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on Microeconomics |
| By: | Kohmei Makihara |
| Abstract: | We study how to allocate a good with positive externalities among agents in an information network, without monetary transfers. Each agent observes their own valuation and those of their neighbors. A principal seeks to allocate the good to the highest-valuation agent through a mechanism robust to agents' heterogeneous belief hierarchies, leveraging the network structure and the partial incentive alignment created by allocative externalities. We characterize the networks for which a robustly efficient mechanism exists: it exists if and only if at least two agents are connected to all others. Relaxing robustness to rule out weakly dominated strategies, one universally connected agent suffices. We generalize the results to a broader class of utility functions, show that robust welfare maximization is impossible unless the network is complete, and establish that an ex post incentive compatible mechanism that is efficient under truthful reports exists if and only if no agent is isolated. |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2609.35907 |
| By: | Vladimir Asriyan; William Fuchs; Caio Lorecchio |
| Abstract: | We study dynamic monopoly pricing with multiple buyers whose valuations are privately known and correlated, so that one buyer 's purchase reveals information about the valuations of others. Without seller commitment, these information spillovers alter future pricing incentives and feed back into current demand. We show that they generate strategic complementarities in buyers' purchase decisions, making demand non-monotone and giving rise to equilibrium multiplicity. Information spillovers can either strengthen or weaken the seller 's effective commitment power, implying that seller revenue, buyer surplus, and total welfare are generically non-monotonic in the strength of spillovers. We characterize when these spillovers encourage data investment and experimentation, as well as facilitate coordination that mitigates hold-up. |
| Keywords: | commitment, dynamic monopoly pricing, equilibrium multiplicity, information spillovers, strategic complementarities |
| JEL: | D42 D82 D83 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:bge:wpaper:1598 |
| By: | Olivier Bos; Martin Pollrich |
| Abstract: | We study mechanisms in which agents' preferences depend both on an object allocation and on a third party's beliefs about private information. A mechanism determines an allocation, transfers, and sends signals to the aftermarket. We compare two informational environments: (i) private transfers, where the aftermarket observes allocations and signals, and (ii) public transfers, where transfers are publicly observable. Our main result shows that any equilibrium outcome implementable with hidden transfers can be approximated arbitrarily well with public transfers. Thus, transfer observability generates at most a vanishing informational distortion and helps rationalize the common assumption that transfers remain hidden from aftermarkets. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2610.03146 |
| By: | Juan Beccuti; Manvir Schneider |
| Abstract: | We study reward design for delegated representatives who acquire costly information and vote on a binary governance proposal. Effort improves both private information and delegated voting weight. We show that no payment rule can make sincere voting strictly optimal at every positive effort profile under a non-neutral prior, while fixed budgets limit accuracy in large symmetric committees. We then compare proportional sharing with a conditional rule that rewards only members of a sufficiently large winning coalition. Unlike proportional sharing, which supports sincere voting only through indifference, the conditional rule makes sincere voting strictly optimal at symmetric positive effort profiles. It supports sincere equilibria with the same effort as proportional sharing and, under suitable reward-cost conditions, with strictly higher effort and decision accuracy. Insincere equilibria may nevertheless coexist. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2610.07959 |
| By: | Carmelo Rodríguez à lvarez (ICAE Instituto Complutense de Análisis Económico, Depto. Análisis Económico y Economía Cuantitativa, Universidad Complutense de Madrid) |
| Abstract: | We study social choice functions that select sets of alternatives, taking voters' preferences over sets as input, when voters evaluate sets according to conditional expected utility obtained from Bayesian updating of a prior. Barberà et al. (2001) shows that under a uniform common prior both dictatorial and bidictatorial rules satisfy strategy-proofness and unanimity. We show that this multiplicity is a knife-edge case. If at most one voter holds a uniform initial prior, dictatorship is the unique rule satisfying these properties. The argument links set-valued rules to random dictatorship and shows that the probability ratios imposed by Bayesian updating from non-uniform priors are incompatible with combining the top choices of multiple voters. |
| Keywords: | Strategy-proofness; Social choice functions over sets; Random dictatorship; Probability assessments. |
| JEL: | C71 D82 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ucm:doicae:2602 |
| By: | Byung-Cheol Kim (Culverhouse College of Business, University of Alabama, Tuscaloosa, AL, USA); Keeyoung Rhee (Department of Economics, Sungkyunkwan University, Seoul, Korea) |
| Abstract: | Firms increasingly outsource innovation to AI platforms serving their competitors, allowing one client's problem solving to improve what the platform delivers to another. We study a duopoly in which firms choose between in-house innovation and a shared AI platform. Cross-client learning occurs when both firms use the platform. Stronger learning can initially support joint use, yet eventually destabilize it as each firm's problem solving increasingly benefits its rival. Too many or too few firms may adopt the platform relative to a coordinated benchmark that maximizes their combined payoff subject to symmetric effort. Blocking cross-client learning can reduce competitive harm yet leave the firms collectively worse off. |
