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Benefiting from Bias: Delegating to Encourage Information Acquisition Journal of Economic Theory (IF 1.79) Pub Date : 2024-03-12 Ian Ball, Xin Gao
A principal delegates decisions to a biased agent. Payoffs depend on a state that the principal cannot observe. Initially, the agent does not observe the state, but he can acquire information about it at a cost. We characterize the principal's optimal delegation set. This set features a cap on high decisions and a gap around the agent's ex ante favorite decision. It may even induce ex-post Pareto-dominated
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Economic distributions, primitive distributions, and demand recovery in monopolistic competition Journal of Economic Theory (IF 1.79) Pub Date : 2024-03-09 Simon P. Anderson, André de Palma
We link fundamental technological and taste distributions to endogenous economic distributions of prices and firm size (output, profit) generated under monopolistic competition with heterogeneous productivities as per recent Trade and Industrial Organization models. We derive full equivalence properties for monopoly mark-ups, demand shape, marginal revenue, and profits to match distributions of cost
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Collective Decision Through an Informed Mediator Journal of Economic Theory (IF 1.79) Pub Date : 2024-03-09 Yunan Li, Xingtan Zhang
An imperfectly informed mediator (or mechanism designer) must make a decision on behalf of a group of agents, who are privately informed about their valuations attached to the decision. The mediator chooses a mechanism before observing a signal about the agents' valuations and commits to truthfully using this information in the mechanism. We give a necessary and sufficient condition on the mediator's
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Make It 'Til You Fake It Journal of Economic Theory (IF 1.79) Pub Date : 2024-03-09 Raphael Boleslavsky, Curtis R. Taylor
We study the dynamics of fraud and trust in a continuous-time reputation game. The principal wishes to approve a real project and reject a fake. The agent is either an ethical type that produces a real project, or a strategic type that also can produce a fake. Producing a real project takes an uncertain amount of time, while a fake can be created instantaneously at some cost. The unique equilibrium
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A model of approval with an application to list design Journal of Economic Theory (IF 1.79) Pub Date : 2024-03-08 Paola Manzini, Marco Mariotti, Levent Ülkü
Online technologies enable a host of observable acts, such as wishlisting, that do not quite amount to choice meant as a final selection. Rather, they express interest and a positive attitude towards an item. We gather this type of behaviour under the term . With items presented as a list, we propose a model of approval. We completely characterise the model in terms of simple properties of observed
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Communication on networks and strong reliability Journal of Economic Theory (IF 1.79) Pub Date : 2024-03-07 Marie Laclau, Ludovic Renou, Xavier Venel
We consider sender–receiver games, where the sender and the receiver are two distant nodes in a communication network. We show that if the network has two disjoint paths of communication between the sender and the receiver, then we can replicate all equilibrium outcomes not only of the direct communication game (i.e., when the sender and the receiver communicate directly with each other) but also of
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Who wants to be an auctioneer? Journal of Economic Theory (IF 1.79) Pub Date : 2024-02-29 Sergei Severinov, Gabor Virag
This paper endogenizes the decision whether to post a mechanism or to participate in another trader's mechanism in a competing mechanisms environment. With a population of heterogeneous buyers and sellers facing standard search frictions, each trader in our market has to decide whether to post a mechanism or to visit a mechanism posted by a trader on the other side of the market. We show that the equilibrium
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Panics and prices Journal of Economic Theory (IF 1.79) Pub Date : 2024-02-29 Yu Awaya, Vijay Krishna
Rumors of a shortage may create higher-order uncertainty and cause panic buying even when there is no real shortage and most consumers are aware of this fact. We study the role of prices in alleviating, or even preventing, panic buying caused by such rumors. Under some circumstances, flexible prices fail to do so and panic buying is the unique equilibrium outcome. In our model consumers do not know
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On existence of Berk-Nash equilibria in misspecified Markov decision processes with infinite spaces Journal of Economic Theory (IF 1.79) Pub Date : 2024-02-29 Robert M. Anderson, Haosui Duanmu, Aniruddha Ghosh, M. Ali Khan
