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on Microeconomics |
| By: | Rosina Rodríguez Olivera |
| Abstract: | I consider a model in which a monopolist data-seller owners information to privately informed data-buyers who play a game of incomplete information. I characterize the data-seller's optimal menu, which screens between two types of data-buyers. Data-buyers' preferences for information cannot generally be ordered across types. I show that the nature of data-buyers' preferences for information allows the data-seller to extract all surplus. In particular, the data-seller owners a perfectly informative experiment to the data-buyer with highest willingness to pay and a partially informative experiment, which makes the data-buyer with the highest willingness to pay for perfect information indifferent between both experiments. I also show that the features of the optimal menu are determined by the interaction between data-buyers' strategic incentives and the correlation of their private information. Namely, the data-seller owners two informative experiments even when data-buyers would choose the same action without supplemental information if data-buyers: i) have coordination incentives and their private information is negatively correlated or ii) have anti-coordination incentives and their private information is positively correlated. |
| Keywords: | Screening, Information, Strategic incentives |
| JEL: | D80 D82 |
| Date: | 2023–06 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2023_437&r=mic |
| By: | Christopher Teh; Chengsi Wang; Makoto Watanabe |
| Abstract: | 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 implements the efficient outcome, but fully extracts surplus from the transactions it intermediates. We also find that in general, buyers prefer to minimize market accessibility, while sellers prefer a weakly greater accessibility level than that which is socially efficient. The efficiency of imperfect accessibility is robust to the introduction of a second chance for unmatched buyers to search. |
| Keywords: | meeting technology, directed search, platform, intermediation, accessibility |
| JEL: | D83 J64 M37 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10507&r=mic |
| By: | Mengxi Zhang |
| Abstract: | I investigate the design of effort-maximizing mechanisms when agents have both private information and convex effort costs, and the designer has a fixed prize budget. I first demonstrate that it is always optimal for the designer to utilize a contest with as many participants as possible. Further, I identify a necessary and sufficient condition for the winner-takes-all prize structure to be optimal. When this condition fails, the designer may prefer to award multiple prizes of descending sizes. I also provide a characterization of the optimal prize allocation rule for this case. Finally, I illustrate how the optimal prize distribution evolves as the contest size grows. |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2023_156v2&r=mic |
| By: | Frédéric Koessler (HEC Paris - Ecole des Hautes Etudes Commerciales, GREGHEC - Groupement de Recherche et d'Etudes en Gestion - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique); Marieke Pahlke (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement) |
| Abstract: | We use a notion of maxmin self-confirming equilibrium (MSCE) to study the optimal design of players' feedbacks about others' behavior in games with ambiguity averse players. Coarse feedbacks shape strategic uncertainty and can therefore modify players' equilibrium strategies in an advantageous way. We characterize MSCE and study the equilibrium implications of coarse feedbacks in various classes of games. We show how feedbacks should be optimally designed to improve contributions in generalized volunteer dilemmas and public good games with strategic substitutes, strategic complements, or more general production functions. We also study games with negative externalities and strategic substitutes such as Cournot oligopolies. In general, perfect and no feedbacks are suboptimal. Some results are extended to α-maxmin preferences. |
| Keywords: | Self-confirming equilibrium, Ambiguity aversion, Information feedback, Strategic uncertainty, Public good games, Volunteer dilemma |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-04039083&r=mic |
| By: | Dmitriy Vorobyev; Azamat Valei; Andrei Matveenko |
