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The cost of proportional representations in electoral system design Economic Theory Bulletin Pub Date : 2024-03-07 Byeong-hyeon Jeong
We present an impossibility result concerning the design of dual vote electoral systems that meet three key conditions: proportional party representation, proportional local representation, and local accountability. By identifying the necessary number of compensatory seats to meet these three conditions in dual vote systems, we show that the number is not bounded in general; thus, it can be very costly
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Welfare reducing licensing by an outside innovator Economic Theory Bulletin Pub Date : 2024-01-06 Arijit Mukherjee, Uday Bhanu Sinha
It is commonly believed that licensing of cost reducing technology increases welfare. We show that technology licensing by an outside innovator may reduce welfare when the technology is not useful for all final goods producers. Technology licensing reduces welfare if cost reduction by the licensed technology is small and the initial cost difference of the final goods producers is large. A higher intensity
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Valuation asymmetry in the dynamic private provision of public goods Economic Theory Bulletin Pub Date : 2023-12-27 Subhra K. Bhattacharya
I consider a dynamic game of private provision of a discrete public good by individuals who derive asymmetric flow benefits every period upon project completion. The individuals are otherwise homogeneous. I show that an asymmetric Markov perfect equilibrium (MPE) exists, which is either a completion equilibrium (where the good is provided) or a no-contribution equilibrium depending on the benefits
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On the shape of Pareto sets in Edgeworth box economies Economic Theory Bulletin Pub Date : 2023-09-12 William Thomson
We study the geometry of the Pareto set in Edgeworth box economies when both agents have continuous, strictly monotonic, strictly convex, smooth, and homothetic preferences. We show that this set is either the diagonal of the box or it is a “doubly visible” curve connecting the origins of the box: imagining the curve to be opaque, an observer standing at either origin is able to see it in its entirety
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Spying and imperfect commitment in first-price auctions: a case of tacit collusion Economic Theory Bulletin Pub Date : 2023-08-28 Cuihong Fan, Byoung Heon Jun, Elmar G. Wolfstetter
We analyze Stackelberg leadership in a first-price auction. Leadership is induced by an information system, represented by a spy, that leaks one bidder’s bid before others choose their bids. However, the leader may secretly revise his bid with some probability; therefore, the leaked bid is only an imperfect signal. Whereas leadership with perfect commitment exclusively benefits the follower, imperfect
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Relative performance evaluation in organizations with information networks Economic Theory Bulletin Pub Date : 2023-08-28 Xiangyu Shi
I build on Bandiera et al. (Quarter. J. Econ. 120(3):917–962, 2005) and propose a novel mechanism whereby the structure of social network within an organization matters for its efficiency. The ability of each agent is private information, but adjacent agents in the network can observe each other’s ability. Under relative performance evaluation, the effect of adding links among agents on the effort
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Obstacles to redistribution through markets and one solution Economic Theory Bulletin Pub Date : 2023-08-24 Roy Allen, John Rehbeck
Dworczak et al. (Econometrica 89:1665–1698, 2021) study when certain market structures are optimal for agents with linear preferences and bivariate preference heterogeneity. The optimal market structure requires the social planner to know the joint distribution of the value of the good and marginal value of money. We show that the features of the distribution needed to characterize optimal market structure
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The enemy of my enemy is my friend: new conditions for network games Economic Theory Bulletin Pub Date : 2023-07-28 Hideto Koizumi
Group formation tends to involve peer effects. In the presence of such complementarities, however, coalitional games need not have a nonempty core. With a restricted preference structure, I provide new sufficient conditions for the nonemptiness of the core of network games that involve pairwise complementarities between peers. The conditions are twofold: (a) sign-consistency—all agents agree on the
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The precedence function: a numerical evaluation method for multicriteria ranking problems Economic Theory Bulletin Pub Date : 2023-07-01 Antonio Villar