Model misspecification is a critical issue in many areas of economics. In the context of misspecified Markov Decision Processes, defined the notion of Berk-Nash equilibrium and established its existence with finite state and action spaces. However, many substantive applications (including two of the three motivating examples presented by Esponda and Pouzo) involve continuous state or action spaces
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Contagion and equilibria in diversified financial networks Journal of Economic Theory (IF 1.79) Pub Date : 2024-02-28 Victor Amelkin, Santosh Venkatesh, Rakesh Vohra
Diversified cross-shareholding networks are thought to be more resilient to shocks, but diversification also increases the channels by which a shock can spread. To resolve these competing intuitions we introduce a stochastic model of a diversified cross-shareholding network in which a firm's valuation depends on its cash endowment and the shares it owns in other firms. We show that a concentration
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Haves and Have-Nots: A Theory of Economic Sufficientarianism Journal of Economic Theory (IF 1.79) Pub Date : 2024-02-13 Christopher P. Chambers, Siming Ye
In this paper, we introduce a generalization of the concept of sufficientarianism, extending it to assess allocations across multiple consumption goods. For a fixed society of agents, sufficientarianism posits that allocations are compared according to the number of individuals whose consumption is considered to be sufficient. Central to our discussion is a newly introduced ethical principle of ‘sufficientrarian
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Money under the mattress: Inflation and lending of last resort Journal of Economic Theory (IF 1.79) Pub Date : 2024-02-08 Gadi Barlevy, Daniel Bird, Daniel Fershtman, David Weiss
This paper examines whether the two key functions of central banks—ensuring price stability and lending during crises—necessarily conflict. We develop a nominal model of bank runs à la in which individuals can store the money they withdraw “under the mattress.” In this setting, lending of last resort need not be inflationary. Whether it is depends on the interest rates the central bank charges on its
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Delegating trial and error Journal of Economic Theory (IF 1.79) Pub Date : 2024-02-08 Deniz Okat, John G.F. Nash
A principal delegates a problem to an agent. The agent solves the problem by conducting independent trials. Each trial is privately costly and produces the solution with some probability. The principal relies on the agent to report the solution before realizing its benefits. The ability to conceal the solution enables the agent to extract rents from the principal. The optimal contract with commitment
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Monotone equilibrium in matching markets with signaling Journal of Economic Theory (IF 1.79) Pub Date : 2024-02-06 Seungjin Han, Alex Sam, Youngki Shin
We introduce a notion of competitive signaling equilibrium (CSE) in one-to-one matching markets with a continuum of heterogeneous senders and receivers. We then study monotone CSE where equilibrium outcomes - sender actions, receiver reactions, beliefs, and matching - are all monotone in the stronger set order. We show that if the sender utility is monotone-supermodular and the receiver's utility is
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Strategic limitation of market accessibility: Search platform design and welfare Journal of Economic Theory (IF 1.79) Pub Date : 2024-01-29 Christopher Teh, Chengsi Wang, Makoto Watanabe
This paper explores the relationship between market accessibility and various participants' welfare in an intermediated directed-search market. For a general class of meeting technologies, we provide a necessary and sufficient condition under which efficiency requires imperfect accessibility, such that each seller's listing is only observed by some but not all buyers. We show that the platform optimally
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Contracting and Search with Heterogeneous Principals and Agents Journal of Economic Theory (IF 1.79) Pub Date : 2024-02-02 Jan Starmans
This paper incorporates a risk-neutral principal-agent problem into a random search model to study contracting and search in general equilibrium. I introduce heterogeneity in principals' and agents' production technologies in terms of the distribution of output across states of nature. Under optimal contracting, this heterogeneity can give rise to complementarity in contracting between specific principal
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Conflicting objectives in kidney exchange Journal of Economic Theory (IF 1.79) Pub Date : 2024-02-02 Jörgen Kratz
There is no conflict between maximizing the number of transplants and giving priority to, e.g., highly HLA-sensitized recipients in kidney exchange programs that only permit pairwise exchanges. In some programs that feature cyclic exchanges or chains, however, giving priority to some recipients may reduce the number of transplants that can be carried out. This paper identifies the conditions under
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The network origins of the gains from trade Journal of Economic Theory (IF 1.79) Pub Date : 2024-02-01 Maarten Bosker, Bastian Westbrock
