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Momentum in contests and its underlying behavioral mechanisms Econ. Theory (IF 1.423) Pub Date : 2024-03-17 Greg Kubitz, Lionel Page, Hao Wan
We investigate the existence and nature of momentum in performance in contests and whether momentum arises for reasons in part unrelated to rational strategies in contests. To address this question, we look at a setting where strategic considerations should not generate momentum: a sequence of two rounds of independent contests. We show that if we relax the assumption of payoff maximizing agents, positive
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R &d and market sharing agreements Econ. Theory (IF 1.423) Pub Date : 2024-03-06 Jérôme Dollinger, Ana Mauleon, Vincent Vannetelbosch
We analyze the formation of R &D alliances and market sharing (MS) agreements by which firms commit not to enter in each other’s territory in oligopolistic markets. We show that R &D alliance structures are stable only in the presence of MS agreements. Thus, long lasting R &D alliances could signal the existence of some MS agreement in the industry. We characterize the set of stable symmetric pairs
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Expectations, beliefs and the business cycle: tracing back to the deep economic drivers Econ. Theory (IF 1.423) Pub Date : 2024-03-06
Abstract When can exogenous changes in beliefs generate endogenous fluctuations in rational expectation models? We analyze this question in the canonical one-sector and two-sector models of the business cycle with increasing returns to scale. A key feature of our analysis is that we express the uniqueness/multiplicity condition of equilibirum paths in terms of restrictions on five critical and economically
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Level-k thinking in the extensive form Econ. Theory (IF 1.423) Pub Date : 2024-03-06 Burkhard C. Schipper, Hang Zhou
Level-k thinking has been widely applied as a solution concept for games in normal form in behavioral and experimental game theory. We consider level-k thinking in games in extensive form. Player’s may learn about levels of opponents’ thinking during the play of the game because some information sets may be inconsistent with certain levels. In particular, for any information set reached, a level-k
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Existence of Walrasian equilibria with discontinuous, non-ordered, interdependent preferences, without free disposal, and with an infinite-dimensional commodity space Econ. Theory (IF 1.423) Pub Date : 2024-02-28
Abstract A new proof of the existence of a Walrasian equilibrium with an infinite dimensional commodity space is provided, which allows agents’ preferences to be discontinuous. The new theorems include as corollaries the existence results of Mas-Collel, Yannelis and Zame, Araujo and Monteiro, and Mas-Collel and Richard, among others.
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Aggregation of misspecified experts Econ. Theory (IF 1.423) Pub Date : 2024-02-16 Bach Dong-Xuan
We investigate how a cautious decision maker might aggregate opinions from experts who are concerned with model misspecification. We use Cerreia-Vioglio et al. (in: Working paper or preprint, 2022, https://bfi.uchicago.edu/wp-content/uploads/BFI_WP_2020103.pdf) criterion to account for concerns related to model misspecification. Under a Pareto-type axiom and a cautious axiom, the decision maker, whose
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Plea bargaining when juror effort is costly Econ. Theory (IF 1.423) Pub Date : 2024-02-14 Brishti Guha
This is the first paper to integrate plea bargaining with costly juror effort. Jurors care about achieving a correct verdict, but experience costs in processing trial-relevant information. There are no fully separating equilibria, where only innocent defendants go to trial, or pooling equilibria, where innocent defendants falsely plead guilty. The first result has been found in literature which does
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Evolution of cooperation in the indefinitely repeated collective action with a contest for power Econ. Theory (IF 1.423) Pub Date : 2024-01-27 Yaroslav Rosokha, Xinxin Lyu, Denis Tverskoi, Sergey Gavrilets
Social and political inequality among individuals is a common driving force behind the breakdown in cooperation. In this paper, we theoretically and experimentally study cooperation among individuals facing a sequence of collective-action problems in which the benefits of cooperation are divided according to political power that is obtained through a contest. We have three main results. First, we find
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Perfect robust implementation by private information design Econ. Theory (IF 1.423) Pub Date : 2024-01-25 Maxim Ivanov
