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on Microeconomics |
| By: | Benjamin Davies |
| Abstract: | A forward-looking agent observes signals of a state that follows a Gaussian AR(1) process. He chooses the signals' precisions sequentially, balancing their marginal cost and informativeness. I characterize his optimal learning strategy, and analyze his steady-state posterior beliefs and welfare. Higher persistence can tighten or loosen these beliefs, but always lowers welfare due to endogenously higher information costs. In contrast, higher patience raises welfare because the agent receives more information from his past selves. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2603.11453 |
| By: | Oihane Gallo |
| Abstract: | We analyze the problem of locating a public facility on a line in a society where agents have either single-peaked or single-dipped preferences. We focus on the domain introduced by Alcalde-Unzu et al. (2024), in which the type of preference of each agent is public information, but the location of her peak or dip, as well as the rest of the preference are unknown. We characterize all strategy-proof and type-anonymous social choice rules on this domain. The first characterization identifies the additional constraints that type- anonymity imposes on the class of strategy-proof rules described in Alcalde-Unzu et al. (2024). The second one generalizes existing results in a two-step procedure as follows: In the first step, the rule computes the median of the reported peaks together with a fixed set of locations (Moulin, 1980) leading to either a single alternative or a pair of contiguous alternatives. In the second step, applied only when the first step yields a pair, we use a double-quota majority method to select between the two alternatives of the pair (Moulin, 1983). Finally, we establish that these two characterizations are equivalent. |
| Keywords: | anonymity, single-dipped preferences, Single-peaked preferences, social choice rule, strategy-proofness |
| JEL: | D70 D71 D79 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:bge:wpaper:1563 |
| By: | Sam Babichenko |
| Abstract: | In strategic environments with private information, evaluating a change in policy requires predicting how the equilibrium responds -- but when actions reshape opponents' signals, each agent's optimal response depends on an infinite hierarchy of beliefs about beliefs that has resisted exact analysis for four decades. We provide the first exact equilibrium characterization of finite-player continuous-time LQG games with endogenous signals. Conditioning on primitive Brownian shocks rather than the physical state -- a dynamic analogue of Harsanyi's common-prior construction -- collapses the belief hierarchy onto deterministic two-time kernels, reducing Nash equilibrium to a deterministic fixed point with no truncation and no large-population limit. The characterization yields an explicit information wedge $\mathcal{V}^i_t$ -- a deterministic Volterra process -- that prices the marginal value of shifting opponents' posteriors. The wedge vanishes precisely when signals are exogenous to controls, formally delineating the boundary where strategic belief manipulation matters, and provides a closed-form mapping from information primitives to equilibrium outcomes. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2603.12140 |
| By: | Christopher P. Chambers; Maxime Cugnon de S\'evricourt; Christopher Turansick |
| Abstract: | In this paper, we study which data can be induced by a correlated equilibrium given a known finite simultaneous move game. We assume that an analyst has access to the frequency of each agent's actions but does not have access to the distribution over joint action profiles. We characterize which sets of marginal distributions over actions arise from some correlated equilibria via a type of no arbitrage condition. An outside observer is unable to make a profit in expectation by independently contracting with each agent and collecting a portion of the total utility gained via unilateral deviation. This characterization naturally extends to Nash equilibria. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2603.02113 |
| By: | Francesco Bilotta; Christoph Carnehl; Justus Preusser |
| Abstract: | A designer relies on an experimenter to provide information to a decision maker, but the experimenter has incentives to persuade rather than merely transmit information. Anticipating this motive, the designer can restrict the set of admissible experiments, but cannot prevent the experimenter from garbling any admissible experiment. We model this situation as delegation over experiments. The optimal delegation set can be obtained by comparing maximally informative experiments among those the experimenter has no incentive to garble. When the experimenter's preferences are $S$-shaped, we fully characterize such experiments as double censorship. Relative to the full delegation outcome, upper censorship, double censorship features an intermediate pooling region, inducing a smaller pooling region for the highest states. We show that the designer strictly benefits from imposing a nontrivial delegation set to constrain the experimenter's ability to persuade while retaining valuable information provision. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2603.10867 |
