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on Microeconomics |
| By: | Yeon-Koo Che; Johannes Horner (Cowles Foundation, Yale University) |
| Abstract: | This paper studies the design of a recommender system for organizing social learning on a product. To improve incentives for early experimentation, the optimal design trades off fully transparent social learning by over-recommending a product (or “spamming”) to a fraction of agents in the early phase of the product cycle. Under the optimal scheme, the designer spams very little about a product right after its release but gradually increases the frequency of spamming and stops it altogether when the product is deemed sufficiently unworthy of recommendation. The optimal recommender system involves randomly triggered spamming when recommendations are public -- as is often the case for product ratings -- and an information “blackout” followed by a burst of spamming when agents can choose when to check in for a recommendation. Fully transparent recommendations may become optimal if a (socially-benevolent) designer does not observe the agents’ costs of experimentation. |
| Keywords: | Experimentation, Social learning, Mechanism design |
| JEL: | D82 D83 M52 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:2000&r=mic |
| By: | Pagnozzi, Marco; Saral, Krista J. |
| Abstract: | We analyze how the possibility of resale affects efficiency in multi-object uniform-price auctions with asymmetric bidders using a combination of theory and experiments. The resale market is modeled as an unstructured bargaining game between auction bidders. Our experimental design consists of four treatments that vary the (exogenous) probability that bidders participate in a resale market after the auction. In all treatments, the possibility of resale increases efficiency after the auction, but it also induces demand reduction by high-value bidders during the auction, which reduces auction efficiency. In contrast to what is usually argued, resale does not necessarily increase final efficiency. When there is a low probability of a resale market, final efficiency is actually lower than in an auction without resale. |
| Keywords: | efficiency, multi-object auctions, resale, asymmetric bidders, bargaining, economic experiments |
| JEL: | C9 D44 |
| Date: | 2015–04–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:63962&r=mic |
| By: | Daniel Garcia; Jun Honda; Maarten Janssen |
| Abstract: | We study vertical relations in markets with consumer and retailer search. Retailers search to learn manufacturers' prices. We obtain three important new results. First, we explain why empirical distributions of retail prices are bi- modal, with a regular price and a sales price. Second, under competitive condi- tions (many retailers or small consumer search cost) social welfare is signicantly smaller than in the double marginalization outcome. Manufacturers' regular price is significantly above the monopoly price squeezing retailers' markups and pro- viding an alternative explanation for incomplete cost pass-through. Finally, by randomizing to induce active consumer search, manufacturers can increase their profits. |
| JEL: | D40 D83 L13 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:vie:viennp:1504&r=mic |
| By: | Shuo Liu |
| Abstract: | We study the effect of public information on collective decision-making in a committee with members of both common and conflicting interests. We show that the set of preferences that allow for the existence of an informative voting equilibrium can be heavily restricted by the presence of a public signal, regardless of the size of the committee and the choice of the voting threshold value. What’s worse, the presence of the public information introduces an inefficient equilibrium which robustly exists across different voting rules. To mitigate the harmful effect of the public information, we propose to use a class of more flexible voting rules, whose threshold values de- pend on both the precision and the realization of the public signal, that may restore the informative voting equilibrium. In particular, in a standard setting with common interest agents, the contingent voting rule that we construct not only always restores the informative voting equilibrium but also achieves full informational efficiency. |
| Keywords: | Strategic voting, collective decision-making, public information, committee design, optimal voting rule |
| JEL: | D72 D82 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:zur:econwp:191&r=mic |
| By: | Musegaas, M. (Tilburg University, Center For Economic Research); Borm, P.E.M. (Tilburg University, Center For Economic Research); Quant, M. (Tilburg University, Center For Economic Research) |
| Abstract: | In this paper we introduce three-valued simple games as a natural extension<br/>of simple games. While simple games are used to evaluate single voting systems, three-valued simple games offer the opportunity for a simultaneous analysis of two different voting systems within the same parliamentary body. This paper analyzes the core and the Shapley value of three-valued simple games. Using the concept of vital players, the vital core is constructed and we show that the vital core is a subset of the core. The Shapley value is characterized on the class of all three-valued simple games. The model is applied to evaluate the relative influence of countries within the current EU-28 Council. |
| Keywords: | simple games; three-valued simple games; core; Shapley value |
| JEL: | C71 C44 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiucen:473afd5c-99b1-4073-888f-2006e20fbf5f&r=mic |
| By: | Kaniska Dam; Prabal Roy Chowdhuri (Division of Economics, CIDE) |
| Abstract: | We develop a model of competition among socially motivated microfinance institutions (MFIs), where the MFIs offer repayment-based incentive contracts to credit agents. The agents gather information regarding a borrower, and may, or may not collude with the borrower, taking bribes in return for not acting upon their information in case of collusion. We show that competition may either increase, or decrease incentives, with incentives becoming less high powered if the MFIs are not too motivated. Further, whenever either the moral hazard problem is relatively severe and/or the MFIs are not too motivated, competition increases default, thus providing a possible explanation for the recent episodes of crisis in the MFI sector. Interestingly, the effects of competition are linked to mission drift, i.e., whether the MFIs in the concerned countries are more, or less motivated. Further, default problems may worsen in case competition is accompanied by greater access to donor funds. |
| Keywords: | Microfinance; competition; collusion; staff incentive schemes; monitoring. |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:emc:wpaper:dte579&r=mic |
| By: | Paolo Casini |
| Abstract: | Microfinance institutions, despite the presence of competition and informational asymmetries, typically offer a limited variety of contracts. Assuming price competition, we propose a simple theoretical explanation for this behavior and study its consequences in terms of strategic interaction and borrower welfare. We model an oligopolistic market in which Microfinance Institutions design their contracts and choose how many of them to offer. We find that when offering a menu is costly, MFIs always offer a single contract. Despite that, there exist equilibria in which MFIs coordinate and offer screening contracts, allowing them to extract a large fraction of the borrower welfare. We discuss the policy implications of our model in terms of price caps, market entry and outreach measurement. |
| Keywords: | Micronance, Competition, Altruism, Contract Menus, Credit Rationing |
| JEL: | G21 L13 L31 O16 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:lic:licosd:34914&r=mic |
| By: | Burkhard Schipper (Department of Economics, University of California Davis) |
| Abstract: | It is known that there are uncoupled learning heuristics leading to Nash equilibrium in all finite games. Why should players use such learning heuristics and where could they come from? We show that there is no uncoupled learning heuristic leading to Nash equilibrium in all finite games that a player has an incentive to adopt, that would be "evolutionary stable" or that "could learn itself". Rather, a player has an incentive to strategically teach such a learning opponent in order secure at least the Stackelberg leader payoff. The impossibility result remains intact when restricted to the classes of generic games, two-player games, potential games, games with strategic complements or 2x2 games, in which learning is known to be "nice". More generally, it also applies to uncoupled learning heuristics leading to correlated equilibria, rationalizable outcomes, iterated admissible outcomes, or minimal curb sets. A possibility result restricted to "strategically trivial" games fails if some generic games outside this class are considered as well. |
| Keywords: | Learning in games, learning heuristics, learning rules, interactive learning, uncoupled learning, meta-learning, reputation, Nash equilibrium, correlated equilibrium, rationalizability, iterated admissibility, minimal curb sets, dominance solvable games, common interest games |
| JEL: | C72 C73 |
| Date: | 2015–04–14 |
| URL: | http://d.repec.org/n?u=RePEc:cda:wpaper:15-1&r=mic |