|
on Microeconomics |
| By: | Christina Luxen (Bonn Graduate School of Economics, University of Bonn) |
| Abstract: | This paper studies the effect of pre-election polls on the participation decision of citizens in a large, two-candidate election, and the resulting incentives for the poll participants. Citizens have private values and voting is costly and instrumental. The environment is ex ante symmetric and features aggregate uncertainty about the distribution ofpreferences. Citizens base their participation decision on their own preferences and on the information provided in the poll. If all participants answer the poll truthfully, the underdog effect implies that the supporters of the trailing candidate turnout at higher rates than the supporters of the leader of the poll. This effect yields incentives for the poll participants to misrepresent their preferences to encourage the voters who have the same preferences to turnout. If poll participants are strategic, however, there does not exist an equilibrium in which the poll conveys any information. Thus, in the limit, the majority candidate wins the election almost surely, regardless of voters' posterior beliefs. |
| Keywords: | Costly voting; Polls; Aggregate Uncertainty; Underdog Effect |
| JEL: | D72 D83 |
| Date: | 2020–08 |
| URL: | http://d.repec.org/n?u=RePEc:ajk:ajkdps:020&r=all |
| By: | Federica Ceron (UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12); Vassili Vergopoulos (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | We provide an axiomatic characterization of recursive Maxmin preferences that stem from (possibly) incomplete preferences representing choices that are justified by hard evidence. The decision-maker disposes of objective probabilistic information that may induce dynamically inconsistent behavior. To ensure that her choices be informed by objective information, dynamically consistent, and ambiguity averse, she constructs her subjective set of priors as the rectangular hull of the objective information set. The characterization builds upon two axioms that naturally combine these three requirements in a behavioral way. Moreover, our main result suggests a principled justification for the use of recursive Maxmin preferences in applications to dynamic choice problems. |
| Abstract: | Nous proposons une caractérisation axiomatique des préférences Maxmin récursives sur la base de préférences incomplètes représentant les choix qui peuvent être justifiés par des preuves irréfutables. Le décideur dispose d'information probabiliste objective qui peut induite en général des comportements dynamiquement incohérents. De façon à faire en sorte que ses choix soient à la fois sensibles à l'information objective, dynamiquement cohérents et averses à l'ambiguïté, il adopte comme ensemble subjectif de priors l'enveloppe rectangulaire de l'information objective. Notre caractérisation repose sur deux axiomes qui combinent de manière naturelle ces trois exigences de manière comportementale. De plus, notre résultat principal suggère un principe de justification de l'utilisation des préférences Maxmin récursives dans les applications aux problèmes de choix dynamique. |
| Keywords: | Rectangularity,Rectangularization,Maxmin Expected Utility,Unanimity Rule,Dynamic Consistency,Prior-by-prior Updating,Objective and Subjective Rationality,Rectangularité,Rectangularisation,Espérance d'Utilité Maxmin,Règle d'Unanimité,Cohérence Dynamique,Mise à jour Prior par Prior,Rationalités Objectives et Subjectives |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-02900497&r=all |
| By: | Herve Cres (New York University in Abu Dhabi); Mich Tvede (University of East Anglia) |
| Abstract: | We consider Cournot competition in general equilibrium. Decisions in firms are taken by majority voting. Naturally, interests of voters–shareholders or stakeholders–depend on their endowments and portfolios. We introduce two notions of local Cournot-Walras equilibria to overcome difficulties arising from non-concavity of profit functions and multiplicity of equilibrium prices. We show existence of local Cournot-Walras equilibria, and characterize distributions of voting weights for which equilibrium allocations are Pareto optimal. We discuss the performance of various governances and highlight the importance of financial markets in regulating large firms. |
| Keywords: | Cournot-Walras equilibrium Majority voting Pareto optimality Shareholder governance Stakeholder democracy Walrasian equilibria |
| JEL: | D41 D43 D51 D61 D71 |
| Date: | 2020–01–02 |
| URL: | http://d.repec.org/n?u=RePEc:uea:ueaeco:2020-01&r=all |
| By: | Bettina Klaus; Panos Protopapas |