This paper studies the general principal-agent framework in which the principal aims to implement his first-best action that is monotone in the unknown state. The principal privately selects a signal structure of the agent whose payoff depends on the principal’s action, the state, and the privately known type. The agent privately observes the generated signal and reports it to the principal, who takes
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Mechanisms and axiomatics for division problems with single-dipped preferences Econ. Theory (IF 1.423) Pub Date : 2024-01-24 Doudou Gong, Bas Dietzenbacher, Hans Peters
A mechanism allocates one unit of an infinitely divisible commodity among agents reporting a number between zero and one. Nash, Pareto optimal Nash, and strong equilibria are analyzed for the case where the agents have single-dipped preferences. One main result is that when the mechanism satisfies anonymity, monotonicity, the zero–one property, and order preservation, then the Pareto optimal Nash and
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Efficiency and equity in a socially-embedded economy Econ. Theory (IF 1.423) Pub Date : 2024-01-09
Abstract A model that only focuses on economic relations, and in which efficiency and equity are defined in terms of resource allocation may miss an important part of the picture. We propose a canonical extension of the standard general equilibrium model that embeds economic activities in a larger game of social interactions. Such a model combines general equilibrium effects with social multiplier
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Long-run belief-scarring effects of COVID-19 in a global economy Econ. Theory (IF 1.423) Pub Date : 2024-01-08 Wen-Tai Hsu, Hsuan-Chih (Luke) Lin, Han Yang
While COVID-19 lockdown measures disrupt production worldwide, they also shock workers’ perceptions and beliefs about the economy and may hence have long-lasting effects after the pandemic. We study a belief-scarring mechanism in the context of labor markets and embed this mechanism into a multi-country, multi-sector Ricardian trade model with input–output linkages. Our quantitative analysis indicates
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Moral preferences in bargaining Econ. Theory (IF 1.423) Pub Date : 2024-01-06 Pau Juan-Bartroli, Emin Karagözoğlu
We analyze the equilibrium of a bilateral bargaining game (Nash, 1953, Econometrica, 21: 128–140). where at least one of the individuals has a preference for morality (homo moralis). We show that the equilibrium set crucially depends on these moral preferences. Furthermore, our comparative static analyses provide insights into the distributional implications of individuals’ moral concerns and the composition
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Ranking blame Econ. Theory (IF 1.423) Pub Date : 2024-01-06
Abstract A social planner wants to rank people. Utilitarianism implies that a natural ranking which orders people from most to least sensitive to their rank is the best ranking. But people’s feelings toward the social planner, like blame or gratitude, can depend both on their assigned rank, and on the alternatives they might have been assigned. As a result, the social planner needs to do pairwise comparisons
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The value of information in stopping problems Econ. Theory (IF 1.423) Pub Date : 2023-12-26
Abstract We consider stopping problems in which a decision maker (DM) faces an unknown state of nature and decides sequentially whether to stop and take an irreversible action, or pay a fee and obtain additional information. We discuss the value and quality of information. The former is the maximal discounted expected total payment the DM can generate under a history-dependent fee scheme. We show that
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Hidden advertisement, signaling, and directed search Econ. Theory (IF 1.423) Pub Date : 2023-12-21
Abstract This paper studies a directed search model where sellers have limited capacities, and buyers cannot observe the varying number of advertisements each seller sends. In the presence of this asymmetric information, the limit purchase and selling probabilities as the market size increases are derived. The limit equilibrium is fully separating, where sellers with low advertisement intensity choose
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Preventive-service fraud in credence good markets Econ. Theory (IF 1.423) Pub Date : 2023-12-21 Edi Karni
Preventive dental care and automotive service is intended to preempt problems that, if they materialized, would require costly treatment or repair. In these markets fraud is both persistent and pervasive. This paper analyzes these markets invoking the notion of perfect Bayesian equilibrium of a stochastic dynamic games of incomplete information in which the players are customers and service providers
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Information exchange through secret vertical contracts Econ. Theory (IF 1.423) Pub Date : 2023-12-21 Jihwan Do, Nicolás Riquelme
