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on Microeconomics |
| By: | Ashkenazi Golan, Galit; Karos, Dominik; Lehrer, Ehud |
| Abstract: | A decision maker repeatedly chooses one of a finite set of actions. In each period, the decision maker's payoff depends on a fixed basic payoff of the chosen action and the frequency with which the action has been chosen in the past. We analyze optimal strategies associated with three types of evaluations of infinite payoffs: discounted present value, the limit inferior, and the limit superior of the partial averages. We show that when the first two are the evaluation schemes (and the discount factor is suffi ciently high), a stationary strategy can achieve the best possible outcome. However, for the latter evaluation scheme, a stationary strategy can achieve the best outcome only if all actions that are chosen with strictly positive frequency by an optimal stationary strategy have the same basic payo. |
| Keywords: | repeated decision problem; intertemporal choice; time-inconsistent preferences; habit formation |
| JEL: | C61 C73 D01 D91 |
| Date: | 2025–05–20 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:128109 |
| By: | Francesc Dilmé; Daniel F. Garrett |
| Abstract: | A seller with commitment power sets prices over time. Risk‐averse buyers arrive to the market and decide when to purchase. We show that it is optimal for the seller to choose a constant high price punctuated by occasional episodes of sequential discounts that occur at random times. This optimal price path has the property that the price a buyer ends up paying is independent of his arrival and purchase times, and only depends on his valuation. Our theory accommodates empirical findings on the timing of discounts. |
| Keywords: | dynamic pricing, sales, random mechanisms |
| JEL: | D82 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_688 |
| By: | Yuan, Yating (University of Warwick) |
| Abstract: | A principal incentivizes a team of agents to work on a joint project. Building on Winter (2004), this paper explores a simple mechanism where agents choose between two public messages, collaborate and ‘monopolize’, and the message profile decides their bonus upon team success. The principal minimizes the total payment while ensuring full effort in outcomes that survive Iterative Elimination of Weakly Dominated Strategies. The optimal mechanism reaches the first-best payment, leaving no rent for strategic uncertainty. Unlike previous results (Winter, 2004; Halac et al., 2021; Cavounidis and Ghosh, 2021), the optimal bonus allocation is neither discriminatory nor private. Thus, effciency need not come at the cost of fairness or transparency. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:wrk:warwec:1561 |
| By: | Gerard Domènech-Gironell (Universitat de Barcelona, BEAT); Caio Lorecchio (Universitat de Barcelona, BEAT); Oriol Tejada (Universitat de Barcelona, BEAT) |
| Abstract: | We examine the impact of deliberation on political learning and election outcomes. A rational, common-valued electorate votes under majority rule, after potentially acquiring costly private information and sharing it freely through public deliberation. Our findings suggest that deliberation can lead to free-riding on information gathering, but also encourage the emergence of informed political experts. Overall, deliberation may legitimize purely electoral outcomes and yield more accurate decisions. However, deliberation may also reduce electoral accuracy. We provide conditions for these results and contribute to the understanding of the strengths and limitations of deliberative democracies. |
| Keywords: | Elections, Information Acquisition, Deliberation |
| JEL: | D72 D82 D83 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ewp:wpaper:479web |
| By: | Modibo K. Camara; Nicole Immorlica; Brendan Lucier |
| Abstract: | If people find it costly to evaluate the options available to them, their choices may not directly reveal their preferences. Yet, it is conceivable that a researcher can still learn about a population's preferences with careful experiment design. We formalize the researcher's problem in a model of robust mechanism design where it is costly for individuals to learn about how much they value a product. We characterize the statistics that the researcher can identify, and find that they are quite restricted. Finally, we apply our positive results to social choice and propose a way to combat uninformed voting. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2505.19570 |
| By: | Cristian Chica; Yinglong Guo; Gilad Lerman |
| Abstract: | There is growing experimental evidence that $Q$-learning agents may learn to charge supracompetitive prices. We provide the first theoretical explanation for this behavior in infinite repeated games. Firms update their pricing policies based solely on observed profits, without computing equilibrium strategies. We show that when the game admits both a one-stage Nash equilibrium price and a collusive-enabling price, and when the $Q$-function satisfies certain inequalities at the end of experimentation, firms learn to consistently charge supracompetitive prices. We introduce a new class of one-memory subgame perfect equilibria (SPEs) and provide conditions under which learned behavior is supported by naive collusion, grim trigger policies, or increasing strategies. Naive collusion does not constitute an SPE unless the collusive-enabling price is a one-stage Nash equilibrium, whereas grim trigger policies can. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2505.22909 |
