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on Microeconomics |
| By: | Gerrit Bauch; Manuel Foerster |
| Abstract: | We conceptualize the communication of narratives as a cheap-talk game under model uncertainty. The sender has private information about the true data generating process of publicly observable data. The receiver is uncertain about how to interpret the data, but aware of the sender's incentives to strategically provide interpretations ("narratives") in her favor. We consider a general class of decision rules under ambiguity resolving the receiver's ignorance of the true data generating process, including maximum likelihood expected utility. The set of equilibria is characterized by a positive integer $N$: there is an equilibrium that induces $n$ different actions for each $1\leq n \leq N$. The diverting power of the sender is weaker than with a na\"ive receiver being unaware of the sender's incentives. Surprisingly, the receiver sometimes prefers to be na\"ive. |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2410.23259 |
| By: | Enxian Chen Bin Wu Hanping Xu |
| Abstract: | This paper studies the equilibrium properties of the ``obvious strategy profile'' in large finite-player games. Each player in such a strategy profile simply adopts a randomized strategy as she would have used in a symmetric equilibrium of an idealized large game. We show that, under a continuity assumption, (i) obvious strategy profiles constitute a convergent sequence of approximate symmetric equilibria as the number of players tends to infinity, and (ii) realizations of such strategy profiles also form a convergent sequence of (pure strategy) approximate equilibria with probability approaching one. Our findings offer a solution that is easily implemented without coordination issues and is asymptotically optimal for players in large finite games. Additionally, we present a convergence result for approximate symmetric equilibria. |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2410.22144 |
| By: | Yassine Lefouili (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse); Leonardo Madio (Unipd - Università degli Studi di Padova = University of Padua); Ying Lei Toh (Federal Reserve Bank - Kansas City) |
| Abstract: | We analyze how a privacy regulation taking the form of a cap on information disclosure affects quality-enhancing innovation incentives by a monopolist--who derives revenues solely from disclosing user data to third parties--and consumer surplus. If the share of privacy-concerned users is sufficiently small, privacy regulation has a negative effect on innovation and may harm users. However, if the share of privacy-concerned users is sufficiently large, privacy regulation has a positive effect on innovation. In this case, there is no trade-off between privacy and innovation and users always benefit from privacy regulation. |
| Keywords: | Privacy Regulation, Data Disclosure, Innovation |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04774302 |
| By: | Xinnian Kazusa Pan |
| Abstract: | This paper establishes the equivalence between synchronous and asynchronous coordination mechanisms in dynamic games with strategic complementarities and common interests. Synchronous coordination, characterized by simultaneous commitments, and asynchronous coordination, defined by sequential action timing, are both prevalent in economic contexts such as crowdfunding and fund management. We introduce Monotone Subgame Perfect Nash Equilibrium, MSPNE, to analyze least favorable equilibrium outcomes. We provide a recursive characterization for synchronous coordination and a graph-theoretic representation for asynchronous coordination, demonstrating their equivalence in terms of the greatest implementable outcome. Our results show that the structure of commitment, whether simultaneous or sequential, does not affect the achievable welfare outcome under certain conditions. Additionally, we discuss computational aspects, highlighting the general NP-Hardness of the problem but identifying a significant class of games that are computationally tractable. These findings offer valuable insights for the optimal design of coordination mechanisms. |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2411.01879 |
| By: | Ian Ball; Teemu Pekkarinen |
| Abstract: | We comment on the regularity assumptions in the multi-agent sequential screening model of Eso and Szentes (2007). First, we observe that the regularity assumptions are not invariant to relabeling each agent's signal realizations. Second, we show that the regularity assumptions rule out valuation distributions with common bounded support. Third, we show that if each signal realization is labeled to equal the expected valuation, then the regularity assumptions imply that each agent's valuation is equal to his signal realization plus independent mean-zero noise. |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2410.17962 |
| By: | Federico Echenique; Quitz\'e Valenzuela-Stookey |
