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on Microeconomics |
| By: | Panagiotis Kyriazis |
| Abstract: | How should consumers learn when a seller chooses a menu of product qualities and prices? We study information design when the seller observes the learning policy, but not consumers' private signals, before choosing its menu. Under cost-curvature conditions, we characterize optimal learning when consumer surplus receives greater weight than profit. Even with two valuations, every optimal posterior distribution combines an interval of posterior types with an efficiently served atom at the highest valuation. The induced menu features a continuum of differentiated products. Strikingly, optimal learning can also induce a lower posterior atom, separated from this interval by a support gap. Buyers in this atom either purchase an isolated low-quality product or are excluded, even when trade with every buyer creates gains. Both configurations can be optimal for the same prior and welfare weight. Served buyers with distinct posterior types are never bunched at the same quality. General finite priors can yield several separating regions and trading atoms. We also characterize the optimal joint design of learning and valuation-dependent segmentation, showing, among other results, that every posterior type with positive gains from trade must be served. Joint design can raise both consumer surplus and profit relative to buyer-optimal private learning alone. Even random assignment to segments with different learning policies and separate menus can give consumers more surplus than any single market yielding the same profit. Additional price discrimination can therefore benefit consumers, even when privacy restrictions require segmentation to reveal nothing about valuations to the seller. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2610.14225 |
| By: | Doruk Cetemen; Francesc Dilmé |
| Abstract: | We study dynamic test design under the threat of manipulation. At each instant, a principal who cannot commit to future actions chooses whether to hire an agent, fire him, or keep him on costly probation and design a test. The test provides information about the agent’s persistent type, which is either good or bad. After observing the test choice, the bad type can exert costly effort to manipulate the evidence and mimic the good type. Deterring manipulation imposes an endogenous information budget that limits how intensively the principal can test. We show that, except at beliefs that remain unchanged in the absence of news, equilibrium tests are one-sided: they generate only passes, which trigger hiring, or only failures, which trigger firing. Equilibrium outcomes feature either correct hiring and firing decisions after costly delay or immediate decisions that risk misallocation. With commitment, an optimal policy either stops immediately or keeps the test constant throughout probation, even as the principal becomes nearly certain of the agent’s type. |
| Keywords: | Dynamic testing, Poisson monitoring, optimal stopping |
| JEL: | C73 D82 D83 D86 |
| Date: | 2026–11 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_795 |
| By: | Seiya Hirano; Yuta Kittaka |
| Abstract: | Cooperation between competing platforms is commonly observed. While the impact of such coopetition on platform competition has been studied, the contractual terms governing such cooperation are typically taken as given, leaving the formation of such cooperation largely unexplored. This paper analyzes a cross-channel strategy in which consumers can access one platform’s content through its rival’s superior distribution channel, and examines whether the strategy emerges through bargaining over the associated revenue-sharing rate. We show that the cross-channel plan is introduced only when the content-providing platform receives about half or more of the revenue generated by the plan. We further show that the welfare effects depend on how the contractual terms are determined. Under a revenue-sharing arrangement determined through Nash bargaining, introducing the cross-channel plan increases industry profit, consumer surplus, and total surplus. By contrast, under an arrangement that combines revenue sharing with a lump-sum transfer, industry profit increases, but consumer surplus and total surplus may decrease. |
| Date: | 2026–11 |
| URL: | https://d.repec.org/n?u=RePEc:dpr:wpaper:1324 |
| By: | Germ\'an Gieczewski; Maria Titova |