We study a common agency problem in which two downstream firms, who are local monopolists and receive private demand signals, offer secret menus of two-part tariff contracts to their common supplier. While direct communication is not possible, they may still exchange their information through signal-contingent menus of vertical contracts. We show that a perfect Bayesian equilibrium exists in which
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Optimal lockdown and vaccination policies to contain the spread of a mutating infectious disease Econ. Theory (IF 1.423) Pub Date : 2023-12-15 Fabien Prieur, Weihua Ruan, Benteng Zou
We develop a piecewise deterministic control model to study optimal lockdown and vaccination policies to manage a pandemic. Lockdown is modeled as an impulse control that allows the decision maker to switch from one level of restrictions to another. Vaccination policy is a continuous control. Decisions are taken under the risk of mutations of the disease, with repercussions on the transmission rate
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An assignment problem with interdependent valuations and externalities Econ. Theory (IF 1.423) Pub Date : 2023-12-14 Tatiana Daddario, Richard P. McLean, Andrew Postlewaite
In this paper, we take a mechanism design approach to optimal assignment problems with asymmetrically informed buyers. In addition, the surplus generated by an assignment of a buyer to a seller may be adversely affected by externalities generated by other assignments. The problem is complicated by several factors. Buyers know their own valuations and externality costs but do not know this same information
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Achieving the maximum size for exchange problems with dichotomous preferences Econ. Theory (IF 1.423) Pub Date : 2023-11-17 Yan Long
We consider an exchange problem with dichotomous preferences, and agents endowed with acceptable (unacceptable) objects can exchange their endowments with other acceptable (unacceptable) objects in order to achieve the “maximum size” of the problem, that is, the maximum number of agents who obtain acceptable objects. We observe that the priority mechanisms appeared in the literature before are not
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Environmental quality along the process of economic growth: a theoretical reappraisal Econ. Theory (IF 1.423) Pub Date : 2023-11-18 Maxime Menuet, Alexandru Minea, Patrick Villieu, Anastasios Xepapadeas
This paper studies the dual interaction between economic growth and environmental quality in an endogenous growth model. We exhibit multiple equilibria and complex local and global dynamics, resulting in potential indeterminacy, hysteresis effects, or long-lasting growth and environmental cycles. From a policy perspective, we reveal that changes in the environmental policy should be handled with care
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The economic impact of lockdown and bounded treatment capability for an epidemic without vaccine Econ. Theory (IF 1.423) Pub Date : 2023-11-10 Konstantin Kogan, Fouad El Ouardighi, Avi Herbon
The COVID-19 virus continues to circulate in many countries, despite successful attempts to curb previous waves, and hence the issue of effective control both of the epidemic and its economic consequences remains a matter of lively debate. Although the estimated development time for an effective vaccine proved to be relatively accurate, many governments were still unable to devise a clear and coherent
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Static and dynamic inefficiencies in an optimizing model of epidemics Econ. Theory (IF 1.423) Pub Date : 2023-11-06 Pietro Garibaldi, Espen R. Moen, Christopher A. Pissarides
Several externalities arise when agents shield optimally to avoid infection during an epidemic. We classify externalities into static and dynamic and compare the decentralized and optimal solutions when agents derive utility from social interaction. For low infection costs agents shield too little; for high costs they shield too much because of a “rat race to shield”: they delay social action until
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Optimal allocations in growth models with private information Econ. Theory (IF 1.423) Pub Date : 2023-11-06 Tom Krebs, Martin Scheffel
This paper considers a class of growth models with idiosyncratic human capital risk and private information about individual effort choices (moral hazard). Households are infinitely-lived and have preferences that allow for a time-additive expected utility representation with a one-period utility function that is additive over consumption and effort as well as logarithmic over consumption. Human capital
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Entrepreneurship and misallocation in production network economies Econ. Theory (IF 1.423) Pub Date : 2023-11-04 Tiago Cavalcanti, Angelo Mendes, Pierluca Pannella
