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on Microeconomics |
| By: | David K Levine; Salvatore Modica |
| Date: | 2018–03–04 |
| URL: | http://d.repec.org/n?u=RePEc:cla:levarc:786969000000001458&r=mic |
| By: | Sujoy Mukerji (Queen Mary University of London); Peter Klibanoff (Kellogg School of Management, Northwestern University) |
| Abstract: | Since at least de Finetti [7], preference symmetry assumptions have played an important role in models of decision making under uncertainty. In the cur- rent paper, we explore (1) the relationship between the symmetry assumption of Klibanoff, Mukerji and Seo (KMS) [21] and alternative symmetry assumptions in the literature, and (2) assuming symmetry, the relationship between the set of relevant measures, shown by KMS [21] to reflect only perceived ambiguity, and the set of measures (which we will refer to as the Bewley set) developed by Ghirardato, Maccheroni and Marinacci [14], Nehring [24, 25] and Ghirardato and Siniscalchi [15, 16]. This Bewley set is the main alternative offered in the literature as possibly representing perceived ambiguity. Regarding symmetry assumptions, we show that, under relatively mild conditions, a variety of preference symmetry conditions from the literature (including that in KMS [21]) are equivalent. In KMS [21], we showed that, under symmetry, the Bewley set and the set of relevant measures are not always the same. Here, we establish a preference condition, No Half Measures, that is necessary and sufficient for the two to be same under symmetry. This condition is rather stringent. Only when it is satisfied may the Bewley set be interpreted as reflecting only perceived ambiguity and not also taste aspects such as ambiguity aversion. |
| Keywords: | Symmetry, beliefs, ambiguity, ambiguity aversion, model uncertainty, Ellsberg |
| JEL: | D01 D80 D81 D83 |
| Date: | 2017–07–20 |
| URL: | http://d.repec.org/n?u=RePEc:qmw:qmwecw:829&r=mic |
| By: | Hakan Genç (Department of Economics, Middle East Technical University, Ankara, Turkey); Serkan Küçükşenel (Department of Economics, Middle East Technical University, Ankara, Turkey) |
| Abstract: | This paper studies a sequential model of multilateral bargaining with a majority rule in which legislators can make decisions over both private and public good dimensions with endogenous recognition process. Legislators expend resources to be the proposer and make proposals about the allocation of private and public goods. We show that legislators can exert effort to be the proposer and make proposals in both dimensions depending on legislative preferences. Effort choices in equilibrium mainly depend on preferences over both distributional and ideological dimensions, as well as the patience level of legislators and the size of the legislature. We also show that in a diverse legislature, it may be possible to have distributive policies when the majority has collective desires or vice-versa. |
| Keywords: | Multilateral bargaining, majority rule, public goods |
| JEL: | C71 C78 D72 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:met:wpaper:1805&r=mic |
| By: | Paulina Restrepo-Echavarria (Federal Reserve Bank of St Louis); Antonella Tutino (Federal Reserve Bank of Dallas); Anton Cheremukhin (Federal Reserve Bank of Dallas) |
| Abstract: | We endogenize the degree of randomness in the matching process by proposing a model where agents have to pay a search cost to locate potential matches more accurately. The model features a tension between an agent's desire to nd a more productive match and to maximize the odds of nding a match. This tension drives a wedge between the shape of sorting patterns and the shape of the underlying match payo function. We show the empirical relevance of the latter prediction by applying the model to the U.S. marriage market. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed017:1413&r=mic |
| By: | Agnieszka Rusinowska (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne, PSE - Paris School of Economics); Akylai Taalaibekova (CORE - Center of Operation Research and Econometrics [Louvain] - UCL - Université Catholique de Louvain, CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne) |
| Abstract: | We consider a model of competitive opinion formation in which three persuaders characterized by (possibly unequal) persuasion impacts try to influence opinions in a society of individuals embedded in a social network. Two of the persuaders have the extreme and opposite opinions, and the third one has the centrist opinion. Each persuader chooses one individual to target, i.e., he forms a link with the chosen individual in order to spread his own “point of view” in the society and to get the average long run opinion as close as possible to his own opinion. We examine the opinion convergence and consensus reaching in the society. We study the existence and characterization of pure strategy Nash equilibria in the game played by the persuaders with equal impacts. This characterization depends on influenceability and centrality (intermediacy) of the targets. We discuss the effect of the centrist persuader on the consensus and symmetric equilibria, compared to the framework with only two persuaders having the extreme opinions. When the persuasion impacts are unequal with one persuader having a sufficiently large impact, the game has only equilibria in mixed strategies. |