| Abstract: | We study generalized verifiable disclosure by an informed sender with type-independent preferences. We first characterize all perfect Bayesian equilibria as individually rational partitions of the sender's types into coalitions ordered by payoff. An equilibrium survives our coalition-proofness criterion if no group of types can profitably coordinate an announcement that the receiver will interpret as coming precisely from the types willing to join it. Coalition-proof equilibria are partitions that are greedy: at each step, a coalition of the remaining types attains the highest payoff consistent with equilibrium. Given the generality of our setting, coalition-proof equilibria may fail to exist. We establish existence under restrictions on preferences and evidence: quasiconcavity with message completeness, betweenness, cheap talk with message completeness, and payoff degradation. For a rich disclosure game with stochastic evidence, we show that the sender's ex-ante payoff in a coalition-proof equilibrium is a piecewise linear tent over the belief simplex, analogous to the concave closure in Bayesian persuasion and the quasiconcave closure in cheap talk. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2610.15087 |
| By: | Hans Gersbach; Elias Kolleck |
| Abstract: | We introduce Cloud Voting, a constitutional rule allocating final authority between citizens and parliament according to turnout of voters. Costly information acquisition and differential participation can make turnout informative about issue magnitude and institutional reliability. We characterize when optimal turnout-contingent authority takes a threshold form. Low parliamentary bias yields an optimal parliament-to-citizen threshold. With moderate bias, turnout can signal parliamentary reliability, and optimal authority can be nonmonotone. Holding information acquisition and participation fixed, the optimal turnout-only rule weakly lowers expected policy loss relative to either fixed-authority benchmark, with strict improvements when each institution is strictly preferable at supported turnout levels. |
| Keywords: | direct democracy, representative democracy, constitution, co-voting, biases, information asymmetry |
| JEL: | D02 D70 D72 D82 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_13120 |
| By: | Francesco Squintani (University of Warwick) |
| Abstract: | Political networks are often factional: like-minded politicians form groups around a small core of leaders, and few links cross ideological collections. I develop a model in which information transmission is a main reason such networks form. Politicians are partitioned into ideologically cohesive collections, transmission is sufficiently reliable but imperfect, and link costs are neither too high nor too low. Every expert–decision maker pair is equally likely and every politician assigns the same weight to every decision. I show that every efficient network is star-factional. In each ideological collection, politicians are connected to a unique leader, and only leaders communicate across collections. Star-factional networks arise as Nash equilibria of the bilateral network formation game and are the only equilibria immune to joint deviations. When politicians differ, efficient leadership favors those with greater expertise, authority, or relevance. If these characteristics are divided, multiple leaders may be efficient. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:wrk:warwec:1631 |
| By: | Hattori, Keisuke; Yoshikawa, Takeshi |
| Abstract: | Manufacturers rely on retailers both to sell their products and to create demand. Investment in demand creation can reverse the usual profit effects of retail entry on manufacturers and incumbent retailers. As the network grows, the manufacturer invests more and each retailer invests less. Entry can reduce the manufacturer's profit despite a higher wholesale price and greater sales, or increase incumbents' profits through savings on investment costs. When investment is sufficiently effective, the manufacturer prefers a finite network even when adding retailers is costless. Cheaper manufacturer investment expands its preferred network, whereas cheaper retailer investment contracts it and can reduce sales and consumer surplus. With identical investment technologies and finite optimal networks, the manufacturer's network is no larger than the socially optimal network; with different technologies, this ordering can reverse. The welfare consequences of distribution limits therefore depend on which firms create demand and bear its cost. |
| Keywords: | Demand creation, Distribution networks, Investment spillovers, Vertical restraints, Profit-increasing entry |
| JEL: | L13 L14 L42 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:344260 |
| By: | Chang Liu; Yuting Zhu |
