nep-mic New Economics Papers
on Microeconomics
Issue of 2021‒09‒06
four papers chosen by
Jing-Yuan Chiou
National Taipei University

  1. Welfare in Experimental News Markets By Albertazzi, Andrea; Ploner, Matteo; Vaccari, Federico
  2. Bayesian learning By Isaac Baley; Laura Veldkamp
  3. Adam Smith and The Roots of Populism By Roberto Censolo; Massimo Morelli
  4. Overcoming coordination failure in games with focal points: An experimental investigation By David Rojo-Arjona; R. Stefania Sitzia; Jiwei Zheng

  1. By: Albertazzi, Andrea; Ploner, Matteo; Vaccari, Federico
    Abstract: We perform a controlled experiment to study the welfare effects of competition in a strategic communication environment. Two equally informed senders with conflicting interests can misreport information at a cost that is increasing in the size of the lie. We compare a treatment where only one sender communicates with a treatment where both senders communicate simultaneously with a decision-maker. We find that the introduction of competition between senders decreases the welfare of all players. Competing senders reveal the truth less often and spend about twice the amount of resources to misreport information than their monopolistic counterpart. As a result, decision-makers take more informed choices when consulting one sender than when consulting both.
    Date: 2021–08–26
  2. By: Isaac Baley; Laura Veldkamp
    Abstract: We survey work using Bayesian learning in macroeconomics, highlighting common themes and new directions. First, we present many of the common types of learning problems agents face-signal extraction problems-and trace out their effects on macro aggregates, in different strategic settings. Then we review different perspectives on how agents get their information. Models differ in their motives for information acquisition and the cost of information, or learning technology. Finally, we survey the growing literature on the data economy, where economic activity generates data and the information in data feeds back to affect economic activity
    Keywords: Bayes’ law, passive learning, active learning, signal extraction, information choice, sticky information, rational inattention, experimentation, data economy, coordination games.
    JEL: D80 D81 D83 D84 E20 E30
    Date: 2021–07
  3. By: Roberto Censolo; Massimo Morelli
    Abstract: Industry, frugality and prudence can foster growth, and, in turn, growth can sustain individual beliefs that these virtues are the right recipe for the pursuing of happiness. This virtuous circle is an often emphasized contribution of Adam Smith. Equally important but neglected, is the Adam Smith's fear that the opposite vitious cycle can meterialize, especially at stages of development of commercial society characterized by stagnation, alienating working conditions and growming inequality: stagnation of wages, and the frustration coming from the perceived impossibility of trickle down effects from the growing wealth of the few, can degenerate moral sentiments, in ways that we can now associate to may of the current features of populism.
    Keywords: Adam Smith; Moral Sentiments; Secular Stagnation; Inequality
    JEL: B12 E71
    Date: 2021–09–03
  4. By: David Rojo-Arjona (The George L Argyros School of Business and Economics, Chapman University.); R. Stefania Sitzia (School of Economics and Centre for Behavioural and Experimental Social Science, University of East Angle, Norwich.); Jiwei Zheng (School of Economics and Centre for Behavioural and Experimental Social Science, University of East Anglia, Norwich)
    Abstract: Focal points (Schelling, 1960) have shown limitations as coordination devices in games with conflict, such as the battle of the sexes games. We experimentally test whether an increase in their salience can counteract the negative impact of conflict on coordination. The intuition is that, in the presence of conflict, the solution to the coordination dilemma offered by the focal point loses importance. Increasing its salience increases its relevance and therefore coordination success. Our results provide strong support for this conjecture. Furthermore, when games feature outcomes with different degrees of payoffs’ inequality (i.e. the difference of players’ payoffs) and efficiency (i.e. the sum of players’ payoffs), increasing salience does not lead to an obvious increase in coordination, unless the salience of the focal point is maximal.
    Keywords: coordination games, focal points, salience, conflict of interests, battle-of-thesexes, intermixed-blocked effect.
    JEL: C72 C78 C91 D91
    Date: 2021–08

This nep-mic issue is ©2021 by Jing-Yuan Chiou. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.