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on Economic Design |
| By: | Agustin G. Bonifacio; Noelia Juarez; Paola B. Manasero |
| Abstract: | We compute the lattice operations for the (pairwise) stable set in two-sided matching markets where only substitutability on agents' choice functions is imposed. To do this, we use Tarski operators defined on the lattices of worker-quasi-stable and firm-quasi-stable matchings. These operators resemble lay-off and vacancy chain dynamics, respectively. First, we compute the lattice operations in the many-to-one model. Then, we extend these operations to a many-to-many model with substitutable choice functions on one side and responsive preferences on the other, via a morphism that relates many-to-one with many-to-many matchings in a natural way. Finally, we present the lattice operations in the many-to-many model with substitutable choice functions on both sides. |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2407.21198 |
| By: | Yasunori Okumura |
| Abstract: | This study examines strategic issues in fair rank-minimizing mechanisms, which choose an assignment that minimizes the average rank of object types to which agents are assigned and satisfy a fairness property called equal treatment of equals. As one of these fair mechanisms, the uniform rank-minimizing mechanism is considered. We particularly focus on the case where agents can refuse their assignment and obtain the outside option instead. Without the refusal option, if the uniform rank-minimizing mechanism is used, truth-telling is not strategically dominated by any strategies. However, if agents have the option, then an outside option demotion strategy -- revealing all object types as acceptable without changing the ranking of truly acceptable ones -- strategically dominates truth-telling. Moreover, we show that adopting this strategy may lead to inefficient assignments. To counter this, we propose the modified uniform rank-minimizing mechanism, though it may lead agents to strategically reduce the number of acceptable types. |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2408.01673 |
| By: | Jean-Michel Benkert; Armin Schmutzler |
| Abstract: | This paper investigates the value of recommendations for disseminating economic information, with a focus on frictions resulting from preference heterogeneity. We consider Bayesian expected-payoff maximizers who receive non-strategic recommendations by other consumers. The paper provides conditions under which different consumer types accept these recommendations. Moreover, we assess the overall value of a recommendation system and the determinants of that value. Our analysis highlights the importance of disentangling objective information from subjective preferences when designing value-maximizing recommendation systems. |
| Keywords: | Recommendations, preference heterogeneity, optimal design |
| JEL: | D02 D47 D83 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:zur:econwp:448 |
| By: | Adam Graham-Squire; Matthew I. Jones; David McCune |
| Abstract: | In real-world elections where voters cast preference ballots, voters often provide only a partial ranking of the candidates. Despite this empirical reality, prior social choice literature frequently analyzes fairness criteria under the assumption that all voters provide a complete ranking of the candidates. We introduce new fairness criteria for multiwinner ranked-choice elections concerning truncated ballots. In particular, we define notions of the independence of losing voters blocs and independence of winning voters blocs, which state that the winning committee of an election should not change when we remove partial ballots which rank only losing candidates, and the winning committee should change in reasonable ways when removing ballots which rank only winning candidates. Of the voting methods we analyze, the Chamberlin-Courant rule performs the best with respect to these criteria, the expanding approvals rule performs the worst, and the method of single transferable vote falls in between. |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2408.03926 |
| By: | Anindya Bhattacharya; Francesco Ciardiello |
| Abstract: | In this paper we consider situations of (multidimensional) spatial majority voting. We explore some possibilities such that under some regularity assumptions usual in this literature, if the number of voters changes from being odd to even then some results may change somewhat drastically. For example, we show that with an even number of voters if the core of the voting situation is singleton (and the core element is in the interior of the policy space) then the core is never externally stable (i.e., the situation has no Condorcet winner). This is sharply opposite to what happens with an odd number of voters: in that case, under identical assumptions on the primitives, it is well known that if the core of the voting situation is non-empty then the singleton core is always externally stable: i.e., the core element is the Condorcet winner majority-dominating every other policy vector. We find similar strikingly contrasting results with respect to the coincidence of the core and the (Gillies) uncovered set and the size and geometry of the (Gillies) uncovered set. These results rectify some erroneous statements found in this literature. |
