|
on Microeconomics |
| By: | Deniz Kattwinkel; Alexander Winter |
| Abstract: | A principal must decide whether to implement a project. She privately knows the cost, an agent privately knows the benefit. Monetary transfers are not available, and compared to the principal, the agent does not fully internalize the cost. We show that the principal-optimal mechanism does not require the agent to report. Instead, it either ignores the agent or endows the agent with free information and full decision authority. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.09409 |
| By: | Sangjun Yea (Korea Institute for International Economic Policy); Daeyoung Jeong (Yonsei University) |
| Abstract: | We study Bayesian persuasion with source uncertainty: a receiver observes one message but cannot tell whether it came from a related news sender, who commands an informative technology, or a fake news sender, whose signals are state-independent. Using a Rothschild-Stiglitz approach, we characterize equilibrium and identify the threshold prominence at which fake news becomes persuasive. Prominent fake news dilutes informative signals, but a sufficiently credible sender preserves influence by raising precision. This self-disciplining effect raises welfare: paradoxically, within the persuasive regime, greater prominence of fake news improves the informational environment and leaves voters better informed ex-ante. |
| Keywords: | Fake News, Social Media, Bayesian Persuasion, Sequential Persuasion |
| JEL: | D72 D82 D83 L82 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:yon:wpaper:2026rwp-295 |
| By: | Shinpei Noguchi; Hiroto Sato; Konan Shimizu |
| Abstract: | This paper studies how network structures affect the efficiency of information aggregation in social learning environments. We consider a model in which rational agents sequentially choose actions based on private signals and observations of their neighbors' actions in a network. Focusing on comparisons of expected payoffs at a given finite period, we show that there exists an information structure under which the star network achieves a strictly higher expected payoff than any other network, and another information structure under which the complete network achieves a strictly higher expected payoff than any other network. Taken together, these results imply that no network is uniformly optimal across all information structures. Our analysis highlights a trade-off between the responsiveness effect and the overturning effect: disconnected networks preserve responsiveness of actions to private signals, whereas highly connected networks facilitate the aggregation of extreme information that overturns public beliefs. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2607.28921 |
| By: | Wataru Kitano; Shohei Yanagita |
| Abstract: | We formulate the voter's strategic information acquisition to control the future self's action as a Bayesian persuasion problem. Our main result shows that acquiring information that is irrelevant to the voter's objective can be a worst-case optimal solution: it can reduce the possibility that the future self is swayed by additional information whose content is ambiguous to the current voter. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.14173 |
| By: | Wataru Kitano; Shohei Yanagita |
| Abstract: | We develop an axiomatic model of robust Bayesian persuasion where the sender cannot fully control the information available to the receiver. After selecting an information structure, the sender expects that more informative structures might be implemented. We model this by allowing the sender to assess each information structure under worst-case information leakage, represented by a set of more informative structures. The model encompasses a wide range of examples of information leakage, which we also explore. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.14017 |
| By: | Boyu Liu; Wei Tang; Zihe Wang; Shuo Zhang |
| Abstract: | Classic results show that even an arbitrarily small correlation across bidders' information can enable full surplus extraction in auctions and related mechanism design settings. Motivated by this fragility, we study the information independence in a second-price auction when the seller commits to a private private information structure, meaning bidders' signals are independent ex ante, while bidders share a symmetric and arbitrarily correlated prior distribution over their valuations. We first show that the seller optimal efficient outcome with full surplus extraction can always be implemented by a private private information structure that admits a Bayes Nash equilibrium. However, this equilibrium may not be stable. We then further construct a private private information structure that achieves revenue arbitrarily close to maximum welfare while admitting a strict equilibrium. At the same time, we establish an impossibility result: under private private information, in general, bidder surplus cannot achieve maximal welfare exactly, and we characterize necessary and sufficient conditions on the prior distribution under which bidder surplus can be made arbitrarily close to maximal welfare. We finally explore which other efficient outcomes are achievable under private private information. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2604.24530 |
