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on Economic Design |
| By: | Minoru Kitahara; Yasunori Okumura |
| Abstract: | This study considers a model where schools may have multiple priority orders on students, which may be inconsistent with each other. For example, in school choice systems, since the sibling priority and the walk zone priority coexist, the priority orders based on them would be conflicting. In that case, there may be no matching that respect to all priority orders. We introduce a novel fairness notion called M-fairness to examine such markets. Further, we focus on a more specific situation where all schools have two priority orders, and for a certain group of students, a priority order of each school is an improvement of the other priority order of the school. An illustrative example is the school choice matching market with a priority-based affirmative action policy. We introduce a mechanism that utilizes the efficiency adjusted deferred acceptance algorithm and show that the mechanism is student optimally M-stable, improved-group optimally M-stable and responsive to improvements. |
| Date: | 2023–08 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2308.04780&r=des |
| By: | Dirk Bergemann (Yale University); Tibor Heumann (Pontificia Universidad Catolica de Chile); Stephen Morris (Massachusetts Institute of Technology) |
| Abstract: | How should a seller offer quantity or quality differentiated products if they have no information about the distribution of demand? We consider a seller who cares about the "profit guarantee" of a pricing rule, that is, the minimum ratio of expected profits to expected social surplus for any distribution of demand. We show that the profit guarantee is maximized by setting the price markup over cost equal to the elasticity of the cost function. We provide profit guarantees (and associated mechanisms) that the seller can achieve across all possible demand distributions. With a constant elasticity cost function, constant markup pricing provides the optimal revenue guarantee across all possible demand distributions and the lower bound is attained under a Pareto distribution. We characterize how profits and consumer surplus vary with the distribution of values and show that Pareto distributions are extremal. We also provide a revenue guarantee for general cost functions. We establish equivalent results for optimal procurement policies that support maximal surplus guarantees for the buyer given all possible cost distributions of the sellers. |
| Date: | 2023–08 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:2368&r=des |
| By: | Nicholas C. Bedard; Jacob K. Goeree |
| Abstract: | We establish the Subgradient Theorem for monotone correspondences -- a monotone correspondence is equal to the subdifferential of a potential if and only if it is conservative, i.e. its integral along a closed path vanishes irrespective of the selection from the correspondence along the path. We prove two attendant results: the Potential Theorem, whereby a conservative monotone correspondence can be integrated up to a potential, and the Duality Theorem, whereby the potential has a Fenchel dual whose subdifferential is another conservative monotone correspondence. We use these results to reinterpret and extend Baldwin and Klemperer's (2019) characterization of demand in economies with indivisible goods. We introduce a simple test for existence of Walrasian equilibrium in quasi-linear economies. Fenchel's Duality Theorem implies this test is met when the aggregate utility is concave, which is not necessarily the case with indivisible goods even if all consumers have concave utilities. |
| Date: | 2023–08 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2308.04593&r=des |
| By: | Joffrey Derchu; Dimitrios Kavvathas; Thibaut Mastrolia; Mathieu Rosenbaum |
| Abstract: | We study a toy two-player game for periodic double auction markets to generate liquidity. The game has imperfect information, which allows us to link market spreads with signal strength. We characterize Nash equilibria in cases with or without incentives from the exchange. This enables us to derive new insights about price formation and incentives design. We show in particular that without any incentives, the market is inefficient and does not lead to any trade between market participants. We however prove that quadratic fees indexed on each players half spread leads to a transaction and we propose a quantitative value for the optimal fees that the exchange has to propose in this model to generate liquidity. |
| Date: | 2023–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2307.15805&r=des |
| By: | Makoto WATANABE; José L. Moraga-González |