This paper proposes and characterizes a method to solve multicriteria evaluation problems when individual judgements are categorical and may fail to satisfy both transitivity and completeness. The evaluation function consists of a weighted sum of the average number of times that each alternative precedes some other, in all pairwise comparisons. It provides, therefore, a quantitative assessment which
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A canonical game—75 years in the making—showing the equivalence of matrix games and linear programming Economic Theory Bulletin Pub Date : 2023-06-26 Benjamin Brooks, Philip J. Reny
According to Dantzig (Econometrica, 17, p.200, 1949), von Neumann was the first to observe that for any finite two-person zero-sum game, there is a feasible linear programming (LP) problem whose saddle points yield equilibria of the game, thus providing an immediate proof of the minimax theorem from the strong duality theorem. We provide an analogous construction going in the other direction. For any
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A simple characterization of the existence of upper semicontinuous order-preserving functions Economic Theory Bulletin Pub Date : 2023-06-18 Gianni Bosi, Laura Franzoi
We introduce an upper semicontinuity condition concerning a not necessarily total preorder on a topological space, namely strong upper semicontinuity, and in this way we extend to the nontotal case the famous Rader’s theorem, which guarantees the existence of an upper semicontinuous order-preserving function for an upper semicontinuous total preorder on a second countable topological space. We show
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Is there free riding in group contests? Economic Theory Bulletin Pub Date : 2023-05-31 Aner Sela
We study best-of-two contests between two symmetric groups of players. Each group includes n heterogeneous players who have resource budgets that decrease in the second stage proportionally to the resource allocated in the first stage. We demonstrate that in our group contests complete “free riding” does not necessarily exist, namely, there is always a subgame perfect equilibrium in which either all
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Directional monotone comparative statics in function spaces Economic Theory Bulletin Pub Date : 2023-04-26 Uttiya Paul, Tarun Sabarwal
We characterize x-directional monotone comparative statics in function spaces, generalizing the results in Barthel and Sabarwal (Econ Theor 66(3):557–591, 2018) for finite-dimensional Euclidean spaces, and showing that their proofs generalize to infinite-dimensional spaces. Our generalizations include those for x-directional set order, x-quasisupermodularity, x-single crossing property, and x-basic
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Strategy-proofness implies minimal participation under single-peakedness Economic Theory Bulletin Pub Date : 2023-04-25 Michael Müller, Clemens Puppe
We study a model in which agents with single-peaked preferences can participate in a costly voting procedure to determine the value of a one-dimensional variable. We show that, for all positive participation costs and all profiles of individual preferences, there exists a unique equilibrium outcome with one single participant whenever the voting rule is strategy-proof, anonymous, and responsive in
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Strategy-proofness in linear production economies with homothetic or quasi-linear preferences Economic Theory Bulletin Pub Date : 2023-04-12 Wataru Ishida
In an economy with linear production, under a richness condition on the domain of preferences, efficiency, equal treatment of equals, and strategy-proofness are compatible. We characterize the rules satisfying the three properties. They are “equal-income Walrasian rules”, selections from the equal-income Walrasian correspondence. Important domains of preferences (e.g. homothetic preferences and quasi-linear
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Strong dictatorship via ratio-scale measurable utilities: a simpler proof Economic Theory Bulletin Pub Date : 2023-03-26 Jacob M. Nebel
Tsui and Weymark (Econ Theory 10:241–256, 1997, https://doi.org/10.1007/s001990050156) have shown that the only continuous social welfare orderings on the whole Euclidean space which satisfy the weak Pareto principle and are invariant to individual-specific similarity transformations of utilities are strongly dictatorial. Their proof relies on functional equation arguments which are quite complex.
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Endogenous gender-based discrimination in a model of simultaneous frictional labor and marriage markets Economic Theory Bulletin Pub Date : 2023-03-17 Roberto Bonilla, Adrian Masters
Without assuming innate differences between genders, we show that the simultaneous interaction between frictional labor and marriage markets can result in a “gendered” equilibrium which is consistent with observed empirical regularities: men earn more than women, and their attachment to the labor market is stronger. The equilibrium also exhibits a marriage-wage premium for men.