| By: | Hedyeh Beyhaghi; Linda Cai; Yiding Feng; Yingkai Li; S. Matthew Weinberg |
| Abstract: | We quantify the value of the monopoly's bargaining power in terms of competition complexity--that is, the number of additional bidders the monopoly must attract in simple auctions to match the expected revenue of the optimal mechanisms (c.f., Bulow and Klemperer, 1996, Eden et al., 2017)--within the setting of multi-item auctions. We show that for simple auctions that sell items separately, the competition complexity is $\Theta(\frac{n}{\alpha})$ in an environment with $n$ original bidders under the slightly stronger assumption of $\alpha$-strong regularity, in contrast to the standard regularity assumption in the literature, which requires $\Omega(n \cdot \ln \frac{m}{n})$ additional bidders (Feldman et al., 2018). This significantly reduces the value of learning the distribution to design the optimal mechanisms, especially in large markets with many items for sale. For simple auctions that sell items as a grand bundle, we establish a constant competition complexity bound in a single-bidder environment when the number of items is small or when the value distribution has a monotone hazard rate. Some of our competition complexity results also hold when we compete against the first best benchmark (i.e., optimal social welfare). |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.09291 |
| By: | Goonj Mohan (Universitat de Barcelona) |
| Abstract: | This paper studies regulation of a social media platform (SMP). I consider a user network with data externalities and an SMP that earns revenue from data-based personalized advertising. The SMP offers a price for user data and users simultaneously accept or reject the offer. Under a microfounded model I show that sharing moderate amount of user data maximizes user welfare. However, externalities reduce price for data and all data is shared in equilibrium. A strict consent policy like GDPR overcorrects this imbalance, burdens users with complete data-control and decreases user welfare. Data minimization moderately shifts data-control to users and increases user welfare. |
| Keywords: | Bayesian signalling, data, social media platform, user welfare |
| JEL: | C11 D62 D83 H23 L51 L88 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ewp:wpaper:477web |
| By: | Yuexin Liao; Kota Saito; Alec Sandroni |
| Abstract: | This paper studies when discrete choice data involving aggregated alternatives such as categorical data or an outside option can be rationalized by a random utility model (RUM). Aggregation introduces ambiguity in composition: the underlying alternatives may differ across individuals and remain unobserved by the analyst. We characterize the observable implications of RUMs under such ambiguity and show that they are surprisingly weak, implying only monotonicity with respect to adding aggregated alternatives and standard RUM consistency on unaggregated menus. These are insufficient to justify the use of an aggregated RUM. We identify two sufficient conditions that restore full rationalizability: non-overlapping preferences and menu-independent aggregation. Simulations show that violations of these conditions generate estimation bias, highlighting the practical importance of how aggregated alternatives are defined. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.00372 |
| By: | Joshua S. Gans |
| Abstract: | The canonical example of unprotected speech—falsely shouting “fire” in a crowded theatre—presumes such an act inevitably causes harmful panic. This paper challenges that presumption through a game-theoretic analysis of evacuation dynamics. I model a theatre as an N × M grid where rational patrons navigate spatial constraints while evacuating. Strategic conflicts arise only when patrons are equidistant from exits, creating localized “clash games” that admit multiple equilibria, including numerous pure-strategy equilibria that achieve zero-collision evacuations. Using global games methodology, I show that strategic uncertainty uniquely selects an equilibrium, where those entering from rows have precedence over those already in aisles. However, introducing a panic mechanism based on accumulated waiting time reveals a tension: the strategically optimal East-priority equilibrium proves most vulnerable to behavioral breakdown, while the alternating equilibrium exhibits superior robustness to panic. These findings suggest that whether false alarms cause harmful disorder depends critically on the interaction between spatial geometry, strategic behavior, and psychological limits—not merely on the alarm itself. |
| JEL: | C72 D61 K42 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33852 |
| By: | Francisco Robles (Universitat de Barcelona); Marina Núñez (Universitat de Barcelona); Laura Robles (Competition Economists Group, Universitat de Barcelona) |