This paper develops a network perspective on the gains from trade in today's international supply chains. In particular, we demonstrate that the comparative statics predictions of a standard general-equilibrium trade model with input-output linkages can be expressed as a network diffusion model. This model captures the relevant dimensions of the production network's structure by just two easily quantifiable
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Fragile meaning - an experiment Journal of Economic Theory (IF 1.79) Pub Date : 2024-01-26 Andreas Blume, Charles N. Noussair, Bohan Ye
Absence of a shared language is an evident barrier to effective communication. Lack of common knowledge of what is shared is more insidious and a potential source of misunderstandings. We induce lack of common knowledge of a shared language in a sender-receiver game experiment by letting the availability of messages with focal meanings be uncertain. We consider an environment in which agents agree
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Expectational equilibria in many-to-one matching models with contracts Journal of Economic Theory (IF 1.79) Pub Date : 2024-01-22 P. Jean-Jacques Herings
We introduce the notion of expectational equilibrium in a general specification of the many-to-one matching with contracts model. The endogenous variables in an expectational equilibrium are expectations about tradable contracts. Expectational equilibrium outcomes are equivalent to stable outcomes. Expectational equilibrium unifies all the other approaches used in the literature so far, in particular
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Informational separability and entropy Journal of Economic Theory (IF 1.79) Pub Date : 2024-01-10 Jianrong Tian
Informational separability occurs when information decreases as the result of suppressing information that differentiates a subset of states in experiments. With multiple states, informational separability leads to entropy measures. Its implications in multiple different contexts are discussed, including segregation measurement, inference with partial information, and rational inattention.
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A simple and general axiomatization of average utility maximization for infinite streams Journal of Economic Theory (IF 1.79) Pub Date : 2024-01-11 Chen Li, Peter P. Wakker
This paper provides the most general preference axiomatization of average utility (AU) maximization over infinite sequences presently available, reaching almost complete generality. The only restriction is that all periodic sequences should be contained in the domain. Infinite sequences may designate intertemporal outcomes streams where AU models patience, welfare allocations where AU models fairness
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Shuttle diplomacy Journal of Economic Theory (IF 1.79) Pub Date : 2024-01-10 Piero Gottardi, Claudio Mezzetti
In practice mediation operates through shuttle diplomacy: the mediator goes back and forth between parties, meeting them in private. We model shuttle diplomacy as a dynamic procedure. The mediator helps each party to gradually discover (privately) her value from settlement and re-assess her bargaining position, while also proposing the terms of the deal. We show that shuttle diplomacy always allows
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Making predictions based on data: Holistic and atomistic procedures Journal of Economic Theory (IF 1.79) Pub Date : 2024-01-09 Jacob Glazer, Ariel Rubinstein
Subjects were asked to predict the choice made by a hypothetical individual, based on a small sample of his past choices in identical situations. Each of the alternatives facing the individual has a number of components. When the data is presented explicitly as a distribution of past choices, most subjects use the holistic procedure according to which the prediction is the most common choice made in
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Mechanism design with belief-dependent preferences Journal of Economic Theory (IF 1.79) Pub Date : 2024-01-09 Ernesto Rivera Mora
This paper studies mechanism design when agents have belief-dependent preferences, in that utilities depend on the agents' hierarchical posterior beliefs about types. For instance, agents may be subject to temptation, shame, image concerns, or privacy concerns. In this setting, the textbook revelation principle does not hold, since mechanisms can provide agents with information that affects posterior
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The existence of universal qualitative belief spaces Journal of Economic Theory (IF 1.79) Pub Date : 2024-01-05 Satoshi Fukuda
This paper constructs a canonical representation of players' interactive beliefs, irrespective of natures of beliefs: whether beliefs are qualitative, truthful (i.e., knowledge), or probabilistic (e.g., countably-additive, finitely-additive, or non-additive). The canonical model is the “largest” interactive belief model to which any particular model can be mapped in a unique belief-preserving way.