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Generalization of the social coalitional equilibrium structure Economic Theory Bulletin Pub Date : 2023-03-09 Ken Urai, Hiromi Murakami, Weiye Chen
We generalize the notion of Ichiishi (Econometrica 49(2):369–377, 1981)’s social coalitional equilibrium to a multi-layered coalition structure with parameters, in which agents can incorporate simultaneously multiple coalition structures with multiple independent coalition-deviation opportunities. For each opportunity, agents play a social coalitional equilibrium (SCE) game, called a sub-parametric
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Multivariate MRS functions and smooth preferences Economic Theory Bulletin Pub Date : 2023-02-08 Norman L. Kleinberg, Barry K. Ma
We construct a preference ordering and associated utility function from a given set of marginal rate of substitution (MRS) functions. Our method is novel and works for any number of goods, thus filling a gap in the existing literature on consumer behavior.
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Losses from cross-holdings in a duopoly with convex cost and strategic input price determination Economic Theory Bulletin Pub Date : 2023-01-24 Arijit Mukherjee
It is well-known that positive output externality on the outside firms is the reason for unprofitable passive cross-holding, which refers to a situation where a producer holds non-controlling shares in rival firms. Considering a final goods market with Cournot duopoly, where cross-holdings do not create positive output externality on the outside firms, we show that cross-holdings can be unprofitable
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Does vertical integration increase product quality? Economic Theory Bulletin Pub Date : 2022-11-29 Sanxi Li, Xinyu Li, Zhan Qu
Numerous product quality scandals are caused by low-quality inputs. When input quality is not perfectly observed by downstream firms, upstream firms often have moral hazard problems. If vertical integration does not directly eliminate the moral hazard problems, does vertical integration still improve product quality? If so, under which conditions? We find that given the precision of monitoring technology
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Core and stable sets of exchange economies with externalities Economic Theory Bulletin Pub Date : 2022-10-28 Maria Gabriella Graziano, Claudia Meo, Nicholas C. Yannelis
It is known that the core of an economy with externalities may be empty. We consider two concepts of dominance that allow us to prove that the set formed by individually rational, Pareto optimal allocations is stable and coincides with the core that, consequently, is non-empty.
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Symmetric games with only asymmetric equilibria: examples with continuous payoff functions Economic Theory Bulletin Pub Date : 2022-10-22 Shiran Rachmilevitch
I construct examples of symmetric 2-person games that have Nash equilibria, but no symmetric Nash equilibria (not even in mixed strategies). Such an example was first constructed by Fey (Games Econ Behav 75: 424–427, 2012). In his example, the actions set is compact and the payoff function is discontinuous. Here, by contrast, payoff functions are continuous, but the actions sets are not compact.
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Stable Markov perfect equilibria in the asymmetric differential-game duopoly with a renewable resource Economic Theory Bulletin Pub Date : 2022-09-15 Yuankan Huang, Takehiro Inohara
We derive an ordinary differential equations (ODE) system from the Hamilton–Jacob–Bellman (HJB) equation in an asymmetric differential-game duopoly with a renewable resource. We show the ODE system admits asymmetric stable Markov perfect equilibria (MPEs) passing through removable singularities. This result relaxes restriction of solving the HJB equation, so that nonlinear stable MPEs can be derived
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Memory retrieval and harshness of conflict in the hawk–dove game Economic Theory Bulletin Pub Date : 2022-09-08 Ennio Bilancini, Leonardo Boncinelli, Sebastian Ille, Eugenio Vicario
We study the long-run dynamics of a repeated non-symmetric hawk–dove type interaction between agents of two different populations. Agents choose a strategy based on their previous experience with the other population by sampling from a collective memory of past interactions. We assume that the sample size differs between populations and define a measure of harshness of conflict in the hawk–dove interaction
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Risky human capital accumulation with endogenous skill premium Economic Theory Bulletin Pub Date : 2022-09-08 Karol Mazur
I investigate the welfare properties of a model with risky human capital accumulation, imperfect substitution between skill types and endogenous skill premium. I show that whenever the insurance markets are incomplete, pecuniary externalities render the competitive equilibrium constrained inefficient with a sub-optimal level of human capital.
