
on Microeconomics 
By:  Joyee Deb (School of Management, Yale University); Yuhta Ishii (Cowles Foundation, Yale University & Centro de Investigacion Economica, ITAM) 
Abstract:  We study a canonical model of reputation between a long run player and a sequence of shortrun opponents, in which the longrun player is privately informed about an uncertain state that determines the monitoring structure in the reputation game. The longrun player plays a stagegame repeatedly against a sequence of shortrun opponents. We present necessary and sufficient conditions (on the monitoring structure and the type space) to obtain reputation building in this setting. Specifically, in contrast to the previous literature, with only stationary commitment types, reputation building is generally not possible and highly sensitive to the inclusion of other commitment types. However, with the inclusion of appropriate dynamic commitment types, reputation building can again be sustained while maintaining robustness to the inclusion of other arbitrary types. 
JEL:  C73 D82 L14 
Date:  2016–05 
URL:  http://d.repec.org/n?u=RePEc:cwl:cwldpp:2042&r=mic 
By:  Bryan McCannon (West Virginia University, Department of Economics); Paul Walker (West Virginia University, Department of Economics) 
Abstract:  The seminal contribution, known as the Condorcet Jury Theorem, observes that under a specific set of conditions an increase in the size of a group tasked with making a decision leads to an improvement in the group's ability to make a good decision. An assumption underappreciated is that the competency of the members of the group is assumed to be exogenous. In numerous applications, members of the group make investments to improve the accuracy of their decision making (e.g. premeeting efforts). We consider the collective action problem that arises. We show that if competence is endogenous, then increases in the size of the group encourages free riding. This trades off with the value of information aggregation. Thus, the value of increased group size is muted. Extensions illustrate that if committee members are allowed to exit/not participate, then the equilibrium committee size is reduced. Additionally, (nondecisive supermajority voting rules encourage the investments and, consequently, individual competence. 
Keywords:  committee decision making, Condorcet Jury Theorem, endogenous competence, group size, majority voting, supermajority voting 
JEL:  D71 D02 H41 
Date:  2016–06 
URL:  http://d.repec.org/n?u=RePEc:wvu:wpaper:1612&r=mic 
By:  Pere GomisPorqueras (Deakin University); Benoit Julien (UNSW Australia); Liang Wang (University of Hawaii Manoa) 
Abstract:  We consider a frictional market where buyers are uncoordinated and sellers cannot commit exante to either a perunit price or quantity of a divisible good. Sellers then can exploit their local monopoly power by adjusting prices or quantities once the local demand is realized. We find that when sellers can adjust quantities expost, there exists a unique symmetric equilibrium where the increase in the buyerseller ratio leads to higher quantities and prices in equilibrium. When sellers post exante quantities and adjust prices expost, a symmetric equilibrium does not exist. 
Keywords:  Competitive Search, Price Posting, Quantity Posting 
JEL:  D40 L10 
URL:  http://d.repec.org/n?u=RePEc:hai:wpaper:201607&r=mic 
By:  De Chiara, Alessandro 
Abstract:  How does the probability of being involved in a renegotiation during the execution of a procurement contract affect the behavior of the interested contractors? What are its implications for the optimal contractual choice made by the buyer? We investigate these issues in a context characterized by uncertainty about the adequateness of the project initially specified by the buyer. We determine under which circumstances the buyer may find it profitable to hold an auction for a project design which exante does not have the highest probability of being adequate. 
Keywords:  Asymmetric Auctions, Procurement, Renegotiation. 
JEL:  D44 D86 H57 
Date:  2015–06–04 
URL:  http://d.repec.org/n?u=RePEc:pra:mprapa:72108&r=mic 
By:  Bó, Inácio; Heller, C.Philipp 
Abstract:  We show that Ergin & Sönmez's (2006) results which show that for schools it is a dominant strategy to truthfully rank the students under the Boston mechanism, and that the Nash equilibrium outcomes in undominated strategies of the induced game are stable, rely crucially on two assumptions. First, (a) that schools need to be restricted to find all students acceptable, and (b) that students cannot observe the priorities set by the schools before submitting their preferences. We show that relaxing either assumption eliminates the strategy dominance, and that Nash equilibrium outcomes in undominated strategies for the simultaneous induced game in case (a) and subgame perfect Nash equilibria in case (b) may contain unstable matchings. We also show that when able to manipulate capacities, schools may only have an incentive to do so if students submit their preferences after observing the reported capacities. 
