
on Microeconomics 
By:  Dirk Bergemann (Cowles Foundation, Yale University); Stephen Morris 
Abstract:  A set of players have preferences over a set of outcomes. We consider the problem of an "information designer" who can choose an information structure for the players to serve his ends, but has no ability to change the mechanism (or force the players to make particular action choices). We describe a unifying perspective for information design. We consider a simple example of Bayesian persuasion with both an uninformed and informed receiver. We extend information design to many players and relate it to the literature on incomplete information correlated equilibrium. 
Keywords:  Information design, Bayesian persuasion, Bayes correlated equilibrium, Information structure 
JEL:  C72 D82 D83 
Date:  2016–01 
URL:  http://d.repec.org/n?u=RePEc:cwl:cwldpp:2027&r=mic 
By:  Aliprantis, Dionissi (Federal Reserve Bank of Cleveland) 
Abstract:  This paper presents a generalization of the DeGroot learning rule in which social learning can lead to polarization, even for connected networks. I first develop a model of biased assimilation in which the utility an agent receives from past decisions depends on current beliefs when uncertainty is slow to resolve. I use this model to motivate key features of an agent’s optimization problem subject to scarce private information, which forces the agent to extrapolate using social information. Even when the agent extrapolates under “scientific” assumptions and all individuals in the network process and report their private signals in an unbiased way, the possibility of biased processing or reporting leads agents to process social signals differently depending on the sender. The resulting solution to the agent’s problem is a heterogeneous confidence learning rule that is distinct from bounded confidence learning rules in that the agent may actually move her beliefs away from, and not only discard, signals from untrustworthy senders. 
Keywords:  Biased Assimilation; Social Learning; Network; DeGroot Learning Rule; Bounded Confidence; Heterogeneous Confidence; SelfAffirmation; 
JEL:  D83 
Date:  2016–01–20 
URL:  http://d.repec.org/n?u=RePEc:fip:fedcwp:1604&r=mic 
By:  Franz Dietrich (EEPPSE  Ecole d'Économie de Paris  Paris School of Economics, CES  Centre d'économie de la Sorbonne  UP1  Université PanthéonSorbonne  CNRS  Centre National de la Recherche Scientifique); Christian List (LSE  London School of Economics) 
Abstract:  We introduce a "reasonbased" framework for explaining and predicting individual choices. The key idea is that a decisionmaker focuses on some but not all properties of the options and chooses an option whose "motivationally salient" properties he/she most prefers. Reasonbased explanations can capture two kinds of contextdependent choice: (i) the motivationally salient properties may vary across choice contexts, and (ii) they may include "contextrelated" properties, not just "intrinsic" properties of the options. Our framework allows us to explain boundedly rational and sophisticated choice behaviour. Since properties can be recombined in new ways, it also offers resources for predicting choices in unobserved contexts. 
Keywords:  Rational choice,reasons,contextdependence,bounded and sophisticated rationality,prediction of choice 
Date:  2016 
URL:  http://d.repec.org/n?u=RePEc:hal:cesptp:halshs01249514&r=mic 
By:  Franz Dietrich (EEPPSE  Ecole d'Économie de Paris  Paris School of Economics, CES  Centre d'économie de la Sorbonne  UP1  Université PanthéonSorbonne  CNRS  Centre National de la Recherche Scientifique) 
Abstract:  I propose a relevancebased independence axiom on how to aggregate individual yes/no judgments on given propositions into collective judgments: the collective judgment on a proposition depends only on people's judgments on propositions which are relevant to that proposition. This axiom contrasts with the classical independence axiom: the collective judgment on a proposition depends only on people's judgments on the same proposition. I generalize the premisebased rule and the sequentialpriority rule to an arbitrary priority order of the propositions, instead of a dichotomous premise/conclusion order resp. a linear priority order. I prove four impossibility theorems on relevancebased aggregation. One theorem simultaneously generalizes Arrow's Theorem (in its general and indifferencefree versions) and the wellknown Arrowlike theorem in judgment aggregation. 
Keywords:  judgment aggregation,generalized Arrow theorem,generalized premisebased and sequentialpriority rules,priority graph,aggregation of nonbinary evaluations 
Date:  2015 
URL:  http://d.repec.org/n?u=RePEc:hal:cesptp:halshs01249513&r=mic 
By:  Koji Shirai (School of Economics, Kwansei Gakuin University) 
Abstract:  We develop revealed preference characterizations of (1) monotone choice in the context of individual decision making and (2) strategic complementarity in the context of simultaneous games. We first consider the case where the observer has access to panel data and then extend the analysis to the case where data sets are cross sectional and preferences heterogenous. Lastly, we apply our techniques to investigate the possibility of spousal influence in smoking decisions. 