This paper investigates how sectoral linkages amplify or diminish misallocation at the intensive and extensive margins. Our analysis is based on a multisector general equilibrium model with input–output linkages, heterogeneous entrepreneurial abilities, and endogenous occupational choice. Distortions affect the intensive use of production inputs and they also impact the agents’ occupational decisions
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Diversification and information in contests Econ. Theory (IF 1.423) Pub Date : 2023-11-03 Jorge Lemus, Emil Temnyalov
We study contests with technological uncertainty, where contestants can invest in different technologies of uncertain value. The principal, who is also uncertain about the value of the technologies, can disclose an informative yet noisy public signal about the merit of each technology. The signal can focus contestants’ investments into more promising technologies or increase diversification. We characterize
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Epictetusian rationality Econ. Theory (IF 1.423) Pub Date : 2023-10-31 Gregory Ponthiere
According to Epictetus, mental freedom and happiness can be achieved by distinguishing between, on the one hand, things that are upon our control (our judgements, desires and acts), and, on the other hand, things that are not upon our control (our body, property and reputation), and by wishing for nothing that is outside our control. We propose two economic accounts of Epictetus’s precept, which extend
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Allocation rules of indivisible prizes in team contests Econ. Theory (IF 1.423) Pub Date : 2023-10-30 Hideo Konishi, Nicolas Sahuguet, Benoît S. Y. Crutzen
We analyze contests in which teams compete to win indivisible homogeneous prizes. Teams are composed of members who may differ in their ability, and who exert effort to increase the success of their team. Each team member can obtain at most one prize as a reward. As effort is costly, teams use the allocation of prizes to give incentives and solve the free-riding problem. We develop a two-stage game
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Vertical contracting between a vertically integrated firm and a downstream rival Econ. Theory (IF 1.423) Pub Date : 2023-10-25 Frago Kourandi, Ioannis N. Pinopoulos
Compared to linear tariffs, two-part tariffs are generally perceived as being more efficient since double marginalization is avoided. We investigate the efficiency of two-part tariffs vs. linear tariffs when a vertically integrated firm sells its input also to an independent downstream firm selling a differentiated substitute product. We find that a linear tariff can generate higher consumer surplus
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Ambiguity and partial Bayesian updating Econ. Theory (IF 1.423) Pub Date : 2023-10-21 Matthew Kovach
Models of updating a set of priors either do not allow a decision maker to make inference about her priors (full bayesian updating or FB) or require an extreme degree of selection (maximum likelihood updating or ML). I characterize a general method for updating a set of priors, partial bayesian updating (PB), in which the decision maker (1) utilizes an event-dependent threshold to determine whether
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Demand operators and the Dutta–Kar rule for minimum cost spanning tree problems Econ. Theory (IF 1.423) Pub Date : 2023-10-17 Changyong Han, Bawoo Kim, Youngsub Chun
Granot and Huberman (Math Program 29:323–347, 1984) introduced two demand operators, the weak demand operator and the strong demand operator, for minimum cost spanning tree problems, which are intended to measure the maximum amount that each agent can demand from her followers in compensation for making a link to her. We investigate the implications of these demand operators by introducing a procedure
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Dynamic preference foundations of expected exponentially-discounted utility Econ. Theory (IF 1.423) Pub Date : 2023-10-06 Craig S. Webb
Expected exponentially-discounted utility (EEDU) is the standard model of choice over risk and time in economics. This paper considers the dynamic preference foundations of EEDU in the timed risks framework. We first provide dynamic preference foundations for a time-invariant expected utility representation. The new axioms for this are called foregone-risk independence and strong time invariance. This
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Unbeatable strategies Econ. Theory (IF 1.423) Pub Date : 2023-09-22 Rabah Amir, Igor V. Evstigneev, Valeriya Potapova
The paper analyzes the notion of an unbeatable strategy as a game-theoretic solution concept. A general framework (games with relative preferences) suitable for the analysis of this concept is proposed. Basic properties of unbeatable strategies are presented and a number of examples and applications considered.