| Abstract: | Using a pivotal costly voting model of elections between a status quo and a challenger alternative, we compare participation and approval quorum requirements in terms of how they shape voter incentives to cast votes, and how they ultimately impact voter turnout, election outcomes, and welfare. We first show that approval and participation quorum restrictions of equal strictness result in at most two types of stable non-trivial equilibria: “abstention, ” in which status quo supporters strategically abstain from voting, and “coordination, ” in which they vote with positive probability. While abstention equilibria are always identical in the two quorum settings, coordination equilibria may differ, but only when the cost of voting is sufficiently low and status quo support among voters is neither extremely high or low, nor is it close to the degree of support for the challenger. We show that, in those cases, the difference in the outcomes of interest between approval and participation quorum settings is quantitatively small. The main difference between the two settings therefore arises from the fact that, under an approval quorum, coordination equilibrium exists for a narrower range of status quo support levels than under a participation quorum. We discuss the implications of these findings for designing optimal quorum restrictions, suggesting that choosing an approval quorum over a participation quorum and setting its strictness close to half of the number of voters, or setting no quorum restrictions at all, are often welfare maximizing choices. |
| Keywords: | voting, participation quorum, approval quorum |
| JEL: | D71 D72 |
| Date: | 2023–07 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2023_438&r=mic |
| By: | Kvaløy, Ola (University of Stavanger Business School); Olsen, Trond E. (Dept. of Business and Management Science, Norwegian School of Economics) |
| Abstract: | We analyze optimal relational contracts for a group (team) of multitasking agents with hidden actions. Contracts are based on noisy signals that may be correlated across agents and between tasks. The optimal contract defines a performance measure in the form of an index (a scorecard) for each agent, and awards a bonus to the highest performing agent, provided his or her index exceeds a hurdle. An optimal index generally involves benchmarking against other agents, and this may, in combination with the hurdle requirement, introduce a cooperative element in the otherwise competitive incentive structure. For agents with separate tasks and normally distributed signals, we find that strong correlation (either positive or negative) across agents is beneficial, while larger correlation within each agent's tasks is detrimental for efficiency, and that this has implications for optimal organization of tasks. For agents with common tasks the optimal contract may have features of both tournament and team incentives. The tournament aspect incentivizes an agent to exert effort on his own task, while the hurdle necessary to receive a bonus also incentivizes an agent to help his peers. In our setting this hybrid scheme can only be optimal if signals from agents' tasks are negatively correlated. Otherwise pure team incentives are optimal. |
| Keywords: | Relational contracts; tournament incentives; team incentives |
| JEL: | D00 D20 D21 D80 D86 |
| Date: | 2023–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhhfms:2023_010&r=mic |
| By: | Agustin G. Bonifacio |
| Abstract: | By endowing the class of tops-only and efficient social choice rules with a dual order structure that exploits the trade-off between different degrees of manipulability and dictatorial power rules allow agents to have, we provide a proof of the Gibbard-Satterthwaite Theorem. |
| Date: | 2023–06 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2306.04587&r=mic |
| By: | J. Atsu Amegashie |
| Abstract: | I consider a market with two firms, a minority group of customers, and a bigoted (racist, ethnocentric, xenophobic, or sexist) majority group of customers. There exists a Nash equilibrium with full segregation in which a low-price firm serves only the minority and a high-price firm serves only the majority. There is also a partial-integration equilibrium in which a high-price firm serves only the majority while a low-price firm serves both the minority and majority. Paradoxically, if the minority group is sufficiently big and the majority is sufficiently prejudiced, then both equilibria hold in the sense that the high-price firm does not lose customers, although its competitor charges a lower price. If the firms can price discriminate, none of these equilibria will hold. The partial integration equilibrium depends on how the prejudice of the majority is modelled. |
| Keywords: | customer discrimination, majority, markets, minority, segregation |
| JEL: | J15 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10453&r=mic |
| By: | Alex Gershkov (Department of Economics, Hebrew University Jerusalem and School of Economics, University of Surrey); Andreas Kleiner (Department of Economics, Arizona State University); Benny Moldovanu (Department of Economics, University of Bonn); Xianwen Shi (Department of Economics, University of Toronto) |