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‘What is important is seldom urgent and what is urgent is seldom important’: a study of the strategic implications of the urgency effect in a competitive setting Economic Theory Bulletin Pub Date : 2022-09-03 Mauro Papi
The urgency effect refers to people’s tendency to choose a relatively unimportant task (with unambiguously low payoff) over a relatively important task (with unambiguously high payoff), when the former is spuriously framed as urgent. In this paper I study a simple model in which two payoff-maximising task suppliers compete for a population of heterogeneous decision-makers. Task suppliers offer tasks
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First-mover advantage reversals under passive cross forward ownership in vertically related markets Economic Theory Bulletin Pub Date : 2022-08-29 Emmanuel Petrakis, Panagiotis Skartados
We consider a two-tier industry with an upstream monopolist trading, via interim observable linear tariff contracts, with two differentiated goods downstream Stackelberg competitors. The upstream monopolist owns a symmetric minority share on both downstream customers, i.e., there is passive cross forward ownership (PCFO). We show that PCFO may reverse the well-known first-mover advantage of the Stackelberg
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Substitution and size effect for factor demand revisited Economic Theory Bulletin Pub Date : 2022-08-24 Johannes Bröcker, Till Requate
We reconsider the decomposition of the comparative statics effect of a factor price increase on (unconditional) factor demand into a substitution and a size (or level) effect. While for the own price effect the substitution effect and the size effect go into the same negative direction, the cross price effect cannot be signed unambiguously, in general. But for two cases of regularity, homotheticity
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Revisiting the convergence theorem for competitive bidding in common value auctions Economic Theory Bulletin Pub Date : 2022-08-20 Seewoo Lee, Jeong-Yoo Kim
In common value auctions, the value of the item for sale is identical among bidders, but bidders have different information (noisy signal) about the item’s value. Wilson (Rev Econ Stud 4:511–518, 1977) and Milgrom (Econometrica 47:679–688, 1979) proved the convergence theorem of competitive bidding that the winning bid converges to the true value almost surely or in probability respectively. In particular
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Local stability constraints Economic Theory Bulletin Pub Date : 2022-07-30 Esteban Peralta
This note revisits the well-known class of one-to-one, frictionless labor-matching markets with perfect transferable utilities and heterogeneous agents. It is shown that when the surplus is increasing and exhibits increasing differences, stability can be characterized by the absence of local blocks; namely, blocks involving a firm and a worker that is matched to a firm with an attribute that is either
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Continuity and sensitivity analysis of parameterized Nash games Economic Theory Bulletin Pub Date : 2022-07-22 Zachary Feinstein
In this paper we consider continuity of the set of Nash equilibria and approximate Nash equilibria for parameterized games. For parameterized games with unique Nash equilibria, the continuity of this equilibrium mapping is well-known. However, when the equilibria need not be unique, there may exist discontinuities in the equilibrium mapping. Because the parameters of a game need to be estimated in
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More ambiguity aversion or more risk aversion? Economic Theory Bulletin Pub Date : 2022-07-21 Jiankang Zhang
Using a pair of preferences \(\succeq ^{\min }\) and \(\succeq ^{\max }\) with utility functions \(\min _{s\in S}f\left( s\right) \) and \(\max _{s\in S}f\left( s\right) \) over the Ellsberg three color acts, this paper argues that the existing notions of attitudes toward ambiguity either mix ambiguity and risk or still involve attitudes toward risk even though ambiguity is exogenously given. Based
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The minimal Hilbert basis of the Hammond order cone Economic Theory Bulletin Pub Date : 2022-07-11 Ramses H. Abul Naga
We characterize the minimal Hilbert basis of the Hammond order cone, and present several novel applications of the resulting basis. From the basis, we extract an invertible matrix, that provides a numerical representation of the Hammond order relation. The basis also enables the construction of a space—that we call the Hammond order lattice—where order-extensions of the Hammond order (i.e. more complete