| Keywords: | Spatial Voting Situations; Core; Condorcet winner; Uncovered set. |
| JEL: | D71 C71 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:yor:yorken:24/03 |
| By: | Jens Gudmundsson (University of Copenhagen); Jens Leth Hougaard (University of Copenhagen); Erik Ansink (Vrije Universiteit Amsterdam) |
| Abstract: | We take a decentralized approach to regulating environmental pollution in set- tings where each agent’s pollution possibly affects all others. There is no central agency to enforce pollution abatement or coordinate monetary transfers. Moreover, agents possess private information, which precludes deducing efficient abatement in general. We propose to implement transfer schemes through smart contracts to allow beneficiaries to compensate for abatement. We characterize all schemes that induce efficient abatement in unique dominant-strategy equilibrium. Moreover, appealing to classical fairness tenets, we pin down the “beneficiaries-compensates principle†. Supporting this principle through smart contracts provides a promising step towards decentralized coordination on environmental issues. |
| Keywords: | Pollution, Decentralization, Smart contracts, Beneficiaries-compensates principle |
| JEL: | C72 D62 Q52 H23 |
| Date: | 2024–05–23 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20240035 |
| By: | Tejas Pagare; Avishek Ghosh |
| Abstract: | Online learning in a decentralized two-sided matching markets, where the demand-side (players) compete to match with the supply-side (arms), has received substantial interest because it abstracts out the complex interactions in matching platforms (e.g. UpWork, TaskRabbit). However, past works assume that each arm knows their preference ranking over the players (one-sided learning), and each player aim to learn the preference over arms through successive interactions. Moreover, several (impractical) assumptions on the problem are usually made for theoretical tractability such as broadcast player-arm match Liu et al. (2020; 2021); Kong & Li (2023) or serial dictatorship Sankararaman et al. (2021); Basu et al. (2021); Ghosh et al. (2022). In this paper, we study a decentralized two-sided matching market, where we do not assume that the preference ranking over players are known to the arms apriori. Furthermore, we do not have any structural assumptions on the problem. We propose a multi-phase explore-then-commit type algorithm namely epoch-based CA-ETC (collision avoidance explore then commit) (\texttt{CA-ETC} in short) for this problem that does not require any communication across agents (players and arms) and hence decentralized. We show that for the initial epoch length of $T_{\circ}$ and subsequent epoch-lengths of $2^{l/\gamma} T_{\circ}$ (for the $l-$th epoch with $\gamma \in (0, 1)$ as an input parameter to the algorithm), \texttt{CA-ETC} yields a player optimal expected regret of $\mathcal{O}\left(T_{\circ} (\frac{K \log T}{T_{\circ} \Delta^2})^{1/\gamma} + T_{\circ} (\frac{T}{T_{\circ}})^\gamma\right)$ for the $i$-th player, where $T$ is the learning horizon, $K$ is the number of arms and $\Delta$ is an appropriately defined problem gap. Furthermore, we propose a blackboard communication based baseline achieving logarithmic regret in $T$. |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2408.08690 |
| By: | Shuo Zhang; Peter J. Kuhn |
| Abstract: | We audit the job recommender algorithms used by four Chinese job boards by creating fictitious applicant profiles that differ only in their gender. Jobs recommended uniquely to the male and female profiles in a pair differ modestly in their observed characteristics, with female jobs advertising lower wages, requesting less experience, and coming from smaller firms. Much larger differences are observed in these ads’ language, however, with women’s jobs containing 0.58 standard deviations more stereotypically female content than men’s. Using our experimental design, we can conclude that these gender gaps are generated primarily by content-based matching algorithms that use the worker’s declared gender as a direct input. Action-based processes like item-based collaborative filtering and recruiters’ reactions to workers’ resumes contribute little to these gaps. |
| JEL: | C99 J16 J71 M50 O33 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32889 |
| By: | Hans Gersbach; Manvir Schneider; Parnian Shahkar |