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Implementation in undominated strategies with applications to auction design, public good provision and matching Journal of Economic Theory (IF 1.79) Pub Date : 2024-01-03 Saptarshi Mukherjee, Nozomu Muto, Arunava Sen
This paper considers implementation in undominated strategies by finite mechanisms, where multiple outcomes may be implemented at a single state of the world. We establish a sufficient condition for implementation applicable in a general environment with private values. We apply it to three well-known environments and obtain strikingly permissive results. In the single-object auction, the second-price
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Unilateral stability in matching problems Journal of Economic Theory (IF 1.79) Pub Date : 2023-12-28 Michael Richter, Ariel Rubinstein
The canonical solution concept used in matching problems is pairwise stability, whose premise is that harmony is disrupted by any two agents intentionally leaving their partners to be with each other. We instead focus on scenarios in which harmony is disrupted merely by a single agent unilaterally initiating contact with a member of a different pair, whether or not his approach is reciprocated. A variety
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Close-knit neighborhoods: Stability of cooperation in networks Journal of Economic Theory (IF 1.79) Pub Date : 2023-12-19 Arnold Polanski
Agents connected in a network face a binary choice whether to contribute or to free-ride. The former action is costly but benefits the agent and her neighbors, while the latter is free, but does not provide any benefits. Who will contribute if agents are farsighted and not constrained by a fixed non-cooperative protocol? I adapt the concepts of consistent sets and farsightedly stable sets to answer
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Selling information in competitive environments Journal of Economic Theory (IF 1.79) Pub Date : 2023-12-22 Alessandro Bonatti, Munther Dahleh, Thibaut Horel, Amir Nouripour
Data buyers compete in a game of incomplete information about which a single data seller owns some payoff-relevant information. The seller faces a joint information- and mechanism-design problem: deciding which information to sell, while eliciting the buyers' types and imposing payments. We derive the welfare- and revenue-optimal mechanisms for a class of games with binary actions and states. Our results
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Asset pricing with time preference shocks: Existence and uniqueness Journal of Economic Theory (IF 1.79) Pub Date : 2023-12-21 John Stachurski, Ole Wilms, Junnan Zhang
This paper studies existence and uniqueness of recursive utility in asset pricing models with time preference shocks. We provide conditions that clarify existence and uniqueness for a wide range of models, including exact necessary and sufficient conditions for standard formulations. The conditions isolate the roles of preference parameters, as well as the different risks that drive the consumption
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Multiple prizes in tournaments with career concerns Journal of Economic Theory (IF 1.79) Pub Date : 2023-12-19 Alvaro J. Name Correa, Huseyin Yildirim
We introduce career concerns into rank-order tournaments and offer a novel explanation for the pervasiveness of multiple prizes. We argue that career-concerned individuals, already facing market pressure to perform, will be reluctant to participate in winner-take-all competitions. To entice them and maximize performance, the organizer promises a softer competition through multiple prizes. We show that
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Irreversible investment under predictable growth: Why land stays vacant when housing demand is booming Journal of Economic Theory (IF 1.79) Pub Date : 2023-12-14 Rutger-Jan Lange, Coen N. Teulings
The standard model of irreversible investment under uncertainty considers only the level of the cash flow that could be obtained through the investment. We present a general model that includes as state variables both the level and the growth rate of the cash flow, while the timing and size of the one-time investment are discretionary. As an illustration, we consider an investor with the exclusive
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As strong as the weakest node: The impact of misinformation in social networks Journal of Economic Theory (IF 1.79) Pub Date : 2023-12-13 Manuel Mueller-Frank
We study the impact of misinformation in a model of boundedly rational opinion formation in a social network. We capture misinformation via misspecified prior beliefs and consider networks that contain agents with differing social learning sophistication: identity social learners and quasi-Bayesian social learners. An attractive feature of the underlying heuristics is that in the baseline case absent