| By: | Ehud Lehrer; Daniel Z. Li |
| Abstract: | This paper studies how information censoring enables a myopic cutoff rule in Bayesian sequential search. Under full information, Bayesian learning generally destroys the monotonicity of continuation values, preventing simple cutoff rules. We show that one-sided censoring restores monotonicity by limiting posterior fluctuations, thereby making a myopic cutoff rule optimal. By decomposing the intertemporal change in the marginal value of search into a fallback-value effect and a learning effect, we derive necessary and sufficient conditions for monotonicity under lower censoring and characterize the optimal cutoff rule. In contrast, under full revelation, monotonicity requires highly restrictive conditions. We further show that expected monotonicity (i.e., the supermartingale property) is characterized by the same conditions under both lower censoring and full revelation, owing to Bayes plausibility and the affine structure of the problem. Thus, censoring restores monotonicity not by altering expected learning, but by reducing posterior volatility. Finally, we apply our framework to job search, consumer price search, and product experimentation. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.14326 |
| By: | Vilok Taori |
| Abstract: | A principal seeks to allocate $k$ identical objects among n sequentially arriving, impatient agents. Each agent privately observes her valuation, and the principal's payoff from allocating an object depends on the recipient's valuation. The principal can perfectly verify the valuation of at most $m$ agents, where $m |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.10478 |
| By: | Jerry Anunrojwong |
| Abstract: | We study prior-independent auction design when bidder values are independently and identically distributed and the seller knows only a scale-invariant shape restriction on their distribution, but neither the distribution nor the scale of values. We show that the maximin problem over a broad class of dominant-strategy incentive-compatible mechanisms reduces without loss to scale-free mechanisms. For any $n\ge 2$ monotone-hazard-rate bidders, the second-price auction without a reserve is maximin optimal over this class, including randomized mechanisms that may allocate to a lower bidder. We derive its exact guarantee for every $n$ and the sharp exponential rate at which its loss relative to the Bayesian optimum vanishes. Many familiar auctions are standard: they allocate only to a highest bidder, although incentive compatibility does not require this. For two regular bidders, we solve the standard problem exactly: its optimal mechanism mixes the second-price auction with a relative-markup auction and achieves a worst-case ratio of approximately $0.524413$. We construct a nonstandard mechanism that sometimes allocates to the lower bidder and achieves approximately $0.524829$, proving that standardness is strictly costly. The contrast is driven by tail restrictions: monotone hazard rate makes lower-rank allocation unhelpful, whereas regularity permits it to improve worst-case revenue. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.02479 |
| By: | Raphael Boleslavsky; Thomas Jungbauer; Mehdi Shadmehr |
| Abstract: | We study a platform that prefers to sell the more profitable of two products. It designs an algorithm that determines the product the consumer encounters first, conditional on her best match. The algorithm simultaneously manipulates consumer attention (steers) and communicates information about match quality (informs). When the algorithm is opaque, it is difficult for a consumer to understand how product order is generated and what it reveals. In the platform's preferred equilibrium, it places the profitable product first. When the algorithm is transparent, the consumer understands the algorithm and what it conveys. Thus, the algorithm can persuade as well as steer. In some cases, the equilibrium algorithm deters search, in others, encourages it. In the former case, transparency helps consumers; in the latter, it harms some or all of them. Extending or shifting transparency requirements uncouples steering from information provision, reverting the consumer's welfare to opacity. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.12558 |
| By: | Drugov, Mikhail; Meyer, Margaret; Möller, Marc |
| Abstract: | We analyze a model of organizational learning where agents’ performance reflects time-invariant unobservable ability, privately-chosen effort, and noise. Our main result is that, even when performance is almost entirely random, maximizing the probability of identifying the best agent (“selective efficiency†) requires biasing final selection in favor of early winners. Making luck persistent, e.g. through fast-tracks, is thus rationalized by the pursuit of selective efficiency. Agents’ strategic efforts amplify the persistence of luck. Organizational learning also affects the persistence of initial advantages stemming from identity. Identity-dependent biases, e.g. gender-specific mentoring, create incentives that make selection both more efficient and more equitable. |