Keywords:  Mechanism Design,TwoSided Matching,Boston Mechanism,School Choice 
JEL:  C78 D63 D78 D82 
Date:  2016 
URL:  http://d.repec.org/n?u=RePEc:zbw:wzbmbh:spii2016204&r=mic 
By:  Yu Zhou; Shigehiro Serizawa 
Abstract:  We consider the allocation problem of assigning heterogeneous objects to a group of agents and determining how much they should pay. Each agent receives at most one object. Agents have nonquasilinear preferences over bundles, each consisting of an object and a payment. Especially, we focus on the cases: (i) objects are linearly ranked, and as long as objects are equally priced, agents commonly prefer a higher ranked object to a lower ranked one, and (ii) objects are partitioned into several tiers, and as long as objects are equally priced, agents commonly prefer an object in the higher tier to an object in the lower tier. The minimum price rule assigns minimum price (Walrasian) equilibrium to each preference profile. We establish: (i) on a commonobjectranking domain, the minimum price rule is the only rule satisfying efficiency, strategyproofness, individual rationality and no subsidy, and (ii) on a commontieredobject domain, the minimum price rule is the only rule satisfying these four axioms. 
Date:  2016–05 
URL:  http://d.repec.org/n?u=RePEc:dpr:wpaper:0971&r=mic 
By:  Christian Ewerhart 
Abstract:  The present paper constructs a novel solution to the chopstick auction, and thereby disproves a conjecture of Szentes and Rosenthal (Games and Economic Behavior, 2003a, 2003b). In contrast to the existing solution, the identi fied equilibrium strategy allows a simple and intuitive characterization. Moreover, its bestresponse set has the same Hausdorff dimension as its support, which may be seen as a robustness property. The analysis also reveals some new links to the literature on Blotto games. 
Keywords:  Chopstick auction, exposure problem, selfsimilarity, blotto games 
JEL:  C02 C72 D44 
Date:  2016–06 
URL:  http://d.repec.org/n?u=RePEc:zur:econwp:229&r=mic 
By:  Grégoire ROTAGRAZIOSI (Centre d'Etudes et de Recherches sur le Développement International(CERDI)) 
Abstract:  Paretoimproving tax coordination, and even tax harmonization, are Nash implementable between sovereign countries without any supranational tax authorities. Following Schelling's approach, we consider voluntary commitment, which constrains countries' respective tax rate choices. We develop a commitment game where countries choose their strategy sets in preliminary stages and play consistently during the final one. We determine the set of tax rates, which are implementable by commitment. This allows countries to reach Paretoimproving equilibriums. We also establish that complete tax harmonization may emerge as the subgame perfect Nash equilibrium of the commitment game as long as the asymmetry between countries remains limited. Our analysis contributes to the rationale of tax ranges and, more broadly, of non binding but selfenforcing commitments (not equivalent to cheap talk) in the context of tax competition. 
Keywords:  Tax coordination, Commitment. 
JEL:  C72 H30 
Date:  2016–06 
URL:  http://d.repec.org/n?u=RePEc:cdi:wpaper:1815&r=mic 
By:  Juan A. Lacomba (Department of Economic Theory and Economic History, University of Granada.); Francisco M. Lagos (Department of Economic Theory and Economic History, University of Granada.); Ernesto Reuben (Columbia University.); Frans Van Winden (University of Amsterdam.) 
Abstract:  In this paper, we study two games of conflict characterized by unequal access to productive resources and finitely repeated interaction. In the Noisy Conflict game, the winner of the conflict is randomly determined depending on a players’ relative conflict expenditures. In the Decisive Conflict game, the winner of the conflict is simply the player who spends more on conflict. By comparing behavior in the two games, we evaluate the effect that “decisiveness” has on the allocation of productive resources to conflict, the resulting inequality in the players’ final wealth, and the likelihood that players from longlasting peaceful relations.. 