| By: | Sauvé, Edwige |
| Abstract: | This paper develops a framework in which a multiproduct ecosystem competes with multiple single-product firms in both price and innovation. The ecosystem can use data from one product to improve the quality of its other products. We use the framework to study three regulatory policies aimed at leveling the playing field. Restricting the ecosystem’s cross-product data usage, or forcing it to share data with single-product firms, benefits those firms and induces them to innovate more. However, these policies also dampen the ecosystem’s incentive to collect data and innovate, potentially raising prices. Consumers are better off only when single-product firms are sufficiently good at innovating. Facilitating data exchange between single-product firms via a data cooperative can backfire and harm them, because it induces the ecosystem to price more aggressively. For both the data-sharing and data-cooperative policies, there exist data-compensation schemes such that consumers are better off compared to no regulation. |
| Keywords: | Digital ecosystems; innovation; data regulation; data cooperative |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:131492 |
| By: | Daron Acemoglu (MIT and NBER); Georgy Egorov (Kellogg School ofManagement and NBER); Konstantin Sonin (University of Chicago) |
| Abstract: | In turbulent times, political labels become increasingly uninformative about politicians’ true policy preferences or their ability to withstand the influence of special interest groups. We offer a model in which politicians use campaign rhetoric to signal their political preferences in multiple dimensions. In equilibrium, the less popular types try to pool with the more popular ones, whereas the more popular types seek to separate themselves. The ability of voters to process information shapes politicians’ campaign rhetoric. If the signals on the cultural dimension are more precise, politicians signal more there, even if the economy is more important to voters. The unpopular type benefits from increased conformity, which bridges the candidates’ rhetoric and makes it more difficult for voters to make an informed decision. |
| Keywords: | elections, multidimensional signaling, populism, culture, conformity |
| JEL: | D72 D84 P00 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:bfi:wpaper:2026-34 |
| By: | Haruvy, Ernan; Heinrich, Timo; Walker, Matthew J. |
| Abstract: | This paper studies hold-ups in markets where sellers may impose undisclosed surcharges. While prior work has examined price transparency’s role in market outcomes, the distinct effect of a transparency norm—separate from a fairness norm—remains unestablished. We formulate a simple model that separates these norms and characterizes their equilibrium implications across different market settings. The model shows that price competition yields higher buyer surplus than ultimatum bargaining and that this surplus increases with transparency concerns but decreases with fairness concerns because of softened competition. Compulsory surcharges cannot be higher in bargaining, as sellers prefer a higher price to a higher surcharge as long as it does not change the buyer’s probability of acceptance. Experimental results confirm the transparency norm’s influence: Total prices are lower with price competition, and surcharges are lower with ultimatum bargaining. Additionally, surcharges rise when pricing is outside of the seller’s control. Estimates of the behavioral parameters reveal that sellers weigh transparency at least as heavily as fairness. The results imply that firms fearing hold-ups should still procure goods and services in competitive market structures. |
| Keywords: | surcharge, transparent pricing, fairness, social norm, hold-up, procurement |
| JEL: | C91 D47 D82 L14 M55 |
| Date: | 2026–01–05 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127601 |
| By: | Ashfaq, M.; Toxvaerd, F.; Wei, Y. |
| Abstract: | We study collusive agreements in an infinite-horizon model in which firms invest in inventories of intermediate goods and compete in quantities of final goods. Stocks of inventories act as capacity constraints at the time of production but can be replenished for future use through investment. Input stocks simultaneously impact firms' ability to deviate from collusive agreements and their ability to punish such deviations and therefore have ambiguous effects on the sustainability of collusion. We characterize subgame perfect equilibria in grim trigger strategies in which firms potentially hold asymmetric excess inventories on the collusive path. We show that the sustainability of collusive agreements is non-monotone in inventory stocks. While holding excess capacity is costly and unproductive, the practice can improve firms' ability to sustain anticompetitive agreements. |
| Keywords: | Collusion, Cartels, Inventories, Capacity Constraints |