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The dual of Bertrand with homogenous products is Cournot with perfect complements Economic Theory Bulletin Pub Date : 2022-05-21 Paolo Bertoletti
The quantity-setting (Cournot) oligopoly with perfect complements is dual to the price-setting (Betrand) oligopoly with homogeneous goods. Under mild technical conditions the former setting has a unique (pure strategy) Nash equilibrium with null quantities. As an implication, the provision of perfectly complementary goods might actually be impossible, if the market is not either perfectly competitive
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Optimal licensing contracts with a downstream oligopoly: insider versus outsider innovation Economic Theory Bulletin Pub Date : 2022-05-19 Tsung-Sheng Tsai, Cheng-Tai Wu
In the literature that deals with cost-reduction technology licensing in an oligopolistic downstream market, the paper by Sen and Tauman (Games Econ Behav 59:163–186, 2007) has been a milestone in that it thoroughly characterizes the optimal licensing contracts for both cases of insider and outsider innovation under complete information. However, when determining the licensee’s fee payment to obtain
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Agglomeration triggered by the number of regions: a NEG model with a quadratic subutility function Economic Theory Bulletin Pub Date : 2022-05-09 Kensuke Ohtake
We extend the mathematical model proposed by Ottaviano et al. (Int Econ Rev 43(2): 409–435, 2002) to a multi-regional case and investigate the stability of the homogeneous stationary solution of the model in a one-dimensional periodic space. When the number of regions is two and three, the homogeneous stationary solution is stable under sufficiently high transport cost. On the other hand, when the
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Auctions with resale and risk aversion Economic Theory Bulletin Pub Date : 2022-04-29 Sanyyam Khurana
This paper provides necessary conditions of an equilibrium for a first-price auction with resale when one of the two bidders participating in the auction is risk averse and the other bidder is risk neutral. We show that the risk averse bidder bids more aggressively than the risk neutral bidder. If the probability distributions are identical, then the risk averse bidder wins the auction more often than
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Existence of alpha-core allocations in economies with non-ordered and discontinuous preferences Economic Theory Bulletin Pub Date : 2022-04-26 Vincenzo Scalzo
We study exchange economies where the preference relation of each consumer depends also on the consumptions of the other consumers. In the setting of economies with a finite number \(n\ge 2\) of consumers and non-ordered and discontinuous preferences, we give sufficient and necessary conditions for the existence of alpha-core allocations in the sense of Yannelis (Equilibrium theory in infinite dimensional
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Monotone comparative statics in the Calvert–Wittman model Economic Theory Bulletin Pub Date : 2022-04-11 Francisco Rodríguez, Eduardo Zambrano
In this paper, we show that when policy-motivated parties can commit to a particular platform during a uni-dimensional electoral contest where valence issues do not arise there must be a positive association between the policies preferred by candidates and the policies adopted in expectation in the lowest and the highest equilibria of the electoral contest. We also show that this need not be so if
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The fractional multidimensional knapsack problem: solution and uniqueness Economic Theory Bulletin Pub Date : 2022-03-29 John Y. Zhu
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On the approximate purification of mixed strategies in games with infinite action sets Economic Theory Bulletin Pub Date : 2022-03-24 Yuhki Hosoya, Chaowen Yu
We consider a game in which the action set of each player is uncountable, and show that, from weak assumptions on the common prior, any mixed strategy has an approximately equivalent pure strategy. The assumption of this result can be further weakened if we consider the purification of a Nash equilibrium. Combined with the existence theorem for a Nash equilibrium, we derive an existence theorem for
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Inequality minimising subsidy and taxation Economic Theory Bulletin Pub Date : 2022-03-22 Satya R. Chakravarty, Palash Sarkar
