
on Microeconomics 
By:  David Kelsey (Department of Economics, University of Exeter); Tigran Melkonyan (University of Warwick) 
Abstract:  The paper examines the e¤ect of ambiguity on contests where multiple parties expend resources to win a prize. We develop a model where contenders perceive ambiguity about their opponents’ strategies and determine how perceptions of ambiguity and attitudes to ambiguity affect equilibrium choice. The paper also investigates how equilibrium under ambiguity is related to behavior where contenders have expected utility preferences. Our model can explain experimental results such as overbidding and overspreading relative to Nash predictions. 
Keywords:  Ambiguity, Contests, Choquet expected utility, neoadditive preferences. 
JEL:  D81 
Date:  2014 
URL:  http://d.repec.org/n?u=RePEc:exe:wpaper:1411&r=mic 
By:  S. CerreiaVioglio; F. Maccheroni; M. Marinacci; A. Rustichini 
Abstract:  Maccheroni, Marinacci, and Rustichini [17], in an AnscombeAumann framework, axiomatically characterize preferences that are represented by the variational utility functional V (f) = min p2 Z u (f) dp + c (p) 8f 2 F; where u is a utility function on outcomes and c is an index of uncertainty aversion. In this paper, for a given variational preference, we study the class C of functions c that represent V . Inter alia, we show that this set is fully characterized by a minimal and a maximal element, c? and d?. The function c?, also identi?ed by Maccheroni, Marinacci, and Rustichini [17], fully characterizes the decision maker's attitude toward uncertainty, while the novel function d? characterizes the uncertainty perceived by the decision maker. 
Date:  2014 
URL:  http://d.repec.org/n?u=RePEc:igi:igierp:520&r=mic 
By:  Geoffroy de Clippel; Rene Saran; Roberto Serrano 
Abstract:  We consider mechanism design in contexts in which agents exhibit bounded depth of reasoning (level k) instead of rational expectations. We use simple direct mechanisms, in which agents report only firstorder beliefs. While level 0 agents are assumed to be truth tellers, level k agents bestrespond to their belief that other agents have at most k  1 levels of reasoning. We find that incentive compatibility is necessary for implementation in this framework, while its strict version alone is sufficient. Adding continuity to both directions, the same results are obtained for continuous implementation with respect to small modeling mistakes. We present examples to illustrate the permissiveness of our findings in contrast to earlier related results under the assumption of rational expectations 
Keywords:  mechanism design; bounded rationality; level k reasoning; small modeling mistakes; incentive compatibility; continuity 
Date:  2014 
URL:  http://d.repec.org/n?u=RePEc:bro:econwp:20147&r=mic 
By:  Krishnendu Ghosh Dastidar 
Abstract:  In this paper we analyse scoring auctions with general nonquasilinear scoring rules. We assume that cost function of each firm is additively separable in quality and type. In sharp contrast to the recent results in the literature we show the following. (i) Equilibria in scoring auctions can be computed without any endogeneity problems and we get explicit solutions. (ii) We provide a complete characterisation of such equilibria and compare quality, price and expected scores across firstscore and secondscore auctions. (iii) We show that such properties and rankings depend on the curvature properties of the scoring rule and the distribution function of types. 
Date:  2014–06 
URL:  http://d.repec.org/n?u=RePEc:dpr:wpaper:0902&r=mic 
By:  Emilio Calvo (Universidad de Valencia. ERICES); Esther GutiérrezLópez (Departamento de Economía Aplicada IV. Universidad del País Vasco U.P.V./E.H.U.) 
Abstract:  The family of discounted Shapley values is analyzed for cooperative games in coalitional form. We consider the bargaining protocol of the alternating random proposer introduced in Hart and MasColell (1996). We demostrate that the discounted Shapley values arise as the expected payoffs associated with the bargaining equilibria when a time discount factor is considered. In a second model, we replace the time cost with the probability that the game ends without agreements. This model also implements these values in transferable utility games, moreover, the model implements the αconsistent values in the nontransferable utility setting. 
Keywords:  Discounted Shapley value; egalitarianism; cooperative TUgames JEL 
JEL:  C71 
Date:  2014–06 
URL:  http://d.repec.org/n?u=RePEc:dbe:wpaper:0414&r=mic 
By:  Zenou, Yves (Dept. of Economics, Stockholm University); Dequiedt, Vianney (Université d’Auvergne) 
Abstract:  The centrality of an agent in a network has been shown to be crucial in explaining different behaviors and outcomes. In this paper, we propose an axiomatic approach to characterize a class of centrality measures for which the centrality of an agent is recursively related to the centralities of the agents she is connected to. This includes the KatzBonacich and the eigenvector centrality. The core of our argument hinges on the power of the consistency axiom, which relates the properties of the measure for a given network to its properties for a reduced problem. In our case, the reduced problem only keeps track of local and parsimonious information. Our axiomatic characterization highlights the conceptual similarities among this class of measures. 
Keywords:  Consistency; centrality measures; networks; axiomatic approach 
JEL:  C70 D85 
Date:  2014–05–21 
URL:  http://d.repec.org/n?u=RePEc:hhs:sunrpe:2014_0004&r=mic 