| Abstract: | This paper investigates (non-)manipulability properties and welfare effects of Walrasian equilibrium rules in object allocation problems with non-quasi-linear preferences. We focus on allocation problems with indivisible and different objects. The agents are interested in acquiring at most one object. We show that the minimum Walrasian equilibrium rule is the unique rule that is non-manipulable via monotonic transformations at the outside option among the set of Walrasian equilibrium rules. Analogously, we also show that the minimum Walrasian equilibrium rule is also the unique Walrasian equilibrium rule that is non-manipulable by pretending to be single-minded. On the domain of quasi-linear preferences, we introduce a novel axiom: welfare parity for uncontested objects. On this domain, this axiom is enough to characterize the minimum Walrasian equilibrium rule among the set of Walrasian equilibrium rules. |
| Keywords: | Strategy-proofness, monotonic transformations, Walrasian equilibrium |
| JEL: | D44 D47 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ewp:wpaper:478web |
| By: | Yan Liu; Ying Qin; Zihe Wang |
| Abstract: | The all-pay auction, a classic competitive model, is widely applied in scenarios such as political elections, sports competitions, and research and development, where all participants pay their bids regardless of winning or losing. However, in the traditional all-pay auction, players have no budget constraints, whereas in real-world scenarios, players typically face budget constraints. This paper studies the Nash equilibrium of two players with budget constraints across multiple heterogeneous items in a complete-information framework. The main contributions are as follows: (1) a comprehensive characterization of the Nash equilibrium in single-item auctions with asymmetric budgets and valuations; (2) the construction of a joint distribution Nash equilibrium for the two-item scenario; and (3) the construction of a joint distribution Nash equilibrium for the three-item scenario. Unlike the unconstrained all-pay auction, which always has a Nash equilibrium, a Nash equilibrium may not exist when players have budget constraints. Our findings highlight the intricate effects of budget constraints on bidding strategies, providing new perspectives and methodologies for theoretical analysis and practical applications of all-pay auctions. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2505.03291 |
| By: | Yeon-Koo Che; Andrew B. Choi |
| Abstract: | Allocation of goods and services often involves both stochastic supply and stochastic demand. Motivated by applications such as cloud computing, gig platforms, and blockchain auctions, we study the design of optimal selling mechanisms in an environment where buyers with private valuations arrive stochastically and are assigned goods that also arrive stochastically, and either buyers or goods can be held in a queue at costs until allocation. The optimal mechanism dynamically leverages competitive pressure across time by managing the queue of buyers and inventory of goods, using reserve prices that increase with the number of buyers in the queue and decrease with the number of items in inventory, and an auction to allocate the goods. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2505.22862 |
| By: | Stelios Arvanitis (Department of Economics, AUEB) |
| Abstract: | This paper utilizes a Banach-type fixed point theorem in a functorial context to develop Universal Choice Spaces for addressing decision problems, focusing on expected utility and preference uncertainty. This generates an infinite sequence of optimal selection problems involving probability measures on utility sets. Each solution at a given stage addresses the preference ambiguity from the previous stage, enabling optimal choices at that level. The Universal Choice Space is characterized as a collection of finite-dimensional vectors of probability distributions, with the mth component being an arbitrary probability measure relevant to the mth stage of the problem. The space is derived as the canonical fixed point of a suitable endofunctor on an enriched category and simultaneously as the colimit of the sequence of iterations of this functor, starting from a suitable object. |
| Keywords: | Expected utility, ambiguity of preferences, infinite regress, enriched category, endofunctor, canonical fixed point, initial algebra, colimit, universal choice space |
| JEL: | D81 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:qed:wpaper:1534 |
| By: | Yiyin Cao; Chuangyin Dang |
| Abstract: | A weakening of sequential rationality of sequential equilibrium yields Reny's (1992) weakly sequentially rational equilibrium (WSRE) in extensive-form games. WSRE requires Kreps and Wilson's (1982) consistent assessment to satisfy global rationality of nonconvex payoff functions at every information set reachable by a player's own strategy. The consistent assessment demands a convergent sequence of totally mixed behavioral strategy profiles and associated Bayesian beliefs. Nonetheless, due to the nonconvexity, proving the existence of WSRE required invoking the existence of a normal-form perfect equilibrium, which is sufficient but not necessary. Furthermore, Reny's WSRE definition does not fully specify how to construct the convergent sequence. To overcome these challenges, this