| Keywords: | shared AI platforms; outsourcing; coopetition; cross-client learning; technology adoption |
| JEL: | D43 L22 L24 O32 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:net:wpaper:2601 |
| By: | Joshua S. Gans |
| Abstract: | How much liability should AI providers bear when their services enable both attack and defence? Liability can improve welfare while increasing harm. Providers sell a common input to productive users, attackers and defenders. Within a defended contest, a higher common price reduces effort without changing attack success or attacker profits, saving resources and improving the target's security payoff. Compensation weakens defence and raises attacker profits. Optimal liability balances these effects against productive exclusion. Greater competition can lower optimal liability; every such decline must end at an outcome retaining defence. With cybersecurity access fixed, monopoly can warrant partial liability but never full liability when provision is worthwhile. When guardrails preserving productive uses are available, strong competition favours universal guarding socially but encourages unilateral removal at insufficient liability. At a fixed provider count, sufficiently many productive users ensure a pure equilibrium with universal guarding under high liability. A universal-guarding requirement makes liability redundant. Under monopoly, adoption follows a unique liability threshold, while zero liability remains uniquely optimal for a range of parameters with sufficiently many productive users. |
| JEL: | D62 K13 L13 L51 L86 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35828 |
| By: | Herbert Dawid; Ali Kashefi; Gerd Muehlheusser |
| Abstract: | Should platforms be held legally responsible for harm caused by products or services offered by third-party sellers? We address this question in a novel setting in which product safety (the likelihood of accidents) is determined by third-party sellers, while the consumer price is set by a monopolistic platform that pays sellers a commission. Relevant examples include platforms providing ride-hailing services (e.g. Uber and Lyft) or health care services (e.g. Teladoc). Sellers decide whether or not to become active on the platform, and consumers' willingness to pay for the platform good increases with the number of active sellers (platform externality). When an accident occurs, the harm is divided between the platform and the respective seller according to a liability rule set ex ante by a welfare-maximizing policymaker. Sellers' incentive to provide high product safety is driven by market demand, which in turn is determined by the platform's pricing scheme, balancing the trade-off between market revenue and expected liability costs. The platform may optimally set a price below the monopoly level to boost demand, thereby triggering active sellers to provide high product safety (market channel). The socially optimal liability rule is dichotomous: it either assigns no liability to the platform, or the maximum liability share for which the platform exploits the market channel to induce high product safety from the sellers. Holding the platform liable is socially desirable only when it induces lower consumer prices. |
| Keywords: | platform liability, consumer pricing, product safety, product liability |
| JEL: | K13 L13 L15 L86 D42 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_13033 |
| By: | Maria Andraos; Mario Ghossoub |
| Abstract: | We consider an insurance market with hidden information, where the agent's type is private information and is drawn from an arbitrary type space. We discuss the notion of implementability of the collection of retention functions. Namely, how to select premium schedules so that the resulting menu of contracts is incentive compatible, or truthtelling. Specifically, for general type spaces, implementability is equivalent to cyclical monotonicity of the collection of retention functions. For compact interval type spaces, we show that submodularity is a sufficient condition for implementability, under suitable type ordering assumptions. Moreover, for any implementable collection of retention functions, we characterize the corresponding premium schedule. Finally, we apply our results to several standard classes of insurance contracts, for which the general implementability conditions admit simpler characterizations, and we provide several numerical illustrations. |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2609.31959 |
| By: | Jonathan Libgober |
| Abstract: | I introduce a robustness criterion for settings where players may disagree about the distribution over signals induced by endogenously chosen information. In the spirit of Hansen and Sargent (2008), an information choice is evaluated by its worst-case payoff over beliefs within an $\eta$-entropy ball around the signal distribution it induces. I apply this formulation to buyer-optimal learning in bilateral trade (Roesler and Szentes, 2017). If trade is always efficient, disagreement raises the price and twists the buyer's demand curve while preserving full trade. When trade may be inefficient, the same characterization holds conditional on trade with an endogenously amplified disagreement level. |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2609.33057 |
| By: | Ashley Perry |