| Keywords: | Organizational learning; Incentives; Selective efficiency; Discrimination; Inequality |
| JEL: | D21 D82 D83 J70 M51 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19309 |
| By: | Sanyyam Khurana (Ashoka University) |
| Abstract: | Consider a finite set of potential bidders for the sale of an indivisible object where every bidder has an outside option. Bidders have private information about the object’s value and their outside option which are drawn from two different probability distributions. Every bidder participates in the auction if and only if their value for the object is larger than their outside option, which leads to uncertain number of participants. The seller imposes a floor on the number of participating bidders in order to conduct an auction. If the floor is not met, the auction is canceled. We show that if either the value distribution is strengthened or the outside option distribution is weakened, the bidders raise their bids. We also show that the bidders raise their bids due to the imposition of a floor. |
| Date: | 2026–08–27 |
| URL: | https://d.repec.org/n?u=RePEc:ash:wpaper:168 |
| By: | Tomohiko Kawamori |
| Abstract: | We define a category of strategic games in which a morphism is a pair of a map between sets of players and a map between sets of strategy profiles with specific properties and show that this category is well-defined. Three cases are considered for the maps between sets of strategy profiles: they may be order-preserving, order-reflecting or order-embedding with respect to each player's preference relation. We define a presheaf on the category of games valued in a category of sets that sends each strategic game to a set of strategy profiles and present conditions for this presheaf to be well-defined. Two cases are considered for the morphisms in the category of sets: they may be relations or maps. We define a presheaf that sends each strategic game to the set of Nash equilibria (resp. Pareto efficient strategy profiles) and show that this presheaf is well-defined if and only if the maps between sets of strategy profiles are order-reflecting or order-embedding (resp. order-embedding), and the morphisms in the category of sets are relations. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.08310 |
| By: | Benkert, Jean-Michel; Schmutzler, Armin |
| Abstract: | This paper investigates the value of recommendations for disseminating economic information, with a focus on frictions resulting from preference heterogeneity. We consider Bayesian expected-payoff maximizers who receive non-strategic recommendations by other consumers. The paper provides conditions under which different consumer types accept these recommendations. Moreover, we assess the overall value of a recommendation system and the determinants of that value. Our analysis highlights the importance of disentangling objective information from subjective preferences when designing value-maximizing recommendation systems. |
| Keywords: | Optimal design |
| JEL: | D02 D47 D83 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19410 |
| By: | Daske, Thomas |
| Abstract: | We ask which welfare judgments can be institutionalized without incentive costs when agents’ material and distributive preferences are private information. A policy rule is definitely implementable if it is implementable under arbitrary variation in the distribution of types: the normative end remains fixed, while the institutional means - the transfer scheme - may adjust to the distribution. We interpret an ex post budget imbalance, if required for definite implementation, as an incentive cost: it entails external subsidies or resource destruction. We find that a policy rule is costless only if it locally admits a welfare representation as aggregate material surplus plus a relational component. Every such relational component must obey a common normative grammar. A substantive subclass satisfying this grammar is globally attainable. Costlessness thus disciplines welfare evaluation without eliminating normative choice. We illustrate this normative freedom through three relational welfare judgments in public-good provision: political restraint, subsidiarity, and minority protection. |
| Keywords: | implementation theory, definite implementation, ex post budget balance, interpersonal preferences, material utilitarianism, relational welfare judgments |
| JEL: | D82 D63 D64 D61 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:342974 |
| By: | Zhang Xu; Mingsheng Zhang; Wei Zhao |
| Abstract: | In this note, we show that equilibrium profit is zero in Bertrand competition with a finite number of firms and consumers whose willingness to pay are bounded, under any market segmentation profile. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.07918 |
| By: | Deng, Shanglyu; Jia, Dun; Leccese, Mario; Sweeting, Andrew |