| Abstract: | Artificial intelligence (AI) can synthesize dispersed information into balanced and informative content, raising the possibility that AI may help reduce polarization. We show that this promise can be undermined by the strategic response of content producers. We develop a game-theoretic model in which consumers acquire information to make downstream decisions, content producers allocate limited informational capacity between broadly valuable vertical information and horizontally differentiated information, and AI provides an alternative source of synthesized information. The effects of AI unfold in three phases as its reliability increases. When reliability is low, AI has no effect on the market. At intermediate levels, AI disciplines prices without attracting consumers or changing content. When AI becomes sufficiently reliable, consumers begin to substitute toward it, and content producers respond by shifting informational capacity away from the vertical dimension and toward horizontally differentiated content, thereby increasing content polarization. The mechanism operates through audience composition: AI attracts consumers who are less well matched to individual producers, leaving producers with stronger incentives to cater to their remaining audiences. The polarization effect intensifies with AI reliability but weakens with greater competition among content producers. Our findings highlight a potential wedge between AI's direct and equilibrium effects: a technology that provides consumers with more balanced information can indirectly make the broader content ecosystem more polarized. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2610.17674 |
| By: | Yuta Nakamura |
| Abstract: | We develop a framework for assessing implementation impossibilities through the information required to resolve them. Domain covers describe information used to select a mechanism without restricting admissible preferences. Coarsening a cover weakens the required information. In quasi-linear public decision problems with a status quo, we study two impossibilities of dominant-strategy implementation: combining efficiency and individual rationality with either budget feasibility or budget balancedness. Under an interval cover based on bounds on maximal social surplus, we characterize the social choice rules implementable in dominant strategies and satisfying the first set of axioms. Under a surplus-level cover based on exact surplus levels, we obtain the corresponding characterization for the second set of axioms. Both covers are minimal: no strictly coarser cover permits implementation under the respective requirements. These economically interpretable minimal covers deepen our understanding of the informational severity of each impossibility. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2610.32958 |
| By: | Rakesh V. Vohra (University of Pennsylvania) |
| Abstract: | Zhong (2022) characterizes, in continuous time, how a decision maker should acquire information before acting when the state is binary. For more than two states, his characterization assumes that an associated partial differential equation has a solution with suitable regularity and shape. I study the same problem with time in discrete periods and beliefs restricted to a finite grid. The decision maker’s problem is then a finite linear or concave program, and each property of its solution follows from an elementary fact about such programs: duality, the number of positive entries in a basic solution, the greedy solution of a knapsack roblem, and the mediant inequality. For two states the discrete model reproduces every qualitative feature of Zhong’s characterization: the value function is quasi-convex, learning is confirmatory, effort rises with the value, targets move toward the current belief as that value rises, and the decision maker acts immediately after a breakthrough. For any number of states, an optimal strategy exists; it uses at most one more posterior belief than there are states, effort rises with the stakes, and the value is no lower at beliefs between the current belief and the posteriors it moves to. The last is the discrete form of Zhong’s result on the direction of learning, which he obtains for more than two states assuming the existence of a desired solution for the associated partial differential equation. |
| Keywords: | dynamic information acquisition, linear programming, Poisson learning, posterior-separable costs, quasi-convexity |
| JEL: | C61 D81 D83 |
| Date: | 2026–10–28 |
| URL: | https://d.repec.org/n?u=RePEc:pen:papers:26-020 |
| By: | Hu Lu (Applied Research and Analysis Directorate, Health Canada); Yuntong Wang (Department of Economics, University of Windsor) |
| Abstract: | This paper revisits the Myerson-Satterthwaite theorem. We consider a bilateral trading problem in which one seller and one buyer have single-peaked preferences on a divisible good. The seller's peak demand and the buyer's peak demand are their private information. We show that for a large family of these bilateral trading problems, there exist trading mechanisms that are incentive-compatible, individually rational, budget balanced, and ex post efficient. We provide a necessary and sufficient condition on the initial distribution of the good between the seller and the buyer under which these trading mechanisms exist. As an application, we consider a new type of river sharing problems: the river sharing problem with incomplete information. In particular, we consider a river sharing problem between two agents located along a river, in which both agents are satiable at certain amounts of water consumption and these satiation amounts are their private information. We show that the efficient trading of water between the two agents can be achieved if and only if the upstream agent's endowment of water exceeds the downstream agent's endowment by a sufficient amount. |