| Abstract: | Nous considérons un modèle de formation d'opinion compétitive dans lequel trois persuadeurs caractérisés par des impacts de persuasion (éventuellement inégaux) tentent d'influencer les opinions dans une société d'individus intégrés dans un réseau social. Deux des persuadeurs ont des opinions extrêmes et opposées, et le troisième a l'opinion centriste. Chaque persuadeur choisit un individu à cibler, c'est-à-dire qu'il forme un lien avec l'individu choisi pour diffuser son propre « point de vue » dans la société et obtenir l'opinion moyenne à long terme aussi proche que possible de sa propre opinion. Nous examinons l'existence et la caractérisation d'équilibres de Nash de pure stratégie dans le jeu joué par les persuadeurs avec des impacts égaux. Cette caractérisation dépend de l'influençabilité et de la centralité des cibles. Nous discutons l'effet du persuadeur centriste sur le consensus et les équilibres symétriques, comparé au cadre avec seulement deux persuadeurs ayant des opinions extrêmes. Lorsque les impacts de persuasion sont inégaux avec un persuadeur ayant un impact suffisamment important, le jeu n'a que des équilibres dans des stratégies mixtes. |
| Keywords: | social network,opinion formation,targeting,extreme and centrist persuaders,réseau social,formation d'opinion,consensus,ciblage,lobbying |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-01720017&r=mic |
| By: | Anne Van den Nouweland (University of Oregon [Eugene]); Agnieszka Rusinowska (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne, PSE - Paris School of Economics) |
| Abstract: | We provide a bargaining foundation for the concept of ratio equilibrium in public good economies. We define a bargaining game of alternating offers in which players bargain to determine their cost shares of public good production and a level of public good. We study the stationary subgame perfect equilibrium without delay of the bargaining game. We demonstrate that when the players are perfectly patient, they are indifferent between the equilibrium offers of all players. We also show that every stationary subgame perfect equilibrium without delay in which the ratios offered by all players are the same leads to a ratio equilibrium. In addition, we demonstrate that all equilibrium ratios are offered by the players at some stationary subgame perfect equilibrium without delay. We use these results to discuss the case when the assumption of perfectly patient players is relaxed and the cost of delay vanishes. |
| Abstract: | Nous fournissons une base de négociation pour le concept d'équilibre des ratios dans les économies des biens publics. Nous définissons un jeu de négociation d'offres alternées dans lequel les joueurs négocient pour déterminer leurs parts de coûts de la production d'un bien public et un niveau d'un bien public. Nous étudions l'équilibre parfait en sous-jeu sans délai du jeu de négociation. Nous démontrons que lorsque les joueurs sont parfaitement patients, ils sont indifférents entre les offres d'équilibre de tous les joueurs. Nous montrons aussi que tout équilibre parfait en sous-jeu sans délai dans lequel les ratios offerts par tout les joueurs sont les mêmes conduit à un équilibre de ratios. En outre, nous démontrons que tous les ratios d'équilibre sont offerts par les joueurs à un équilibre parfait en sous-jeu sans délai. Nous utilisons ces résultats pour discuter le cas où l'hypothèse de joueurs parfaitement patients est relâchée et le coût de délai disparaît. |
| Keywords: | stationary subgame perfect equilibrium,public good economy,bargaining game,ratio equilibrium,équilibre des ratios,économie des biens publics,jeu de négociation,équilibre parfait en sous-jeux |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-01720001&r=mic |
| By: | Benjamin Tengelsen (Carnegie Mellon University); Ariel Zetlin-Jones (Carnegie Mellon University); Emilio Bisetti (Carnegie Mellon University, Tepper Schoo) |
| Abstract: | This paper re-examines the importance of separation between ownership and labor in team production models that feature free riding. In models of team production subject to moral hazard, conventional wisdom suggests an outsider is needed to administer incentive schemes that do not balance the budget. We analyze the ability of insiders to to administer such incentive schemes in a dynamic setting by developing a repeated model of moral hazard in teams. In our setting, after team outcomes are observed, a benevolent planner who lacks commitment has the opportunity to impose group punishments which do not balance the budget. We extend techniques from \citet{abreu1986extremal} to characterize the entire set of subgame perfect equilibrium payoffs and find that insiders are capable of enforcing group punishments when they are sufficiently patient. When these group punishments are enforceable, they are welfare enhancing for the team of producers relative to an environment where such punishments are exogenously restricted. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed017:1496&r=mic |