| Abstract: | Industries with significant scale economies or learning-by-doing may come to be dominated by a single firm. Economists have studied how likely this is to happen, and whether it is efficient, using models where buyers are price or quantity takers, even though these industries are often also characterized by buyer-seller negotiations. We extend the dynamic “learning-by-doing and forgetting†model of Besanko, Doraszelski, Kryukov, and Satterthwaite (2010) to allow for Nash-in-Nash bargaining over prices. Price-taking and the social planner solution are captured as special cases. We show that sellers' dynamic incentives, market concentration and welfare can change sharply, and non-monotonically, as one moves away from the price-taking assumption. We study the implications of buyer bargaining power for the existence of multiple equilibria, the design of subsidy policies and the welfare effects of policies designed to increase competition. |
| JEL: | C73 D21 D43 L13 L41 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19241 |
| By: | Dana Golden |
| Abstract: | When does the global game information structure select a unique equilibrium? Limit uniqueness in two-player supermodular games fails exactly when a risk-dominant better response cycle exists (Veiel, 2025). We show that rank-one factor structure on payoffs eliminates such cycles entirely, so every rank-one supermodular game admits a generalized ordinal potential and limit uniqueness follows for any number of actions. The boundary is sharp: an explicit three-action rank-two game carries a length-six cycle, no supermodular game carries a cycle of length four, and every game within a quantified sup-norm margin of a nondegenerate rank-one game is cycle-free. Rank-one structure can also be manufactured: when players compete across many independent markets with common latent payoffs, the stacked observation matrix is rank one plus sparse, and a Robust PCA estimator leaves residual noise that vanishes with the signal scale yet stays positive at any finite sample, even under partial observation. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2607.23360 |
| By: | Shuyang Zhang; Xiangtian Li |
| Abstract: | As an extension of existing Bayesian persuasion framework with inadequate message mechanism, we study direct recommendation when a sender is bound by an installed information policy only with probability $\rho$, the realization of binding is hidden, and the receiver does not observe the persistent structural environment. The receiver first sees a payoff-neutral, nonmanipulable calibration sample and then faces a fresh, non-certified deployment interaction. In common, the calibration law identifies only the receiver-facing reduced form, not the latent binding and discretionary kernels. We characterize type-wise $\rho$-implementability, construct the receiver's posterior over the full deployment node, and prove a static direct-following implementation theorem. After every calibration history that passes a posterior-predictive obedience test, the deployment assessment is an exact perfect Bayesian equilibrium: Bayes consistency, receiver sequential rationality, sender sequential rationality, and off-path completion are all verified. Under finite-type separation, common recommendation support, and a positive obedience margin, the test activates such an equilibrium with high probability. Our results keep statistical failure probability distinct from equilibrium approximation. Finally, we embed the original robust value frontier, support-wise linear-programming algorithm, and binary-action fractional-knapsack specialization into this implementation framework |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.20766 |
| By: | Maria-Florina Balcan; Tejas Pagare; Karan Singh |
| Abstract: | Motivated by modern marketplaces, where the platform or the seller routinely gathers detailed user profiles, we study a novel learning theoretic model that simultaneously involves information and mechanism design. Specifically, we consider the economic setting recently introduced by Bergemann et al. (2022), where in addition to the menu of quality-price pairs, the seller offers information on the value of the match between product quality and buyer's taste via a signaling scheme. We relax the assumption that the seller knows the buyers' belief about the distribution of tastes and study the sample requirements of designing a revenue maximizing scheme. We consider both the batch setting where we have access to data from a set of i.i.d. buyers and an online demand query model where we observe the buyers' behaviors to seller's schemes. Despite the apparent non-convexity of the problem, we also give the first FPTAS to compute a scheme that maximizes the revenue within an arbitrarily small additive loss, which was left open by Bergemann et al. (2022). Overall, this brings a new learning perspective in asymmetric economic settings where buyers and sellers know different types of information. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.16699 |
| By: | Dantong Chu; Xuefeng Gao; Yufei Zhang |
