nep-mic New Economics Papers
on Microeconomics
Issue of 2023‒01‒02
eleven papers chosen by
Jing-Yuan Chiou
National Taipei University

  1. Who Controls the Agenda Controls the Polity By S. Nageeb Ali; B. Douglas Bernheim; Alexander W. Bloedel; Silvia Console Battilana
  2. Organizational dynamics: culture, design, and performance By Besley, Timothy; Persson, Torsten
  3. The Economics of Advice By Winand Emons; Severin Lenhard
  4. The Limits of Commitment By Jacopo Bizzotto; Toomas Hinnosaar; Adrien Vigier
  5. "A New Folk Theorem in OLG Games" By Chihiro Morooka
  6. Strategyproofness and Proportionality in Party-Approval Multiwinner Elections By Th\'eo Delemazure; Tom Demeulemeester; Manuel Eberl; Jonas Israel; Patrick Lederer
  7. The mismatch between potential and actual shirking in a model of bureaucracy By Ciccia, Diego; Distefano, Rosaria; Reito, Francesco
  8. Asymmetric majority pillage games By Kerber, Manfred; Rowat, Colin; Yoshihara, Naoki
  9. When can lotteries improve public procurement processes? By Antonio Estache; Renaud Foucart; Tomas Serebrisky
  11. A Rigorous Proof of the Index Theorem for Economists By Yuhki Hosoya