| Abstract: | This paper studies how selling constraints, which refer to the inability of firms to attend to all the buyers who want to inspect their products, affect the equilibrium price and social welfare. We show that the price that maximizes social welfare is greater than the marginal cost. This is because with selling constraints, a higher price, despite reducing the probability of trade (fewer buyers are willing to pay a higher price) increases the value of trade (only trades generating positive surplus are consummated). We show that the equilibrium price is inefficiently high except in the limit when firms selling constraints vanish and consumers observe prices before they visit firms. Thus, selling constraints constitute a source of market power. |
| Date: | 2023–08 |
| URL: | http://d.repec.org/n?u=RePEc:cnn:wpaper:23-012e&r=des |
| By: | Daher, Wassim; Karam, Fida; Ahmed, Naveed |
| Abstract: | We study a generalization of the Kyle (1985) static model with two risk neutral insiders to the case where each insider is partially informed about the value of the stock and compete under Stackelberg setting. First, we characterize the linear Bayesian equilibrium. Then, we carry out a comparative statics analysis. Our findings reveal that partial information increases the insiders profits in a Stackelberg setting than in a Cournot setting. Finally we study the impact of the information sharing on equilibrium outcomes. |
| Keywords: | Insider trading, Risk neutrality, Partial Information, Stackelberg structure, Kyle model |
| JEL: | D82 G14 |
| Date: | 2023–06–29 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:118138&r=des |
| By: | Jose Bonet Faus; Pascal Le Masson (CGS i3 - Centre de Gestion Scientifique i3 - Mines Paris - PSL (École nationale supérieure des mines de Paris) - PSL - Université Paris sciences et lettres - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique); Ugo Pelissier; Nafissa Jibet (CGS i3 - Centre de Gestion Scientifique i3 - Mines Paris - PSL (École nationale supérieure des mines de Paris) - PSL - Université Paris sciences et lettres - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique); Antoine Bordas; Sébastien Pajot |
| Abstract: | In the IT landscape, DevOps is the preferred approach for developing and maintaining rapidly evolving systems that require continuous improvements. Yet, DevOps frameworks do not entirely prevent the accumulation of Technical Debt (TD), and under certain circumstances DevOps can even contribute to generating TD. This paper focuses on a specific type of TD, Entangled Technical Debt (ETD), that corresponds to the implicit complexification of a system's design and the appearance of unintentional couplings in its architecture over time. Our work seeks to inform methods for Diagnosing and Locating ETD in DevOps frameworks. Through a research partnership with Ubisoft's IT branch, an experimental case-study was conducted. It takes the form of an assessment of 6 innovative IT projects and a subsequent in-depth architecture analysis of an individual IT system, which enabled the characterization of the mechanisms linking DevOps to ETD. This allowed us to develop and test practical methods for diagnosing and locating ETD in IT systems. |
| Date: | 2023–07–24 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04086471&r=des |
| By: | Giuseppe Dari-Mattiacci Author-Workplace-Name :University of Amsterdam; Sander Onderstal Author-Workplace-Name :University of Amsterdam; Francesco Parisi Author-Workplace-Name :University of Minnesota; Ram Singh (Department of Economics, Delhi School of Economicss, University of Delhi) |
| Abstract: | Contract law traditionally applies different disclosure duties on buyers and sellers. Sellers are generally required to disclose “negative” information about hidden defects of the products they sell. Failure to disclose can make the contract voidable and can give rise to liability. By contrast, buyers are generally under no comparable duties to disclose “positive” information about hidden qualities of the products they buy. The leading explanation for the law’s disparate treatment of buyers and sellers in these two asymmetric information problems is that imposing disclosure duties on buyers would undermine their incentives to acquire costly (but socially useful) information prior to forming a contract (Kronman, 1978). This explanation lacks a key step—the failure to correct asymmetric information problems would cause the inverse adverse selection problem (identified by Burckart and Lee (2016) and Dari-Mattiacci et al. (2021)) to arise. Uninformed sellers would withdraw from the market and resources would not move to higher-valuing users. In this paper, we develop a model to study the incentives created by disclosure and non-disclosure rules. We show that when parties can contract around defaults, the choice of alternative disclosure rules (duty to disclose vs. no duty to disclose) makes a difference. Unlike disclosure rules, non-disclosure default rules yield partially separating equilibria that preserve the buyers’ incentives to acquire information. They also foster trade opportunities between expert buyers and uninformed sellers. Our results add to the existing literature by providing an additional rationale for the different treatment of buyers and sellers in asymmetric information problems. JEL Codes : D44, D82, D86, K12. |