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Signaling through entry in auctions with sequential and costly participation Econ. Theory (IF 1.423) Pub Date : 2023-09-21 Jeongwoo Lee, Jaeok Park
This paper analyzes a scenario in which two bidders compete for two objects sold at two second-price auctions. Each bidder’s valuations of the two objects are affiliated, and participating in each auction is costly. Bidders make their participation decisions for the two auctions sequentially, in that they decide whether to enter the second auction after observing their entry decisions for the first
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Marginal pricing equilibrium with externalities in Riesz spaces Econ. Theory (IF 1.423) Pub Date : 2023-09-21 Jean-Marc Bonnisseau, Matías Fuentes
The purpose of this paper is to prove the existence of a marginal pricing economic equilibrium in presence of increasing returns and externalities in a commodity space general enough as to encompass the vast majority of economic situations. This extends the existing literature on competitive equilibria in vector lattices by incorporating market failures, and it also generalises several non-competitive
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Solving multidimensional screening problems using a generalized single crossing property Econ. Theory (IF 1.423) Pub Date : 2023-09-21 William Dodds
This paper derives necessary and sufficient conditions for allocations to be incentive compatible in multidimensional screening problems that satisfy a generalized single crossing property. We then devise a numerical method based on these results to solve multidimensional screening problems. Importantly, our numerical method can be applied to multidimensional screening problems for which existing approaches
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Revealed statistical consumer theory Econ. Theory (IF 1.423) Pub Date : 2023-09-16 Roy Allen, Paweł Dziewulski, John Rehbeck
We provide a microfoundation to use aggregates (e.g. mean purchases) to evaluate consumer choice data. We study statistical consumer theory where an individual maximizes a preference over distributions of bundles when constrained by a statistic of the distribution (e.g. mean expenditure). We show statistical consumer theory is observationally equivalent to an individual whose preferences depend only
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Persuasion with ambiguous receiver preferences Econ. Theory (IF 1.423) Pub Date : 2023-09-14 Eitan Sapiro-Gheiler
I describe a Bayesian persuasion problem where Receiver has a private type representing a cutoff for choosing Sender’s preferred action, and Sender has maxmin preferences over all Receiver type distributions with known mean and bounds. This problem can be represented as a zero-sum game where Sender chooses a distribution of posterior mean beliefs that is a mean-preserving contraction of the prior over
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Information aggregation in large collective purchases Econ. Theory (IF 1.423) Pub Date : 2023-09-12 Itai Arieli, Moran Koren, Rann Smorodinsky
Society uses the following mechanism to decide on the supply of an experience good. Each agent can choose whether or not to contribute to the good. Contributions are collected, and the good is supplied whenever total contributions exceed a threshold. We study the case where the good is excludable, agents have a common value, and each agent receives a private signal about the common value. We study
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Performance cycles Econ. Theory (IF 1.423) Pub Date : 2023-08-25 David Lagziel, Ehud Lehrer
A decision maker repeatedly exerts efforts to produce new outputs, while being compensated based on his past and current production levels. We show that the decision maker’s optimal strategy dictates a cyclic oscillatory performance whenever the compensation depends on recent past performance. We apply our model to various economic settings such as the delegated portfolio-managers problem, an R &D
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Contributing with private bundles to public goods Econ. Theory (IF 1.423) Pub Date : 2023-08-21 Marta Faias, Mercedes Guevara-Velázquez, Emma Moreno-García
We extend to multiple private commodities the seminal model by Bergstrom et al. (J Public Econ 29:25–49, 1986) on the private provision of public goods. Considering the relative value of the aggregate donations, we define a notion of equilibrium and show its existence. We analyze the effects of resource redistributions on the equilibrium outcome, identifying conditions that guarantee neutrality. We
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Epidemic outbreaks and the optimal lockdown area: a spatial normative approach Econ. Theory (IF 1.423) Pub Date : 2023-08-17 Davide La Torre, Danilo Liuzzi, Simone Marsiglio