| Keywords: | Bilateral trading; single-peaked preferences; river sharing; satiation; mechanism design. |
| JEL: | C72 D82 |
| Date: | 2026–11 |
| URL: | https://d.repec.org/n?u=RePEc:wis:wpaper:2605 |
| By: | Ayush Gupta |
| Abstract: | This paper studies decision problems where the decision maker’s choice of action affects the probability distribution of a payoff relevant random variable. We establish sufficient conditions for the existence of an expected utility maximizing action in such settings. The main requirement is a mild continuity condition on the family of possible distributions. We also show that this condition is a minimal requirement. Our result does not require common assumptions such as the monotone likelihood ratio property (MLRP) or the convexity of distribution functions condition (CDFC). It can therefore be used to prove the existence of an optimal action in many settings where existing results do not apply, including an important class of problems where the support of the random variable depends on the decision maker’s choice and the density functions are not pointwise continuous. |
| Keywords: | Endogenous uncertainty; u lity maximiza on; existence theorem |
| JEL: | D8 C6 |
| Date: | 2026–11 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_794 |
| By: | Haohui Wang |
| Abstract: | A long-lived sender repeatedly advises a myopic receiver who observes only the recommendation record. Nonbinding, observable self-restraint, such as a rolling quota on favorable recommendations, makes each favorable recommendation use capacity that could serve future opportunities, inducing selective advice. With two actions, when obedience requires a strictly positive cost of self-restraint, the sender's normalized equilibrium payoff is subject to a ceiling equal to the payoff from the best credible partitional signal minus the expected cost of self-restraint. This bound holds at every discount factor; under an upper-tail condition, rolling quotas approach it as the sender becomes patient. A sufficiently valuable opportunity can also induce an informative violation that ends communication. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2610.33390 |
| By: | Marek Weretka (University of Wisconsin-Madison); Debraj Ray (University of Warwick) |
| Abstract: | A principal contracts with multiple agents, as in Lazear and Rosen (1981) and Green and Stokey (1983). Agents have interdependent preferences, but otherwise the setting is classical. We characterize optimal contracts, and relate the direction of co-movement in rewards — “joint liability” (positive) or “tournaments” (negative) — to the assumed structure of preference interdependence. At the same time, as we range over a symmetric family of positively and negatively interdependent preferences, the corresponding distribution of optimal contracts leans towards commonality in payoffs (e.g., joint liability) rather than differences (e.g., tournaments), in a sense made precise in the paper. This asymmetry is qualified to some degree when the mechanism-design problem is augmented by robustness constraints designed to eliminate multiple equilibria. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:wrk:warwec:1634 |
| By: | Dietzenbacher, Bas (RS: GSBE other - not theme-related research, QE Math. Economics & Game Theory); Hanssen, Pauline (RS: GSBE other - not theme-related research, QE Math. Economics & Game Theory); Tamura, Yuki |
| Abstract: | This paper studies egalitarian reallocation when preferences are single-peaked and each agent is endowed with a share of one unit of an infinitely divisible and non- disposable commodity. We focus on the distributional criteria Lorenz domination and variance domination. We show that a new rule, the egalitarian uniform rule, is the unique Pareto optimal and individually rational rule that Lorenz dominates and variance dominates all other rules satisfying these properties. |
| Keywords: | resource reallocation, single-peaked preferences, egalitarianism |
| JEL: | D63 D71 D74 |
| Date: | 2026–11–02 |
| URL: | https://d.repec.org/n?u=RePEc:unm:umagsb:2026014 |
| By: | Rajiv Vohra (Brown University); Debraj Ray (University of Warwick) |
