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on Microeconomics |
| By: | Marie Obidzinski (Université Paris Panthéon Assas, CRED, Paris, France); Yves Oytana (Université de Franche-Comté, CRESE, Besançon, France) |
| Abstract: | We characterize the socially optimal liability sharing rule in a situation where a manufacturer develops an artificial intelligence (AI) system that is then used by a human operator (or user). First, the manufacturer invests to increase the autonomy of the AI (i.e., the set of situations that the AI can handle without human intervention) and sets a selling price. The user then decides whether or not to buy the AI. Since the autonomy of the AI remains limited, the human operator must sometimes intervene even when the AI is in use. Our main assumptions relate to behavioral inattention. Behavioral inattention reduces the effectiveness of user intervention and increases the expected harm. Only some users are aware of their own attentional limits. Under the assumption that AI outperforms users, we show that policymakers may face a tradeoff when choosing how to allocate liability between the manufacturer and the user. Indeed, the manufacturer may underinvest in the autonomy of the AI. If this is the case, the policymaker can incentivize the latter to invest more by increasing his share of liability. On the other hand, increasing the liability of the manufacturer may come at the cost of slowing down the diffusion of AI technology. |
| Keywords: | K4 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:afd:wpaper:2406 |
| By: | Swati Singla (Department of Economics, Delhi School of Economic); Vishruti Gupta (Department of Economics, Delhi School of Economic) |
| Abstract: | We examine duopoly competition between firms with asymmetric quality, wherein firms compete sequentially in quality and price. We find that the partial shareholding of the high-quality firm in revenue (or profit) of the low-quality firm softens the competition. The market share of the high-quality firm decreases as the percentage of the share in revenue (or profit) increases. Further, we find that the improvement in quality by high-quality firm is lesser than by low-quality firms. The price charged by the high-quality firm is higher than that of the low-quality firm as the high-quality firm continues to have the quality advantage. Comparing the two scenarios, revenue sharing is more desirable than profit sharing for firms, giving higher total profits.Consumers and social planner prefer profit sharing between the firms as it leads to a higher surplus. |
| Keywords: | Revenue share, Profit share, Vertical differentiation, Hoteling line. |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:cde:cdewps:353 |
| By: | Schroeder, Andreas |
| Abstract: | The axiomatic requirements in Brandl and Brandt (2024) make it possible to define solution concepts that do not select the set of all Nash equilibria as claimed. More precisely, it is possible to construct solution concepts that fulfill the axiomatic requirements, but in certain games no equilibrium is selected at all, as a simple example shows. |
| Keywords: | Non-coporative Game Theory, Nash Equilinrium, Solution Concept |
| JEL: | C72 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123069 |
| By: | Laurent Bouton; Micael Castanheira De Moura; Allan Drazen |
| Abstract: | Popular and academic discussions have mostly concentrated on large donors, even though small donors are a major source of financing for political campaigns. We propose a theory of small donors with a key novelty: it centres on the interactions between small donors and the parties' fundraising strategy. In equilibrium, parties micro-target donors with a higher contribution potential (that is, richer and with more intense preferences) and increase their total fundraising effort in close races. The parties' strategic fundraising amplifies the effect of income on contributions, and leads to closeness, underdog and bandwagon effects. We then study the welfare effects of a number of common campaign finance laws. We find that, due to equilibrium effects, those tools may produce outcomes opposite to intended objectives. Finally, we identify a tax-and-subsidy scheme that mutes the effect of income while still allowing donors to voice the intensity of their support. |
| JEL: | D71 D70 H31 |
| Date: | 2024–08–01 |
| URL: | https://d.repec.org/n?u=RePEc:ulb:ulbeco:2013/378528 |
| By: | Prummer, Anja; Squintani, Francesco |
| Abstract: | Motivated by the recent surge in union drives, we present a theoretical model of the factors that influence unionization. An employee seeking to unionize their workplace assembles organizers to persuade coworkers to vote in favor. If unionization benefits workers, it is more likely to succeed when the organizers are credible. Credibility depends on the organizers not being overly biased and/or bearing significant organizational costs. Our theory explains why grassroots movements, rather than established unions, often succeed in organizing workplaces. Interestingly, the likelihood of successful unionization, when it benefits workers, is non-monotonic with respect to organizational costs. When such costs are low, a firm that opposes unionization and targets organizers may paradoxically increase the chances of success. However, the unionization drive is ineffective if the firm's opposition is sufficiently strong, as this makes organizational costs prohibitive. |
| Keywords: | Unions, Labor Organization, Campaigns |
| JEL: | D71 D83 D23 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:fubsbe:307603 |
| By: | Samuel Kapon (UC Berkeley); Lucia Del Carpio (INSEAD); Sylvain Chassang (Princeton University) |
| Abstract: | Tax collection with limited enforcement capacity may be consistent with both high and low delinquency regimes: high delinquency reduces the effectiveness of threats, thereby reinforcing high delinquency. We explore the practical challenges of unraveling the high delinquency equilibrium using a mechanism design insight known as “divide-and-conquer." Our preferred mechanism takes the form of Prioritized Iterative Enforcement (PIE). Taxpayers are ranked using the ratio of expected collection to capacity use. Collection threats are issued in small batches to ensure high credibility and induce high compliance. Following repayments, liberated capacity is used to issue the next round of threats. In collaboration with a district of Lima, we experimentally assess PIE in a sample of 13, 432 property taxpayers. The data both validate and refine our theoretical framework. A semi-structural model suggests that keeping collection actions fixed, PIE would increase tax revenue by roughly 10%. |
| Keywords: | Lima, Peru; prioritized iterative enforcement, divide-and-conquer, tax collection, limited government capacity |
| JEL: | H20 |
| Date: | 2024–02 |
| URL: | https://d.repec.org/n?u=RePEc:pri:cepsud:335 |