| Abstract: | Harsanyi (1955) showed that the only way to aggregate individual preferences into a social preference which satisfies certain desirable properties is ``utilitarianism'', whereby the social utility function is a weighted average of individual utilities. This representation forms the basis for welfare analysis in most applied work. We argue, however, that welfare analysis based on Harsanyi's version of utilitarianism may overlook important distributional considerations. We therefore introduce a notion of utilitarianism for discrete-choice settings which applies to \textit{social choice functions}, which describe the actions of society, rather than social welfare functions which describe society's preferences (as in Harsanyi). We characterize a representation of utilitarian social choice, and show that it provides a foundation for a family of \textit{distributional welfare measures} based on quantiles of the distribution of individual welfare effects, rather than averages. |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2411.01315 |
| By: | Yushi Hamaguchi; Alex S. L. Tse |
| Abstract: | We introduce an infinite-horizon, continuous-time portfolio selection problem faced by an agent with periodic S-shaped preference and present bias. The inclusion of a quasi-hyperbolic discount function leads to time-inconsistency and we characterize the optimal portfolio for a pre-committing, naive and sophisticated agent respectively. In the more theoretically challenging problem with a sophisticated agent, the time-consistent planning strategy can be formulated as an equilibrium to a static mean field game. Interestingly, present bias and naivety do not necessarily result in less desirable risk taking behaviors, while agent's sophistication may lead to excessive leverage (underinvestement) in the bad (good) states of the world. |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2410.18240 |
| By: | Christian Ewerhart |
| Abstract: | It is shown that the two-player Tullock contest admits precisely one equilibrium in randomized strategies. |
| Keywords: | Tullock contest, mixed equilibrium, sequence spaces, Cauchy matrices, Dirichlet series |
| JEL: | C72 D72 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:zur:econwp:457 |
| By: | Casey, Katherine (Stanford U); Glennerster, Rachel (U of Chicago) |
| Abstract: | Why are there few debates in low-information elections where they have the greatest potential to inform vote choices? Consistent with weak incentives to reveal their quality or make policy commitments, we find only a quarter of Parliamentary candidates in Sierra Leone privately volunteer to debate. Publicizing their choices through guaranteed dissemination platforms allows voters to punish those who abstain and sharply increases participation. Randomly improving platform quality induces frontrunners to join. We document high voter willingness to pay to access debates and private sector interest in disseminating them, confirming that candidate reluctance and not market viability is the main barrier. |
| JEL: | D72 O12 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:ecl:stabus:4178 |
| By: | Hans Gersbach; Kremena Valkanova |
| Abstract: | This paper introduces Voting with Random Proposers (VRP) procedure to address the challenges of agenda manipulation in voting. In each round of VRP, a randomly selected proposer suggests an alternative that is voted on against the previous round's winner. In a framework with single-peaked preferences, we show that the VRP procedure guarantees that the Condorcet winner is implemented in a few rounds with truthful voting, and in just two rounds under sufficiently symmetric preference distributions or if status quo positions are not extreme. The results have applications for committee decisions, legislative decision-making, and the organization of citizens' assemblies and decentralized autonomous organizations. |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2410.20476 |
| By: | Edith Elkind; Ayumi Igarashi; Nicholas Teh |
| Abstract: | We study fair allocation of indivisible chores to agents under budget constraints, where each chore has an objective size and disutility. This model captures scenarios where a set of chores need to be divided among agents with limited time, and each chore has a specific time needed for completion. We propose a budget-constrained model for allocating indivisible chores, and systematically explore the differences between goods and chores in this setting. We establish the existence of an EFX allocation. We then show that EF2 allocations are polynomial-time computable in general; for many restricted settings, we strengthen this result to EF1. For divisible chores, we develop an efficient algorithm for computing an EF allocation. |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2410.23979 |
| By: | Guanyi Wang |
| Abstract: | Many policy problems involve designing individualized treatment allocation rules to maximize the equilibrium social welfare of interacting agents. Focusing on large-scale simultaneous decision games with strategic complementarities, we develop a method to estimate an optimal treatment allocation rule that is robust to the presence of multiple equilibria. Our approach remains agnostic about changes in the equilibrium selection mechanism under counterfactual policies, and we provide a closed-form expression for the boundary of the set-identified equilibrium outcomes. To address the incompleteness that arises when an equilibrium selection mechanism is not specified, we use the maximin welfare criterion to select a policy, and implement this policy using a greedy algorithm. We establish a performance guarantee for our method by deriving a welfare regret bound, which accounts for sampling uncertainty and the use of the greedy algorithm. We demonstrate our method with an application to the microfinance dataset of Banerjee et al. (2013). |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2410.20860 |