nep-mic New Economics Papers
on Microeconomics
Issue of 2013‒03‒09
four papers chosen by
Jing-Yuan Chiou
IMT Lucca Institute for Advanced Studies

  1. Conditional Expected Utility By Massimiliano Amarante
  2. Every Choice Function is Backwards-Induction Rationalizable By Walter Bossert; Yves Sprumont
  3. Axiomatizations of symmetrically weighted solutions By Kleppe, John; Reijnierse, Hans; Sudhölter, Peter
  4. A Formal Behavioral Model of Firm Boundaries: Why Does Authority Relation Mitigate Ex Post Adaptation Problems? By Yusuke Mori;

  1. By: Massimiliano Amarante
    Abstract: Let E be a class of event. Conditionally Expected Utility decision makers are decision makers whose conditional preferences %E, E 2 E, satisfy the axioms of Subjective Expected Utility theory (SEU). We extend the notion of unconditional preference that is conditionally EU to unconditional preferences that are not necessarily SEU. We give a representation theorem for a class of such preferences, and show that they are Invariant Bi-separable in the sense of Ghirardato et al.[7]. Then, we consider the special case where the unconditional preference is itself SEU, and compare our results with those of Fishburn [6].
    Date: 2013
  2. By: Walter Bossert; Yves Sprumont
    Abstract: A choice function is backwards-induction rationalizable if there exists a finite perfect-information extensive-form game such that, for each subset of alternatives, the backwards-induction outcome of the restriction of the game to that subset of alternatives coincides with the choice from that subset. We prove that every choice function is backwards-induction rationalizable.
    JEL: C72 D70
    Date: 2013
  3. By: Kleppe, John (CentER and Department of Econometrics and Operations Research); Reijnierse, Hans (CentER and Department of Econometrics and Operations Research); Sudhölter, Peter (Department of Business and Economics)
    Abstract: If the excesses of the coalitions in a transferable utility game are weighted, then we show that the arising weighted modifications of the well-known (pre)nucleolus and (pre)kernel satisfy the equal treatment property if and only if the weight system is symmetric in the sense that the weight of a subcoalition of a grand coalition may only depend on the grand coalition and the size of the subcoalition. Hence, the symmetrically weighted versions of the (pre)nucleolus and the (pre)kernel are symmetric, i.e., invariant under symmetries of a game. They may, however, violate anonymity, i.e., they may depend on the names of the players. E.g., a symmetrically weighted nucleolus may assign the classical nucleolus to one game and the per capita nucleolus to another game. We generalize Sobolev's axiomatization of the prenucleolus and its modification for the nucleolus as well as Peleg's axiomatization of the prekernel to the symmetrically weighted versions. Only the reduced games have to be replaced by suitably modified reduced games whose definitions may depend on the weight system. Moreover, it is shown that a solution may only satisfy the mentioned sets of modified axioms if the weight system is symmetric.
    Keywords: TU game; nucleolus; kernel
    JEL: C71
    Date: 2013–02–01
  4. By: Yusuke Mori;
    Abstract: We explore why authority within firms helps trading parties immediately settle ex post adaptation problems despite the possibility of a subordinate's disobedience to the orders of his boss. By employing three crucial behavioral assumptions (reference-dependent preference, self-serving bias, and shading), we point out that the choice of governance structure affects trading parties' expectations about outcome of ex post adaptations and show that a subordinate is likely to obey orders of his boss because he is expected to do so. Nevertheless, our study also points out that such a positive aspect of authority comes with subordinate's psychological disutility.
    Date: 2013–01

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