| Abstract: | We study correspondences that choose an interval of alternatives when agents have single-peaked preferences over locations and ordinally extend their preferences over intervals. We extend the main results of Moulin (1980) to our setting and show that the results of Ching (1997) cannot always be similarly extended. First, strategy-proofness and peaks-onliness characterize the class of generalized median correspondences (Theorem 1). Second, this result neither holds on the domain of symmetric and single-peaked preferences, nor can in this result min/max continuity substitute peaks-onliness (see counter-Example 3). Third, strategy-proofness and voter-sovereignty characterize the class of ecient generalized median correspondences (Theorem 2). |
| Keywords: | correspondences; generalized median correspondences; single-peaked preferences;strategy-proofness |
| JEL: | C71 D63 D78 H41 |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:lau:crdeep:20.04&r=all |
| By: | Muthoo, Abhinay (University of Warwick) |
| Abstract: | We lay down a simple (game-theoretic) model of a state-of-anarchy involving three players. We focus attention on the following question : Which subset of players (if any) will agree to cooperate amongst each other? Will all three players agree to do so, or only two of the three players (and if so, which two players)? Or will no player agree to cooperate with any other player? We show that the socially optimal outcome is for all three players to agree to cooperate with each other. We also show that due to the presence of positive externalities, in equilibrium, cooperation may only be established between two of the three players (which is sub-optimal). JEL codes: D62 ; D74 ; F02 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:1296&r=all |
| By: | Yassine Lefouili; Joana Pinho |
| Abstract: | This paper explores the incentives for, and the effects of, collusion in prices between two-sided platforms. We characterize the most profitable sustainable agreement when platforms collude on both sides of the market and when they collude on a single side of the market. Under two-sided collusion, prices on both sides are higher than the competitive prices, implying that agents on both sides become worse off as compared to the competitive outcome. An increase in cross-group externalities makes two-sided collusion harder to sustain, and reduces the harm from collusion suffered by the agents on a given side as long as the collusive price on that side is lower than the monopoly price. When platforms collude on a single side of the market, the price on the collusive side is lower (higher) than the competitive price if the magnitude of the cross-group externalities exerted on that side is sufficiently large (small). As a result, one-sided collusion may benefit the agents on the collusive side and harm the agents on the competitive side. |
| Keywords: | Collusion; Two-sided markets; Cross-group externalities |
| JEL: | L41 D43 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:mde:wpaper:0147&r=all |
| By: | Ori Haimanko (BGU) |
| Keywords: | Generalized Tullock contests, Bayesian Nash Equilibrium, equi- librium existence, absolute continuity, information structures, continuum of types |
| JEL: | C72 D44 D82 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:bgu:wpaper:2013&r=all |
| By: | Elias Carroni; Giuseppe Pignataro; Alessandro Tampieri |
| Abstract: | We study a context in which a seller can increase the perceived value of her product by a costly manipulative action, and buyers’ collective learning can contrast the seller’s manipulation. Each buyer needs to face documentation (effort) costs to understand product value. A buyer alone is never willing to face the cost of effort, as her documentation activity has no impact on the seller’s choices. The intermediation of a platform induces the buyers to exert effort, thereby reducing manipulation. The platform can direct the learning activity by developing a peer-review system or only allowing for individual learning. The choice between the two environments depends on (i) the precisions of the signals that each buyer receives and (ii) the manipulative ability of the seller. |
| Keywords: | Manipulation, Private Information, Online Marketplace, Bayesian Learning, In- formation Acquisition, Peer-Review. |
| JEL: | D42 D82 D83 L13 M37 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:frz:wpaper:wp2020_06.rdf&r=all |
| By: | Chen Cohen (BGU); Ishay Rabi (BGU); Aner Sela (BGU) |
| Keywords: | Two-sided matching, Tullock contest |
| JEL: | D44 J31 D72 D82 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:bgu:wpaper:2004&r=all |
| By: | Yingkai Li; Harry Pei |