paper develops a characterization of WSRE through $\varepsilon$-perfect $\gamma$-WSRE with local sequential rationality, which is accomplished by incorporating an extra behavioral strategy profile. For any given $\gamma>0$, we generate a perfect $\gamma$-WSRE as a limit point of a sequence of $\varepsilon_k$-perfect $\gamma$-WSRE with $\varepsilon_k\to 0$. A WSRE is then acquired from a limit point of a sequence of perfect $\gamma_q$-WSRE with $\gamma_q\to 0$. This characterization enables analytical identification of all WSREs in small extensive-form games and a direct proof of the existence of WSRE. An application of the characterization yields a polynomial system that serves as a necessary and sufficient condition for verifying whether a totally mixed assessment is an $\varepsilon$-perfect $\gamma$-WSRE. Exploiting the system, we devise differentiable path-following methods to compute WSREs by establishing the existence of smooth paths, which are secured from the equilibrium systems of barrier and penalty extensive-form games. Comprehensive numerical results further confirm the efficiency of the methods. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2505.19496 |
| By: | Alex A. T. Rathke |
| Abstract: | For the standard lattice model of information structures, we derive a reduced poset representation which provides the same informational content as the complete lattice structure which derives it. Rational agents can recover the complete lattice of events by means of the reduced poset alone. We find that both structures provide isomorphic models under mild conditions. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2505.18615 |
| By: | Omar Besbes; Yash Kanoria; Akshit Kumar |
| Abstract: | Individuals often navigate several options with incomplete knowledge of their own preferences. Information provisioning tools such as public rankings and personalized recommendations have become central to helping individuals make choices, yet their value proposition under different marketplace environments remains unexplored. This paper studies a stylized model to explore the impact of these tools in two marketplace settings: uncapacitated supply, where items can be selected by any number of agents, and capacitated supply, where each item is constrained to be matched to a single agent. We model the agents utility as a weighted combination of a common term which depends only on the item, reflecting the item's population level quality, and an idiosyncratic term, which depends on the agent item pair capturing individual specific tastes. Public rankings reveal the common term, while personalized recommendations reveal both terms. In the supply unconstrained settings, both public rankings and personalized recommendations improve welfare, with their relative value determined by the degree of preference heterogeneity. Public rankings are effective when preferences are relatively homogeneous, while personalized recommendations become critical as heterogeneity increases. In contrast, in supply constrained settings, revealing just the common term, as done by public rankings, provides limited benefit since the total common value available is limited by capacity constraints, whereas personalized recommendations, by revealing both common and idiosyncratic terms, significantly enhance welfare by enabling agents to match with items they idiosyncratically value highly. These results illustrate the interplay between supply constraints and preference heterogeneity in determining the effectiveness of information provisioning tools, offering insights for their design and deployment in diverse settings. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.03369 |
| By: | Frédéric Deroïan (Aix-Marseille Univ., CNRS, AMSE, Marseille); Mohamed Belhaj (Aix-Marseille Univ., CNRS, AMSE, Marseille) |
| Abstract: | This paper introduces demotivation in the context of social comparison in networks. Social comparison is modeled as a status effect rewarding or penalizing agents according to their relative performance with respect to local peers. A demotivated agent faces both a reduced marginal return to effort and a psychological cost. In the absence of demotivation, social comparison leads to higher effort levels but reduces equilibrium welfare. Introducing demotivation leads to two main findings. First, it generates a network game of strategic substitutes. Second, despite the individual psychological costs incurred by demotivated agents, it can enhance overall welfare—by alleviating social pressure to exert effort and by generating positive externalities for peers. |
| Keywords: | Social Comparison; Demotivation; Networks; Strategic Substitutes, Equilibrium Welfare. |
| JEL: | C72 D83 D85 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:aim:wpaimx:2511 |
| By: | Ryo Masuyama (Graduate School of Economics and Junior Research Fellow, Research Institute for Economics & Business Administration (RIEB), Kobe University, JAPAN) |
