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on Economic Design |
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Issue of 2018‒01‒08
five papers chosen by Guillaume Haeringer, Baruch College and Alex Teytelboym, University of Oxford |
| By: | Sandro Ambuehl; Vivienne Groves |
| Abstract: | Unraveling, the excessively early matching of future workers to employers, is a pervasive phenomenon in entry-level labor markets that leads to hiring decisions based on severely incomplete information. We provide a model of unraveling in one-to-one matching markets for prestigious positions. Its distinguishing feature is that the market operates over an extended time period during which information about potential matches arrives gradually. We find that unraveling causes potentially thick markets to spread thinly over a long time period. In equilibrium, an employers desirability is correlated neither with the time at which they hire, nor with the expected productivity of their matched worker. Unraveling thus significantly redistributes welfare among employers compared to a pairwise stable match. We study policies that manipulate the availability of information about students and show that they are effective only if they provide a sudden surge in information. Our main application is the market for U.S. federal appellate court clerks, a significant input into the efficiency of the justice system. Consistent with the model, hiring times in our dataset are spread over a period of six months and are uncorrelated with the desirability of a judge as an employer. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6739&r=des |
| By: | Antonin Macé (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - CNRS - Centre National de la Recherche Scientifique - ECM - Ecole Centrale de Marseille); Rafael Treibich (University of Southern Denmark) |
| Abstract: | We study the design of voting rules for international unions when countries’ participation is voluntary. While efficiency recommends weighting countries proportionally to their stakes, we show that accounting for participation constraints entails overweighting some countries, those for which the incentive to participate is the lowest. When decisions are not enforceable, cooperation requires the satisfaction of more stringent constraints, that may be mitigated by granting a veto power to some countries. The model has important implications for the problem of apportionment, the allocation of voting weights to countries of differing populations, where it provides a rationale for setting a minimum representation for small countries. |
| Keywords: | international unions,constitutional design,veto,participation constraints |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01630090&r=des |
| By: | Hans Gersbach; Akaki Mamageishvili; Oriol Tejada |
| Abstract: | We analyze Assessment Voting, a new two-round voting procedure that can be applied to binary decisions in democratic societies. In the first round, a randomly-selected number of citizens cast their vote on one of the two alternatives at hand, thereby irrevocably exercising their right to vote. In the second round, after the results of the first round have been published, the remaining citizens decide whether to vote for one alternative or to ab- stain. The votes from both rounds are aggregated, and the final outcome is obtained by applying the majority rule, with ties being broken by fair randomization. Within a costly voting framework, we show that large elec- torates will choose the preferred alternative of the majority with high prob- ability, and that average costs will be low. This result is in contrast with the literature on one-round voting, which predicts either higher voting costs (when voting is compulsory) or decisions that often do not represent the preferences of the majority (when voting is voluntary). |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1712.05470&r=des |
| By: | Andrea Attar (Toulouse School of Economics and CEIS & DEF University of Rome Tor Vergata); Eloisa Campioni (CEIS & DEF, University of Rome "Tor Vergata"); Gwenaël Piaser (Ipag Business School Paris) |
| Abstract: | We study competing mechanism games in which principals simultaneously design contracts to deal with several agents. We show that principals can profit from privately communicating with agents by generating incomplete information in the continuation game they play. Specifically, we construct an example of a complete information game in which none of the (multiple) equilibria in Yamashita (2010) survives against unilateral deviations to mechanisms involving private communication. This also contrasts with the robustness result established by Han (2007). The role of private communication we document may call for extending the standard construction of Epstein and Peters (1999) to incorporate this additional element. |
| Date: | 2017–12–16 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceisrp:421&r=des |
| By: | Mengus, Eric; Lukyanov, George |
| Abstract: | This note explores conditions that admit recursive representation for a class of dynamic mechanism design problems. We derive a tight sufficient condition, called the common state property (CSP), which ensures that temporary incentive constraints guarantee implementability, and so allows to characterize the principal's problem recursively. The condition imposes no restrictions on agent's preferences and only concerns the properties of the evolution of private information. |
| Keywords: | First order approach; Dynamic mechanism design |
| JEL: | D30 D80 D82 |
| Date: | 2016–06–09 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:heccah:1151&r=des |