| Abstract: | We examine a patient player's behavior when he can build a reputation in front of a sequence of myopic opponents. With positive probability, the patient player is a commitment type who mechanically plays his Stackelberg action in every period. We characterize the patient player's action frequencies in equilibrium. Our results clarify the extent to which reputation effects can refine the patient player's equilibrium behavior. |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2007.14002&r=all |
| By: | Simon Hoof (Paderborn University) |
| Abstract: | We consider a n-person pure bargaining game in which the payoff space of feasible agreements is constructed via a noncooperative cake eating differential game. At the beginning of the game the agents bargain over strategies to be played during the game while the noncooperative Nash equilibrium serves as the disagreement strategies. An initial cooperative solution (a strategy tuple) is called time consistent if renegotiating it at a later time instant yields the original solution and subgame individually rational if it remains individually rational to stick to the initial solution throughout the game. We show that time consistent and subgame individually rational bargaining solutions exist if the space of cooperative strategies is restricted to linear functions and the bargaining solution is a maximizer of some linear homogenous function. |
| Keywords: | : cooperative NTU differential games, time consistency, bargaining solution |
| JEL: | C61 C71 C78 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:pdn:dispap:67&r=all |
| By: | Aner Sela (BGU) |
| Keywords: | Iatching, Tullock contest |
| JEL: | D44 J31 D72 D82 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:bgu:wpaper:2005&r=all |
| By: | Anna Sanktjohanser (Cowles Foundation, Yale University) |
| Abstract: | I consider a bargaining game with two types of players – rational and stubborn. Rational players choose demands at each point in time. Stubborn players are restricted to choose from the set of “insistent†strategies that always make the same demand and never accept anything less. However, their initial choice of demand is unrestricted. I characterize the equilibria of this game. I show that while pooling equilibria exist, fully separating equilibria do not. Relative to the case with exogenous behavioral types, strong behavioral predictions emerge: in the limit, players randomize over at most two demands. However, unlike in a world with exogenous types, there is Folk-theorem-like payoff multiplicity. |
| Keywords: | Reputation, Bargaining, Behavioral types, War of attrition |
| Date: | 2020–08 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:2255&r=all |
| By: | Chen Cohen (BGU); David Lagziel (BGU); Ofer Levi (BGU); Aner Sela (BGU) |
| Keywords: | All-pay contests, multiple prizes, complete information |
| JEL: | D44 D82 J31 J41 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:bgu:wpaper:2010&r=all |
| By: | M. Ali Khan; Metin Uyanik |
| Abstract: | This chapter examines how positivity and order play out in two important questions in mathematical economics, and in so doing, subjects the postulates of continuity, additivity and monotonicity to closer scrutiny. Two sets of results are offered: the first departs from Eilenberg's (1941) necessary and sufficient conditions on the topology under which an anti-symmetric, complete, transitive and continuous binary relation exists on a topologically connected space; and the second, from DeGroot's (1970) result concerning an additivity postulate that ensures a complete binary relation on a {\sigma}-algebra to be transitive. These results are framed in the registers of order, topology, algebra and measure-theory; and also beyond mathematics in economics: the exploitation of Villegas' notion of monotonic continuity by Arrow-Chichilnisky in the context of Savage's theorem in decision theory, and the extension of Diamond's impossibility result in social choice theory by Basu-Mitra. As such, this chapter has a synthetic and expository motivation, and can be read as a plea for inter-disciplinary conversations, connections and collaboration. |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2007.01952&r=all |
| By: | Din Cohen (BGU); Aner Sela (BGU) |
| Keywords: | Group contests, asymmetric information |
| JEL: | C72 D44 D82 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:bgu:wpaper:2007&r=all |
| By: | Michael J. Fishman; Jonathan A. Parker; Ludwig Straub |
