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on Microeconomics |
| By: | Luca Colombo; Gianluca Femminis; Alessandro Pavan |
| Abstract: | We study information acquisition in a exible framework with strategic complementarity or substitutability in actions and a rich set of externalities that are responsible for possible wedges between the equilibrium and the efficient acquisition of information. First, we relate the (in)efficiency in the acquisition of information to the (in)efficiency in the use of information and explain why efficiency in the use does not guarantee efficiency in the acquisition. Next, we show how the acquisition of private information affects the social value of public information (i.e., the comparative statics of equilibrium welfare with respect to the quality of public information). Finally, we illustrate the implications of our results in a few applications that include beauty contests, monetary economies with price-setting complementarities, and economies with negative production externalities. |
| Keywords: | endogenous information, strategic complementarity/substitutability, externalities, efficiency, welfare JEL Classification Numbers: C72, D62, D83, E50. |
| Date: | 2012–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:nwu:cmsems:1554&r=mic |
| By: | Nick Netzer; Florian Scheuer |
| Abstract: | We construct a fully specified extensive form game that captures competitive markets with adverse selection. In particular, it allows firms to offer any finite set of contracts, so that cross-subsidization is not ruled out. Moreover, firms can withdraw from the market after initial contract offers have been observed. We show that a subgame perfect equilibrium always exists and that, in fact, when withdrawal is costless, the set of subgame perfect equilibrium outcomes may correspond to the entire set of feasible contracts. We then focus on robust equilibria that exist both when withdrawal costs are zero and when they are arbitrarily small but strictly positive. We show that the Miyazaki-Wilson contracts are the unique robust equilibrium outcome of our game. This outcome is always constrained efficient and involves cross-subsidization from low to high risk agents that is increasing in the share of low risks in the population under weak conditions on risk preferences. |
| JEL: | C73 D02 D82 D86 G22 H1 L1 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18471&r=mic |
| By: | Mohamed Belhaj (Centrale Marseille (Aix-Marseille School of Economics), CNRS & EHESS); Yann Bramoullé (Department of Economics, Université Laval and Aix-Marseille University (Aix-Marseille School of Economics), CNRS & EHESS); Frédéric Deroian (Department of Economics, Université Laval and Aix-Marseille University (Aix-Marseille School of Economics), CNRS & EHESS) |
| Abstract: | We study network games with linear best-replies and strategic complementarities. We assume that actions are continuous but bounded from above. We show that there is always a unique equilibrium. We find that two key features of these games under small network effects may not hold when network effects are large. Action may not be aligned with network centrality and the interdependence between agents' actions may be broken. |
| Keywords: | Network Games, Strategic Complementarities, Supermodular Games, Bonacich Centrality. |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:aim:wpaimx:1225&r=mic |
| By: | Domenico Colucci (Dipartimento di Matematica per le Decisioni - Università degli Studi di Firenze); Nicola Doni (Dipartimento di Scienze dell'Economia - Università degli Studi di Firenze); Vincenzo Valori (Dipartimento di Matematica per le Decisioni - Università degli Studi di Firenze) |
| Abstract: | We study a model of procurement auctions in which information policies can be used to treat two heterogeneous suppliers asymmetrically. The buyer is shown to be better off revealing information about her preferences to the weak supplier only, when there is a sufficient cost difference between the weak and the strong. Conversely, when the two competitors have similar cost structures, for the buyer it is best to disclose her preferences publicly. |
| Keywords: | procurement, information revelation, discriminatory policy, asymmetric auctions |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:flo:wpaper:2012-06&r=mic |
| By: | Domenico Colucci (Dipartimento di Matematica per le Decisioni - Università degli Studi di Firenze); Nicola Doni (Dipartimento di Scienze dell'Economia - Università degli Studi di Firenze); Vincenzo Valori (Dipartimento di Matematica per le Decisioni - Università degli Studi di Firenze) |
| Abstract: | Procurement auctions often involve quality considerations as a determinant of the final outcome. When qualities are the procurer’s private information then various information policies may be used to affect the expected outcome. For auctions with two cost heterogeneous suppliers, this work defines a notion of duality between pairs of policies, and shows that dual policies are revenue equivalent. |
| Keywords: | procurement, information revelation, discriminatory policy, asymmetric auctions |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:flo:wpaper:2012-07&r=mic |
| By: | Ruijgrok, Matthijs |
| Abstract: | A double auction game with an infinite number of buyers and sellers is introduced. All sellers posses one unit of a good, all buyers desire to buy one unit. Each seller and each buyer has a private valuation of the good. The distribution of the valuations define supply and demand functions. One unit of the good is auctioned. At successive, discrete time instances, a player is randomly selected to make a bid (buyer) or an ask (seller). When the maximum of the bids becomes larger than the minimum of the asks, a transaction occurs and the auction is closed. The players have to choose the value of their bid or ask before the auction starts and use this value when they are selected. Assuming that the supply and demand functions are known, expected profits as functions of the strategies are derived, as well as expected transaction prices. It is shown that for linear supply and demand functions, there exists at most one Bayesian Nash equilibrium. Competitive behaviour is not an equilibrium of the game. For linear supply and demand functions, the sum of the expected profit of the sellers and the buyers is the same for the Bayesian Nash equilibrium and the market where players behave competitively. Connections are made with the ZI-C traders model and the $k$-double auction. |
| Keywords: | Continuous double auction; supply and demand; Bayesian Nash equilibrium; ZI-C model; k-double auction |
| JEL: | D44 C72 |
| Date: | 2012–10–19 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:42086&r=mic |
| By: | Pierpaolo Battigalli; Gary Charness; Martin Dufwenberg |
| Abstract: | Gneezy (2005) reports evidence indicating that in some settings people do not like to lie. In many other situations people do not suffer when they lie. We show that the theory of simple guilt can accommodate these observations. |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:igi:igierp:457&r=mic |
| By: | Maxime Agbo; Marc Santugini; Jonathan W. Williams |
| Abstract: | We study second-degree price discrimination for a congestible network good. We show that the seller does not always provide distinct contracts (i.e., it is not always optimal to price discriminate) and that it is more likely for the low-valuation buyer to be excluded. Because of the network externality through congestion, no buyer receives an efficient allocation. In particular, the high-valuation buyer might be offered a higher or a lower quality (relative to the first-degree price discrimination offer). Moreover, with congestion and for values of the parameters for which all types are serviced, consumer surplus under second-degree price discrimination may be greater than consumer surplus under no price discrimination. |
| Keywords: | Congestion, Network, Price Discrimination |
| JEL: | D40 D62 D86 L14 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:lacicr:1239&r=mic |