|
on Economic Design |
|
Issue of 2023‒04‒10
nine papers chosen by Guillaume Haeringer, Baruch College and Alex Teytelboym, University of Oxford |
| By: | Alex Gershkov; Benny Moldovanu; Philipp Strack; Mengxi Zhang |
| Abstract: | We study a generalization of the classical monopoly insurance problem under adverse selection (see Stiglitz [1977]) where we allow for a random distribution of losses, possibly correlated with the agent’s risk parameter that is private information. Our model explains patterns of observed customer behavior and predicts insurance contracts most often observed in practice: these consist of menus of several deductible-premium pairs, or menus of insurance with coverage limits-premium pairs. The main departure from the classical insurance literature is obtained here by endowing the agents with risk-averse preferences that can be represented by a dual utility functional (Yaari [1987]). |
| Keywords: | digital platforms, Big Tech, market definition, multi-markets approach, German Competition Act, 19a designations, competition law |
| JEL: | K21 |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2023_399&r=des |
| By: | Agustín Germán Bonifacio; Jordi Massó; Pablo Neme |
| Keywords: | Single-peakedness, Strategy-proofness, Anonymity, Unanimity, Tops-onlyness |
| JEL: | D71 |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:aep:anales:4441&r=des |
| By: | Pablo Neme; Agustín Bonifacio; Nadia Guiñazú; Noelia Juarez; Jorge Oviedo |
| Keywords: | Matching, worker-quasi-stability, lattice, Tarski operator, re-equilibration process |
| JEL: | C78 D47 |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:aep:anales:4498&r=des |
| By: | Anna Bogomolnaia (HSE St Petersburg - Higher School of Economics - St Petersburg, University of Glasgow, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Hervé Moulin (University of Glasgow, HSE St Petersburg - Higher School of Economics - St Petersburg, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | When dividing a "manna" Ω of private items (commodities, workloads, land, time slots) between n agents, the individual guarantee is the welfare each agent can secure in the worst case of other agents' preferences and actions. If the manna is nonatomic and utilities are continuous (not necessarily monotone or convex) the minmax utility, that of our agent's best share in the agent's worst partition of the manna, is guaranteed by Kuhn's generalization of divide and choose. The larger maxmin utility—of the agent's worst share in the agent's best partition—cannot be guaranteed even for two agents. If, for all agents, more manna is better than less (or less is better than more), the new bid and choose rules offer guarantees between minmax and maxmin by letting agents bid for the smallest (or largest) size of a share they find acceptable. |
| Keywords: | fair division, divide and choose, guarantees, nonatomic utilities |
| Date: | 2022–04–08 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03886828&r=des |
| By: | Alessandro Ispano; Peter Vida (Université de Cergy-Pontoise, THEMA) |
| Abstract: | We provide a model of interrogations with two-sided asymmetric information. The suspect knows his status as guilty or innocent and the likely strength of the law enforcer’s evidence, which is informative about the suspect’s status and may also disprove lies. We compare prosecution errors in the equilibrium of the one-shot interrogation and in the optimal mechanism under full commitment. We describe a “back and forth” interrogation with disclosure of the evidence and discretionary forgiveness of lies that implements the optimum in equilibrium without any commitment. |
| Keywords: | lie, evidence, questioning, confession, law, prosecution, disclosure, persuasion, two-sided asymmetric information |
| JEL: | D82 D83 C72 K40 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ema:worpap:2021-02_v2&r=des |
| By: | Koji Yokote; Isa E. Hafalir; Fuhito Kojima; M. Bumin Yenmez |
| Abstract: | Path independence is arguably one of the most important choice rule properties in economic theory. We show that a choice rule is path independent if and only if it is rationalizable by a utility function satisfying ordinal concavity, a concept closely related to concavity notions in discrete mathematics. We also provide a representation result for choice rules that satisfy path independence and the law of aggregate demand. |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2303.00892&r=des |
| By: | Aubry, Mathieu; Kräussl, Roman; Manso, Gustavo; Spaenjers, Christophe |