| Abstract: | As firms increasingly deploy machine learning for strategic decision-making, understanding algorithmic interactions has become central to operations research and economics. This paper studies learning in infinite-horizon, nonzero-sum linear-quadratic stochastic games under a radically uncoupled information structure, where players are either unaware of opponents or strategically oblivious, observing only a common state and their own action history. Under this minimal information, we analyze an asynchronous decentralized learning process in which each player independently runs a single-agent $\epsilon$-greedy iterated least-squares algorithm. We prove that, despite being unable to identify the system parameters, players' learning dynamics converge almost surely to the complete-information Nash equilibrium and characterize the convergence rate. We then apply the framework to a dynamic Cournot competition with sticky prices. Numerical experiments validate the theoretical results and show that learning under limited information reduces firm profits under both low and high price stickiness, while total surplus declines and market concentration increases when price stickiness is high. Publicly revealing aggregate market output substantially accelerates convergence and mitigates these welfare losses. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.08268 |
| By: | Takashi Kunimoto (School of Economics, Singapore Management University); Cuiling Zhang (School of Economics, Singapore Management University) |
| Abstract: | We identify the ex ante welfare (EAW) condition as a necessary requirement to implement ex post efficient bilateral trade in any finite type space with interdependent values and correlated beliefs. As these finite settings become finer to approximate a continuous type space, we derive a limit EAW condition by taking the EAW condition in finite settings to its limit. We show that this limit condition trivially holds in the benchmark continuous setting admitting a full-support density function. We then insist on locally robust implementation by requiring efficient trade to be implemented uniformly across all finite type spaces that approximate the benchmark continuous type space. Our main result shows that under high interdependence, locally robust implementation of efficient trade is impossible. We thus show that the negative results of Myerson and Satterthwaite (1983) and Fieseler, Kittsteiner, and Moldovanu (2003) under independent beliefs can also emerge as the robust limit of discrete environments even when beliefs are correlated. |
| Keywords: | bilateral trade; the ex ante welfare condition; interdependence; correlation. |
| JEL: | C72 D78 D82 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:ris:smuesw:023538 |
| By: | Federico Vaccari |
| Abstract: | This paper studies how much public information is needed to implement efficient trade in dynamic markets with privately informed sellers and buyers. An institution compares a certified statistic of market composition with the statistic implied by agents' reports. Truthful reporting is supported when the statistic changes after every unilateral change in reported type. When all market compositions are possible, the least number of public announcements is {K, L}, where K is the number of seller qualities and L the number of buyer types. The certificate must rely on information outside the reports it checks. The paper also shows that information sufficient to discipline reports need not coordinate buyers across limited capacity. Posted-price implementation may require certified capacities and a clearing rule. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2607.19140 |
| By: | Zihan Zhao |
| Abstract: | This paper studies how robust social learning is when sampling is selective, i.e., some types of actions are more likely to be sampled by successors. We show that Bayesian agents can achieve asymptotic learning despite non-expanding observations, because the endogenous observation network itself carries information and agents have ways to undo the selection bias. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.16599 |
| By: | Masaki Miyashita |
| Abstract: | This paper uncovers general properties of optimal information structures by exploiting a linear-programming formulation of information design. A critical observation is that an optimum can be found as ``sparse, '' i.e., many coordinates of the action-state joint distribution are zero. This implies that, once part of an action-state profile is fixed, there is limited room for the remaining part to fluctuate. As a result, agents' action recommendations are conditionally deterministic in many states, or correlated in a way that allows some agents to infer others' recommendations. The implications of sparsity are illustrated in an adoption problem, where the designer maximizes the number of adopters of an innovation that features network effects. The optimal information structure deterministically recommends full adoption in high states, while it randomizes over nested action profiles in low states, so that whenever an agent is recommended to adopt, she is certain that more optimistic agents also adopt. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.00729 |