| Abstract: | We revisit Nash’s axiomatic bargaining solution when coalitions employ threats that must be consistent with their solutions. As in Nash, our solution maximizes a (possibly weighted) product of payoffs for each coalition, but subcoalitional threats appear as conventional constraints that are not netted out when maximizing the Nash product. We study different aspects of this coalitional solution, including its connections to a notion of “pragmatic egalitarianism”. We then embed the solution into a setting with externalities, and define viable coalitional structures, under which every coalition follows its coalitional solution but interacts noncooperatively with other coalitions. We discuss applications to public goods, R&D coalitions, oligopoly cartels, and hospital networks. |
| Keywords: | Nash bargaining, coalitional threats, strategic externalities JEL codes: C70, D60, D63 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:wrk:warwec:1633 |
| By: | Makoto WATANABE; Patrick Arnold; Marc Möller |
| Abstract: | This paper considers the effects of common ownership on advance purchase markets featuring intertemporal price discrimination (e.g. airline tickets). Common ownership increases advance prices, while spot prices can decrease. We show that common ownership is anticompetitive but the increase in average transacted prices is smaller than under uniform pricing, although consumers shift towards more informed, more expensive purchases. Common ownership is less detrimental for consumers than under uniform pricing and can even benefit consumers when consumers are sufficiently uninformed about their preferences in advance. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:cnn:wpaper:26-020e |
| By: | Xiaoming Cai (Peking University HSBC Business School); Pieter A. Gautier (Vrije Universiteit Amsterdam) |
| Abstract: | How does buyers' search for bundles generate sorting among heterogeneous sellers? We study competitive search in which buyers assemble bundles through separate transactions, where prices direct search and determine congestion. With two seller types, buyers choose only same-type bundles below a single threshold in cross-type value and cross-type bundles above it. The threshold lies strictly between geometric and arithmetic means of same-type values, so search produces cross-type matching even when types are complements. With a continuum of types, log-supermodularity and submodularity yield unique stable equilibria with positive and negative assortative matching. Positive sorting extends to any fixed number of visits. |
| Keywords: | competitive search, search for bundles, assortative matching, seller heterogeneity |
| Date: | 2026–11–01 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20260084 |
| By: | Maria Gabriella Graziano (University of Naples Federico II and CSEF) |
| Abstract: | We study fairness in finite exchange economies with consumption externalities using the framework of A-economies, in which each agent is associated with a reference group and may propose consumption plans for the agents belonging to that group. We introduce notions of coalitional fairness and justified envy adapted to this reference-group structure and relate them to A-equilibrium and the fuzzy A-core. Under the conditions ensuring fuzzy A-core equivalence, equilibrium, core, coalitional fairness and the justified A-envy-free core characterize the same allocations. We also introduce a notion of type appropriate to A-economies and show that, with Aubin coalitions, imposing a solidarity based non-discrimination requirement does not further restrict the fuzzy A-core. The analysis highlights how the reference structure governs both decentralized opportunities and the relevant comparisons underlying fairness. |
| Keywords: | Exchange economies, consumption externalities, A-equilibrium, fuzzy A-core, coalitional fairness, justified envy, non-discrimination. |
| JEL: | C71 D51 D62 D63 |
| Date: | 2026–11–02 |
| URL: | https://d.repec.org/n?u=RePEc:sef:csefwp:801 |
| By: | Jarrod Burgh; Emerson Melo; Matthew Shum |
| Abstract: | Mental accounting is usually explained by self-control, and two-stage budgeting by separable preferences. We propose a third explanation based on sellers' market power. A consumer who commits to spend a fixed number of dollars in a category has unit-elastic demand, so a seller in that category gains nothing by restricting quantity. A consumer who instead targets a fixed physical quantity has perfectly inelastic demand, a case that a monopolist can exploit. We characterize the commitments that remove a seller's incentive to mark up prices, and show that the fixed dollar budget is the least restrictive. We then show that what matters is budget rigidity rather than separability of preferences. A consumer who re-optimizes her category budget when prices change is insulated from market power only if categories are substitutes; a rigid budget insulates her in every case. Mental accounting can therefore be read as a commitment device against markups, a rationale that is separate from the self-control motive in the existing literature. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2610.12587 |
| By: | Pengyu Qian; Sophie H. Yu |