| Abstract: | We construct a neural network algorithm that generates price predictions for art at auction, relying on both visual and non-visual object characteristics. We find that higher automated valuations relative to auction house pre-sale estimates are associated with substantially higher price-to-estimate ratios and lower buy-in rates, pointing to estimates' informational inefficiency. The relative contribution of machine learning is higher for artists with less dispersed and lower average prices. Furthermore, we show that auctioneers' prediction errors are persistent both at the artist and at the auction house level, and hence directly predictable themselves using information on past errors. |
| Keywords: | art, auctions, experts, asset valuation, biases, machine learning, computer vision |
| JEL: | C50 D44 G12 Z11 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cfswop:692&r=des |
| By: | Eduardo Cardadeiro; João E. Gata |
| Abstract: | During the past several months, passenger air transport has been recovering from its significant retraction during the two years Covid pandemics. If the recent significant drop in air traffic due do the Covid pandemics acted as an external mitigating factor to airport traffic congestion in several major airports around the world, with the post-pandemics air traffic recovery it is likely that airport capacity will, once again, fall short of demand and not keep pace with the growth in air traffic. That is why close to two hundred major airports worldwide, most of them in Europe, face capacity constraints and are “coordinated”. Eurocontrol predicts Europe's capacity shortage in 2050 at 500, 000 flights/year in the baseline scenario, which could rise to 2.7 million in an optimistic scenario. The allocation of airport slots in Europe and elsewhere is still ruled by administrative processes, based on the IATA (International Air Transport Association) Worldwide Airport Slot Guidelines (WASG), which follow historical precedence and time adjustments of historical slots. Market mechanisms in slot allocation, as an alternative to administrative processes, are still rarely used. Several authors have highlighted the inefficiency of the current airport slot administrative allocation system, based on the IATA’s Guidelines. Several authors have suggested improvements in this administrative system, such as congestion pricing mechanisms and other market mechanisms involving auction procedures. Among the various auction mechanisms, scoring auctions and the PAUSE methodology have been suggested in the literature. In this paper, and following our previous work, we explore and extend the application of the PAUSE auction mechanism with bidding based on a score function for the auctioneer, that includes another variable in addition to the total revenue, where this variable can represent e.g., quality of the service provided. We study the application of this auction mechanism, in a gradual fashion, p.e. to the year round three level 3 international airports operating in Portugal. The different airlines using these airports would still follow the current IATA slot allocation guidelines in their use of other airports, including the slot exchange protocols. We show that some of PAUSE auction mechanism’s desirable properties, such as computability, transparency, absence of envy, and the mitigation of the “price-jump problem”, “threshold problem”, “exposure problem”, and “winner’s curse problem”, still hold. |
| Keywords: | Scoring auctions, PAUSE, air travel, airport slot, IATA slot allocation guidelines, market-based allocation mechanism, combinatorial auctions, score function, secondary market. |
| JEL: | D44 D47 L93 R41 |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:ise:remwps:wp02602023&r=des |
| By: | Kiran Tomlinson; Johan Ugander; Jon Kleinberg |
| Abstract: | Instant runoff voting (IRV) has gained popularity in recent years as an alternative to traditional plurality voting. Advocates of IRV claim that one of its benefits relative to plurality voting is its tendency toward moderation: that it produces more moderate winners than plurality and could therefore be a useful tool for addressing polarization. However, there is little theoretical backing for this claim, and existing evidence has focused on simulations and case studies. In this work, we prove that IRV has a moderating effect relative to traditional plurality voting in a specific sense, developed in a 1-dimensional Euclidean model of voter preferences. Our results show that as long as voters are symmetrically distributed and not too concentrated at the extremes, IRV will not elect a candidate that is beyond a certain threshold in the tails of the distribution, while plurality can. For the uniform distribution, we provide an approach for deriving the exact distributions of the plurality and IRV winner positions, enabling further analysis. We also extend a classical analysis of so-called stick-breaking processes to derive the asymptotic winning plurality vote share, which we use to prove that plurality can elect arbitrarily extreme candidates even when there are many moderate options. |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2303.09734&r=des |