All new papers
http://lists.repec.org/mailman/listinfo/nep-mic
All new papers2014-09-08Jing-Yuan ChiouAggregation of coherent experts opinion: a tractable extreme-outcomes consistent rule
http://d.repec.org/n?u=RePEc:ipg:wpaper:2014-541&r=mic
The paper defines a consensus distribution with respect to experts’ opinions by a multiple quantile utility model. The paper points out that the Steiner Point is the representative consensus probability. The new rule of experts’ opinions aggregation, that can be evaluated by the Shapley value in a simple way, is prudential and coherent.Marcello Basili, Alain Chateauneuf2014-08-29Ambiguity, Aggregation, Steiner Point, Multiple Priors, Quantiles.The equivalence between two-person symmetric games and decision problems
http://d.repec.org/n?u=RePEc:unm:umagsb:2014023&r=mic
We illustrate an equivalence between the class of two-person symmetric games and the class of decision problems with a complete preference relation. Moreover, we show that a strategy is an optimal threat strategy Nash, 1953 in a two-person symmetric game if and only if it is a maximal element in its equivalent decision problem. In particular, a Nash equilibrium in a two-person symmetric zero-sum game and a pair of maximal elements in its equivalent decision problem coincide. In addition, we show that a two-person symmetric zero-sum game can be extended to its von Neumann-Morgenstern vN-M mixed extension if and only if the extended decision problem satisfies the SSB utility Fishburn, 1982 axioms. Furthermore, we demonstrate that a decision problem satisfies vN-M utility if and only if its equivalent symmetric game is a potential game. Accordingly, we provide a formula for the number of linearly independent equations in order for the independence axiom to be satisfied which grows quadratically as the number of alternatives increase.Ismail M.S.2014Noncooperative Games;Delayed Verification Mechanism for Dynamic Implementation
http://d.repec.org/n?u=RePEc:mpg:wpaper:2014_11&r=mic
This paper introduces a virtually efficient mechanism in a setting with sequentially arriving agents who hold informative signals about future types. To reveal the information the principal organises betting on future type reports. An agent’s betting reward depends on how accurately the prior updated on his report predicts the type reports observed in the following period. The mechanism satisfies participation constraints and generates no deficit after any reported history.Olga Gorelkina2014-08Dynamic mechanisms, scoring rule, Bayesian learning, conjugate priorsLearning Tastes Through Social Interaction
http://d.repec.org/n?u=RePEc:hcx:wpaper:1405&r=mic
This paper offers an information-based model of social interaction, and analyzes optimal investment and pricing of services that facilitate interaction in a duopoly. Agents have uncertainty over their preferences but are aware that they are correlated with others’, so there exists an incentive to communicate with others in the population. When a firm’s good can be bundled with a coordination mechanism for its consumers, its value is endogenously determined due to a consumption externality. Although this mechanism increases total surplus, it is underprovided and consumer surplus decreases.Alice Hsiaw2014-08Get Rid of Unanimity: The Superiority of Majority Rule with Veto Power
http://d.repec.org/n?u=RePEc:qmw:qmwecw:wp722&r=mic
A group of agents wants to reform the status quo if and only if this is Pareto improving. Agents have private information and may have common or private objectives, which creates a tension between information aggregation and minority protection. We analyze a simple voting system - majority rule with veto power (Veto) - that essentially resolves this tension, for it combines the advantageous properties of both majority and unanimity rules. We argue that our results shed new light on the evolution of voting rules in the EU institutions and could help to inform debates about policy reforms in cases such as juries in the US.Laurent Bouton, Aniol Llorente-Saguer, Fr�d�ric Malherbe2014-08Unanimity rule, Veto power, Information aggregation, Pareto criterion, Constructive abstentionSeparating equilibrium in quasi-linear signaling games
http://d.repec.org/n?u=RePEc:unm:umagsb:2014026&r=mic