| JEL: | L13 L41 D25 |
| Date: | 2026–02–27 |
| URL: | https://d.repec.org/n?u=RePEc:cam:camdae:2612 |
| By: | Chen, Yongmin; Li, Zhuozheng; Zhang, Tianle |
| Abstract: | We study the impacts of repeat purchases on consumer search and price competition in an overlapping generations model. Search incentives are higher for “new” consumers and lower for “old” consumers in each generation, which changes price competition directly for these consumers and also indirectly through intertemporal rivalry. There exist two types of consumer loyalty, with remarkably different competitive effects. Relative to the single-purchase benchmark, equilibrium price is lower when brand preference is unlikely to persist, but higher when discount factors are relatively low. |
| Keywords: | search, repeat purchase, dynamic search incentive, price competition |
| JEL: | D8 L1 |
| Date: | 2026–02–08 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127995 |
| By: | Daron Acemoglu; Dingwen Kong; Asuman Ozdaglar |
| Abstract: | We study how generative AI, and in particular agentic AI, shapes human learning incentives and the long-run evolution of society’s information ecosystem. We build a dynamic model of learning and decision-making in which successful decisions require combining shared, community-level general knowledge with individual-level, context-specific knowledge; these two inputs are complements. Learning exhibits economies of scope: costly human effort jointly produces a private signal about their own context and a “thin” public signal that accumulates into the community’s stock of general knowledge, generating a learning externality. Agentic AI delivers context-specific recommendations that substitute for human effort. By contrast, a richer stock of general knowledge complements human effort by raising its marginal return. The model highlights a sharp dynamic tension: while agentic AI can improve contemporaneous decision quality, it can also erode learning incentives that sustain long-run collective knowledge. When human effort is sufficiently elastic and agentic recommendations exceed an accuracy threshold, the economy can tip into a knowledge-collapse steady state in which general knowledge vanishes ultimately, despite high-quality personalized advice. Welfare is generally non-monotone in agentic accuracy, implying an interior, welfare-maximizing level of agentic precision and motivating information-design regulations. In contrast, greater aggregation capacity for general knowledge—meaning more effective sharing and pooling of human-generated general knowledge—unambiguously raises welfare and increases resilience to knowledge collapse. |
| JEL: | D80 D83 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34910 |
| By: | Di Corato, Luca; Moretto, Michele |
| Abstract: | This paper studies a continuous-time regulatory problem in which a firm holds persistent private information about demand and is subject to a flow limited-liability constraint. The regulator regulates prices through a dynamic mechanism that ensures truthful reporting of the evolving type. Limited liability imposes a state-dependent lower bound on the firm’s instantaneous utility, inducing a reflecting boundary in continuation utility and giving rise to a tractable singular-control representation. We derive closed-form expressions for the optimal pricing rule and the associated continuation-utility function, and we characterize the optimal up-front transfer required to induce truthful revelation of the firm’s initial type. The resulting contract is fully explicit and highlights how limited liability shapes information rents and regulatory distortions over time. |
| Keywords: | Environmental Economics and Policy, Financial Economics |
| Date: | 2026–03–06 |
| URL: | https://d.repec.org/n?u=RePEc:ags:feemwp:396239 |
| By: | Martin Kolmar |
| Abstract: | Revealed preference theory (RPT) and its behavioral extension (BRPT) underpin an important strand of welfare economics. Their normative appeal rests on the claim that welfare can be inferred from observed behavior without substantive assumptions about what agents should value - a property I call value neutrality. This paper argues that such neutrality is structurally impossible. I develop a framework - the triangulation problem - identifying five dimensions along which inference from behavior to welfare is underdetermined: the partitioning of the alternative space, the preference domain, the choice rule, the social technology, and the phenomenological mapping from preferences to experience. A sixth problem - the agent's lack of experiential acquaintance with novel alternatives - compounds the underdeterminacy. Resolving these dimensions requires substantive commitments about value rationality - about what agents ought to care about and what counts for welfare. No specification of (B)RPT is both determinate enough to yield welfare rankings and neutral with respect to value rationality. I show that this impossibility entails a collapse thesis: (B)RPT understands itself as a subjectivist theory of well-being, but every operational specification embeds objectivist commitments - attitude-independent claims about what is basically good for the agent - in its auxiliary assumptions. In normative use, (B)RPT is a de-facto objectivist theory that presents itself in subjectivist form, concealing commitments that require philosophical justification behind an appearance of empirical neutrality. |