We address the problem of procuring a certain amount of tax from the individuals in a society together with allocating a specific quantity of subsidy to the same set of individuals in an inequality minimising manner, where the tax and subsidy sizes need not be the same. If the combined tax-subsidy schedule does not modify the aggregate income, then Fei’s (Econometrica 49:869–881, 1981) inequality minimising
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The risk-neutral non-additive probability with market frictions Economic Theory Bulletin Pub Date : 2022-03-15 Alain Chateauneuf, Bernard Cornet
The fundamental theory of asset pricing has been developed under the two main assumptions that markets are frictionless and have no arbitrage opportunities. In this case the market enforces that replicable assets are valued by a linear function of their payoffs, or as the discounted expectation with respect to the so-called risk-neutral probability. Important evidence of the presence of frictions in
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Impact of Information Concerning the Popularity of Candidates on Loss-Averse Voters’ Abstention Economic Theory Bulletin Pub Date : 2022-01-11 Kohei Daido, Tomoya Tajika
In this study, we build a two-candidate election model, in which voters are loss averse and face uncertainty about whether their preferred candidate is supported by a majority. Even without costs for voting, abstention may occur when voters have expectations-based reference-dependent preferences, as in Kőszegi and Rabin (Q J Econ 121:1133–1165, 2006; Am Econ Rev 97:1047–1073, https://doi.org/10.1257/aer
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Equilibrium existence in two-player contests without absolute continuity of information Economic Theory Bulletin Pub Date : 2021-11-29 Ori Haimanko
We prove the existence of a behavioral-strategy Bayesian Nash equilibrium, without assuming absolute continuity of information, in two-player common-value contests where each player’s probability to win is continuous in efforts outside the zero-effort profile and non-decreasing in his own effort. In particular, equilibrium exists even if both players have a continuum of interdependent information types
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Correction to: Reduced-form mechanism design and ex post fairness constraints Economic Theory Bulletin Pub Date : 2021-11-12 Yang, Erya
A Correction to this paper has been published: 10.1007/s40505-021-00211-1
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Designing income distributions with specified inequalities Economic Theory Bulletin Pub Date : 2021-10-23 Satya R. Chakravarty, Palash Sarkar
Often from policy perspective it becomes necessary to arrive at an income distribution whose inequality value coincides with a targeted (low) inequality level. In the present article we address this duality problem in inequality measurement by using the well-known Gini and Bonferroni metrics of inequality. The duality theorem also enables us to determine the financial cost of achieving the targeted
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Mixed strategy implementation under ambiguity Economic Theory Bulletin Pub Date : 2021-09-06 Zhiwei Liu, Nicholas C. Yannelis
We extend the previous work of De Castro et al. (2017a, 2017b) into mixed strategies.
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Core equivalence in collective-choice bargaining under minimal assumptions Economic Theory Bulletin Pub Date : 2021-09-03 Kawamori, Tomohiko
We investigate a collective-choice bargaining model under minimal assumptions. In this model, the set of alternatives is arbitrary; each player’s utility function is nonnegative-valued; the decision rule is monotonic; the probability of each player’s being recognized as a proposer depends only on the tuple of actions in the previous round; any player is perfectly patient. We show that for any alternative
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Reduced-form mechanism design and ex post fairness constraints Economic Theory Bulletin Pub Date : 2021-09-04 Erya Yang
This paper incorporates fairness constraints into the classic single-unit reduced-form implementation problem (Border in Econometrica, 59(4):1175–1187, 1991, Econ Theory 31(1):167–181, 2007; Che et al. in Econometrica 81(6): 2487–2520, 2013; Manelli and Vincent in Econometrica, 78(6):1905–1938, 2010) with two agents. To do so, I use a new approach that utilizes the results from Kellerer (Math Ann 144(4):323–344
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Afriat and arbitrage Economic Theory Bulletin Pub Date : 2021-08-21 Beggs, Alan
This paper presents a proof of Afriat’s (Int Econ Rev 8:67–77) theorem on revealed preference by using the idea that a rational consumer should not be vulnerable to arbitrage. The main mathematical tool is the separating hyperplane theorem.