| Abstract: | This paper analyzes the relative efficiency of horizontal and vertical organizational structures modeled as communication networks under limited managerial attention. In this framework, workers receive noisy signals about the state of the world and communicate reports to a decision-maker whose meeting time relatively more constrained. The clarity of each report depends endogenously on meeting lengths and the workers' heterogeneous communication and processing abilities. When workers possess identical communication abilities, the horizontal structure is always optimal because it allows the decision-maker to weight signals optimally without compounding transmission noise. Conversely, when workers have asymmetric communication abilities, the attention constraint of the decision-maker induces a structural switch. Under these constraints, the vertical structure becomes preferred because the decision-maker can delegate the time-intensive task of information aggregation to the superior communicator, balancing the loss from transmission noise against the premium on the decision-maker's scarce time. Under the assumption of homogeneous processing abilities I derive the analytical threshold for the n-worker model. |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2609.35244 |
| By: | Moeen Nehzati |
| Abstract: | We show that distinct pure-strategy Nash equilibria typically have different utilitarian welfare values in sufficiently rich classes of $C^2$ games with open strategy sets. Here, typical means both generic and finitely prevalent, while rich means that the class admits a finite-dimensional family of perturbations that can independently move payoff values and first derivatives in any direction at any two distinct strategy profiles (for example, polynomial perturbations of degree at most three). Consequently, a welfare-maximizing equilibrium, if one exists, is unique. The result extends to each fixed $C^1$ payoff aggregator whose derivative with respect to the payoff vector is everywhere nonzero. In the full $C^2$ utility space, we also treat scalar criteria depending on strategies, payoffs, and payoff derivatives, subject to a nonvanishing condition in payoff-level or cross-player derivative directions. Finally, adjoining arbitrarily small perturbations from a suitable finite-dimensional space makes welfare separation typical in the augmented family, with separation holding for almost every perturbation of each fixed base game. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2610.08661 |
| By: | Alessandro Bonatti; Doruk Cetemen; Juuso Toikka |
| Abstract: | We study optimal dynamic contracts for long-term projects where a risk-averse agent exerts hidden effort to increase the drift of a Brownian process toward a com- pletion threshold. Relative to the first best, the optimal contract slows progress, makes success less likely, induces earlier termination, and narrows project scope. Allowing for costly project resets generates further distortions: resets may be excessive or insufficient depending on the residual effort required afterwards. With endogenous risk taking, optimal incentives introduce penalties for failure and reduce rewards for effort above a critical progress level, resulting in discontinuous and nonmonotonic effort in progress. In the baseline model, the optimal contract can be implemented with linear spot contracts that require no long-term commitment. |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2609.35238 |
| By: | Christian Jaag |
| Abstract: | An organization may bind future decision makers through a commitment over its own lifespan. This paper studies that choice for philanthropic foundations. A foundation may commit to terminate, commit to institutional continuity, or leave termination to future discretion. Discretion preserves state-contingent stopping. Perpetuity instead raises investment in foundation-specific organizational capital whose return is partly lost upon termination. A terminal commitment limits excessive continuation when future governing bodies obtain private benefits from organizational survival. A canonical model yields nonempty regions in which each regime is optimal, while a finite-horizon extension endogenizes the terminal date. Perpetuity is optimal when organizational capital is sufficiently productive relative to the cost of continuing in bad states; discretion is optimal when stopping flexibility is valuable and governance is aligned; a finite lifespan is optimal when survival incentives create sufficiently costly entrenchment. Organizational lifespan is therefore a distinct commitment margin. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2610.08447 |
| By: | Takashi Shimizu (Graduate School of Economics, Kobe University) |
| Abstract: | We study information transmission within organizations, focusing on how biased Subordinates should be combined to elicit truthful information. We assume that the directions of the Subordinates’ biases are common knowledge, whereas their magnitudes are privately known to each Subordinate. We show that a homogeneous composition of Subordinates is preferable to a heterogeneous one. The intuition is that, under a homogeneous composition, the effect of an individual false report is amplified by false reports from other Subordinates. Anticipating this amplification effect reduces each Subordinate’s incentive to misreport and thereby promotes truthful information transmission. |
| Keywords: | Cross-holdings: Organization; Information transmission; Cheap talk; Bias; Homogeneous mode; Heterogeneous mode |
| JEL: | D23 D82 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:koe:wpaper:2614 |
| By: | Wei He; Fei Li; Jiangtao Li; Hanqing Ye |
| Abstract: | A principal relies on information held by a biased agent in decision-making. Without a prior over the circumstances that may arise, she designs a delegation rule to minimize the worst-case regret. Optimal delegation combines a default action, a fixed gap above it, and a higher discretionary interval with random boundaries. This structure separates two margins: whether the decision departs from the default and how much discretion the agent receives conditional on doing so. The default and gap limit excessive adjustment when little adaptation is warranted, while the higher interval preserves flexibility when larger adjustments are needed. Randomizing the discretionary interval's floor and ceiling hedges the principal's exposure across potential worst-case states. This rule is optimal among all stochastic incentive-compatible mechanisms. |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2609.35156 |