| Abstract: | This paper investigates which alternative benefits from vote delegation in binary collective decisions within blockchains. We begin by examining two extreme cases of voting weight distributions: Equal-Weight (EW), where each voter has equal voting weight, and Dominant-Weight (DW), where a single voter holds a majority of the voting weights before any delegation occurs. We show that vote delegation tends to benefit the ex-ante minority under EW, i.e., the alternative with a lower initial probability of winning. The converse holds under DW distribution. Through numerical simulations, we extend our findings to arbitrary voting weight distributions, showing that vote delegation benefits the ex-ante majority when it leads to a more balanced distribution of voting weights. Finally, in large communities where all agents have equal voting weight, vote delegation has a negligible impact on the outcome. These insights provide practical guidance for governance decisions in blockchains. |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2408.05410 |
| By: | Francesco Passarelli; Robert W. Staiger |
| Abstract: | The legitimacy of the world trading system is under growing attack, as challenges to its conformity with norms of fairness and social justice are increasingly voiced by citizens and their governments around the world. Taking a novel "bottom up" approach to concerns for fairness, we show how these concerns can be formalized in a general and tractable way, and we describe their implications for the purpose and design of a trade agreement. Our findings suggest that as currently designed, the GATT/WTO is well-equipped to allow its member governments to address many, but not all, of the possible trade-related fairness concerns of their citizens. More generally, our findings point to a detailed understanding of real-world perceptions of fairness in trade policy as the key input into the appropriate design of fair trade agreements. |
| JEL: | F11 F13 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32853 |
| By: | Geßner, Daniel |
| Abstract: | A lot of countries have recently published updated hydrogen strategies, often including more ambitious targets for hydrogen production. In parallel, accompanying ramp-up mechanisms are increasingly coming into focus with the first ones already being released. However, these proposals usually translate mechanisms from renewable energy (RE) policy without considering the specific uncertainties, spillovers, and externalities of integrating hydrogen electrolysis into electricity grids. This article details how different aspects of a policy can address the specific issues, namely funding, risk-mitigation, and the complex relation with electricity markets. It shows that, compared to RE policy, subsidies need to emphasize the input side more strongly as price risks and intermittency from electricity markets are more prominent than from hydrogen markets. Also, it proposes a targeted mechanism to capture the positive externality of mitigating excess electricity in the grid while keeping investment security high. Economic policy should consider such approaches before massively scaling support and avoid the design shortcomings experienced with early RE policy. |
| Keywords: | hydrogen policy, renewable energy policy, support mechanisms, contracts for difference |
| JEL: | O25 O38 Q42 Q48 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:wuewep:301868 |
| By: | Gabriele Camera; Alessandro Gioffré |
| Abstract: | The literature on cooperation in infinitely repeated Prisoner’s Dilemmas covers the extreme opposites of the matching spectrum: partners, a player’s opponent never changes, and strangers, a player’s opponent randomly changes in every period. Here, we extend the analysis to settings where the opponent changes, but not in every period. In these temporary partnerships, players can deter some deviations by directly sanctioning their partner. Hence, relaxing the extreme assumption of one-period matchings can support some cooperation also off equilibrium because a class of strategies emerges that are less extreme than the typical “grim†strategy. We establish conditions supporting full cooperation as a subgame perfect equilibrium under a social norm that complements direct sanctions with a cyclical community sanction. Though this strategy less effectively incentivizes cooperation, it more effectively incentivizes punishment after a deviation, hence, can be preferable to the grim strategy under certain conditions. |
| Keywords: | prisoner's dilemma, random matching, social norms. |
| JEL: | E4 E5 C7 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:frz:wpaper:wp2024_15.rdf |
| By: | Megan R. Bailey; David P. Brown; Erica Myers; Blake C. Shaffer; Frank A. Wolak |
| Abstract: | The growth of electric vehicles (EVs) raises new challenges for electricity systems. We implement a field experiment to assess the effect of time-of-use (TOU) pricing and managed charging on EV charging behavior. We find that while TOU pricing is effective at shifting EV charging into off-peak hours, it unintentionally induces new and larger “shadow peaks” of simultaneous charging. These shadow peaks lead to greater exceedance of local capacity constraints and advance the need for distribution network upgrades. In contrast, centrally managed charging solves the coordination problem, reducing transformer capacity requirements, and is well-tolerated by consumers in our setting. |
| JEL: | L94 Q41 R40 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32886 |