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Wealth and income inequality in a monetary economy Economic Theory Bulletin Pub Date : 2021-08-19 Gokan, Yoichi, Turnovsky, Stephen J.
In contrast to the standard aggregate monetary model which suggests that money growth is super-neutral in the long run with respect to real aggregate quantities, we find that the super-neutrality of money does not extend to inequality measures. Two alternative scenarios to illustrate the impact of money on inequality are considered, enabling us to identify the channels whereby monetary policy impacts
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Social discount rate: spaces for agreement Economic Theory Bulletin Pub Date : 2021-08-17 Hayashi, Takashi, Lombardi, Michele
We study the problem of aggregating discounted utility preferences into a social discounted utility preference model. We use an axiom capturing a social responsibility of individuals’ attitudes to time, called consensus Pareto. We show that this axiom can provide consistent foundations for welfare judgments. Moreover, in conjunction with the standard axioms of anonymity and continuity, consensus Pareto
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Fine cartels Economic Theory Bulletin Pub Date : 2021-07-06 David K. Levine
This paper studies a simple model of a repeated cartel that can punish using both voluntary fines and inefficient prices wars. The idea is to use the fines in response to noisy signals of bad behavior and back it up with threats of price wars in response to the easily observed failure to pay the voluntary fines. The model is shown to deliver the insights of modern repeated game theory in an empirically
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Evolution of conventions in games between behavioural rules Economic Theory Bulletin Pub Date : 2021-05-06 Abhimanyu Khan
I examine when, how, and which conventions arise in N-player games. Each player draws a random sample of strategies used in the recent past, and then chooses a strategy in response to this sample. A player’s response is determined by a behavioural rule, which maps from the set of recently used strategy profiles to a subset of his own strategy set, and each element in the latter set is chosen with positive
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Demand functions and demand manifolds Economic Theory Bulletin Pub Date : 2021-04-12 Alan Beggs
Mrázová and Neary (2017) introduce the notion of the Demand Manifold which expresses the relationship between the elasticity and curvature of a demand function. They argue that this determines many important comparative static properties of firm behavior. This paper gives necessary and sufficient conditions for two demand functions to have the same demand manifold and so to have similar comparative
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Stationary equilibrium in stochastic dynamic models: Semi-Markov strategies Economic Theory Bulletin Pub Date : 2021-04-10 Subir K. Chakrabarti
We show here that a stationary equilibrium in Semi-Markov strategies exists for stochastic games under just the condition of norm continuity of the transition probability that are absolutely continuous with respect to a fixed measure on the state space. We also show that the result can be extended to the case of generalized games in which the feasible action correspondences depend on the action of
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Duopoly price competition with limited capacity Economic Theory Bulletin Pub Date : 2021-02-11 A. Bërdëllima
We study a variation of the duopoly model by Kreps and Scheinkman (1983). Firms limited by their capacity of production engage in a two stage game. In the first stage they commit to levels of production not exceeding their capacities which are then made common knowledge. In the second stage after production has taken place firms simultane- ously compete in prices. Solution of this sequential game shows
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Informed principal, moral hazard, and limited liability Economic Theory Bulletin Pub Date : 2021-02-09 Teddy Mekonnen
I consider a moral hazard problem with risk neutral parties, limited liability, and an informed principal. The contractible outcome is correlated to both the principal’s private information and the agent’s hidden action. In contrast to a model without a privately informed principal or without limited liability, I show that the first-best payoff cannot be implemented by any equilibrium mechanism.