessary and sufficient conditions for self-consistency. If all players are self-consistent, the question of consistency arises: is there a common prior that rationalizes the beliefs of all players? Is it possible that self-consistency or consistency holds regardless of the numerical values of beliefs of the players? This paper provides necessary and sufficient conditions for consistency of beliefs.
Luciana C. Fiorini
José A. Rodrigues-Neto
consistency, cycle, knowledge, partition, prior
2017-04
Interactive Epistemology in Simple Dynamic Games with a Continuum of Strategies
http://d.repec.org/n?u=RePEc:igi:igierp:602&r=mic
We extend the epistemic analysis of dynamic games of Battigalli and Siniscalchi (1999, 2002, 2007) from finite dynamic games to all simple games, that is, fi nite and infi nite-horizon games with finite action sets at non-terminal stages and compact action sets at terminal stages. We prove a generalization of Lubins (1974) extension result to deal with conditional probability systems and strong belief. With this, we can provide a short proof of the following result: in every simple dynamic game, strong rationalizability characterizes the behavioral implications of rationality and common strong belief in rationality. Keywords: Epistemic game theory, simple in finite dynamic game, strong belief, strong rationalizability.
Pierpaolo Battigalli
Gabriele Beneduci
Pietro Tebaldi
2017
When Is Social Learning Path-Dependent?
http://d.repec.org/n?u=RePEc:pra:mprapa:78962&r=mic
In various environments new agents may base their decisions on observations of actions taken by a few other agents in the past. In this paper we analyze a broad class of such social learning processes, and study under what circumstances they are path-dependent. Our main result shows that a population converges to the same behavior independently of the initial state, provided that the expected number of actions observed by each agent is less than one. Moreover, in any environment in which the expected number of observed actions is more than one, there is a learning rule for which the initial state has a lasting impact on future behavior.
Heller, Yuval
Mohlin, Erik
Social learning, steady state, path dependence.
2017-04-28
Strategy-proof multi-object auction design: Ex-post revenue maximization with no wastage
http://d.repec.org/n?u=RePEc:dpr:wpaper:1001&r=mic
A seller is selling multiple objects to a set of agents. Each agent can buy at most one object and his utility over consumption bundles (i.e., (object, transfer) pairs) need not be quasilinear. The seller considers the following desiderata for her mechanism, which she terms desirable: (1) strategy-proofness, (2) ex-post individual rationality, (3) equal treatment of equals, (4) no wastage (every object is allocated to some agent). The minimum Walrasian equilibrium price (MWEP) mechanism is desirable. We show that at each preference profile, the MWEP mechanism generates more revenue for the seller than any desirable mechanism satisfying no subsidy. Our result works for quasilinear type space, where the MWEP mechanism is the VCG mechanism, and for various non-quasilinear type spaces, some of which incorporate positive income effect of agents. We can relax no subsidy to no bankruptcy in our result for certain type spaces with positive income effect.
Tomoya Kazumura
Debasis Mishra
Shigehiro Serizawa
2017-05
Reason-based choice and context-dependence: An explanatory framework
http://d.repec.org/n?u=RePEc:hal:pseose:halshs-01249514&r=mic
We introduce a "reason-based" framework for explaining and predicting individual choices. The key idea is that a decision-maker focuses on some but not all properties of the options and chooses an option whose "motivationally salient" properties he/she most prefers. Reason-based explanations can capture two kinds of context-dependent choice: (i) the motivationally salient properties may vary across choice contexts, and (ii) they may include "context-related" properties, not just "intrinsic" properties of the options. Our framework allows us to explain boundedly rational and sophisticated choice behaviour. Since properties can be recombined in new ways, it also offers resources for predicting choices in unobserved contexts.
Franz Dietrich
Christian List
Rational choice,reasons,context-dependence,bounded and sophisticated rationality,prediction of choice
2016
Robust Social Decisions
http://d.repec.org/n?u=RePEc:hal:pseose:halshs-01415412&r=mic
We propose and operationalize normative principles to guide social decisions when individuals potentially have imprecise and heterogeneous beliefs, in addition to conflicting tastes or interests. To do so we adapt the standard Pareto principle to those preference comparisons that are robust to belief imprecision and characterize social preferences that respect this robust principle. We also characterize a suitable restriction of this principle. The former principle provides stronger guidance when it can be satisfied; when it cannot, the latter always provides minimal guidance.
Eric Danan
Thibault Gajdos
Brian Hill
Jean-Marc Tallon
D81,JEL Classification D71,Uncertainty, Social choice, Preference aggregation, Pareto dominance,Unambiguous preferences
2016-09
Belief revision generalized: A joint characterization of Bayes' and Je¤rey's rules
http://d.repec.org/n?u=RePEc:hal:pseose:halshs-01249635&r=mic
We present a general framework for representing belief-revision rules and use it to characterize Bayes' rule as a classical example and Jeffrey's rule as a non-classical one. In Je¤rey's rule, the input to a belief revision is not simply the information that some event has occurred, as in Bayes' rule, but a new assignment of probabilities to some events. Despite their differences, Bayes' and Je¤rey's rules can be characterized in terms of the same axioms: responsiveness, which requires that revised beliefs incorporate what has been learnt, and conservativeness, which requires that beliefs on which the learnt input is 'silent' do not change. To illustrate the use of non-Bayesian belief revision in economic theory, we sketch a simple decision-theoretic application.
