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on Microeconomics |
| By: | Ritesh Jain (Institute of Economics, Academia Sinica, Taipei, Taiwan); Michele Lombardi (Adam Smith Business School, University of Glasgow.) |
| Abstract: | A social choice rule (SCR) F maps preference profiles to lotteries over some finite set of outcomes. F is virtually implementable in (pure and mixed) Nash equilibria provided that for all E > 0, there exists a mechanism such that for each preference profile t, its set of Nash equilibrium outcomes at t is E-closed to the socially desirable set F(t). Under a domain restriction, we obtain the following result: When there are at least three agents, any F is virtually implementable in Nash equilibrium, as well as in rationalizable strategies, by a bounded mechanism. No "tail-chasing" constructions, common in the constructive proofs of the literature, is used to assure that undesired strategy combinations do not form a Nash equilibrium. |
| Keywords: | : Virtual implementation, pure and mixed Nash equilibria, rationalizability, social choice rules |
| JEL: | C79 D82 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:sin:wpaper:19-a001&r=all |
| By: | Dominik Grafenhofer; Wolfgang Kuhle |
| Abstract: | We study Bayesian coordination games where agents receive noisy private information over the game's payoff structure, and over each others' actions. If private information over actions is precise, we find that agents can coordinate on multiple equilibria. If private information over actions is of low quality, equilibrium uniqueness obtains like in a standard global games setting. The current model, with its flexible information structure, can thus be used to study phenomena such as bank-runs, currency crises, recessions, riots, and revolutions, where agents rely on information over each others' actions. |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1904.10744&r=all |
| By: | Francesco Decarolis; Maris Goldmanis; Antonio Penta |
| Abstract: | The transition of the advertising market from traditional media to the internet has induced a proliferation of marketing agencies specialized in bidding in the auctions that are used to sell ad space on the web. We analyze how collusive bidding can emerge from bid delegation to a common marketing agency and how this can undermine the revenues and allocative efficiency of both the Generalized Second Price auction (GSP, used by Google and Microsoft-Bing and Yahoo!) and the of VCG mechanism (used by Facebook). We find that, despite its well-known susceptibility to collusion, the VCG mechanism outperforms the GSP auction both in terms of revenues and efficiency. |
| Keywords: | Collusion, digital marketing agencies, facebook, google, GSP, internet auctions, online advertising, VCG |
| JEL: | C72 D44 L81 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1657&r=all |
| By: | Hattori, Keisuke; Yamada, Mai |
| Abstract: | This paper considers effective leadership selection in a simple two-person team production model with heterogeneous agents. We demonstrate leadership success through synergy by showing that the existence of synergy makes effort complementary, implying that the leader devote more effort than the follower and that a team with a leader yields greater production than a team without a leader. We also show that, to elicit greater team production, a principal should appoint the agent with higher (lower) opportunity cost as the leader (follower). Even if the agents' opportunity costs are unobservable to the principal, the principal can select a better leader by proposing a larger position allowance for the leader. The results may explain why many organizations indeed favor leadership styles and why real-world leaders receive higher compensation than followers. |
| Keywords: | Team production; Leadership selection; Synergy effect; Complementary team |
| JEL: | D21 H41 M54 |
| Date: | 2019–04–21 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:93436&r=all |
| By: | Yue Feng (Department of Economics, The University of Kansas); Tarun Sabarwal (Department of Economics, University of Kansas) |
| Abstract: | Strategic complements are well understood for normal form games, but less so for extensive form games. Indeed, there is some evidence that extensive form games with strategic complemen- tarities are a very restrictive class of games (Echenique (2004)). We explore the extent of this restrictiveness in the context of two stage, 2×2 games. We find that the restrictiveness imposed by quasisupermodularity and single crossing property is particularly severe, in the sense that the set of games in which payoffs satisfy these conditions has measure zero. In contrast, the set of games that exhibit strategic complements (in the sense of increasing best responses) has infinite measure. This enlarges the scope of strategic complements in two stage, 2 × 2 games (and provides a basis for possibly greater scope in more general games). Moreover, the set of subgame perfect Nash equilibria in the larger class of games continues to remain a nonempty, complete lattice. |
| Keywords: | Strategic complements, extensive form game, two stage game |
| JEL: | C61 C70 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:kan:wpaper:201906&r=all |
| By: | Gaenssle, Sophia; Budzinski, Oliver |
