
on Microeconomics 
By:  Panayotis Mertikopoulos; Heinrich H. Nax; Bary S. R. Pradelski 
Abstract:  We examine twosided markets where players arrive stochastically over time and are drawn from a continuum of types. The cost of matching a client and provider varies, so a social planner is faced with two contending objectives: a) to reduce players' waiting time before getting matched; and b) to form efficient pairs in order to reduce matching costs. We show that such markets are characterized by a quick or cheap dilemma: Under a large class of distributional assumptions, there is no `free lunch', i.e., there exists no clearing schedule that is simultaneously optimal along both objectives. We further identify a unique breaking point signifying a stark reduction in matching cost contrasted by an increase in waiting time. Generalizing this model, we identify two regimes: one, where no free lunch exists; the other, where a window of opportunity opens to achieve a free lunch. Remarkably, greedy scheduling is never optimal in this setting. 
Keywords:  Dynamic matching, online markets, market design 
JEL:  D47 C78 C60 D80 
Date:  2019–12 
URL:  http://d.repec.org/n?u=RePEc:zur:econwp:338&r=all 
By:  Christine L. Exley; Judd B. Kessler 
Abstract:  In three sets of experiments involving over 4,200 subjects, we show that agents motivated to be selfish make systematic decision errors of the kind generally attributed to cognitive limitations or behavioral biases. We show that these decision errors are eliminated (or dramatically reduced) when selfserving motives are removed. We say that individuals make "motivated errors." They make decision errors, but only when it is selfserving to do so. 
JEL:  C91 D64 D91 
Date:  2019–12 
URL:  http://d.repec.org/n?u=RePEc:nbr:nberwo:26595&r=all 
By:  Claudia Herresthal 
Abstract:  An agent can sequentially run informative tests about an unknown state and disclose (some or all) outcomes to a decision maker who then faces an approval choice. Players agree on the optimal choice under certainty, but the decision maker has a higher approval threshold than the agent. I compare the case where testing is hidden and the agent chooses which test outcomes to verifiably disclose to the case where testing is observable. When testing is observable, I show that the agent may strategically stop testing even if further tests could yield a mutual benefit. I find conditions under which the decision maker is strictly better off under hidden testing and in some equilibria both players are strictly better off under hidden testing than in the unique equilibrium under observable testing. 
Keywords:  endogenous information acquisition, verifiable disclosure, transparency, questionable research practices 
JEL:  D83 D82 
Date:  2020–01 
URL:  http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2020_145&r=all 
By:  Fugger, Nicolas; Gillen, Philippe; Riehm, Tobias 
Abstract:  We show that it is beneficial for a buyer to conduct a multistage mechanism if bidders are loss averse. In a first step, we derive a revenue equivalence principle. Fixing the multistage structure, the revenue is independent of the chosen payment rule. Secondly, we introduce a simple twostage mechanism which always leads to a decrease in procurement costs compared to any singlestage auction. Finally we derive the optimal efficient twostage mechanism. 
Keywords:  Auctions,Experiment,Loss aversion,Preferences 
JEL:  D44 D47 D90 
Date:  2019 
URL:  http://d.repec.org/n?u=RePEc:zbw:zewdip:19060&r=all 
By:  Dan Kovenock (Economic Science Institute, Chapman University); Jingfeng Lu (Department of Economics, National University of Singapore) 
Abstract:  In this paper, we study score procurement auctions with allpay quality bids. A supplierís score is the di§erence between his quality and price bids. The supplier with the highest score wins and gets paid his own price bid. The procurerís payo§ is the di§erence between the winnerís quality and the procurerís payments to the suppliers. Equilibrium quality and price bids are solved without Örst obtaining the corresponding equilibrium scores. We Önd that quality bids, the suppliersípayo§s and the procurerís payo§ do not depend on whether price bids are made contingent on quality bids. Compared to a benchmark of winnerpay quality bids, in which the losing suppliersí quality bidding costs are reimbursed by the procurer, allpay quality bids tend to reduce quality provision and suppliersípayo§s, but they tend to increase the total surplus and the procurerís payo§. 