| By: | Yuta KITTAKA |
| Abstract: | This study constructs a sequential consumer search model with differentiated products in which some consumers search for a single product while the others search for multiple products. When the mass of consumers who demand one of the products decreases, the price for one product decreases while another price increases due to the joint-search effect, even if the products are neither complements nor substitutes. In addition, under some conditions, this decrease in demand causes an increase in each firm's profit. |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:dpr:wpaper:1024&r=mic |
| By: | Sujoy Mukerji (Queen Mary University of London); Ian Jewitt (Nuffield College, Oxford University) |
| Abstract: | We investigate what it means for one act to be more ambiguous than another. The question is evidently analogous to asking what makes one prospect riskier than another, but beliefs are neither objective nor representable by a unique probability. Our starting point is an abstract class of preferences constructed to be (strictly) partially ordered by a more ambiguity averse relation. First, we define two notions of more ambiguous with respect to such a class. A more ambiguous (I) act makes an ambiguity averse decision maker (DM) worse off but does not affect the welfare of an ambiguity neutral DM. A more ambiguous (II) act adversely affects a more ambiguity averse DM more, as measured by the compensation they require to switch acts. Unlike more ambiguous (I), more ambiguous (II) does not require indifference of ambiguity neutral elements to the acts being compared. Second, we implement the abstract definitions to characterize more ambiguous (I) and (II) for two explicit preference families: a maxmin expected utility and smooth ambiguity. Thirdly, we give applications to the comparative statics of more ambiguous in a standard portfolio problem and a consumption-saving problem. |
| Keywords: | Ambiguity, Uncertainty, Knightian Uncertainty, Ambiguity Aversion, Uncertainty aversion, Ellsberg paradox, Comparative statics, Single-crossing, More ambiguous, Portfolio choice |
| JEL: | C44 D80 D81 G11 |
| Date: | 2017–07–20 |
| URL: | http://d.repec.org/n?u=RePEc:qmw:qmwecw:828&r=mic |
| By: | Frank Huettner, (ESMT European School of Management and Technology); Tamer Boyaci, (ESMT European School of Management and Technology); Yalcin Akcay (Melbourne Business School) |
| Abstract: | Consumers often do not have complete information about the choices they face and therefore have to spend time and effort in acquiring information. Since information acquisition is costly, consumers trade-off the value of better information against its cost, and make their final product choices based on imperfect information. We model this decision using the rational inattention approach and describe the rationally inattentive consumer’s choice behavior when she faces alternatives with different information costs. To this end, we introduce an information cost function that distinguishes between direct and implied information. We then analytically characterize the optimal choice probabilities. We find that non-uniform information costs can have a strong impact on product choice, which gets particularly conspicuous when the product alternatives are otherwise very similar. There are significant implications on how a seller should provide information about its products and how changes to the product set impacts consumer choice. For example, non-uniform information costs can lead to situations where it is disadvantageous for the seller to provide easier access to information for a particular product, and to situations where the addition of an inferior (never chosen) product increases the market share of another existing product (i.e., failure of regularity). We also provide an algorithm to compute the optimal choice probabilities and discuss how our framework can be empirically estimated from suitable choice data. |
| Keywords: | discrete choice, rational inattention, information acquisition, non-uniform information costs, strong failure of regularity |
| JEL: | D40 D80 |
| Date: | 2016–08–18 |
| URL: | http://d.repec.org/n?u=RePEc:esm:wpaper:esmt-16-04_r2&r=mic |
| By: | Edi Karni (Johns Hopkins University); Quitze Valenzuela-Stookey (Northwestern University); Marie-Louise Viero (Queen's University) |
| Abstract: | In this note we clarify and generalize the main result in Karni and Viero (2013) by allowing the discovery of new consequences to nulllify some states that were non-null before the discovery. |
| Keywords: | Growing awareness, reverse Bayesianism, falsification |
| JEL: | D8 D81 D83 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:qed:wpaper:1400&r=mic |
| By: | Afacan, Mustafa Oğuz; Bó, Inácio Guerberoff Lanari; Turhan, Bertan |
