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on Economic Design |
| By: | Lawrence W. Abrams |
| Abstract: | The exchange of rebates for formulary positions is conceptualized as a multi-round combinatorial position auction. This paper develops a linear assignment model of the winners' determination equation of this auction where the bases are net unit prices after unit rebates and expected demand. |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2502.00970 |
| By: | Lauber, Arne; March, Christoph; Sahm, Marco |
| Abstract: | We conduct a laboratory experiment to compare the fairness and intensity of round-robin tournaments with three symmetric players, a single prize, and two alternative match formats. Matches are either organized as lottery contests or all-pay auctions. Whereas we confirm the theoretical prediction that tournaments are less fair if matches are organized as all-pay auctions, we reject the predicted difference in tournament intensity. Moreover, the reason for the reduced fairness of tournaments based on all-pay auctions is also at odds with theory. In the lab, such tournaments heavily disfavor (in payoff-terms) the player acting in the final two matches. The reason is the substantially weaker than predicted discouragement of this player when competing first against the loser of the first match. Subjects try to exploit a perceived negative psychological momentum in such situations but only manage to end up in a dissipation trap: an effort-intense, final-like last match which significantly reduces their payoffs. |
| Keywords: | Sequential Round-Robin Tournament, Lottery Contest, All-Pay Auction, Laboratory Experiment, Discouragement Effect, Dissipation Trap |
| JEL: | C72 C91 D72 Z20 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bamber:311830 |
| By: | Fang, Yuhan; Kawaguchi, Kohei |
| Abstract: | To protect users' online privacy, many Internet browsers prohibit advertisers from tracking user information or targeting potential consumers. Advertisers are concerned that such retargeting prohibition policies could lead to a reduction in ads' click probability, thereby affecting their bidding valuations. Bid data from a demand-side platform (DSP) reveals that the bid valuations for non-retargeted impressions are more than 60% lower than those for retargeted ones. However, since the retargeting status is only observed for bids winning the internal auction at the DSP, we need to correct the selection bias. To address this, we develop an internal auction model and structurally estimate the advertisers' CPC and CTR. Counterfactual simulations using the estimate indicate the expected bid reduces by 38.10% on average if retargeting is prohibited compared to the scenario with the industry-average retargeting prevalence. |
| Date: | 2025–02–01 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:j34t8_v1 |
| By: | Adam Dominiak; Matthew Kovach; Gerelt Tserenjigmid |
| Abstract: | We study belief revision when information is represented by a set of probability distributions, or general information. General information extends the standard event notion while including qualitative information (A is more likely than B), interval information (A has a ten-to-twenty percent chance), and more. We behaviorally characterize Inertial Updating: the decision maker's posterior is of minimal subjective distance from her prior, given the information constraint. Further, we introduce and characterize a notion of Bayesian updating for general information and show that Bayesian agents may disagree. We also behaviorally characterize f-divergences, the class of distances consistent with Bayesian updating. |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2502.00958 |
| By: | Pongou, Roland; Sidie, Ghislain Junior |
| Abstract: | Ranked voting is an election format in which each voter ranks candidates on a ballot, and individual rankings are aggregated using a general rule to produce a social ranking. This paper proposes a non-cooperative model of this electoral system. The setting allows for unequal voting rights, abstention, and social incomparability of candidates, and each voter's utility is measured by how close his or her true preferences are to the social ranking. The analysis uncovers three main findings. First, it proves the existence of a pure strategy Nash equilibrium. Second, it shows that truthtelling is always a Nash equilibrium regardless of the voting rule and the structure of individual preferences. Third, under mild conditions, truthtelling is Pareto-efficient when voters have strict preferences. Extending the analysis to majoritarian elections with costly voluntary participation shows that truthtelling is an equilibrium if and only if the costs of participation are not too high and the election is tight. The findings have implications for the design of ranked voting systems that are compatible with truthtelling and efficiency while allowing unrestricted freedom in the choice of the voting rule. A reinterpretation of the model in the context of intrapersonal bargaining, where the decision-maker has multiple rational selves, has implications for the occurrence of cyclic individual choices that reflect stable and efficient behavioral patterns. |
| Date: | 2024–07–02 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10837 |