Keywords:  conflict; decisiveness; inequality; peace; rent seeking 
JEL:  D72 D74 C92 
Date:  2016–05–30 
URL:  http://d.repec.org/n?u=RePEc:gra:wpaper:16/04&r=mic 
By:  Alex Barrachina (Department of Economics, Universitat Jaume I, Castellón, Spain) 
Abstract:  The effects of informationgathering activities on a basic entry model with asymmetric information are analyzed. In the basic entry game, an incumbent monopoly faces potential entry by one firm without knowing with certainty whether this potential entrant is weak or strong. If the entrant decides to enter, the monopoly must compete with him and decide whether to accommodate or to fight. To include informationgathering activities, it is considered that the monopoly has access to an Intelligence System (IS) of a certain precision (exogenous and common knowledge) that generates a noisy signal about the entrant's type. When the monopoly believes that the entrant is weak, the probability of market entry increases only for the relatively inaccurate precision of the IS and decreases for relatively accurate precision. If the monopoly is not sure about the entrant’s level of strength or considers him to be strong, the informationgathering activities either have no effect on market entry or decrease the probability of entry. Not only do these results suggest that to inform the entrant credibly about informationgathering activities can be considered as a monopoly’s entry deterrence strategy, but they also provide give an idea about when to allow or not allow monopoly’s informationgathering activities. 
Keywords:  Entry Deterrence, InformationGathering, Asymmetric Information, Credible Communication 
JEL:  C72 D82 L10 L12 
Date:  2016 
URL:  http://d.repec.org/n?u=RePEc:jau:wpaper:2016/09&r=mic 
By:  Jan Christoph Schlegel 
Abstract:  We study conditions for the existence of stable, strategyproof mechanisms in a manytoone matching model with discrete salary space (the discrete KelsoCrawford model). Workers and firms want to match manytoone and agree on the terms of their match. Firms demand different sets of workers at different salaries. Workers have preferences over different firmsalary combinations. Workers' preferences are monotone in salaries. We show that for this model a descending auction mechanism is the only candidate for a stable mechanism that is strategyproof for workers. Moreover, we identify a maximal domain of demand functions for firms, such that the mechanism is stable and strategyproof. For each demand function in our domain, we can construct a related demand function that we call a virtual demand function. Replacing demand functions by virtual demand functions will not change the outcome of our mechanism. Known conditions (gross substitutability and the law of aggregate demand) can be applied to the virtual demand profile to check whether the mechanism is stable and strategyproof. Our result gives a sense in which gross substitutability and the law of aggregate demand are necessary for the existence of a stable and strategyproof mechanism. In the special case where demand functions are generated by quasilinear profit functions, demand functions and virtual demand functions agree. Thus for this case, our domain reduces to the domain of demand functions under which workers are gross substitutes. 
Keywords:  Matching with contracts; Matching with salaries; Gross Substitutes; Virtual Demand 
JEL:  C78 D47 
Date:  2016–06 
URL:  http://d.repec.org/n?u=RePEc:lau:crdeep:16.11&r=mic 
By:  Takashi Kunimoto; Roberto Serrano 
Abstract:  We come close to characterizing the class of social choice correspondences that are implementable in rationalizable strategies. We identify a new condition, which we call setmonotonicity, and show that it is necessary and almost sufficient for rationalizable implementation. Setmonotonicity is much weaker than Maskin monotonicity, which is the key condition for Nash implementation and which also had been shown to be necessary for rationalizable implementation of social choice functions. Setmonotonicity reduces to Maskin monotonicity in the case of functions. We conclude that the conditions for rationalizable implementation are not only starkly different from, but also much weaker than those for Nash implementation, when we consider social choice correspondences. 
Date:  2016 
URL:  http://d.repec.org/n?u=RePEc:bro:econwp:20164&r=mic 