| By: | Elizabeth Baldwin; Paul Klemperer; Edwin Lock |
| Abstract: | Arctic product-mix auctions allow budget-constrained bidders to express preferences over multiple substitute goods. We give the first strongly polynomial algorithm to find the competitive equilibria when the auctioneer has separable convex piecewise-linear costs. It combines a strongly polynomial reduction to the costless Arctic auction with an existing strongly polynomial algorithm for costless Arctic auctions. We also give a polynomial-time Turing reduction from costless Arctic auctions to linear Fisher markets, and a strongly polynomial many-to-one reduction to linear Arrow-Debreu exchange markets. If a good is sold in positive quantity in two competitive equilibria, its price is the same in both. |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2609.36346 |
| By: | Juan-Jose Ganuza (Comision Nacional de los Mercados y la Competencia (CNMC), Spain); Ivan Rendo (Toulouse School of Economics, Toulouse, France) |
| Abstract: | Piracy is central to digital markets, where identical content can be accessed legally or through unauthorized channels. While easier piracy seems likely to intensify competition and lower prices, it also reduces profitability and discourages entry. We develop a circular-city model with free entry in which consumers jointly choose content and access mode. Stronger enforcement raises prices for a fixed number of firms but also attracts competitors. Prices rise with enforcement in less competitive markets but can follow an inverted U in more competitive markets, where entry eventually pushes prices down. Extensions show that piracy can also weaken competition and raise prices by attracting consumers most willing to switch between legal providers. |
| Keywords: | competition; piracy; entry; digital markets |
| JEL: | L13 L82 K42 D43 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:net:wpaper:2602 |
| By: | Steven Kivinen (University of Graz, Austria); Tatiana Mayskaya (International College of Economics and Finance; HSE University, Russia); Arina Nikandrova (University of London, UK) |
| Abstract: | A sender must disclose all available signals but commits to their order to persuade a receiver who pays to observe them sequentially and can stop at any time. Front loading favourable signals is generally suboptimal. With many weak signals, an asymptotically optimal policy uses the first signal to encode a recommendation based on the entire sample, then alternates favourable and unfavourable signals to postpone revelation of the sample composition and deter further learning. This policy makes the dynamic ordering problem asymptotically equivalent to static persuasion with costly verification. |
| Keywords: | information design, costly information acquisition, optimal stopping, primacy effect |
| JEL: | D82 D83 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:grz:wpaper:2026-21 |
| By: | Mark Whitmeyer |
| Abstract: | I show that the equivalence in finite social-choice environments of Bayesian incentive compatibility and dominant-strategy incentive compatibility holds universally if and only if every type-dependent difference in the valuation of prizes operates through a single scalar type index. Beyond binary domains this universal robustifiability is nongeneric. |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2609.26223 |
| By: | Kexin Chen; Tao Lin; Jianwei Huang |
| Abstract: | AI advice increasingly enters human decision workflows before costly information acquisition and final action. This paper studies how such advice affects decision quality, measured by the gross utility of the final action. Advice shifts beliefs before the decision maker chooses an acquisition experiment with uniformly posterior-separable (UPS) costs. The analysis characterizes gross effects through the continuation gross value generated by net-optimal acquisition. Convexity of this value function is necessary and sufficient for every AI signal to weakly improve gross utility at every prior, while nonconvexity allows a binary signal to cause gross harm. The criterion gives tight state-space results. Every AI signal is weakly gross-improving in binary-state problems under arbitrary actions, payoffs, and UPS costs. A minimal three-state problem can generate gross harm through concentrated shutdown, where valuable acquisition stops. For classification problems with Shannon acquisition costs, the criterion becomes an active-set slope test. It guarantees weak gross improvement for homogeneous classification and all three-state weighted classification problems, while a minimal four-state failure arises from attention dilution, where acquisition shifts away from high-stake distinctions. Along a Blackwell-increasing mixture path, gross utility can first decrease and then increase. With endogenous interpretation, cheaper interpretation can reduce gross utility. |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2609.35137 |
| By: | Hao Yu |
| Abstract: | When a subset of alternatives is allowed to be the collective choice, one approach is to study the social choice correspondence defined on agents' preferences over alternatives. This paper considers a different approach. We argue that agents should have preferences directly over outcomes. We consider the social choice problem on a closed real interval, and assume a single-peaked domain over intervals. Our focus is on the peak-only social choice function, referred to as the voting scheme. The leftright scheme, which generalizes the minmax scheme, is the only strategy-proof voting scheme. Adding anonymity, it reduces to the generalized median scheme. For an odd number of agents, the median scheme is the only voting scheme satisfying efficiency, anonymity, and strategy-proofness. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2610.08435 |