| Abstract: | We review the economics of superstars, originally developed for stars in traditional media, and discuss whether they are applicable for the (allegedly) novel phenomenon of stars in social media (influencer, micro-celebrities). Moreover, we analyse potentially new factors for creating social media superstardom that may be special to the nature of social media. Our overall result is that the economics of superstars, like the role of talent, market concentration effects, MacDonald-style and Adler-style effects, remain applicable and relevant for social media stars. In line with this assessment, we find that several (allegedly) new star factors in social media, like user-generated content, prosumption, disappearance of gatekeepers and authenticity, turn out to be only partly applicable or just slightly different to traditional concepts. However, algorithm management and upload strategies represent novel success factors relevant for social media superstardom that are not captured by traditional superstar theories. |
| Keywords: | social media,digital media,popularity,superstars,cultural economics,media economics,influencer,micro-celebrities,creators,user-generated content,prosumer,algorithm management,YouTube,Instagram,entertainment markets |
| JEL: | L82 Z10 L13 L15 L86 D43 D83 F23 M21 D91 L26 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:tuiedp:123&r=all |
| By: | Birgit Rudloff; Firdevs Ulus |
| Abstract: | For incomplete preference relations that are represented by multiple priors and/or multiple -- possibly multivariate -- utility functions, we define a certainty equivalent as well as the utility buy and sell prices and indifference price bounds as set-valued functions of the claim. Furthermore, we motivate and introduce the notion of a weak and a strong certainty equivalent. We will show that our definitions contain as special cases some definitions found in the literature so far on complete or special incomplete preferences. We prove monotonicity and convexity properties of utility buy and sell prices that hold in total analogy to the properties of the scalar indifference prices for complete preferences. We show how the (weak and strong) set-valued certainty equivalent as well as the indifference price bounds can be computed or approximated by solving convex vector optimization problems. Numerical examples and their economic interpretations are given for the univariate as well as for the multivariate case. |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1904.09456&r=all |
| By: | Haraguchi, Junichi; Matsumura, Toshihiro |
| Abstract: | We investigate endogenous timing in a mixed duopoly with price competition and with social marginal cost differing from private marginal costs. We find that any equilibrium timing patterns--Bertrand, Stackelberg with private leadership, Stackelberg with public leadership, and multiple Stackelberg equilibria-- emerge. When the foreign ownership share in a private firm is less than 50%, public leadership more likely emerges than private leadership. Conversely, private leadership can emerge in a unique equilibrium when the foreign ownership share in a private firm is large. These results may explain recent policy changes in public financial institutions in Japan. We also find a nonmonotone relationship between the welfare advantage of public and private leadership and the difference between social and private marginal costs for a private firm. A nonmonotone relationship does not emerge in profit ranking. |
| Keywords: | public financial institutions, differentiated products, Bertrand, Stackelberg, payoff dominance |
| JEL: | H42 L13 |
| Date: | 2019–04–20 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:93450&r=all |
| By: | M. Ali Khan (Department of Economics, Johns Hopkins University, USA); Haomiao Yu (Department of Economics, Ryerson University, Canada); Zhixiang Zhang (CEMA, Central University of Finance and Economics, China) |
| Abstract: | Blackwell's (1949) theorem on the comparison of information structures has been influential in both theoretical and applied work in economics, statistics and game theory, but severely hampered by its confinement to finite state spaces. Applications and alternative proofs have all suffered from this limitation, though in their use of continuous density functions, not all authors have realized this. In this note, we remove this dissonance that has dogged the literature at least since Boll's (1955) announcement. We do so by working with an abstract, measurable state-space and a Polish observation space, and as one application, apply the theorem to generalize the Hirshleifer-Schlee result on the value of information in a Walrasian price-taking environment. We relate our results to a broad selection of the antecedent (inter-disciplinary) literature. |
| Keywords: | Information structure, sufficiency, informativeness, second-order stochastic dominance, mean-preserving spread, martingalizability, Hirshleifer effect |
| JEL: | C6 D5 D8 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:rye:wpaper:wp076&r=all |
| By: | Gensbittel, Fabien; Renault, Jérôme; Peski, Marcin |
| JEL: | C70 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:122929&r=all |
| By: | Miclo, Laurent; Villeneuve, Stéphane |
| Abstract: | This paper is concerned with the solution of the optimal stopping problem associated to the valuation of Perpetual American options driven by continuous time Markov chains. We introduce a new dynamic approach for the numerical pricing of this type of American options where the main idea is to build a monotone sequence of almost excessive functions that are associated to hitting times of explicit sets. Under minimal assumptions about the payoff and the Markov chain, we prove that the value function of an American option is characterized by the limit of this monotone sequence. |
| Keywords: | Markov chains; Optimal Stopping; American option pricing |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:122933&r=all |