| By: | Aseem Pahuja; Zhiling Guo; Tahir Abbas Syed |
| Abstract: | The paper examines the strategic behavior of Gen AI chatbots used for emotional support. Using a Bayesian Persuasion, we model interactions between chatbots that send signals about users' emotional states and users who decide whether to engage based on these signals. We demonstrate that chatbots face economic incentives to occasionally misrepresent users' emotional conditions to maximize engagement metrics. Our equilibrium analysis reveals that the optimal strategy for chatbots involves truthfully reporting when users genuinely need support, but strategically misreporting emotional need when users are in good emotional states. Interestingly, this deception increases chatbot engagement without reducing users' expected payoff. More skeptical users receive more honest assessments, as chatbots cannot afford to lie to users with higher engagement thresholds. While our model suggests that deception can occur without payoff reduction, it raises significant ethical and regulatory concerns. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.01480 |
| By: | David Dillenberger (University of Pennsylvania); Jay Lu (University of California, Los Angeles) |
| Abstract: | We introduce a behavioral notion of domain-specific risk aversion that separates attitudes toward risk from deterministic utility: an agent is more pure risk averse in one domain than in another if, for prizes that are indifferent under certainty, he is more averse to risk in the former domain than in the latter. We develop a model that goes beyond expected utility by allowing risk attitudes to vary across domains, while preserving expected utility within each domain. The domains are subjective and need not be specified in advance; they are identified from choice behavior. We establish uniqueness of the model’s parameters and provide an axiomatic characterization. |
| Keywords: | domain-specific risk aversion; non-expected utility; subjective domains; prize interchangeability |
| JEL: | D81 D91 D80 |
| Date: | 2026–08–19 |
| URL: | https://d.repec.org/n?u=RePEc:pen:papers:26-011 |
| By: | Hattori, Keisuke |
| Abstract: | Does unequal bargaining power within a team help or hurt its performance? We show that the answer depends on enforceability. Two members who differ only in bargaining power bargain once over a stationary workload allocation for an ongoing production relationship. When negotiated workloads are externally enforced, greater bargaining asymmetry raises team performance. When the agreement must instead be self-enforcing, sufficiently large asymmetry makes the weaker bargainer's workload unsustainable. Restoring her incentive to cooperate contracts both members' efforts and can reduce performance below the equal-power level. Bargaining power therefore has no institution-free performance effect. This reversal is robust to effort complementarity. |
| Keywords: | Bargaining, Team production, Self-enforcing agreements, Workload allocation, Relational contracts |
| JEL: | C78 D23 D86 L23 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:342595 |
| By: | Athanasios Andrikopoulos; Nikolaos Sampanis |
| Abstract: | The theory of optimal choice sets provides a well-established framework in social choice and game theory. When preferences are cyclic, as often occurs in complex economic environments, the set of maximal elements may be empty, thereby motivating alternative solution concepts such as the von Neumann--Morgenstern (vNM) stable set. In this paper, we study binary relations on infinite sets of alternatives within an order-theoretic and topological framework. Our main result yields a topological characterization of von Neumann--Morgenstern stable maximality: for consistent abstract decision problems satisfying Upper MacNeille Informational Monotonicity, the set of maximal elements is non-empty and stable if and only if there exists a compact topology on \(X\) with respect to which \(R\) is Nachbin closed and upper semicontinuous. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2607.26559 |
| By: | Drew Fudenberg; Andrew Koh |
| Abstract: | We study R&D competition in the shadow of disaster: advancing the technology frontier raises the risk of permanently ending all firms' payoffs. Under perfect monitoring and common knowledge of rationality, the equilibrium frontier is bounded below by the optimal stopping time of a monopolist, and above by that of a representative firm that persistently but mistakenly believes its rival is about to stop. We then analyze how the frontier is shaped by transparency (speed of monitoring) and trust (belief in the rationality of rival firms). |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2607.27638 |
| By: | Grega Smrkolj (Newcastle University); Florian Wagener (University of Amsterdam) |