  1. By: S. Nageeb Ali; B. Douglas Bernheim; Alexander W. Bloedel; Silvia Console Battilana
    Abstract: This paper models legislative decision-making with an agenda setter who can propose policies sequentially, tailoring each proposal to the status quo that prevails after prior votes. Voters are sophisticated and the agenda setter cannot commit to her future proposals. Nevertheless, the agenda setter obtains her favorite outcome in every equilibrium regardless of the initial default policy. Central to our results is a new condition on preferences, manipulability, that holds in rich policy spaces, including spatial settings and distribution problems. Our results overturn the conventional wisdom that voter sophistication alone constrains an agenda setter's power.
    Date: 2022–12
  2. By: Besley, Timothy; Persson, Torsten
    Abstract: We examine the two-way interplay between organizational cultures and organizational design, where culture is modeled as the prevailing social identities among workplace groups that can affect project choices. In a setting where cultural dynamics depend on the expected relative payoffs of holding different identities, we investigate how tribalism and charismatic leadership shape organizational dynamics and steady-state cultures. We show how a strong culture can be a virtue when it permits greater delegated authority, but a vice when the culture is poorly aligned with organizational objectives. We apply our analysis to concrete debates about the interaction of design, performance, and culture.
    Keywords: project ECOSOCPOL
    JEL: L23 M14
    Date: 2022–10–28
  3. By: Winand Emons; Severin Lenhard
    Abstract: A consumer wants to buy one of three different products. An expert observes which of the three products is the best match for the consumer. Under linear prices a monopolistic expert may truthfully reveal, may partially reveal, and may not reveal at all her information. The outcome is ineffcient; moreover, the consumer gets some of the surplus. With a two-part tariff the expert truthfully reveals her information. The outcome is effcient and the expert appropriates the entire surplus. If experts are competitive, they also truthfully reveal; here all the surplus goes to consumers.
    Keywords: advice, credence good, horizontal product differentiation.
    JEL: D18 D82
    Date: 2022–11
  4. By: Jacopo Bizzotto (Oslo Business School, Oslo Metropolitan University); Toomas Hinnosaar (University of Nottingham); Adrien Vigier (University of Oxford)
    Abstract: We study partial commitment in leader-follower games. A collection of subsets covering the leader's action space determines her commitment opportunities. We characterize the outcomes resulting from all possible commitment structures of this kind. If the commitment structure is an interval partition, then the leader's payoff is bounded by the payoffs she obtains under the full and no-commitment benchmarks. We apply our results to study new design problems.
    Date: 2022–05–11
  5. By: Chihiro Morooka (School of Science and Engineering, Tokyo Denki University)
    Abstract: We study payoffs in the subgame perfect equilibria of general n-player discounted overlapping generations games. Without a public randomization device and the observability of mixed actions, we show that patient players can approximately obtain any payoffs in the smallest cube containing the feasible and individually rational one-shot payoffs in the sense of effective minimax values with pure actions. This result is obtained when we first choose the discount rate and then choose the players’ lifespan. When mixed actions are observable, the analogous result holds true for mixed minimaxing. We also show that players cannot obtain better payoffs outside this cube defined by mixed minimaxing.
    Date: 2022–11
  6. By: Th\'eo Delemazure; Tom Demeulemeester; Manuel Eberl; Jonas Israel; Patrick Lederer
    Abstract: In party-approval multiwinner elections the goal is to allocate the seats of a fixed-size committee to parties based on the approval ballots of the voters over the parties. In particular, each voter can approve multiple parties and each party can be assigned multiple seats. Two central requirements in this setting are proportional representation and strategyproofness. Intuitively, proportional representation requires that every sufficiently large group of voters with similar preferences is represented in the committee. Strategyproofness demands that no voter can benefit by misreporting her true preferences. We show that these two axioms are incompatible for anonymous party-approval multiwinner voting rules, thus proving a far-reaching impossibility theorem. The proof of this result is obtained by formulating the problem in propositional logic and then letting a SAT solver show that the formula is unsatisfiable. Additionally, we demonstrate how to circumvent this impossibility by considering a weakening of strategy\-proofness which requires that only voters who do not approve any elected party cannot manipulate. While most common voting rules fail even this weak notion of strategyproofness, we characterize Chamberlin--Courant approval voting within the class of Thiele rules based on this strategyproofness notion.
    Date: 2022–11
  7. By: Ciccia, Diego; Distefano, Rosaria; Reito, Francesco
    Abstract: We present a simple model of bureaucracy under imperfect information, with a public manager and many public officials, some of whom may have the incentive to shirk. We show that the level of shirking in the bureaucracy may be non-monotone in the initial proportion of potential shirkers in the population. Namely, provided the utility from leisure is not too large, the equilibrium level of shirking can be first increasing and then decreasing in the proportion of potential shirkers. A corollary result is that the equilibrium can be efficient only when potential shirkers are particularly numerous.
    Keywords: bureaucracy; asymmetric information; shirking.
    JEL: D82 J31 J45
    Date: 2022–09–07
  8. By: Kerber, Manfred; Rowat, Colin; Yoshihara, Naoki
    Abstract: We study pillage games (Jordan in J Econ Theory 131.1:26-44, 2006, “Pillage and property”), which model unstructured power contests. To enable empirical tests of pillage game theory, we relax a symmetry assumption that agents’ intrinsic contributions to a coalition’s power is identical. We characterise the core for all n. In the three-agent game: (i) only eight configurations are possible for the core, which contains at most six allocations; (ii) for each core configuration, the stable set is either unique or fails to exist; (iii) the linear power function creates a tension between a stable set’s existence and the interiority of its allocations, so that only special cases contain strictly interior allocations. Our analysis suggests that non-linear power functions may offer better empirical tests of pillage game theory.
    Keywords: power contests, core, stable sets
    JEL: C71 D51 P14
    Date: 2022–10
  9. By: Antonio Estache; Renaud Foucart; Tomas Serebrisky
    Abstract: We study the feasibility, challenges, and potential benefits of adding a lottery component to standard negotiated and rule-based procurement procedures. For negotiated procedures, we introduce a “discrete lottery†in which local bureaucrats negotiate with a small number of selected bidders and a lottery decides who is awarded the contract. We show that the discrete lottery performs better than a standard negotiated procedure when the pool of firms to choose from is large and corruption is high. For rule-based auction procedures, we introduce a “third-price lottery†in which the two highest bidders are selected with equal probability and the project is contracted at a price corresponding to the third highest bid. We show that the third-price lottery reduces the risks from limited liability and renegotiation. It performs better than a standard second-price or ascending auction when the suppliers’ pool size, the risk of cost overrun, delays and non-delivery of the project are high. The choice between a second-price auction, a third price lottery and a lottery amongst all bidders also depends on the weight placed on producer surplus, including for instance the desire to increase the participation of local SMEs in public sector services markets.
    Keywords: rules, discretion, procurement, lotteries, corruption, auctions
    JEL: D44 D73 H57
    Date: 2022
  10. By: Ezra Einy (BGU); Ori Haimanko (BGU)
    Keywords: Bayesian games, Bayesian potential, pure-strategy equilibrium, continuous payoffs, absolute continuity of information
    JEL: C62 C72 D82
    Date: 2022
  11. By: Yuhki Hosoya
    Abstract: This paper provides a rigorous and gap-free proof of the index theorem used in the theory of regular economy. In the index theorem that is the subject of this paper, the assumptions for the excess demand function are only several usual assumptions and continuous differentiability around any equilibrium price, and thus it has a form that is applicable to many economies. However, the textbooks on this theme contain only abbreviated proofs and there is no known monograph that contains a rigorous proof of this theorem. Hence, the purpose of this paper is to make this theorem available to more economists by constructing a readable proof.
    Date: 2022–11

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