| Abstract: | Targeted pricing is an aggressive strategy to steal demand from rivals. Therefore, it is believed that firms should employ it. However, targeted pricing has rarely been observed. There is a gap between our perceptions in the literature on targeted pricing and reality. This study demonstrates the negative aspects of targeted pricing by considering supply chain competition. When a rival supply chain is vertically separated, targeted pricing lowers the rival’s input price and intensifies competition. Conversely, when the rival firm is vertically integrated, this effect does not occur. Therefore, a firm should confirm its rival's vertical structure when deciding whether to employ targeted pricing. |
| Keywords: | Targeted pricing; Uniform pricing; Vertical structure; Supply chain management; Hotelling model |
| JEL: | D43 L10 L13 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:kob:dpaper:dp2025-13 |
| By: | John W. Patty; Elizabeth Maggie Penn |
| Abstract: | We demonstrate that the set of cost distributions under which the optimal strategy for maximizing compliance (or more generally, effort) in a binary choice environment is identical to the optimal strategy for maximizing the accuracy of the reward (minimizing Type-I and Type-II errors) is finitely shy (Anderson and Zame (2001) in the space of all smooth parameterized real-valued distributions possessing full support on the real line. In words, this implies that maximizing compliance and maximizing accuracy "almost always" call for different incentive schemes. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2505.18094 |
| By: | Bernhardt, Dan (Department of Economics, University of Illinois and Department of Economics, University of Warwick); Hwang, Ilwoo (Department of Economics, Seoul National University); Krasa, Stefan (Department of Economics, University of Illinois) |
| Abstract: | We modify a canonical two-agent bargaining game with investments in a joint project, by allowing agents to also invest in outside options that improve their bargaining positions. Absent outside options, it is well known that equal bargaining power maximizes output. However, this is no longer true when investment in outside options is possible and the joint-project technology exhibits stronger substitutability than Cobb-Douglas. When this is so, equal bargaining power minimizes project output while maximizing total investment in unused outside options. Paradoxically, when inputs are suffciently strong substitutes, starting at equal bargaining power, each agent would gain from reductions in their own bargaining power. |
| Keywords: | Bargaining ; bargaining power ; outside option ; hold-up problem JEL Codes: C78 ; D25 ; L24 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:wrk:warwec:1559 |
| By: | Daniel Halpern; Ariel D. Procaccia; Warut Suksompong |
| Abstract: | The proportional veto principle, which captures the idea that a candidate vetoed by a large group of voters should not be chosen, has been studied for ranked ballots in single-winner voting. We introduce a version of this principle for approval ballots, which we call flexible-voter representation (FVR). We show that while the approval voting rule and other natural scoring rules provide the optimal FVR guarantee only for some flexibility threshold, there exists a scoring rule that is FVR-optimal for all thresholds simultaneously. We also extend our results to multi-winner voting. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2505.01395 |
| By: | Tom Gargani (AMSE) |
| Abstract: | This article establishes a direct proof of the equivalence between two incomplete rankings of distributions of an ordinal attribute. The first ranking is the possibility of going from one distribution to another by a finite sequence of Hammond transfers. The second ranking is the intersection of two dominance criteria introduced by Gravel et al.(Economic Theory, 71 (2021), 33-80). The proof constructs an algorithm that provides a series of Hammond transfers, between any two distributions related by the intersection of the two dominances. |
| Keywords: | Hammond Transfers, Inequality, Algorithm |
| JEL: | D3 D63 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:aim:wpaimx:2509 |
| By: | Enrico Mattia Salonia (Toulouse School of Economics) |
| Abstract: | I introduce a framework for studying different interpretations of meritocracy and testing whether individuals adhere to them. Each meritocracy has two components: a merit criterion, determining when one individual is more meritorious than another, and a reward criterion for each individual, determining when one outcome is more rewarding than another for that individual. An allocation is meritocratic if more meritorious individuals are more rewarded. I distinguish between two conceptions of meritocracy. Meritocracy as an end holds it intrinsically valuable that individuals are rewarded according to their merit. Meritocracy as a means views rewarding merit as instrumental in achieving desirable outcomes according to other standards, such as efficiency. I show that these two conceptions are equivalent: each instance of meritocracy as a means can be associated with a corresponding meritocracy as an end. Finally, I examine two specific meritocracies present in the literature. Pareto meritocracy defines an action as more meritorious if it leads to a Pareto improvement in welfare, whereas proportional meritocracy requires that an individual’s consumption be proportional to the amount of labour he provides. By observing whether allocation choices of impartial spectators align with specific merit criteria, one can test whether spectators adhere to these meritocracies. |