Keywords:  Allpay quality bids, Equilibrium analysis, Score auctions, Score procurements, Winnerpay quality bid 
JEL:  C70 D44 D89 L12 O32 
Date:  2020 
URL:  http://d.repec.org/n?u=RePEc:chu:wpaper:2001&r=all 
By:  Franz Dietrich (CNRS  Centre National de la Recherche Scientifique, PSE  Paris School of Economics, CES  Centre d'économie de la Sorbonne  UP1  Université PanthéonSorbonne  CNRS  Centre National de la Recherche Scientifique); Antonios Staras (Cardiff University); Robert Sugden (UEA  University of East Anglia [Norwich]) 
Abstract:  Logical models of the mind focus on beliefs, and how one reasons with beliefs. But we also have desires, intentions, preferences, and other attitudesand arguably we reason with them, particularly when making decisions. To enable a logical analysis of someone's psychology and decisionmaking, we generalize three classic logical desiderata on beliefs  consistency, completeness, and implicationclosedness  towards multiple attitudes. The three resulting 'logical' desiderata on our psychology contrast with the classic notion of 'rationality requirements': requirements of having transitive preferences, noncontradictory beliefs, nonacratic intentions, intentions consistent with preferences, and so on. We prove a theorem that connects the logical desiderata to rationality requirements: each of the three logical desiderata (generalized to multiple attitudes) is equivalent to the satisfaction of a certain class of rationality requirements. This result connects logic with choice theory and psychology, and has implications for whether reasoning can make our attitudes consistent, complete, and closed. 
Date:  2020–01–08 
URL:  http://d.repec.org/n?u=RePEc:hal:wpaper:halshs02431917&r=all 
By:  Chatterji, Shurojit (School of Economics, Singapore Management University); Roy, Souvik (Indian Statistical Institute); Sadhukhan, Soumyarup (Indian Statistical Institute); Sen, Arunava (Indian Statistical Institute); Zeng, Huaxia (Shanghai University of Finance and Economics) 
Abstract:  We study Random Social Choice Functions (or RSCFs) in a standard ordinal mechanism design model. We introduce a new preference domain called a hybrid domain which includes as special cases as the complete domain and the singlepeaked domain. We characterize the class of unanimous and strategyproof RSCFs on these domains and refer to them as Restricted Probabilistic Fixed Ballot Rules (or RPFBRs). These RSCFs are not necessarily decomposable, i.e., cannot be written as a convex combination of their deterministic counterparts. We identify a necessary and suﬃcient condition under which decomposability holds for anonymous RPFBRs. Finally, we provide an axiomatic justiﬁcation of hybrid domains and show that every connected domain satisfying some mild conditions is a hybrid domain where the RPFBR characterization still prevails. 
Keywords:  Strategyproofness; hybrid domain; restricted probabilistic fixed ballot rule; decomposability; connectedness 
JEL:  D71 H41 
Date:  2020–01–09 
URL:  http://d.repec.org/n?u=RePEc:ris:smuesw:2020_003&r=all 
By:  Howell, William; Shepsle, Kenneth; Wolton, Stephane 
Abstract:  Separated powers cannot permanently constrain individual ambitions. Concerns about a government's ability to respond to contemporary and future crises, we show, invariably compromise the principled commitments one branch of government has in limiting the authority of another. We study a dynamic model in which a politician (most commonly an executive) makes authority claims that are subject to a hard constraint (administered, typically, by a court). At any period, the court is free to rule against the executive and thereby permanently halt her efforts to acquire more power. Because it appropriately cares about the executive's ability to address realworld disruptions, however, the court is always willing to affirm more authority. Neither robust electoral competition nor alternative characterizations of judicial rule fundamentally alters this state of affairs. The result, we show, is a persistent accumulation of executive authority. 
Keywords:  Authority, Executive Growh, Judicial Decision, Separation of Power, Federalist 
JEL:  C73 D02 D70 D72 H11 K39 
Date:  2020–01–16 
URL:  http://d.repec.org/n?u=RePEc:pra:mprapa:98221&r=all 
By:  Müller, Michael; Puppe, Clemens 
Abstract:  We study a model in which agents with singlepeaked preferences can participate in a costly voting procedure to determine the value of a onedimensional variable. We show that, for all positive participation cost and all profiles of individual preferences, there exists a (generically) unique equilibrium with (at most) one single participant whenever the voting mechanism is strategyproof, anonymous, and responsive in the sense that the outcome reacts to a unanimous move of the votes of all agents in the same direction. 