| Abstract: | We evaluate the goal of maximizing the number of individually rational assignments. We show that it implies incentive, fairness, and implementation impossibilities. Despite that, we present two classes of mechanisms that maximize assignments. The first are Pareto efficient, and undominated - in terms of number of assignments - in equilibrium. The second are fair for unassigned students and assign weakly more students than stable mechanisms in equilibrium. We provide comparisons with well-known mechanisms through computer simulations. Those show that the difference in number of matched agents between the proposed mechanisms and others in the literature is large and significant. |
| Keywords: | market design,matching,maximal matching,fairness,object allocation,school choice |
| JEL: | C78 D63 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbmbh:spii2018201&r=mic |
| By: | Richard S.J. Tol (Department of Economics, University of Sussex; Department of Spatial Economics, Vrije Universiteit, Amsterdam; Institute for Environmental Studies, Vrije Universiteit, Amsterdam; Tinbergen Institute, Amsterdam; CESifo, Munich) |
| Abstract: | The paper presents the professor-student network of Nobel laureates in economics. 72 of the 77 Nobelists belong to one family tree. The remaining 5 belong to 3 separate trees. There are 350 men in the graph, and 4 women. Karl Knies is the central-most professor, followed by Wassily Leontief. Harvard is the central-most university, followed by Chicago and Berlin. Most candidates for the Nobel prize belong to the main family tree, but new trees may arise for the students of Terence Gorman and Denis Sargan. |
| Keywords: | social network; professor-student relationship; Nobel Prize |
| JEL: | A14 B20 B31 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:sus:susewp:0518&r=mic |
| By: | Pradeep Dubey |
| Abstract: | We show that any transferable utility game can be represented by an assignment of facilities to the players, in which it is intuitively obvious how to allocate the total cost of the facilities. The intuitive solution in the representation turns out to be the Shapley value of the game. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:nys:sunysb:18-01&r=mic |
| By: | Bó, Inácio Guerberoff Lanari; Ko, Chiu Yu |
| Abstract: | We consider a simple model of the competitive screening of students by schools and colleges. Students apply to schools which then perform costly screening procedures of the applicants to select those with high ability. Students who receive more than one offer may choose among those. Colleges select students and can observe the school which they attended. We show a channel through which students' preferences affect schools' screening decisions and outcomes: as schools increase the screening for high-ability students, a greater proportion of them is identified as such by multiple schools and are able to select one among them to attend. Schools' marginal gains from screening therefore depend on other schools' screenings and students' preferences. By focusing on the schools' screening choices (instead of the students' application decisions), we show how the competition for students between schools and colleges affect outcomes and students' welfare. We also show that, simply by observing which school a candidate attended, colleges can "free-ride" on the information produced by a fierce competition between schools for those students. Finally, we show that although colleges make full use of the information contained in the school a student attended, the extent to which students can improve the college that they are matched to by going to a (less desired) high-ranked school is fairly limited. |
| Keywords: | information transmission,college admissions,screening,rankings |
| JEL: | C78 D61 D83 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbmbh:spii2018202&r=mic |
| By: | Jens-Uwe Franck; Martin peitz |
| Abstract: | The focus of cartel damages law is on the recovery of the cartel overcharge. Parties other than purchasers are often neglected, not only as a matter of judicial practice, but also due to legal restrictions. We argue that a narrow concept of standing—which excludes parties that supply either the cartel or the firms that purchase from the cartel with complementary product components—falls short of achieving effective antitrust enforcement and corrective justice in the best possible way. We provide a framework with two complementary products and show that under neither competition nor cartelization do the allocation and the distribution of surpluses depend on whether producers of complements purchase from the cartel or supply the cartel or the cartel’s customers. Thus, we argue that prima facie producers of complements should be treated alike, regardless of their position in the supply chain. Moreover, based on various factors that determine the enforcement effect of antitrust damages claims and their role as an instrument to achieve corrective justice, we show that a broad concept of standing is, indeed, the preferable legal solution. While its implementation would require a change in position by the U.S. federal courts, we submit that it would amount to a consistent completion of the legal framework within the E.U. |
| Keywords: | Cartel damages, antitrust standing, pass-on, suppliers, complementary goods |
| JEL: | K21 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_007_2018&r=mic |