Franz Dietrich
Christian List
Richard Bradley
fine-grained versus coarse-grained beliefs,axio-matic foundations,Belief revision,subjective probability,Bayes's rule,Je¤rey's rule,unawareness
2016
Strategic Voting in Multi-Winner Elections with Approval Balloting: A Theory for Large Electorates
http://d.repec.org/n?u=RePEc:hal:pseose:halshs-01304688&r=mic
We propose a theory of strategic voting in multi-winner elections with approval balloting: A fixed number M of candidates are to be elected; each voter votes for as many candidates as she wants; the M candidates with the most votes are elected. We assume that voter preferences are separable and that there exists a tiny probability that any vote might be misrecorded. Best responses involve voting by pairwise comparisons. Two candidates play a critical role: the weakest expected winner and the strongest expected loser. Expected winners are approved if and only if they are preferred to the strongest expected loser and expected losers are approved if and only if they are preferred to the weakest expected winner. At equilibrium, if any, a candidate is elected if and only if he is approved by at least half of the voters. With single-peaked preferences, an equilibrium always exists, in which the first M candidates according to the majority tournament relation are elected. The theory is tested on individual data from the 2011 Regional Government election in Zurich.
Jean-François Laslier
Karine Van Der Straeten
Approval Voting,Elections,Voting behavior
2016-04
Determining models of influence
http://d.repec.org/n?u=RePEc:hal:pseose:hal-01387480&r=mic
We consider a model of opinion formation based on aggregation functions. Each player modifies his opinion by arbitrarily aggregating the current opinion of all players. A player is influential on another player if the opinion of the first one matters to the latter. A generalization of an influential player to a coalition whose opinion matters to a player is called an influential coalition. Influential players (coalitions) can be graphically represented by the graph (hypergraph) of influence, and convergence analysis is based on properties of the hypergraphs of influence. In the paper, we focus on the practical issues of applicability of the model w.r.t. a standard framework for opinion formation driven by Markov chain theory. For a qualitative analysis of convergence, knowing the aggregation functions of the players is not required, one only needs to know the set of influential coalitions for each player. We propose simple algorithms that permit us to fully determine the influential coalitions. We distinguish three cases: the symmetric decomposable model, the anonymous model, and the general model. JEL Classification: C7, D7, D85
Michel Grabisch
Agnieszka Rusinowska
algorithm,social network,opinion formation,aggregation function,influential coalition
2016
Decentralized Pricing and the equivalence between Nash and Walrasian equilibrium
http://d.repec.org/n?u=RePEc:hal:pseose:halshs-01296646&r=mic
We introduce, in the standard exchange economy model, market games in which agents use private prices as strategies. We give conditions on the game form that ensure that the only strict Nash equilibria of the game are the competitive equilibria of the underlying economy. This equivalence result has two main corollaries. First, it adds to the evidence that competitive equilibria can be strategically stable even in small economies. Second, it implies that competitive equilibria have good local stability properties under a large class of evolutionary learning dynamics.
Antoine Mandel
Herbert Gintis
General equilibrium, Market games, Stability, Computational economics, Evolutionary game theory
2016-03-01
Optimal Multistage Adjudication
http://d.repec.org/n?u=RePEc:nbr:nberwo:23364&r=mic
In many settings, there are preliminary or interim decision points at which legal cases may be terminated: e.g., motions to dismiss and for summary judgment in U.S. civil litigation, grand jury decisions in criminal cases, and agencies’ screening and other exercises of discretion in pursuing investigations. This article analyzes how the decision whether to continue versus terminate should optimally be made when (A) proceeding to the next stage generates further information but at a cost to both the defendant and the government and (B) the prospect of going forward, and ultimately imposing sanctions, deters harmful acts and also chills desirable behavior. This subject involves a mechanism design analogue to the standard value of information problem, one that proves to be qualitatively different and notably more complex. Numerous factors enter into the optimal decision rule – some expected, some subtle, and some counterintuitive. The optimal rule for initial or intermediate stages is also qualitatively different from that for assigning liability at the final stage of adjudication.
Louis Kaplow
2017-04
On Legislative Lobbying under Political Uncertainty
http://d.repec.org/n?u=RePEc:tse:wpaper:31704&r=mic
We study a simple influence game, in which a lobby tries to manipulate the decision of a legislature via monetary o¤ers to one or more members. The type of a legislator is the relative weight he/she places on social welfare as compared to money. We study the equilibria of this lobbying game under political certainty and uncertainty, and examine the circumstances under which the lobby is successful, and the amount of money invested in the political process. Special attention is paid to three primitives of the environment: the budget available for lobbying, the internal organization of the legislature and the proportion of "bad" and "good" legislators in the political arena.
Tyutin, Anton
Zaporozhets, Vera
2017-05
On a Class of Smooth Preferences
http://d.repec.org/n?u=RePEc:tse:wpaper:31631&r=mic
We construct a complete space of smooth strictly convex preference relations defined over physical commodities and monetary transfers. This construction extends the classic one by assuming that preferences are monotone in transfers, but not necessarily in all commodities. This provides a natural framework to perform genericity analyses in situations involving inventory costs or decisions under risk.
Attar, Andrea
Mariotti, Thomas
Salanié, François
Smooth Preferences, Nonmonotonicity.
2017-04