Date:  2020 
URL:  http://d.repec.org/n?u=RePEc:zbw:kitwps:138&r=all 
By:  Erel SegalHalevi; Warut Suksompong 
Abstract:  A fundamental result in cake cutting states that for any number of players with arbitrary preferences over a cake, there exists a division of the cake such that every player receives a single contiguous piece and no player is left envious. We generalize this result by showing that it is possible to partition the players into groups of any desired sizes and divide the cake among the groups, so that each group receives a single contiguous piece and no player finds the piece of another group better than that of the player's own group. 
Date:  2020–01 
URL:  http://d.repec.org/n?u=RePEc:arx:papers:2001.03327&r=all 
By:  Franz Dietrich (CNRS  Centre National de la Recherche Scientifique, PSE  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 and Political Science) 
Abstract:  Agents are often assumed to have degrees of belief ("credences") and also binary beliefs ("beliefs simpliciter"). How are these related to each other? A muchdiscussed answer asserts that it is rational to believe a proposition if and only if one has a high enough degree of belief in it. But this answer runs into the "lottery paradox": the set of believed propositions may violate the key rationality conditions of consistency and deductive closure. In earlier work, we showed that this problem generalizes: there exists no local function from degrees of belief to binary beliefs that satisfies some minimal conditions of rationality and nontriviality. "Locality" means that the binary belief in each proposition depends only on the degree of belief in that proposition, not on the degrees of belief in others. One might think that the impossibility can be avoided by dropping the assumption that binary beliefs are a function of degrees of belief. We prove that, even if we drop the "functionality" restriction, there still exists no local relation between degrees of belief and binary beliefs that satisfies some minimal conditions. Thus functionality is not the source of the impossibility; its source is the condition of locality. If there is any nontrivial relation between degrees of belief and binary beliefs at all, it must be a "holistic" one. We explore several concrete forms this "holistic" relation could take. 
Date:  2020–01–08 
URL:  http://d.repec.org/n?u=RePEc:hal:wpaper:halshs02431882&r=all 
By:  Hannu Salonen (University of Turku); Mitri Kitti (University of Turku) 
Abstract:  We give a proof of the existence of a Nash equilibrium fornpersonnormal form games when each playerâ€™s utility function is continuousw.r.t. strategy profiles, and concave and differentiable w.r.t. his ownstrategy. The proof uses only elementary mathematical tools such asmathematical induction. We show that this equilibrium existence result is sufficiently general to imply the Brouwer Fixed Point Theorem.The Kakutani Fixed Point Theorem is obtained as a corollary by usingstandard techniques. 
Keywords:  Nash equilibrium, fixedpoint theorem 
JEL:  C72 
Date:  2019–12 
URL:  http://d.repec.org/n?u=RePEc:tkk:dpaper:dp131&r=all 
By:  Federica Ceron (UP1 UFR02  Université PanthéonSorbonne  UFR d'Économie  UP1  Université PanthéonSorbonne); Stéphane Gonzalez (UJM  Université Jean Monnet [SaintÉtienne], GATE Lyon SaintÉtienne  Groupe d'analyse et de théorie économique  ENS Lyon  École normale supérieure  Lyon  UL2  Université Lumière  Lyon 2  UCBL  Université Claude Bernard Lyon 1  Université de Lyon  UJM  Université Jean Monnet [SaintÉtienne]  Université de Lyon  CNRS  Centre National de la Recherche Scientifique) 
Abstract:  We provide an axiomatic characterization of Approval Voting without the approval balloting assumption. The dichotomous structure of the informational basis of Approval voting as well as its aggregative rationale are jointly derived from a set of normative conditions on the voting procedure. The first one is the wellknown socialtheoretic principle of consistency; the second one, ballot richness, requires voters to be able to express a sufficiently rich set of opinions; the last one, dubbed no singlevoter overrides, demands that the addition of a voter to an electorate cannot radically change the outcome of the election. Such result is promising insofar it suggests that the informational basis of voting may have a normative relevance that deserves formal treatment. 