Infectious diseases generate heterogeneous economic and health impacts within countries, thus it is essential to account for the spatial dimension in the design of epidemic management programs. We analyze the optimal regional policy to contain the spread of a communicable disease in a spatial framework with endogenous determination of the regional borders characterizing which policy regime will prevail
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Bounded arbitrage and nearly rational behavior Econ. Theory (IF 1.423) Pub Date : 2023-08-12 Leandro Nascimento
We establish the equivalence between a principle of almost absence of arbitrage opportunities and nearly rational decision-making. The implications of such principle are considered in the context of the aggregation of probabilistic opinions and of stochastic choice functions. In the former a bounded arbitrage principle and its equivalent form as an approximately Pareto condition are shown to bound
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Dynamic discrete choice under rational inattention Econ. Theory (IF 1.423) Pub Date : 2023-08-11 Jianjun Miao, Hao Xing
We adopt the posterior-based approach to study dynamic discrete choice problems under rational inattention. We provide necessary and sufficient conditions to characterize the solution for general uniformly posterior-separable cost functions. We propose an efficient algorithm to solve these conditions and apply our model to explain phenomena such as perceptual distance, status quo bias, confirmation
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Testing under information manipulation Econ. Theory (IF 1.423) Pub Date : 2023-08-09 Silvia Martinez-Gorricho, Carlos Oyarzun
A principal makes a binary decision based on evidence that can be manipulated by a privately informed agent. The principal’s objective is to minimize the expected loss associated to type I and II errors. When the principal can commit to an acceptance standard, the optimal test features ex-post inefficient standards, to internalize the agent’s manipulation incentives. We provide conditions for the principal
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Bayesian social aggregation with non-Archimedean utilities and probabilities Econ. Theory (IF 1.423) Pub Date : 2023-08-05 Marcus Pivato, Élise Flore Tchouante
We consider social decisions under uncertainty. Given certain richness conditions, we show that the ex ante social preference order satisfies a Pareto axiom with respect to ex ante individual preferences, along with an axiom of Statewise Dominance, if and only if all agents admit subjective expected utility (SEU) representations with the same beliefs, and furthermore the social preferences are utilitarian
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On slots’ scheduling Econ. Theory (IF 1.423) Pub Date : 2023-07-28 Anna Bogomolnaia
Server works in discrete time, and is equipped with a given sequence of per-date capacities. It has to accommodate a set of agents with unit jobs, arriving at different dates. It can process a job in several installments, however no monetary transfers are allowed. Server is given jobs’ birth dates and it only knows that agents want their jobs done as soon as possible, but not agents’ complete preferences
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Covid-19 and mobility: determinant or consequence? Econ. Theory (IF 1.423) Pub Date : 2023-07-25 Hippolyte d’Albis, Emmanuelle Augeraud-Véron, Dramane Coulibaly, Rodolphe Desbordes
This paper disentangles the relationship between COVID-19 propagation and mobility. In a theoretical model allowing mobility to be endogenously determined by the COVID-19 prevalence rate, we show that an exogenous epidemic shock has an immediate effect on mobility whereas an exogenous mobility shock influences epidemic variables with a delay. In the long run, exogenous disease contagiousness and mobility
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The core of school choice problems Econ. Theory (IF 1.423) Pub Date : 2023-07-24 Kang Rong, Qianfeng Tang, Yongchao Zhang
We propose a notion of core for school choice (i.e., priority-based allocation) problems. We say that a coalition of students is able to enforce a subassignment among them if, given their priorities at schools, other students together cannot exclude any student in the coalition from her assigned school. An assignment is in the core if no coalition of students can enforce any subassignment among them
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A time-space integro-differential economic model of epidemic control Econ. Theory (IF 1.423) Pub Date : 2023-07-06 Carmen Camacho, Rodolphe Desbordes, Davide La Torre
In this paper we propose a time-space economic model to control the evolution and the spread of a disease. The underlying epidemiological model is formulated as a reaction-diffusion integro-differential partial differential equation. This specific model formulation, supported by empirical data, contains three different terms: a pure diffusion term, a linear growth term, and an integral term. These
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A mean field game model for COVID-19 with human capital accumulation Econ. Theory (IF 1.423) Pub Date : 2023-07-03 Daria Ghilli, Cristiano Ricci, Giovanni Zanco