Keywords:  monotone comparative statics, single crossing di↵erences, interval dominance, supermodular games, lattices 
JEL:  C6 C7 D7 
Date:  2015–12 
URL:  http://d.repec.org/n?u=RePEc:kgu:wpaper:138&r=mic 
By:  Drozd, Lukasz A. (Federal Reserve Bank of Philadelphia); SerranoPadial, Ricardo (Drexel University) 
Abstract:  Contract enforceability in financial markets often depends on the aggregate actions of agents. For example, high default rates in credit markets can delay legal enforcement or reduce the value of collateral, incentivizing even more defaults and potentially affecting credit supply. We develop a theory of credit provision in which enforceability of individual contracts is linked to aggregate behavior. The central element behind this link is enforcement capacity, which is endogenously determined by investments in enforcement infrastructure. Our paper sheds new light on the emergence of credit crunches and the relationship between enforcement infrastructure, economic growth, and political economy distortions. 
Keywords:  Enforcement; Credit rationing; Costly state verification; State capacity; Financial accelerator; Credit crunch; Global games; Heterogeneity 
JEL:  D82 D84 D86 G21 O16 O17 O43 
Date:  2016–01–20 
URL:  http://d.repec.org/n?u=RePEc:fip:fedpwp:161&r=mic 
By:  Jorge Alcalde Unzu (Departamento de EconomíaUPNA); Marc Vorsatz 
Abstract:  Agents frequently have di fferent opinions on where to locate a public facility. While some agents consider the facility a good and prefer to have it nearby, others dislike it and would like to see it built far away from their own locations. To aggregate agents' preferences in these situations, we propose a new preference domain according to which each agent is allowed to have singlepeaked or singledipped preferences on the location of the facility, but in such a way that the peak or dip is situated in her own location. We characterize all strategyproof rules in this general framework and show that they are also group strategyproof. Finally, we characterize for some focal cases the rules that additionally satisfy Pareto efficiency. 
Keywords:  Singlepeaked preferences, singledipped preferences, social choice rule, strategyproofness, Pareto efficiency. 
Date:  2015 
URL:  http://d.repec.org/n?u=RePEc:nav:ecupna:1502&r=mic 
By:  Franz Dietrich (EEPPSE  Ecole d'Économie de Paris  Paris School of Economics, CES  Centre d'économie de la Sorbonne  UP1  Université PanthéonSorbonne  CNRS  Centre National de la Recherche Scientifique); Christian List (LSE  London School of Economics); Richard Bradley (LSE  London School of Economics) 
Abstract:  We present a general framework for representing beliefrevision rules and use it to characterize Bayes' rule as a classical example and Jeffrey's rule as a nonclassical one. In Je¤rey's rule, the input to a belief revision is not simply the information that some event has occurred, as in Bayes' rule, but a new assignment of probabilities to some events. Despite their differences, Bayes' and Je¤rey's rules can be characterized in terms of the same axioms: responsiveness, which requires that revised beliefs incorporate what has been learnt, and conservativeness, which requires that beliefs on which the learnt input is 'silent' do not change. To illustrate the use of nonBayesian belief revision in economic theory, we sketch a simple decisiontheoretic application. 
Keywords:  Belief revision,subjective probability,Bayes's rule,Je¤rey's rule,axiomatic foundations,finegrained versus coarsegrained beliefs,unawareness 
Date:  2016 
URL:  http://d.repec.org/n?u=RePEc:hal:cesptp:halshs01249635&r=mic 
By:  Nicholas S. Gonchar; Wolodymyr H. Kozyrski; Anatol S. Zhokhin 
Abstract:  The theorems we proved describe the structure of economic equilibrium in the exchange economy model. We have studied the structure of property vectors under given structure of demand vectors at which given price vector is equilibrium one. On this ground, we describe the general structure of the equilibrium state and give characteristic of equilibrium state describing economic recession. The theory developed is applied to explain the state of the economy in some European countries. 
Date:  2016–01 
URL:  http://d.repec.org/n?u=RePEc:arx:papers:1601.04949&r=mic 
By:  Christian Basteck (Technische Universitaet Berlin) 
Abstract:  We study the problem of assigning indivisible goods to individuals where each is to receive one good. To guarantee fairness in the absence of monetary compensation, we consider random assignments that individuals evaluate according to first order stochastic dominance (sd). In particular, we find that solutions that guarantee sdnoenvy (e.g. the Probabilistic Serial) are incompatible even with the weak sdcore from equal division. Solutions on the other hand that produce assignments in the strong sdcore from equal division (e.g. Hylland and Zeckhauserâ€™s Walrasian Equilibria from Equal Incomes) are incompatible with the strong sdequaldivisionlowerbound. As an alternative, we present a solution, based on Walrasian equilibria, that is sdefficient, in the weak sdcore from equal division and satisfies the strong sdequaldivisionlowerbound. 
Keywords:  Probabilistic Serial; Sdefficiency; Sdenvyfree; Sdcore from equal division; Sdequaldivisionlowerbound 
JEL:  C70 D63 
Date:  2016–01–21 
URL:  http://d.repec.org/n?u=RePEc:bdp:wpaper:2016001&r=mic 