| Abstract: | Generative AI can lower the cost of producing polished application materials without improving applicants' abilities to do the job. We study an employer who observes qualifications and work history, summarized by observable quality, but must infer other job-relevant attributes from reports that applicants can manipulate at costs that depend on privately known manipulation ability. The employer commits to a hiring rule under a capacity constraint, and we evaluate rules by match value net of applicants' manipulation costs. We show that, as manipulation ability becomes increasingly dispersed among applicants with the same observable quality, socially optimal hiring converges to selection on observable quality alone, a phenomenon we call strategic feature collapse. To capture the remaining welfare gain from reports, we construct a simple dual-track mechanism that directly admits applicants with high observable quality and offers some otherwise excluded applicants a report-based route to admission. Despite the complexity of multidimensional screening, this mechanism is asymptotically optimal under additional regularity, matching the unrestricted optimum's welfare gain from reports through second order. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2610.34508 |
| By: | Liu, Ernest; Redding, Stephen J.; Smith-Worthington, Bennett; Yang, David Y. |
| Abstract: | We develop a tractable framework for analyzing geopolitics as a network of coordination and strategic influence. Countries choose geopolitical actions that trade off domestic interests against incentives to align with connected countries. They can exert costly bilateral influence to affect one another's actions. We characterize equilibrium actions and bilateral influence in closed form. Crosscountry differences in domestic interests decompose into latent geopolitical cleavages, each of which the network transmits into geopolitical actions independently of the others. The crosscountry covariance matrices of domestic interests and of geopolitical actions identify the cleavages and their importance, from which we recover the network. We implement the framework using data on United Nations voting and democratic orientation. The inferred network is well approximated by a few dimensions, aligns with external measures of geopolitical ties, and recovers well-known historical cleavages. We undertake counterfactuals for domestic interests and network connections and quantify three notions of geopolitical power. |
| Keywords: | networks;coordination;strategic influence;network games |
| JEL: | F15 F52 D85 C72 |
| Date: | 2026–10–19 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:141793 |
| By: | Ryo Tsukamoto (Department of Economics, Keio University) |
| Abstract: | This study investigates pairwise endowment exchange without monetary transfers under dichotomous preferences, motivated by living donor kidney exchange problem. In contrast to the standard strict preference domain–where no mechanism satisfies efficiency, incentive compatibility, and individual rationality simultaneously–these properties are jointly achievable in this setting. We adopt a definition of mechanisms as welfare-based correspondences rather than single-valued functions, treating welfare-equivalent outcomes as identical. We provide the first characterization of mechanisms satisfying these properties and show that all mechanisms in this class closely resemble the priority mechanism (Roth, Sönmez, and Ünver, 2005), supporting its use in pairwise kidney exchange. |
| Keywords: | Dichotomous preference, Kidney exchange, Matching, Matroid |
| JEL: | D45 D47 D71 |
| Date: | 2026–10–26 |
| URL: | https://d.repec.org/n?u=RePEc:keo:dpaper:dp2026-022 |
| By: | Nico Lombardi (Hanse-Wissenschaftskolleg - Institute for Advanced Study); Paolo Nerini (Department of Economics, European University Institute (EUI)); Vincenzo Platino (University of Naples Federico II and CSEF); Antonio Villanacci (University of Florence) |
| Abstract: | We consider a pure exchange economy with a finite number of commodities and households, in which preferences are affected by the welfare of others, measured in terms of wealth, and households are allowed to transfer resources to one another. Economies are described by endowments of commodities and utility functions. We establish generic regularity, that is, for an open and dense subset of economies, the set of equilibria is finite and each equilibrium admits a local differentiable representation as a function of the fundamentals. |
| Keywords: | Interdependent preferences, transfers, competitive equilibrium, regular economies. |
| JEL: | C62 D50 D51 D62 |
| Date: | 2026–10–17 |
| URL: | https://d.repec.org/n?u=RePEc:sef:csefwp:800 |
| By: | Andrew Harkins (University of Warwick) |