In this manuscript, we study a model of human capital accumulation during the spread of disease following an agent-based approach, where agents behave maximising their intertemporal utility. We assume that the agent interaction is of mean field type, yielding a mean field game description of the problem. We discuss how the analysis of a model including both the mechanism of change of species from one
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Optimal group testing with heterogeneous risks Econ. Theory (IF 1.423) Pub Date : 2023-06-06 Nina Bobkova, Ying Chen, Hülya Eraslan
We consider optimal group testing of individuals with heterogeneous risks for an infectious disease. Our algorithm significantly reduces the number of tests needed compared to Dorfman (Ann Math Stat 14(4):436–440, 1943). When both low-risk and high-risk samples have sufficiently low infection probabilities, it is optimal to form heterogeneous groups with exactly one high-risk sample per group. Otherwise
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Rational housing demand bubble Econ. Theory (IF 1.423) Pub Date : 2023-06-06 Lise Clain-Chamoset-Yvrard, Xavier Raurich, Thomas Seegmuller
We provide a unified framework with demand for housing over the life cycle and financial frictions to analyze the existence and macroeconomic effects of rational housing bubbles. We distinguish a housing price bubble, defined as the difference between the housing market price and its fundamental value, from a housing demand bubble, which corresponds to a situation where a pure speculative housing demand
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Sunk costs, entry and clustering Econ. Theory (IF 1.423) Pub Date : 2023-05-31 Alexander Matros, Vladimir Smirnov, Andrew Wait
We examine how differences in firm sunk entry costs affect both entry order and the potential for clustering in a triopoly preemption game. If the cost asymmetry between the firms is sufficiently large, the firms always enter in the order from the lowest to highest cost, whereas if firms are relatively symmetric, it is possible that the second-highest cost firm enters first. There is never clustering
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Talking with an extremist Econ. Theory (IF 1.423) Pub Date : 2023-05-09 Emiliano Catonini, Tatiana Mayskaya
Two agents announce the state they consider most likely infinitely many times. A small departure from common belief in rationality can have a severe impact on the belief about the state and on the behavior of an extremist: while initial periods of disagreement produce a temporary convergence of beliefs, prolonged disagreement induces reversion towards the initial belief. The mechanism is simple: the
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Influential news and policy-making Econ. Theory (IF 1.423) Pub Date : 2023-04-24 Federico Vaccari
This paper analyzes the implications of interventions that affect the costs of misreporting. I study a model of communication between an uninformed voter and a media outlet that knows the quality of two competing candidates. The alternatives available to the voter are endogenously championed by the two candidates. I show that higher costs may lead to more misreporting and persuasion, whereas low costs
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A simple planning problem for COVID-19 lockdown: a dynamic programming approach Econ. Theory (IF 1.423) Pub Date : 2023-04-15 Alessandro Calvia, Fausto Gozzi, Francesco Lippi, Giovanni Zanco
A large number of recent studies consider a compartmental SIR model to study optimal control policies aimed at containing the diffusion of COVID-19 while minimizing the economic costs of preventive measures. Such problems are non-convex and standard results need not to hold. We use a Dynamic Programming approach and prove some continuity properties of the value function of the associated optimization
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Cooperative teaching and learning of actions Econ. Theory (IF 1.423) Pub Date : 2023-04-10 Yangbo Song, Mofei Zhao
This paper studies a novel game-theoretic setting: players may acquire new actions over time by observing the opponent’s play. We model this scenario as finitely repeated games where players’ action sets are private information and may endogenously expand over time. Three main implications emerge from this framework and its equilibria. First, players may target a payoff vector for the long run and
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Dual auctions for assigning winners and compensating losers Econ. Theory (IF 1.423) Pub Date : 2023-04-11 Matt Van Essen, John Wooders
We study the bargaining problem of allocating homogeneous goods or chores when participants have equal claim to a unit of the good or equal obligation to undertake a chore. We propose two sequential auctions for solving problems of this type: a sequential ascending clock “goods” auction and a sequential descending clock “chore” auction, which are duals of one another. Either auction can be used for