| Keywords: | Meritocracy, Responsibility-sensitive social choice, Pareto meritocracy, Proportional meritocracy, Equality of opportunity |
| JEL: | C70 D63 D71 D82 |
| Date: | 2025–05–30 |
| URL: | https://d.repec.org/n?u=RePEc:rtv:ceisrp:601 |
| By: | Ryoga Doi (Graduate School of Economics, Keio University and Junior Research Fellow, Research Institute for Economics & Business Administration (RIEB), Kobe University, JAPAN) |
| Abstract: | We consider situations in which the final ranking of candidates is determined by rankings of multiple factors. For example, in Formula 1 racing, the annual ranking is determined by the results of many races. In sport climbing, the final ranking is determined by combining the results of two or three events. Dependent on rules that aggregate rankings across multiple factors, a candidate can improve the final position of a fellow candidate by holding back her performance without dropping the final position. We call the property of rules that prevent this kind of strategic manipulation assistance-proofness. We show that when there are four or more events, no scoring rule other than the null rule satisfies assistance-proofness. However, when there are two events, all dichotomous scoring rules satisfy assistance-proofness. For three events, we characterize a subclass of dichotomous scoring rules that satisfy assistanceproofness. |
| Keywords: | Assistance-proofness; Scoring rules; Voting; Strategic manipulation; Collusion |
| JEL: | D71 D72 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:kob:dpaper:dp2025-12 |
| By: | Leo Kurata; Kensei Nakamura |
| Abstract: | This paper studies preference aggregation under uncertainty in the multi-profile framework introduced by Sprumont (2018, 2019) and characterizes a new class of aggregation rules that can address classical concerns about Harsanyi's (1955) utilitarian rules. Our class of aggregation rules, which we call relative fair aggregation rules, is grounded in three key ideas: utilitarianism, egalitarianism, and the 0--1 normalization. These rules are parameterized by a set of weights over individuals. Each ambiguous alternative is evaluated by computing the minimum weighted sum of the 0--1 normalized utility levels within that weight set. For the characterization, we propose two novel key axioms -- weak preference for mixing and restricted certainty independence -- developed using a new method of objectively randomizing outcomes even within the fully uncertain Savagean framework. Furthermore, we show that relative utilitarian aggregation rules can be identified from the above class by imposing an axiom stronger than restricted certainty independence, and that the Rawlsian maximin version can be derived by considering strong preference for mixing instead. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2505.03232 |
| By: | Joshua S. Gans |
| Abstract: | This paper analyzes the design of tests to distinguish human from artificial intelligence through the lens of information design. We identify a fundamental asymmetry: while AI systems can strategically underperform to mimic human limitations, they cannot overperform beyond their capabilities. This leads to our main contribution—the concept of capability inversion domains, where AIs fail detection not through inferior performance, but by performing “suspiciously well” when they overestimate human capabilities. We show that if an AI significantly overestimates human ability in even one domain, it cannot reliably pass an optimally designed test. This insight reverses conventional intuition: effective tests should target not what humans do well, but the specific patterns of human imperfection that AIs systematically misunderstand. We identify structural sources of persistent misperception—including the difficulty of learning about failure from successful examples and fundamental differences in embodied experience—that make certain capability inversions exploitable for detection even as AI systems improve. |
| JEL: | C72 D82 D83 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33893 |
| By: | Dickinson, David L. (Appalachian State University); Villeval, Marie Claire (CNRS) |
| Abstract: | We investigate how group identity affects belief updating about moral norms. Using a Belief Updating task, we found that individuals follow a cautious version of Bayesian updating. Group identity itself does not directly affect belief updating. However, when given an information signal about the truthfulness of a normative statement that is dissonant with one’s perceived norm, individuals differ in their resistance to updating beliefs. This difference depends on whether the statement reflects moral norm judgments from people with the same or different political affiliation, and whether the signal supports or opposes honesty. This highlights the importance of understanding how one updates beliefs regarding moral norms, and how the group identity of those making normative judgments can be an important consideration. |
| Keywords: | online experiment, group identity, belief updating, social norms, cheating |
| JEL: | C91 D83 D91 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17892 |