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Price impact under heterogeneous beliefs and restricted participation Journal of Economic Theory (IF 1.79) Pub Date : 2023-12-13 Michail Anthropelos, Constantinos Kardaras
We consider a financial market in which traders potentially face restrictions in trading some of the available securities. Traders are heterogeneous with respect to their beliefs and risk profiles, and the market is assumed thin: traders strategically trade against their price impacts. We prove existence and uniqueness of a corresponding equilibrium, and provide an efficient algorithm to numerically
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Optimal prize design in team contests with pairwise battles Journal of Economic Theory (IF 1.79) Pub Date : 2023-11-30 Xin Feng, Qian Jiao, Zhonghong Kuang, Jingfeng Lu
This paper studies the effort-maximizing design of a team contest with an arbitrary number (odd or even) of pairwise battles. In a setting with full heterogeneity across players and battles, the organizer determines the prize allocation rule (or the winning rule of an indivisible prize) contingent on battle outcomes. We propose a measure of team's strength, which plays a crucial role in prize design
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A theory of international unions with exits Journal of Economic Theory (IF 1.79) Pub Date : 2023-11-22 Michał L. Kobielarz
The dwindling popularity of globalization and international cooperation poses the issue of exiting an international union. An individually made exit decision is inefficient, as it neglects the losses of the other members. Fiscal transfers inside the union eliminate socially inefficient exits and restore the first-best outcome. When fiscal transfers are impossible, the union benefits from introducing
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A population's feasible posterior beliefs Journal of Economic Theory (IF 1.79) Pub Date : 2023-11-22 Itai Arieli, Yakov Babichenko
We consider a population of Bayesian agents who share a common prior over some finite state space and each agent is exposed to some information about the state. We characterize which distributions over the empirical distribution of posterior beliefs in the population are feasible. We apply this result in several domains. First, we study the problem of maximizing the polarization of beliefs in a population
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Sequential Bayesian persuasion Journal of Economic Theory (IF 1.79) Pub Date : 2023-11-17 Wenhao Wu
I study a Bayesian persuasion model in which multiple senders sequentially persuade one receiver, after observing signal structures of prior senders and their realizations. I develop a geometric method, recursive concavification, to characterize the Perfect Bayesian Equilibrium paths. I prove the existence of the silent equilibrium, where at most one sender provides nontrivial information. I also show
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The ratchet effect: A learning perspective Journal of Economic Theory (IF 1.79) Pub Date : 2023-11-14 V Bhaskar, Nikita Roketskiy
We examine the ratchet effect under moral hazard and symmetric learning by worker and firm about new technology. Shirking increases the worker's future payoffs, since the firm overestimates job difficulty. High-powered incentives to deter shirking induce the agent to over-work, since he can quit if the firm thinks the job is too easy. With continuous effort choices, no deterministic interior effort
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A model of the gold standard Journal of Economic Theory (IF 1.79) Pub Date : 2023-11-10 Jesús Fernández-Villaverde, Daniel Sanches
We present a micro-founded monetary model of a small open economy to examine the behavior of money, prices, and output under the gold standard. In particular, we formally analyze Hume's celebrated price-specie flow mechanism. Our framework incorporates the influence of international trade on the money supply in the Home country through gold flows. In the short run, a positive correlation exists between
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Endogenous criteria for success Journal of Economic Theory (IF 1.79) Pub Date : 2023-10-31 René Kirkegaard
Economic agents are motivated to undertake costly actions by the prospect of being rewarded for successes and punished for failures. But what determines what a success looks like? This paper endogenizes the criteria for success in an otherwise standard principal-agent model with risk neutrality and limited liability. The set of feasible contracts is constrained by incentive constraints and possibly