Using a network approach we provide a characterization of a separating equilibrium for standard signaling games where the senders payoff function is quasi-linear. Given a strategy of the sender, we construct a network where the node set and the length between two nodes are the set of the senders type and the difference of signaling costs, respectively. Construction of a separating equilibrium is then equivalent to constructing the length between two nodes in the network under the condition that the response of the receiver is a node potential.We show that, when the set of the senders type is finite, the collection of separating signaling functions forms a lower bounded lattice. We describe an algorithm to compute separating equilibrium strategies. When the set of the senders type is a real interval, shortest path lengths are antisymmetric and a node potential is unique up to a constant. A strategy of the sender in a separating equilibrium is characterized by some differential equation with a unique solution.Our results can be readily applied to a broad range of economic situations, such as the standard job market signaling model of Spence a model not captured by earlier papers and principal-agent models with production.Lee J., Müller R.J., Vermeulen A.J.2014Noncooperative Games; Asymmetric and Private Information; Mechanism Design;Precluding Collusion in the Vickrey Auction
http://d.repec.org/n?u=RePEc:mpg:wpaper:2014_10&r=mic
This paper studies collusion in one-shot auctions, where a buyer can bribe his competitors into lowering their bids. We modify the single-unit Vickrey auction to incite deviations from the designated-winner scenario and thus undermine collusion. The construction of mechanism does not require the knowledge of colluders’ identities or distributions of valuations, in which sense it is entirely detail-free.Olga Gorelkina2014-08Bidder collusion, detail-free auctions, Vickrey auctionSequential lending with dynamic joint liability in micro-finance
http://d.repec.org/n?u=RePEc:syd:wpaper:2014-07&r=mic
This paper develops a theory of sequential lending in groups in micro-finance that centers on the notion of dynamic incentives, in particular the simple idea that default incentives should be relatively uniformly distributed across time. In a framework that allows project returns to accrue over time (rather than at a single point), as well as strategic default, we show that sequential lending can help resolve problems arising out of coordinated default, thus improving project efficiency vis-a-vis individual lending. Inter alia, we also provide a justification for the use of frequent repayment schemes, as well as demonstrate that, depending on how it is manifested, social capital has implications for project efficiency and borrower default. We then examine the optimal choices for the MFI, demonstrating that the MFI opts for higher project sizes under group lending with limited collusion, and also provide a plausible explanation of the transition from group to individual lending.Shyamal Chowdhury; Prabal Roy Chowdhury; Kunal Sengupta2014-08collusion; coordinated default; dynamic incentives; group-lending; micro- finance; sequential financing; social capital; social sanctionsMacroeconomies as Constructively Rational Games
http://d.repec.org/n?u=RePEc:isu:genres:37834&r=mic
Real-world decision-makers are forced to be locally constructive, in the sense that their actions are constrained by the interaction networks, limited information, and computational capabilities at their disposal.� This study poses the following question:� Suppose utility-seeking consumers and profit-seeking firms in an otherwise standard dynamic macroeconomic model are required to be locally constructive decision-makers, unaided by the external imposition of global coordination conditions.� What combinations of locally constructive decision rules result in good macroeconomic performance relative to a social planner benchmark model, and what are the game-theoretic properties of these decision-rule combinations?� We begin our investigation of this question by specifying locally constructive decision rules for the consumers and firms that range from simple reinforcement learning to sophisticated adaptive dynamic programming algorithms.� We then use computational experiments to explore macroeconomic performance under alternative decision-rule combinations.� A key finding is that simpler rules can outperform more sophisticated rules, but that forward-looking behavior coupled with a relatively long memory permitting past observations to inform current decision-making is critical for good performance.Sinitskaya, Ekaterina, Tesfatsion, Leigh2014-08-22Learning; Macroeconomics; agent-based; game; stochastic optimizationPro-competitive Rationing in Multi-unit Auctions
http://d.repec.org/n?u=RePEc:hhs:iuiwop:1037&r=mic
In multi-unit auctions, such as auctions of commodities and securities, and financial exchanges, it is necessary to specify rationing rules to break ties between multiple marginal bids. The standard approach in the literature and in practice is to ration marginal bids proportionally. This paper shows how bidding can be made more competitive if the rationing rule instead gives increasing priority to bidders with a small volume of marginal bids at clearing prices closer to the reservation price. In comparison to standard rationing, such a rule can have almost the same effect on the competitiveness of bids as a doubling of the number of bidders.Holmberg, Pär2014-08-22C72; D44; D45