nep-mic New Economics Papers
on Microeconomics
Issue of 2014‒04‒05
eight papers chosen by
Jing-Yuan Chiou
National Taipei University

  1. Advances in Auctions By Todd R. Kaplan; Shmuel Zamir
  2. Collective Reputation and the Dynamics of Statistical Discrimination By Kim, Young-Chul; Loury, Glenn
  3. Playing 'Hard to Get': An Economic Rationale for Crowding Out of Intrinsically Motivated Behavior By Schnedler, Wendelin; Vanberg, Christoph
  4. The Economics of the Gift By David Reinstein;
  5. Constrained Interactions and Social Coordination By Mathias Staudigl; Simon Weidenholzer
  6. Sociability, Altruism and Subjective Well-Being By Leonardo Becchetti; Nazaria Solferino; M. Elisabetta Tessitore
  7. Economics and Genocide: Choices and Consequences By Brauer, Jurgen; Anderton, Charles H.
  8. Local Interactions and Switching Costs By Ge Jiang; Simon Weidenholzer

  1. By: Todd R. Kaplan (Department of Economics, University of Exeter and University of Haifa); Shmuel Zamir (Department of Economics, University of Exeter and the Center for the Study of Rationality, The Henrew University of Jerusalem, Israel)
    Abstract: As a selling mechanism, auctions have acquired a central position in the free market economy all over the globe. This development has deepened, broadened, and expanded the theory of auctions in new directions. This chapter is intended as a selective update of some of the developments and applications of auction theory in the two decades since Wilson (1992) wrote the previous Handbook chapter on this topic.
    Keywords: Auctions, Private-Value Auctions, Multi-Unit Auctions, All-Pay Auctions, Resale, Position Auctions, Dynamic Auctions, Spectrum Auctions; Monotone Equilibrium.
    JEL: D44 D82 C72 H57
    Date: 2014
  2. By: Kim, Young-Chul; Loury, Glenn
    Abstract: Economists have developed theoretical models identifying self-fulfilling expectations as an important source of statistical discrimination in labor markets (Arrow, 1973). The static models dominating the literature of statistical discrimination, however, may leave the false impression that a bad equilibrium is as fragile as a "bubble" and can burst at any moment when expectations flip. Such models thus understate the adversity that disadvantaged groups face in seeking to escape bad equilibria. By developing a dynamic version of a statistical discrimination model based on Coate and Loury's (1993) original setup, we clarify the limits of expectations-related fragility. We show that when a group is strongly affected by negative reputational externalities, the group cannot escape a low skill investment trap, regardless of how expectations are formed. By examining the evolution of stereotypes in this way, we also provide new insights into egalitarian policies.
    Keywords: Statistical Discrimination, Collective Reputation, Reputation Trap, Forward-Looking Behavior
    JEL: D63 D82 J15 J7
    Date: 2012–08–12
  3. By: Schnedler, Wendelin; Vanberg, Christoph
    Abstract: Anecdotal, empirical, and experimental evidence suggests that offering extrinsic rewards for certain activities can reduce people's willingness to engage in those activities voluntarily. We propose a simple rationale for this 'crowding out' phenomenon, using standard economic arguments. The central idea is that the potential to earn rewards in return for an activity may create incentives to play 'hard to get' in an effort to increase those rewards. We discuss two specic contexts in which such incentives arise. In the first, refraining from the activity causes others to attach higher value to it because it becomes scarce. In the second, restraint serves to conceal the actor's intrinsic motivation. In both cases, not engaging in the activity causes others to offer larger rewards. Our theory yields the testable prediction that such effects are likely to occur when a motivated actor enjoys a sufficient degree of 'market power.'
    Keywords: intrinsic motivation; crowding out; behavioral economics; market power; hidden information
    Date: 2014–03–21
  4. By: David Reinstein;
    Abstract: This essay broadly considers gifts, giving and gift economies, modern and pre-modern, from a mainstream (and behavioural) economics perspective.
    Date: 2014–03–01
  5. By: Mathias Staudigl; Simon Weidenholzer
    Abstract: We consider a co-evolutionary model of social coordination and network formation where agents may decide on an action in a 2x2 - coordination game and on whom to establish costly links to. We find that a payoff domination convention is selected for a wider parameter range when agents may only support a limited number of links as compared to a scenario where agents are not constrained in their linking choice. The main reason behind this result is that whenever there is a small cluster of agents playing the efficient strategy other players want to link up to those layers and choose the efficient action.
    Date: 2014–02–01
  6. By: Leonardo Becchetti (University of Rome "Tor Vergata"); Nazaria Solferino (University of Rome "Tor Vergata"); M. Elisabetta Tessitore (University of Rome "Tor Vergata")
    Abstract: The choice between performing a task today or procrastinating it until tomorrow or later is the building block of any economic action. In our paper we aim to enrich the theoretical literature on procrastination by outlining conditions for bad and good procrastination and looking at the special cases of pathological procrastination, the curse of perfec- tionism and productive procrastination. We discuss how our theoreti- cal framework may be applied to explain different types of (education, investment and production) microeconomic decisions and which policy measures can be taken to avoid bad procrastination.
    Keywords: Time-Inconsistent Preferences, Optimal Effort, Procras- tination, Intertemporal Choice
    JEL: A12 D03 D11 D74 D91
    Date: 2014–03
  7. By: Brauer, Jurgen; Anderton, Charles H.
    Abstract: Professional economists rarely write on questions of genocide. This surprises because a workhorse tool of the economics discipline concerns the analysis of behavior that takes place under constraints. All parties in genocide—perpetrators, victims, and third parties—face cost and resource constraints subject to which they seek to achieve their objectives, be it killing, surviving, or intervening. This essay characterizes and illustrates economic thinking about objectives, costs, and resources for each of the three groups. There is potentially much that economics can contribute to genocide studies and, vice versa, much that genocide scholars may learn from welcoming an economic perspective.
    Keywords: Genocide, economics, constrained optimization, rational choice
    JEL: A12 D00 D74 H87
    Date: 2014–04–02
  8. By: Ge Jiang; Simon Weidenholzer
    Abstract: We study the impact of swtiching costs on the long run outcome in 2x2 conordination games played in the circular city model oflocal interactions. For low levels of switiching costs the predictions are in line with the previous literature and the risk dominant convention is the unique long run equilibrium. For intermediate levels of switching costs the set oflong run equilibria still contain the risk dominant convention but may also contain conventions that are not risk dominant. For high levels of switching costs also non-monomorphic states will be included in the set of long run equilibria. Finally, we reconcile our result with a recent paper by Norman (2009) by considering the case of large interaction neighborhoods in large populations.
    Date: 2014–01–11

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