| Keywords: | revealed preference theory, (behavioral) welfare economics, value rationality, underdeterminacy, normative economics, subjectivism, objectivism, well-being |
| JEL: | B41 D01 D60 D63 I31 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12519 |
| By: | Kazumichi Iwasa (Research Institute for Economics and Business Administration, Kobe University, JAPAN); Kazuo Nishimura (Research Institute for Economics and Business Administration and Center for Computational Social Science, Kobe University, JAPAN) |
| Abstract: | This paper examines the relationship between dynamic stability and the presence of Giffen goods in a standard two-sector growth model. We show that a steady state may take the form of a saddle point even when a labor-intensive good becomes a Giffen good at the steady state.The results highlight that the stability of equilibria is shaped not by the presence of Giffen behavior per se, but by the strength of the income effect associated with inferior goods. When this effect is suffciently large, steady states can become unstable; otherwise, stability is preserved. These findings clarify the conditions under which Giffen behavior interacts with dynamic equilibria, and emphasize the central role of income elasticity in determining stability outcomes. |
| Keywords: | Giffen goods; Dynamic stability; Two-sector model; Income elasticity |
| JEL: | D11 E13 E21 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:kob:dpaper:dp2026-07 |
| By: | Frank Yang; Kai Hao Yang |
| Abstract: | We study optimization problems in which a linear functional is maximized over probability measures that are dominated by a given measure according to an integral stochastic order in an arbitrary dimension. We show that the following four properties are equivalent for any such order: (i) the test function cone is closed under pointwise minimum, (ii) the value function is affine, (iii) the solution correspondence has a convex graph with decomposable extreme points, and (iv) every ordered pair of measures admits an order-preserving coupling. As corollaries, we derive the extreme and exposed point properties involving integral stochastic orders such as multidimensional mean-preserving spreads and stochastic dominance. Applying these results, we generalize Blackwell's theorem by completely characterizing the comparisons of experiments that admit two equivalent descriptions -- through instrumental values and through information technologies. We also show that these results immediately yield new insights into information design, mechanism design, and decision theory. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2603.11448 |
| By: | ALDASHEV, Alisher |
| Abstract: | This paper develops a dynamic theory of academic publishing in which evaluation metrics interact with researchers’ skill formation. Building on classic models of adverse selection and signaling, the analysis introduces endogenous human capital dynamics: researchers’ skills evolve as a function of their publication choices. Engagement with high-scrutiny journals enhances skills through learning-by-doing and referee feedback, while repeated publication in low-scrutiny outlets leads to skill depreciation. The model shows that when governing bodies fail to differentiate between high- and low-scrutiny publication outlets—treating all indexed outputs as equivalent—researchers optimally exert minimal effort, triggering a decline in aggregate research skills. Crucially, this process generates hysteresis: even if evaluation policies are later corrected, accumulated skill depreciation may prevent the re-emergence of a separating equilibrium. The theory is empirically motivated by a comparison of two research funding regimes in Kazakhstan—one imposing strict publication targets tied to indexed journals, and another without publication requirements—which generate markedly different publication patterns despite operating within the same academic environment. The framework highlights a previously unexplored channel through which metric-based evaluation systems can cause persistent damage to research capacity. It delivers clear policy implications: delayed reforms are costly, stronger differentiation across publication outlets may be required to restore quality, and increasing the cost of low-scrutiny publication can be as important as raising rewards for high-quality output. While grounded in a specific institutional setting, the model provides a general framework for understanding durable quality failure in research systems reliant on targeted publication metrics. |
| Keywords: | adverse selection, predatory publishing, human capital dynamics, lock-in effects |
| JEL: | O31 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127677 |