| Abstract: | This paper develops a model of opinion dynamics in networks where message content can be differentiated by target. In contrast to previous approaches, this model studies the evolution of message content on the edges of the graph, rather than focusing on how beliefs evolve at nodes. This framework is then used to explore how opinion conformity, the act of tailoring one’s stated opinion to the recipient, can impact convergence speed and polarization. Pairwise opinion conformity slows convergence to consensus, whereas anticonformity can lead to faster asymptotic convergence. It is also shown that group conformity can lead to persistent disagreement, even in a connected graph, providing a new perspective on the causes of opinion polarization within social networks. |
| Keywords: | Opinion dynamics; social networks; conformity; polarization; social learning JEL codes: D85; D83 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:wrk:warwec:1637 |
| By: | Feng Dong; Siqing Wang; Fan Wu |
| Abstract: | We study how retained ownership supports the value of an asset that pays no dividends and is held only for resale. A sponsor chooses hidden maintenance that determines market survival, bears its full cost, and captures only the benefit accruing to its retained tokens. A positive stationary equilibrium exists if and only if retention meets an endogenous minimum. Under additional curvature restrictions, retention above this threshold supports two positive stationary equilibria. Conditional on survival, prices below the upper equilibrium converge to the lower one while the upper price is the largest feasible initial valuation. Greater retention expands the feasible price interval. Credible news that future retention will be below the minimum causes an immediate collapse through backward unraveling. The model identifies a governance channel through which insider unlocks can affect valuation without changing total token supply or fundamental cash flows. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2610.19496 |
| By: | Renner, Philipp; Scheidegger, Simon |
| Abstract: | We present a flexible and scalable computational framework integrating machine learning and optimization theory to solve dynamic adverse selection models with persistent private information and many types. Our approach reformulates the model into a numerically tractable structure that bypasses set-valued dynamic programming; we formally prove that, under verifiable conditions, this relaxation yields the solution to the original problem. The recast problem is solved via a parallelized value function iteration algorithm, where high-dimensional, nonlinear functions are approximated using Gaussian process regression combined with Bayesian active learning. We apply our framework to two previously intractable models: one with persistent hidden information involving up to ten types and another incorporating multiple persistent types and overreporting. Validation against known solutions and rigorous credibility measures confirms accuracy. Allowing overreporting significantly alters long-run contract outcomes, concentrating consumption away from extremes and smoothing utility promises over time. |
| Keywords: | dynamic contracts;dynamic programming;gaussian processes;heterogeneous agents;machine learning;principal-agent model |
| JEL: | C61 C73 D82 D86 E61 |
| Date: | 2026–09–30 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:141438 |
| By: | Hattori, Keisuke; Yamada, Mai |
| Abstract: | Helping colleagues builds up workplace relationships which have both productive and private benefits, at the cost of time that could otherwise be spent on one's own work. We model this trade-off to examine how the private value of workplace relationships affects reward design, team size, and leadership. Under individual rewards, helping is insufficient when the private value of relationships is low and excessive when it is high. More productive relationships can lead members to spend too much time helping, reducing team output even under an optimal reward scheme. When individual and team rewards are combined, the optimal weight on team performance is lower in teams whose members place greater private value on relationships, and higher in teams with greater common ability. Under individual rewards, expanding a team can curb excessive helping by weakening its mutual reinforcement, but also reduces the productive benefits of relationships. The optimal team size balances these effects and is larger when members place a higher private value on relationships. By committing to an effort allocation first, the leader induces more helping from the follower and strengthens social ties. This form of leadership can improve output when relationships are insufficiently developed, but lowers output when relationship formation is already at or beyond the output-maximizing level. Both members nevertheless gain in utility. |
| Keywords: | Social relationships, Helping, Team production, Incentive design, Effort allocation, Strategic complementarity |
| JEL: | D23 M52 M54 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:344455 |