| By: | Guoqiang Tian |
| Abstract: | This paper studies the endogenous informational evolution of dynamic economic systems. Building on Hurwicz's conceptual framework, such a system is defined as a dynamic joint adjustment process of resource and information allocation linked by recursive feedback. Economic theory gains precision by isolating particular margins, but when information production, disclosure, learning, incentives, actions, and future feasibility interact across these two processes, conclusions obtained by holding other margins fixed need not survive their joint determination. The paper develops a system-level dynamic equilibrium framework for this interaction. Holding particular links fixed yields familiar environments in dynamic mechanism design, information design, experimentation and learning, feedback and disclosure, and information acquisition. The analysis establishes three central failures relative to fixed or partially exogenous informational environments: informational efficiency under exogenous feasibility is generally incompatible with endogenous dynamic feasibility; incentive and disclosure design cannot generally be separated; and informational monotonicity can fail without implementation replicability. It also identifies the corresponding positive boundaries. Optimal disclosure may be interior or extreme; bang--bang disclosure arises under additional conditions, and a further specialization generates an endogenous transition from opacity to transparency. Information may therefore be optimally withheld even when its direct decision value is strictly positive. Extensions to private payoff-relevant information and limited commitment preserve the recursive structure. |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2609.36093 |
| By: | Georgy Lukyanov; Mikhail Zolotarev |
| Abstract: | Public support for early adoption can affect what later users learn from observed choices. An adopter may have favourable private information, or may have received a rebate. We study a government that randomly assigns eligibility for a fixed rebate and chooses the program's coverage and reporting rule. We characterize when disclosing individual eligibility changes optimal coverage from zero to a positive rate under general convex program costs. This requires both a favourable marginal return to a disclosed program and a bound on the direct benefit available from a large opaque intervention. In the benchmark, disclosure allows the government to increase early adoption and welfare while leaving expected total adoption unchanged. We then allow imperfect compliance and private information for the late user. An eligibility label can be strictly informative without changing anyone's decision, in which case disclosure has no welfare value. The policy reversal survives when both extensions are present. The results identify when an eligibility record is a useful part of the design of an adoption program. |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2609.31744 |
| By: | Miguel Risco (IGIER, Bocconi University, Milan, Italy) |
| Abstract: | Interoperability has been proposed to make social media contestable. But platforms are no longer purely network-based: personalization algorithms select much of what users see beyond their network, and an interoperability mandate opens the network but not the discovery layer. We study two platforms, each allocating resources between its network and discovery layers. A reciprocal mandate can raise the leading platform's size even if it is more productive in both, because its comparative advantage in discovery makes the challenger the network specialist, whose specialty the mandate opens. This effect can reverse once investment adjusts. Opening only the leader's network lowers its size, so any increase in concentration under a reciprocal mandate comes from opening the challenger's network. Concentration, challenger profit and user surplus can diverge. Whether recommendation technology, now largely driven by artificial intelligence, becomes a commodity or a moat determines whether the mandate reaches the source of the leader's advantage. |
| Keywords: | interoperability; social media; discovery; recommender systems; platform competition |
| JEL: | L13 L41 L51 L86 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:net:wpaper:2605 |
| By: | Julien Combe; Yves Le Yaouanq |
| Abstract: | Many markets are regulated for paternalistic reasons. We develop a mechanism-design framework to derive the optimal policy mix between price regulation and quantity controls. A budget-constrained planner allocates trade between privately informed buyers and sellers while disagreeing with their valuations. When the planner’s valuations preserve the ranking of agents, price instruments (e.g., sin taxes) are optimal. When the planner instead believes that a high willingness to trade indicates a bias, optimal regulation can restrict quantities or even prohibit transactions. De-biasing interventions offer two benefits beyond economic regulation: improving selection into markets and, for virtuous goods, raising the volume of trade. |
| Keywords: | paternalism, mechanism design, market regulation, rationing, sin taxes, nudges |
| JEL: | D82 D90 D47 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_13028 |
| By: | Sizhong Fang |
