nep-mic New Economics Papers
on Microeconomics
Issue of 2021‒10‒18
three papers chosen by
Jing-Yuan Chiou
National Taipei University

  1. Signaling under Double-Crossing Preferences By Chia-Hui Chen; Junichiro Ishida; Wing Suen
  2. Group Identity, Social Learning and Opinion Dynamics By Sebastiano Della Lena; Luca Paolo Merlino
  3. Maskin Meets Abreu and Matsushima By Yi-Chun Chen; Takashi Kunimoto; Yifei Sun; Siyang Xiong

  1. By: Chia-Hui Chen; Junichiro Ishida; Wing Suen
    Abstract: This paper provides a general analysis of signaling under double-crossing preferences with a continuum of types. There are natural economic environments where the indifference curves of two types cross twice, such that the celebrated single-crossing property fails to hold. Equilibrium exhibits a threshold type below which types choose actions that are fully revealing and above which they pool in a pairwise fashion, with a gap separating the actions chosen by these two sets of types. The resulting signaling action is quasi-concave in type. We also provide an algorithm to establish equilibrium existence by construction.
    Date: 2020–10
  2. By: Sebastiano Della Lena; Luca Paolo Merlino
    Abstract: In this paper, we study opinion dynamics in a balanced social structure consisting of two groups. Agents learn the true state of the world naively learning from their neighbors and from an unbiased source of information. Agents want to agree with others of the same group -- in-group identity, -- but to disagree with those of the opposite group -- out-group conflict. We characterize steady state opinions, and show that agents' influence depends on their Bonacich centrality in the signed network of opinion exchange. Finally, we study the effect of group size, the weight given to unbiased information and homophily when agents in the same group are homogeneous.
    Date: 2021–10
  3. By: Yi-Chun Chen; Takashi Kunimoto; Yifei Sun; Siyang Xiong
    Abstract: The theory of full implementation has been criticized for using integer/modulo games which admit no equilibrium (Jackson (1992)). To address the critique, we revisit the classical Nash implementation problem due to Maskin (1999) but allow for the use of lotteries and monetary transfers as in Abreu and Matsushima (1992, 1994). We unify the two well-established but somewhat orthogonal approaches in full implementation theory. We show that Maskin monotonicity is a necessary and sufficient condition for (exact) mixed-strategy Nash implementation by a finite mechanism. In contrast to previous papers, our approach possesses the following features: finite mechanisms (with no integer or modulo game) are used; mixed strategies are handled explicitly; neither undesirable outcomes nor transfers occur in equilibrium; the size of transfers can be made arbitrarily small; and our mechanism is robust to information perturbations. Finally, our result can be extended to infinite/continuous settings and ordinal settings.
    Date: 2021–10

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