| Abstract: | We develop a tractable dynamic model of credit markets in which lending standards and the quality of potential borrowers are endogenous. Competitive banks privately choose their lending standards: whether to pay a cost to screen out some unprofitable borrowers. Lending standards have negative externalities and are dynamic strategic complements: tighter screening worsens the future pool of borrowers for all banks and increases their incentives to screen in the future. Lending standards can amplify and prolong temporary downturns, affecting lending volume, credit spreads, and default rates. We characterize constrained-optimal policy which can generally be implemented as a government loan insurance program. When markets recover, they may do so only slowly, a phenomenon we call “slow thawing.” Finally, we show that limits on lending such as from capital constraints naturally incentivize tight lending standards, further amplifying shocks to credit markets. |
| JEL: | D82 E51 G21 |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27610&r=all |
| By: | Youichiro Higashi (Faculty of Economics, Okayama University); Kazuya Hyogo (Faculty of Economics, Ryukoku University); Norio Takeoka (Department of Economics, Hitotsubashi University) |
| Abstract: | Information acquisition is an important aspect of decision making. Acquiring information is costly, but the cost of information acquisition is not typically observable and hence it is not obvious how it can be measured. Using preference over menus, de Oliveira, Denti, Mihm, and Ozbek [15] provide an axiomatic foundation for the additive costs model of information acquisition. If obtaining signals from experiments is time-consuming, such as in the case of a long-run investment decision, however, costs may be measured as a discount factor or waiting time for acquiring information. We propose a general class of representations which allows for non-additive costs for information acquisition and provide its axiomatic foundation. Furthermore, the discounting costs model is characterized as a special case. |
| Keywords: | costly information acquisition, rational inattention, waiting costs, preference for flexibility, preference over menus. |
| JEL: | D11 D81 D91 |
| Date: | 2020–08 |
| URL: | http://d.repec.org/n?u=RePEc:kyo:wpaper:1040&r=all |
| By: | Jose de Jesus Herrera-Velasquez (Graduate School of Economics, Kyoto University) |
| Abstract: | We develop a model of conglomerate mergers. There are two markets that are not related horizontally or vertically. Each market has an oligopoly structure where the firms compete in a Cournot fashion. The firms cannot merge with a firm in the same market, but they are able to with a firm in a different market. Without a merger, we assume that only the firms in one of the markets can invest in technology to reduce the cost of production. After the merger, the new formed conglomerate is able to use the technology in both markets. Using the technology has a cost of opportunity in the merger scenario, hence the conglomerate has to decide how to allocate the technology across both markets. The model predicts that in a monopoly benchmark, the incentives to allocate the technology are to reduce the costs in the markets with better prospects of prots. In an oligopoly structure, the firms merge if they have incentives to transfer the technology from the original market either to invest in the better markets or to avoid technological competition. We fully characterize how the markets' size and the technological compatibility determine the equilibrium market outcomes and the underlying merger decisions. We derive welfare implications of the equilibria. |
| Keywords: | Conglomerate Mergers; Corporate Diversication; Game Theory; Resources; Multimarket Competition |
| Date: | 2020–08 |
| URL: | http://d.repec.org/n?u=RePEc:kyo:wpaper:1038&r=all |
| By: | Omri Haluta (BGU); Aner Sela (BGU) |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:bgu:wpaper:2006&r=all |
| By: | Filomena Garcia; Muxin Li |
| Abstract: | In this paper we study the effects of the introduction of a new two sided platform endowed with artificial intelligence in a market where a firm provides a brick and mortar platform to buyers and sellers. In our theoretical model we show that the decision of whether to introduce the new platform depends on the reduction of the search cost for the consumers. We also show that the introduction of the platform enlarges the market with more consumers using both platforms. Finally we study the welfare effect of the introduction of the platform opening the discussion on whether certain artificial intelligence devices for shopping should be regulated. |
| Keywords: | e-Commerce; Intermediary; Two-sided markets |
| JEL: | L1 L2 L8 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:mde:wpaper:0146&r=all |