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Information, market power and welfare Journal of Economic Theory (IF 1.79) Pub Date : 2023-10-24 Youcheng Lou, Rohit Rahi
We study the market for a risky asset in which traders are heterogeneous both in terms of their value for the asset and the information that they have about this value. Traders behave strategically and use the equilibrium price to extract information that is relevant to them. Due to adverse selection, uninformed traders are less willing than the informed to provide liquidity. We evaluate the impact
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Connecting friends Journal of Economic Theory (IF 1.79) Pub Date : 2023-10-20 Sihua Ding
We study how people form networks through introductions. We consider a model where players with different ability levels are connected in a network. The players seek to match with someone they are linked to in the network (i.e., their neighbors), and they prefer high-ability neighbors over low-ability ones. We investigate whether a player will strategically introduce two unacquainted neighbors to each
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Bargaining under almost complete information Journal of Economic Theory (IF 1.79) Pub Date : 2023-10-20 Deepal Basak
We consider the canonical frequent-offer Rubinstein bargaining game between two leaders on a policy issue. The public sentiment on this issue leans toward one leader or the other. Public sentiment determines the maximum compromise a leader can make without risking getting primaried. We introduce a positive probability ε that the leaders are uninformed about the sentiment. We show that a unique equilibrium
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Signaling covertly acquired information Journal of Economic Theory (IF 1.79) Pub Date : 2023-10-17 Mehmet Ekmekci, Nenad Kos
We study the interplay between information acquisition and signaling. A sender decides whether to learn his type at a cost prior to taking a signaling action. A receiver observes the signaling action and responds. We characterize equilibria and apply a version of never a weak best response refinement in the environment where the information acquisition is observable as well as in the environment where
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Coherence without rationality at the zero lower bound Journal of Economic Theory (IF 1.79) Pub Date : 2023-10-18 Guido Ascari, Sophocles Mavroeidis, Nigel McClung
Standard rational expectations models with an occasionally binding zero lower bound constraint either admit no solutions (incoherence) or multiple solutions (incompleteness). This paper shows that deviations from full-information rational expectations mitigate concerns about incoherence and incompleteness. Models with no rational expectations equilibria admit self-confirming equilibria involving the
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A fiscal theory of money and bank liquidity provision Journal of Economic Theory (IF 1.79) Pub Date : 2023-10-04 Ping He, Zehao Liu, Chengbo Xie
Fiscal-backed money can provide additional liquidity to consumers and mitigate the liquidity shortage problem in an economy with banks where agents face idiosyncratic liquidity shocks without being fully insured. The government issues fiat money and creates real value for money by levying a tax and accepting money for tax payments. Tax reallocates the distribution of liquidity in the economy. An increase
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Preference for Knowledge Journal of Economic Theory (IF 1.79) Pub Date : 2023-09-30 Hendrik Rommeswinkel, Hung-Chi Chang, Wen-Tai Hsu
We examine the subjective value of gaining knowledge in a version of Savage's model for decisions under uncertainty in which the received outcome provides information about which event has obtained. Decision makers commonly value such knowledge either because they want to use it in future decisions or because they are personally interested in it. We find that in our model, the sure-thing principle
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On the voluntary disclosure of redundant information Journal of Economic Theory (IF 1.79) Pub Date : 2023-09-29 Snehal Banerjee, Bradyn Breon-Drish, Ron Kaniel, Ilan Kremer
Why do firms engage in costly, voluntary disclosure of information which is subsumed by a later announcement? We consider a model in which the firm's manager can choose to disclose short-term information which becomes redundant later. When disclosure costs are sufficiently low, the manager discloses even if she only cares about the long-term price of the firm. Intuitively, by disclosing, she causes
