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on Microeconomics |
| By: | Chongwoo Choe (Department of Economics, Monash University); Jiajia Cong (Department of Marketing, City University of Hong Kong); Noriaki Matsushima (Institute of Social and Economic Research, Osaka University); Shiva Shekhar (Tilburg School of Economics and Management (TiSEM), CESifo Research affiliate) |
| Abstract: | Privacy regulations like the General Data Protection Regulation aim to empower consumers with greater transparency and control over their personal data. In response, firms may exercise price discrimination in the form of versioning. This paper studies how these two aspects of privacy regulation—consumer empowerment and versioning—affect market outcomes and welfare. We develop a model where firms earn revenue from sales of service and data monetization, and consumers differ in their preferences for the service and privacy costs incurred when sharing data with the firm. In a monopoly, the firm is better off after regulation because its ability to price discriminate outweighs the effects of increased consumer empowerment. In a duopoly, however, greater consumer choice after regulation intensifies competition, as firms have more ways to deviate from mutually beneficial outcomes. This results in the firm with more data monetization earning smaller profit, while the firm with less data monetization earns larger profit. However, the industry profit as a whole decreases and consumer surplus increases after the regulation. Therefore, the regulation’s impact is nuanced and depends on the market structure. We also examine the regulatory impact on firms’ optimal data-driven revenue models and market entry. |
| Keywords: | privacy regulation, privacy management, versioning, monopoly, competition |
| JEL: | D18 D61 K24 L12 L51 L86 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:mos:moswps:2025-03 |
| By: | Fedor Sandomirskiy; Po Hyun Sung; Omer Tamuz; Ben Wincelberg |
| Abstract: | We study finite normal-form games under a narrow bracketing assumption: when players play several games simultaneously, they consider each one separately. We show that under mild additional assumptions, players must play either Nash equilibria, logit quantal response equilibria, or their generalizations, which capture players with various risk attitudes. |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2502.11243 |
| By: | Schmitt, Stefanie Y. |
| Abstract: | Consumers increasingly care about the environmental quality of the goods they consume. However, limited attention impairs consumers' ability to compare and evaluate the environmental quality of goods. I show that investments in environmental quality, consumer surplus, producer surplus, and welfare are non-monotonic functions of attention. Average environmental quality, consumer surplus, producer surplus, and welfare are highest under intermediate (but different) levels of atten-tion. In addition, limited attention influences the effectiveness of policy interventions. I identify conditions under which emission taxes, subsidies, information campaigns, and mandatory disclosure lead to less investments in environmental quality, more emissions, lower consumer surplus, or lower welfare. |
| Keywords: | environmental quality, environmental policies, limited attention |
| JEL: | D91 L13 Q55 Q58 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bamber:313019 |
| By: | Patty, John; Turner, Ian R (Yale University) |
| Abstract: | Legislators can benefit from delegation to executive agencies, but they have limited tools to hold these agencies accountable. One key tool is 'power of the purse': control of the agency's appropriations. We present a theory that incorporates heterogeneous legislator preferences over bureaucratic activity, legislative budgetary control, and endogenous bureaucratic policy discretion to understand legislative incentives when appropriating funds to bureaucratic agencies. Our theory provides several insights: first, legislators' induced preferences over budgets are only partially determined by their policy preferences. Second, in some cases a legislator opposed to the direction that the agency will take policy nevertheless supports increased funding for that agency, which we refer to as the legislator facing cross-pressure. Finally, "strange bedfellows" coalitions emerge in which legislators with competing policy preferences may nonetheless agree on their most-desired budget level for the agency. |
| Date: | 2024–01–11 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:pnx2u_v1 |
| By: | Tadashi SEKIGUCHI; Katsutoshi WAKAI |
| Abstract: | Game theory proves the existence of a stronger punishment than the Nash reversion in the repeated games. Recent empirical ndings in Oligopoly, how- ever, suggest the implementation of the Nash reversion. In a standard repeated game setting, we propose a potential answer for this empirical puzzle by using a re ned version of the discounted utility that exhibits gain/loss asymmetry, where players discount gains more than losses. Our main result is as follows: among gain/loss robust subgame perfect equilibria, the Nash reversion o¤ers the strongest punishment. The robustness is based on the assumption that players are unsure about their own level of gain/loss asymmetry and choose only the strategies that are subgame perfect for any level of gain/loss asymmetry they can perceive as possible. |
| Keywords: | Gain/loss asymmetry, optimal penal code, repeated game, re-cursive utility, utility smoothing |
| JEL: | C73 D20 D90 L13 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:kue:epaper:e-24-009 |
| By: | Eun Jeong Heo; Vikram Manjunath |
| Abstract: | In allocating objects via lotteries, it is common to consider ordinal rules that rely solely on how agents rank degenerate lotteries. While ordinality is often imposed due to cognitive or informational constraints, we provide another justification from an axiomatic perspective: for three-agent problems, the combination of efficiency, strategy-proofness, non-bossiness, and a weak form of continuity collectively implies ordinality. |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2502.14154 |
| By: | Pierre Bardier |
| Abstract: | We provide a formal framework accounting for a widespread idea in the theory of economic design: analytically established incompatibilities between given axioms should be qualified by the likelihood of their violation. We define the degree to which rules satisfy an axiom, as well as several axioms, on the basis of a probability measure over the inputs of the rules. Armed with this notion of degree, we propose and characterize i) a criterion to evaluate and compare rules given a set of axioms, allowing the importance of each combination of axioms to differ, and ii) a criterion to measure the compatibility between given axioms, building on a analogy with cooperative game theory. |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2502.13850 |
| By: | Benjamin Golub |
| Abstract: | Square matrices often arise in microeconomics, particularly in network models addressing applications from opinion dynamics to platform regulation. Spectral theory provides powerful tools for analyzing their properties. We present an accessible overview of several fundamental applications of spectral methods in microeconomics, focusing especially on the Perron-Frobenius Theorem's role and its connection to centrality measures. Applications include social learning, network games, public goods provision, and market intervention under uncertainty. The exposition assumes minimal social science background, using spectral theory as a unifying mathematical thread to introduce interested readers to some exciting current topics in microeconomic theory. |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2502.12309 |