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on Economic Design |
| By: | Yannai A. Gonczarowski; Ori Heffetz; Guy Ishai; Clayton Thomas |
| Abstract: | We conduct an incentivized lab experiment to test participants' ability to understand the DA matching mechanism and the strategyproofness property, conveyed in different ways. We find that while many participants can (using a novel GUI) learn DA's mechanics and calculate its outcomes, such understanding does not imply understanding of strategyproofness (as measured by specially designed tests). However, a novel menu description of strategyproofness conveys this property significantly better than other treatments. While behavioral effects are small on average, participants with levels of strategyproofness understanding above a certain threshold play the classical dominant strategy at very high rates. |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2409.18166 |
| By: | Carmelo Rodríguez-Ã lvarez (Instituto Complutense de Análisis Económico (ICAE), Universidad Complutense de Madrid (Spain).) |
| Abstract: | We examine social choice correspondences (SCCs) -mappings from preference profiles to sets of alternatives- that satisfy strategy-proofness and unanimity when individuals are endowed with single-peaked preferences over alternatives, preferences over sets are consistent with Expected Utility Theory, uniform prior probabilities, and Bayesian Updating. Leveraging the relation between SCCs and probabilistic decision schemes -mappings from preference profiles to lotteries over alternatives- we extend the results by Ingalagavi and Sadhukhan (2023, Journal of Mathematical Economics 109, 102912). In one-dimensional spaces of alternatives, only the union of two single-valued strategy-proof SCCs satisfy strategy-proofness and unanimity. In multi-dimensional convex spaces of alternatives, only unions of up to two dictatorships satisfy both properties. |
| Keywords: | Strategy-Proofness; Single-Peaked Preferences; Social Choice Correspondences. |
| JEL: | C71 C78 D71 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ucm:doicae:2402 |
| By: | Ritesh Jain; Michele Lombardi; Antonio Penta |
| Abstract: | We put forward a notion of implementation for Social Choice Functions (SCF) that is robust with respect to the solution concept used to model agents’ strategic interaction. Formally, we define implementation in Interim Correlated Rationalizability and its Refinements (ICRR implementation) as implementation in Interim Correlated Rationalizability (ICR), with the extra requirement that it be achieved by a mechanism in which all selections from ICR have the best-reply property. We provide a tight characterization in terms of a novel notion of monotonicity, Iterative Interim Monotonicity (IIM). Our condition relates the possibility of ICRR-implementation with a specific way in which the SCF is constrained by agents’ preference reversals. We provide several alternative formulations of IIM, that clarify both its connection with various parts of the literature (such as Oury and Tercieux (2012)’s Interim Rationalizable Monotonicity, and others), and the source of IIM’s ability to overcome several limitations of the previous conditions in the literature. |
| JEL: | C79 D82 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:bge:wpaper:1461 |
| By: | Dr. Enzo Rossi |
| Abstract: | The Swiss National Bank (SNB) has conducted sealed-bid, uniform-price auctions for allocating T-bills on behalf of the Treasury since July 1979. This study describes the development of auction rules and summarises the results in terms of bidders' behaviour and auction outcomes. From July 1979 to December 2020, the SNB held 1, 634 auctions, all well covered. T-bills have been a stable and reliable source of funding for the treasury through which it borrowed CHF 1.121 trillion. There is clear evidence of a marked increase in the demand for T-bills by private investors following the introduction of noncompetitive bids, sustained broad-based interest despite a steady decline in yields since the 1990s, an extraordinary demand boost after the global financial and European sovereign debt crises, and net revenue from T-bill borrowing of CHF 502 million. |
| Keywords: | Treasury bills, Treasury auctions, Uniform-price auction, Negative yields, Safe assets, Public debt management |
| JEL: | D44 G12 G20 H63 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:snb:snbecs:2024-12 |
| By: | Marco Bornstein; Zora Che; Suhas Julapalli; Abdirisak Mohamed; Amrit Singh Bedi; Furong Huang |
| Abstract: | In an era of "moving fast and breaking things", regulators have moved slowly to pick up the safety, bias, and legal pieces left in the wake of broken Artificial Intelligence (AI) deployment. Since AI models, such as large language models, are able to push misinformation and stoke division within our society, it is imperative for regulators to employ a framework that mitigates these dangers and ensures user safety. While there is much-warranted discussion about how to address the safety, bias, and legal woes of state-of-the-art AI models, the number of rigorous and realistic mathematical frameworks to regulate AI safety is lacking. We take on this challenge, proposing an auction-based regulatory mechanism that provably incentivizes model-building agents (i) to deploy safer models and (ii) to participate in the regulation process. We provably guarantee, via derived Nash Equilibria, that each participating agent's best strategy is to submit a model safer than a prescribed minimum-safety threshold. Empirical results show that our regulatory auction boosts safety and participation rates by 20% and 15% respectively, outperforming simple regulatory frameworks that merely enforce minimum safety standards. |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2410.01871 |
| By: | Stephen F. Hamilton (Department of Economics, California Polytechnic State University); Benjamin Ouvrard (Grenoble Applied Economics Laboratory) |
| Abstract: | Fair pricing standards are used in various industries, encompassing fair trade, labor practices, and state-regulated pricing. We demonstrate that fair pricing can serve as a vertical restraint by a dominant manufacturer on its retailers to fully coordinating prices in a multi-product distribution channel with fair priced and conventional goods. We identify buyer market power by the manufacturer in the upstream market as a novel role for a manufacturer to impose a vertical restraint on retailers in the downstream market, and characterize the vertical restraint that maximizes collective rents in terms of demand-side and supply-side diversion ratios. |
| Keywords: | Fair pricing; vertical restraint; buyer market power |
| JEL: | L13 L14 L42 D43 |
| Date: | 2023 |
| URL: | https://d.repec.org/n?u=RePEc:cpl:wpaper:2402 |
| By: | Barth, Andreas; Mansouri, Sasan; Wöbbeking, Fabian |
| JEL: | G14 G18 D82 C83 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:vfsc24:302384 |
| By: | Jan Knoepfle |
| Abstract: | This paper studies information transmission from multiple senders who compete for the attention of a decision maker. Each sender is partially informed about the state of the world and decides how to reveal her information over time to maximise attention. A decision maker wants to learn about the state but faces an attention cost. We derive a condition on the informational environment and the decision problem that guarantees that all information from the senders can be transmitted to the decision maker in equilibrium. A simple class of information processes implements full transmission across general environments. The attention each sender receives is proportional to the residual value of her information. In the case of conditionally iid-informed senders, in the limit as the number of senders grows large, the receiver learns the state exactly and immediately (at no attention cost). |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2409.18595 |