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Virus dynamics with behavioral responses Journal of Economic Theory (IF 1.79) Pub Date : 2023-09-25 Krishna Dasaratha
Motivated by epidemics such as COVID-19, we study the spread of a contagious disease when behavior responds to the disease's prevalence. We extend the SIR epidemiological model to include endogenous meeting rates. Individuals benefit from economic activity, but activity involves interactions with potentially infected individuals. The main focus is a theoretical analysis of contagion dynamics and behavioral
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Post-auction investment by financially constrained bidders Journal of Economic Theory (IF 1.79) Pub Date : 2023-09-22 Ryuji Sano
This study examines auctions in which the value of goods is endogenously determined by ex post investment while bidders face financial constraints. The main results are twofold. First, we characterize performance comparisons on revenue and investment between standard auctions. When the valuation is linear in investment, we have the equivalence theorem with respect to the seller's expected revenue and
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Competition in costly talk Journal of Economic Theory (IF 1.79) Pub Date : 2023-09-20 Federico Vaccari
This paper studies a communication game between an uninformed decision maker and two perfectly informed senders with conflicting interests. Senders can misreport information at a cost that increases with the size of the misrepresentation. The main result concerns the characterization of equilibria with desirable properties: they always exist, are essentially unique, and are robust. Information transmission
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Inefficiency of Random Serial Dictatorship under incomplete information Journal of Economic Theory (IF 1.79) Pub Date : 2023-09-19 Ethem Akyol
We study the problem of allocating n objects to n agents without monetary transfers in a setting where each agent's preference over objects is private. We assume that each agent's value vector (values for n objects) is independently drawn from an exchangeable distribution and show that the celebrated Random Serial Dictatorship mechanism is welfare inferior to another allocation method, the Random Boston
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Co-essentiality of money and credit: A mechanism-design view Journal of Economic Theory (IF 1.79) Pub Date : 2023-09-11 Hugo van Buggenum, Stanislav Rabinovich
Under what conditions are money and credit jointly essential for trade? We answer this question by applying a mechanism-design approach to a standard monetary search model, augmented with two types of credit technologies. First, payment can be enforced up to some exogenous amount (enforcement-based credit). Second, default on past promises can be partially monitored by future trading partners (monitoring-based
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Behavioral implementation under incomplete information Journal of Economic Theory (IF 1.79) Pub Date : 2023-09-11 Mehmet Barlo, Nuh Aygün Dalkıran
We investigate implementation under incomplete information allowing for individuals' choices featuring violations of rationality. Our primitives are individuals' interim choices that do not have to satisfy the weak axiom of revealed preferences. In this setting, we provide necessary as well as sufficient conditions for behavioral implementation under incomplete information. We also introduce behavioral
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Sequentially mixed search and equilibrium price dispersion Journal of Economic Theory (IF 1.79) Pub Date : 2023-09-09 Shouyong Shi
Many markets feature sequentially mixed search (SMS), which is search directed toward a price distribution followed by noisy matching with multiple offers. I construct a tractable model of SMS, establish existence of a unique equilibrium, and prove that the equilibrium is constrained efficient. Although individuals on each side of the market are homogeneous and search is directed, the equilibrium has
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Strategy-proof and envy-free mechanisms for house allocation Journal of Economic Theory (IF 1.79) Pub Date : 2023-09-09 Priyanka Shende, Manish Purohit
We consider the problem of allocating indivisible objects to agents when agents have strict preferences over objects. There are inherent trade-offs between competing notions of efficiency, fairness and incentives in such assignment mechanisms. It is, therefore, natural to consider mechanisms that satisfy two of these three properties in their strongest notions, while trying to improve on the third