| Keywords: | asymmetric information, penalty default rules, inverse adverse selection |
| Date: | 2023–08 |
| URL: | http://d.repec.org/n?u=RePEc:cde:cdewps:338&r=des |
| By: | Stéphane Bonhomme; Kevin Dano; Bryan S. Graham |
| Abstract: | We study identification in a binary choice panel data model with a single predetermined binary covariate (i.e., a covariate sequentially exogenous conditional on lagged outcomes and covariates). The choice model is indexed by a scalar parameter θ, whereas the distribution of unit-specific heterogeneity, as well as the feedback process that maps lagged outcomes into future covariate realizations, are left unrestricted. We provide a simple condition under which θ is never point-identified, no matter the number of time periods available. This condition is satisfied in most models, including the logit one. We also characterize the identified set of θ and show how to compute it using linear programming techniques. While θ is not generally point-identified, its identified set is informative in the examples we analyze numerically, suggesting that meaningful learning about θ may be possible even in short panels with feedback. As a complement, we report calculations of identified sets for an average partial effect, and find informative sets in this case as well. |
| Date: | 2023–07–26 |
| URL: | http://d.repec.org/n?u=RePEc:azt:cemmap:17/23&r=des |
| By: | Krige Siebrits; Estian Calitz |
| Abstract: | This paper discusses the rationale and options for a fiscal anchor for South Africa and its potential for restoring and maintaining fiscal sustainability. It argues that a well designed fiscal anchor can be useful in the current fiscal milieu, but notes that the popularity of fiscal rules belies an uneven record and doubts about their efficacy. |
| Keywords: | Fiscal policy, Fiscal sustainability, South Africa, Rules |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp-2023-98&r=des |
| By: | Bührle, Anna Theresa; Nicolay, Katharina; Spengel, Christoph; Wickel, Sophia |
| Abstract: | This study provides an overview of current political developments in the tax competition debate, emphasizing the consequences for large German family businesses. We analyze new tax competition trends in Europe and selected industrialized countries in recent years. Subsequently, we discuss various international tax policy counter-reactions, namely the Anti-Tax Avoidance Directive and country-by-country reporting on the European level as well as the OECD's two-pillar project. We outline a potential shift in tax competition away from companies towards highly wealthy and highly qualified individuals. The implications of these developments on large German family businesses are emphasized, offering insights into the evolving landscape of tax competition. |
| Keywords: | tax competition, family businesses, international tax policy |
| JEL: | H25 H24 K34 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:23027&r=des |
| By: | Yuwei Yin; Yazheng Yang; Jian Yang; Qi Liu |
| Abstract: | Financial risk prediction plays a crucial role in the financial sector. Machine learning methods have been widely applied for automatically detecting potential risks and thus saving the cost of labor. However, the development in this field is lagging behind in recent years by the following two facts: 1) the algorithms used are somewhat outdated, especially in the context of the fast advance of generative AI and large language models (LLMs); 2) the lack of a unified and open-sourced financial benchmark has impeded the related research for years. To tackle these issues, we propose FinPT and FinBench: the former is a novel approach for financial risk prediction that conduct Profile Tuning on large pretrained foundation models, and the latter is a set of high-quality datasets on financial risks such as default, fraud, and churn. In FinPT, we fill the financial tabular data into the pre-defined instruction template, obtain natural-language customer profiles by prompting LLMs, and fine-tune large foundation models with the profile text to make predictions. We demonstrate the effectiveness of the proposed FinPT by experimenting with a range of representative strong baselines on FinBench. The analytical studies further deepen the understanding of LLMs for financial risk prediction. |
| Date: | 2023–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2308.00065&r=des |