| Abstract: | This paper provides a topological construction for studying social aggregation of weak preferences over a finite set of alternatives. We identify weak preferences with the cells of the type $A_{n-1}$ braid arrangement and, equivalently, with the simplices of the corresponding type $A_{n-1}$ Coxeter complex, which we call the preference complex. Then we define face-monotonicity by requiring a social welfare function to be order-preserving when viewed as a map between the preference-profile poset and the preference poset. We prove that if a common preference domain admits a unanimous, anonymous, and face-monotonic social welfare function, then every connected component of the geometric realization of its order complex is contractible. We then apply this construction to two restricted domains. For fixed-extrema domains, we prove that their order-complex realizations are contractible and define a unanimous, anonymous, and face-monotonic social welfare function using the meet operation. For single-peaked domains, we prove that the corresponding subcomplex of the preference complex has a contractible realization and, in the three-alternative case, construct a unanimous, anonymous, and face-monotonic social welfare function. |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2609.35866 |
| By: | Tommaso Bondi (SC Johnson College of Business, Cornell University, Ithaca, NY, USA); Lijuan Luo (SC Johnson College of Business, Cornell University, Ithaca, NY, USA) |
| Abstract: | Online reviews are usually modeled as quality signals, but their text also tells readers which products suit them. We study this matching role in a dynamic model in which majority and minority consumers care about partly different product features. As matching improves, each product’s buyers become more alike, and its reviews say less about the features that matter only to consumers of the other type. The unique equilibrium therefore features partial matching, sustained by mismatched buyers whose reviews cover what matched buyers leave out. In the benchmark model, uniformly degrading what consumers see never raises equilibrium matching. Pooled AI summaries of the most frequently mentioned features leave minority readers no better informed than a page written only by fans. Descriptive evidence from 11.6 million Goodreads reviews shows that review text separates fit from quality and that readers who like and dislike a book write about different things. This paper suggests that platforms can serve minority readers better by building AI summaries within reader segments and by not letting majority endorsement decide which reviews are most visible. |
| Keywords: | online reviews; product fit; social learning; information design; AI summaries; platform design |
| JEL: | D82 D83 L15 L86 M31 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:net:wpaper:2603 |
| By: | Sylvain C. Chassang (Princeton University) |
| Abstract: | I argue that in long-term consumer–producer relationships, menus of contracts can be advantageously replaced by a single generous contract such that, at any point in time, the sum of a consumer’s transfers is equal to the sum of transfers they would have made under the contract that is the best for them in hindsight. Such generous long-term contracts can increase skeptical consumers’ demand for complex and higher-powered contracts while approximately implementing the same outcomes as the underlying menu evaluated by a rational decision maker. Applications include voluntary load shedding in retail electricity markets and cost sharing in health insurance. |
| JEL: | D11 D12 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:pri:cepsud:354 |
| By: | Georgy Lukyanov; Nikita Ogorodnikov |
| Abstract: | New information services begin without a record that teaches customers how to interpret them. We study a two-period monopoly selling standardized forecasts whose committed scoring technology combines noisy evidence with a persistent, initially unknown calibration. More evidence improves a forecast's current decision value but makes the source's calibration harder to learn. The first forecast is released publicly only after its immediate use expires, so it builds a common decoder for the next forecast. For an arbitrary stakes distribution, monopoly pricing uses the same static cutoff in both periods. Provider patience lowers initial evidence intensity; with identical technologies and a binary format menu, transparent conditions generate an endogenous low-evidence first forecast followed by a high-evidence second forecast. A constrained planner switches later because monopoly undercaptures the return to costly evidence. A calibration audit eliminates the accuracy--interpretability trade-off, but the provider may not adopt it even when adoption is socially valuable. The mechanism requires neither distorted reporting nor confirmation preferences: the strategic choice is the auditable evidence input to a mechanically generated score. |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2609.31745 |
| By: | Xiaoming Cai; Pieter Gautier |
| Abstract: | Search frictions normally raise the bar for sorting: both random and directed search require complementarities strictly stronger than the supermodularity that suffices in Becker's (1973) frictionless model. We introduce private information into this setting: firms post wages without observing worker productivity, while better workers have better outside options, creating a market for lemons (Akerlof 1970). We show that this information friction pushes sorting the other way: attracting high-productivity workers without attracting low-productivity ones requires a higher wage paired with a lower job-finding probability, so vacancies fill faster. This strict ranking of vacancy-filling rates sorts the market positively whenever output is complementary in worker and firm quality. Becker's condition therefore suffices once more, and private information makes positive sorting easier to sustain than complete information does. |
| Keywords: | competitive search, adverse selection, screening, sorting, positive assortative matching |
| JEL: | C78 D82 D83 J64 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_13031 |
| By: | Hinata Kurashita |