| Abstract: | We study a continuous-time duopoly model of process innovation with R&D spillovers, comparing noncooperative R&D with cooperative research regimes. We extend the standard constant-spillover framework by allowing knowledge transmission to decay with technological distance and to favor followers over leaders in asymmetric specifications. In a global Markov-perfect model, firms may invest before production is viable, enter or exit production as costs evolve, and converge to no-market, monopoly, or duopoly outcomes. State-dependent spillovers change R&D incentives, catch-up dynamics, long-run market structure, and the welfare effects of research cooperation. In the computed equilibria, more follower-favoring spillovers weaken the leader's private incentive to invest but accelerate catch-up, shorten monopoly phases, and make eventual duopoly more likely. When spillovers are weak, cooperation mainly softens dynamic rivalry; when information sharing is substantial, cooperation expands market formation, lowers long-run costs, and can raise both consumer and total surplus, especially under the research-joint-venture regime. The value of R&D cooperation depends on the direction and persistence of knowledge flows, not only on their average intensity. |
| JEL: | C73 D43 O31 |
| Date: | 2026–06–29 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20260041 |
| By: | Yuliy Sannikov; Weijie Zhong |
| Abstract: | We study a decision-maker who explores --- dynamically choosing what to learn --- before stopping to act. We first reduce this dynamic control problem to a static one: any exploration-and-stopping strategy is equivalent to a choice of the joint distribution of the stopped state and the stopping time, subject to one information-budget constraint at each date, and we characterize exactly which distributions are attainable. The reduced problem is a convex program with a linear objective; its dual prices information over time, and the optimal policy concavifies the stopping payoff net of these shadow prices. The curvature of the decision-maker's time preference then governs the shape of optimal exploration: convex time preference induces Poisson exploration, concave time preference confines stopping to a window whose length is controlled by the dispersion of the marginal cost of delay --- forcing an initial phase of pure exploration when the window is short --- and the linear case lies at the boundary between them. We apply the framework to real options, to the speed--accuracy tradeoff in information acquisition, and to a continuous-time exploration contest. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.10274 |
| By: | Matteo Marsili |
| Abstract: | This note discusses zero-sum games with open-ended innovation, whereby each player may introduce new strategies. The innovation process is modelled as a draw of new strategies form a distribution. It is argued that, under generic conditions, this setting can lead to an everlasting innovation arm race, because the introduction of new technologies of one player increases the marginal utility for technological innovation of the opponent. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2607.25677 |
| By: | Daiki Kishishita |
| Abstract: | This paper studies an electoral competition model in which parties maximize legislative power rather than vote shares. Voters are uniformly distributed on the unit interval and vote for the party proposing the closest policy platform. After the election, parties form coalitions through a communication network arising from ideological proximity: two parties are directly linked if their policy distance is at most $d$. A party's objective is its Myerson value in the resulting graph-restricted voting game. I characterize symmetric pure-strategy equilibria in two-, three-, and four-party systems. The two-party case yields convergence to the median. The three-party case admits a continuum of symmetric equilibria in which the two extreme parties are directly linked. In the four-party case, the unique symmetric equilibrium places two parties at $(1-d)/2$ and two parties at $(1+d)/2$. In both three- and four-party systems, more restrictive coalition communication, represented by a smaller $d$, generates a centripetal force, and the median voter theorem holds in the limit despite the multiparty setting. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2607.27996 |
| By: | Gregorio Curello; Sam Jindani |
| Abstract: | We consider the problem of bargaining when transfers between agents are possible. Such situations are typically modelled as coalitional games with transferable utilities. However this model makes a strong implicit assumption: the outcome can only depend on the total surplus that each coalition of agents can achieve, not on which agents within the coalition generate the surplus. Is this assumption justified? We define a richer model in which solutions may depend on who generates the surplus. In this model, the classical axiomatisation of the Shapley value fails: a broad family of solutions satisfy efficiency, anonymity, the dummy property, and additivity. Nevertheless, we obtain an axiomatisation of the Shapley value in the richer model by adding continuity and individual rationality to the original axioms. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.09232 |