Keywords:  Approval voting,balloting procedure,Informational basis,Evaluative voting 
Date:  2019 
URL:  http://d.repec.org/n?u=RePEc:hal:wpaper:halshs02440615&r=all 
By:  Martin F. Quaas; Stefan Baumgärtner; Moritz A. Drupp; Jasper N. Meya 
Abstract:  We characterize intertemporal utility functions over heterogeneous goods that feature (i) a constant elasticity of substitution between goods at each point in time and (ii) a constant intertemporal elasticity of substitution for at least one of the goods. We find that a standard (stationary) intertemporal utility function is consistent with these two properties if and only if it either is of the intertemporal constant elasticity of substitution (ICES) form, that is, if all elasticities of substitution are identical, or if the instantaneous utility function is CobbDouglas. We also characterize the families of standard intertemporal utility functions that feature either (i) or (ii), but not the respective other property. The ICES utility function offers a simple and consistent solution for applications that use constant goodspecific intertemporal substitutability. This is, for example, relevant for dual discounting of market and nonmarket goods. 
Keywords:  substitutability, CES, CIES, intertemporal utility, nonmarket goods 
JEL:  D61 Q51 
Date:  2019 
URL:  http://d.repec.org/n?u=RePEc:ces:ceswps:_7999&r=all 
By:  Matteo Triossi; María Haydée FonsecaMairena 
Abstract:  We study the implementability of stable correspondences in marriage markets with externalities. We prove that, contrary to what happens in markets without externalities, no stable revelation mechanism makes a dominant strategy for the agents on one side of the market to reveal their preferences. However, the stable correspondence in implementable in Nash equilibrium. JEL Codes:Economic Literature Classification Numbers: C72, C78, D62, D78. Key words: Marriage market with externalities; Incentives; Implementation. 
Date:  2019 
URL:  http://d.repec.org/n?u=RePEc:edj:ceauch:344&r=all 
By:  Alexander Frug 
Abstract:  The main insight of the literature on strategic information transmission is that even a small conflict of interest between a fully informed sender (e.g., a financial adviser) and an uninformed receiver (an investor) often poses considerable difficulties for effective communication. However, in many reallife situations, the sender is not fully informed at the outset but gradually studies the case before offering advice. The gradual arrival of information to the sender weakens the strategic barriers between the players and significantly improves communication. 
JEL:  D82 D83 
Date:  2019–12 
URL:  http://d.repec.org/n?u=RePEc:upf:upfgen:1691&r=all 
By:  Kim, Minseong 
Abstract:  In this paper, it is argued that notion of what credence is affects how one should view and solve the sleeping beauty problem. If credence is decoupled from using all known information to approximate probabilistic distribution of a (mathematical and classical) stochastic process, then credence may have to be updated even if there is no new information. 
Date:  2019–10–25 
URL:  http://d.repec.org/n?u=RePEc:osf:osfxxx:d2msc&r=all 
By:  Daniel Bird; Alexander Frug 
Abstract:  Workers rarely perform exactly the same tasks every day. Instead, their daily workload may change randomly over time to comply with the uctuating needs of the organiza tion where they are employed. In this paper, we show that this typical randomness in workplaces has a striking e ect on the structure of longterm employment contracts. In particular, simple intertemporal variability in the worker's tasks is sucient to gen erate a rich promotionbased dynamics in which, occasionally, the worker receives a (permanent) wage raise and his future work requirements are reduced. 
Keywords:  Dynamic contracting, random tasks, seniority, promotion. 
JEL:  D86 M51 
Date:  2020–01 
URL:  http://d.repec.org/n?u=RePEc:upf:upfgen:1690&r=all 
By:  Grüb, Jens 
Abstract:  This paper studies whether mergers may lead to partial tacit collusion, thereby having the potential to induce simultaneous coordinated and noncoordinated effects. We use a BertrandEdgeworth model with heterogeneous discount factors to derive conditions for profitable and stable collusion and provide a numerical example. Mergers that change the market structure in a way such that maverick firms are eliminated or colluding firms reach a critical share in total capacity can lead to partial collusion. 
Keywords:  Partial Collusion,Tacit Collusion,Mergers,Coordinated Effects,Noncoordinated Effects,Umbrella Effects 
Date:  2019 
URL:  http://d.repec.org/n?u=RePEc:zbw:hohdps:152019&r=all 