| Abstract: | We study object reallocation problems with single-peaked preferences. On the unrestricted domain of strict preferences, top trading cycles (TTC) is the unique rule that satisfies efficiency, individual rationality, and strategy-proofness. On the single-peaked preference domain, the crawler introduced by Bade (2019) satisfies the same properties. We show that the Nash equilibrium allocations of the crawler's direct revelation game form a complete lattice under weak Pareto dominance. The truthful allocation is the greatest element of this lattice, while the initial endowment allocation is its least element. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2610.08096 |
| By: | Brekke, Kjell (University of Oslo); Nyborg, Karine (University of Oslo) |
| Abstract: | We show that ideologically motivated disrespect triggers social processes helping individuals protect their self-image and social image, causing ideological and affective polarization as by-products. If even small shares of the population are less respected by one side of the ideological spectrum than the other, ideological views are polarized in equilibrium for almost everyone, including those equally respected by all. Although everyone socializes only with the like-minded in equilibrium, homophily is not assumed but emerges endogenously. The sets of characteristics disrespected by each side determine segregation and polarization patterns, while the degree of polarization depends strongly on exposure to non-peers’ views. |
| Keywords: | affective and ideological polarization, image preferences, reluctant social learning, social migration |
| JEL: | D72 D91 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18956 |
| By: | Joshua S. Gans |
| Abstract: | A honeytoken, a decoy credential or record whose use reveals an intruder, produces defence intelligence only if an adversary sometimes treats it as genuine. The adversary can instead pay to fingerprint it. I model this problem as information design followed by receiver information acquisition. Without fingerprinting, a defender whose installed trap prevalence exceeds the adversary's participation boundary places the attacked pool exactly at that boundary: calibrated bait. That posterior also maximises the gross value of any fixed informative diagnostic with finitely many signal outcomes. For a perfect covert test, the resulting appearance design has a closed-form, prior-dependent characterisation: expensive testing preserves calibrated bait, intermediate-cost testing produces under-calibrated bait, and cheap testing yields pooling, protected segmentation or abstention. Free and costless adjustment of trap prevalence makes non-degenerate segmentation unnecessary, but a sufficiently large adjustment cost around a sufficiently high inherited composition can sustain it. Finally, along an exogenously declining fingerprinting-cost path, lower cost reduces trap activation without reducing genuine compromise within the under-calibrated regime. Evaluation against fresh attackers can therefore overstate the durability of reusable bait. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2609.26797 |
| By: | Mark Whitmeyer |
| Abstract: | For an exogenous source of information and a prespecified number of messages k, I characterize the set of maximal--that is to say, undominated--summaries of the information that use at most k messages. When the exogenous information produces a regular distribution over posteriors (if it has a density on its affine hull, for instance), the maximal summaries take a precise geometric form. They are hierarchical power diagrams: convex subdivisions of the space of beliefs constructed by recursively subdividing cells according to weighted proximity criteria. |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2609.27888 |
| By: | MohammadHossein Bateni; Zahra Hadizadeh; MohammadTaghi Hajiaghayi; Mahdi JafariRaviz; Shayan Taherijam |
| Abstract: | We study information aggregation in the networked learning model introduced by Kearns, Roth, and Ryu (SODA 2026). There is a fixed distribution over $d$ features and a common label. Agents learn in topological order on a directed acyclic graph. Each observes a subset of the features and its parents' predictions, fits a linear predictor to minimize mean squared error, and passes only its prediction forward. The global predictor is the best linear predictor using all features. Kearns, Roth, and Ryu show that the output agent's error approaches the global predictor's error along sufficiently deep paths with suitable feature coverage, while insufficient depth can prevent aggregation even in large networks. In contrast to their main focus on a given graph and feature allocation, we consider the limits of the model under two settings. In the adaptive designer setting, a designer chooses the graph, feature allocation, and output agent knowing the distribution. In the oblivious designer setting, the designer fixes all three before an adversary chooses the distribution. Each agent observes one feature and receives predictions from a limited number of parents. We call the aggregation exact when the output agent matches the global predictor exactly. For $d\ge3$, we show that no finite depth guarantees exact aggregation for every distribution with one parent per agent, even when the designer knows the distribution. In contrast, two parents per agent suffice for exact aggregation even in the oblivious designer setting. A fixed graph, feature allocation, and output agent achieve this for every distribution at depth $O(d\log d)$. Knowing the distribution reduces the depth to $O(d)$. Both constructions use $O(d^2)$ agents, with a very large constant for two parents. We show the bounds on the depth and number of agents are all optimal up to constant factors. |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2609.35537 |
| By: | Christian Jaag |
| Abstract: | Non-governmental organizations often compete for funding while valuing similar social outcomes. Fundraising may expand total giving to a cause or redirect a given funding pool toward the focal organization. This paper studies how cross-organizational purpose alignment changes the composition of such competition. The analysis separates two effects of fundraising: marginal \emph{lift} in aggregate funding and marginal \emph{shift} of funding between organizations. Incomplete alignment creates a wedge between an NGO's marginal mission return and the aggregate mission return that is proportional to shift minus lift. When NGOs choose among fundraising technologies, greater purpose alignment shifts effort toward the relatively lift-intensive technology. Relative to the aggregate mission benchmark, incompletely aligned NGOs choose portfolios that are too shift-intensive. A uniform restriction on fundraising may change total effort but cannot generally correct this composition distortion; correcting the portfolio requires changing relative incentives across technologies. A simple microfoundation interprets cause promotion as lift and organization promotion as shift. Productivity differences preserve reallocation when it raises mission output, while organization-specific benefits restore rivalry even under complete alignment. The model therefore predicts how a common purpose changes the form of competition even when its effect on the level of competition is ambiguous. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2610.08455 |
| By: | Nicole Immorlica; Brendan Lucier; Yaroslav Mukhin; Clayton Thomas; Ruqing Xu |
| Abstract: | We often learn from multiple sources that convey information in different ways. How informative is it to know the source of a signal, and how is this informativeness shaped by the distribution of sources? We extend the standard (binary-state, binary-signal) Blackwell experiment model by introducing a commonly known distribution over signaling schemes, representing the distribution of information sources. We compare learning under two information models: source-aware, where decision makers observe a signaling scheme and its realization (e.g., raw reviews, search results), and source-blind, where only the signal realization is observed (e.g., aggregate ratings, LLM-generated summaries). We show that a mean-preserving spread in the distribution of signaling schemes translates into Blackwell dominance for source-aware decision makers, implying they are "risk-loving" in information sources. In contrast, it has no impact on source-blind decision makers. When learning from repeated draws of signaling schemes, source-blind decision makers learn more slowly. However, as long as the average signaling scheme is $\varepsilon$ away from being completely uninformative, source-blind learning can match source-aware learning by using at most $O(1/\varepsilon)$ times more data. |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2609.33214 |
| By: | Hattori, Keisuke |
| Abstract: | Replacing a human follower with AI that supplies more input can reduce team output. With complementary effort, a leader works harder because a human follower observes this effort and responds with greater effort. AI that matches the follower's contribution removes this reason to work hard, so the leader works less and team output falls. In larger teams, the remaining human followers also work less. Profit-maximizing firms may nevertheless adopt AI that contributes more while the team produces less. Falling AI costs can trigger an output drop at adoption, followed by recovery. Replacing followers can mean discouraging leaders. |
| Keywords: | Artificial intelligence, Team production, Leadership, Strategic complementarity, Automation |
| JEL: | D23 J23 M54 O33 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:344041 |
| By: | Luigi Montrucchio; Lorenzo Stanca |
| Abstract: | We derive sufficient conditions for the existence, non-existence, uniqueness and global attractivity of stochastic recursive utilities. Our approach uses abstract order-theoretic fixed-point arguments, allowing us to accommodate a large class of Markov consumption-growth models with unbounded per-period consumption and a broad range of recursive preferences, including non-expected utility specifications. We illustrate the usefulness of the framework through macro-finance applications to widely used consumption-growth models under several preference specifications, including Epstein--Zin preferences, multiple priors, smooth ambiguity, and Hansen--Sargent robust-control preferences. In each application, our general conditions reduce to a simple, economically interpretable parameter test that shows how fundamental parameters influence existence and uniqueness. While uniqueness of recursive utility can be difficult to guarantee in unbounded environments, in a Markov setting with non-unit elasticity we establish uniqueness within the class of recursive utilities having a so-called separability property. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2610.03157 |
| By: | Austin Lieberman; Matthew I. Jones |
| Abstract: | We create a set of 6 axioms relating to strategic voting and study them on single transferable vote (STV), Meek STV, Bloc, Chamberlin-Courant, Monroe, and k-Borda. For Chamberlin-Courant, Monroe, and k-Borda, we implement ``optimistic'' and ``pessimistic'' models for handing incomplete ballots, thus turning each of the three into two separate voting rules. We determine which voting rules satisfy each axiom. We find that under Chamberlin-Courant and k-Borda, the optimistic models encourage burying, while the pessimistic models encourage truncation strategies, indicating that the handling of partial ballots has tremendous implications for strategic voting. We define an axiom called no skipped payment that differentiates similar rules, as Meek STV and Chamberlin-Courant satisfy it, while STV and Monroe fail. Each voting rule was found to fail favorite betrayal, revealing that none of them are completely immune to strategic voting. In general, STV variants are relatively resistant to strategic voting while Monroe is susceptible to a wide range of strategies. |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2609.37373 |