| Abstract: | We generalize the standard, private values voting model with single-peaked preferences and incomplete information by introducing interdependent preferences. Our main results show how standard mechanisms that are outcome-equivalent and implement the Condorcet winner under complete information or under private values yield starkly different outcomes if values are interdependent. We also propose a new notion of Condorcet winner under incomplete information and interdependent preferences, and discuss its implementation. The new phenomena in this paper arise because diffrent voting rules (including dynamic ones) induce different processes of information aggregation and learning. |
| Date: | 2023–06 |
| URL: | http://d.repec.org/n?u=RePEc:ajk:ajkdps:243&r=mic |
| By: | Jeon, Doh-Shin; Menicucci, Domenico |
| Abstract: | We study how data portability aspects consumer surplus and firms profits in a two-period model with a switching cost where two rms compete under a non-negative pricing constraint. The firms can circumvent the constraint by tying another complementary free service (called "freebies") with the original service. We consider a general framework of incomplete pass-through of freebies into consumer benet, which includes the two extreme cases of no pass through and full pass through. Regarding the effect on consumer surplus, data portability involves a trade-off between intensifying competition after consumer lock-in and reducing rent dissipation before consumer lock-in. For an intermediate range of pass-through rates, data portability increases both consumer surplus and profits. |
| JEL: | D21 D43 L13 L15 |
| Date: | 2023–06–27 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:128175&r=mic |
| By: | Noelia Juarez (UNSL/CONICET); Paola B. Manasero (UNSL/CONICET); Oviedo Jorge (UNSL/CONICET) |
| Abstract: | In a many-to-one matching market with substitutable preferences, we analyze the game induced by a stable rule. When both sides of the market play strategically, we show that any stable rule implements, in Nash equilibrium, the individually rational matchings. Also, when only workers play strategically and firms’ preferences satisfy the law of aggregated demand, we show that any stable rule implements, in Nash equilibrium, the stable matchings |
| Keywords: | Stable matchings, Nash equilibrium, substitutable preferences, matching game |
| JEL: | C78 D47 |
| Date: | 2023–07 |
| URL: | http://d.repec.org/n?u=RePEc:aoz:wpaper:255&r=mic |
| By: | Schmitz, Patrick W. |
| Abstract: | We revisit the contract-theoretic literature on privatization initiated by Hart et al. (1997). This literature has two major shortcomings. First, it is focused on ex-ante investment incentives, whereas ex-post inefficiencies which are ubiquitous in the real world cannot be explained. Second, ownership does not matter when incentive contracts can be written. Both shortcomings are due to the fact that this literature has studied the case of symmetric information only. We explore how asymmetric information leads to different kinds of ex-post inefficiencies depending on the ownership structure. Moreover, we show that under asymmetric information ownership matters even when incentive contracts are feasible. |
| Keywords: | incomplete contracts; privatization; control rights; asymmetric information; investment incentives |
| JEL: | D23 D82 D86 H11 L32 |
| Date: | 2023–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:117742&r=mic |
| By: | Shiri Alon (Department of Economics, Bar-Ilan University); Sarah Auster (Department of Economics, University of Bonn); Gabi Gayer (Department of Economics, Bar-Ilan University); Stefania Minardi (Department of Economics and Decision Sciences, HEC Paris) |
| Abstract: | A strategic sender collects data with the goal of persuading a receiver to adopt a new action. The receiver assesses the profitability of adopting the action by following a classical statistics approach: she forms an estimate via the similarity-weighted empirical frequencies of outcomes in past cases, sharing some attributes with the problem at hand. The sender has control over the characteristics of the sampled cases and discloses the outcomes of his study truthfully. We characterize the sender's optimal sampling strategy as the outcome of a greedy algorithm. The sender provides more relevant data---consisting of observations sharing relatively more characteristics with the current problem---when the sampling capacity is low, when a large amount of initial public data is available, and when the estimated benefit of adoption according to this public data is low. Competition between senders curbs incentives for biasing the receiver's estimate and leads to more balanced datasets. |
| Keywords: | Persuasion, case-based inference, similarity-weighted frequencies |
| JEL: | D81 D83 |
| Date: | 2023–07 |
| URL: | http://d.repec.org/n?u=RePEc:ajk:ajkdps:245&r=mic |
| By: | Alex Gershkov (Department of Economics and the Federmann Center for the Study of Rationality, The Hebrew University of Jerusalem, and School of Economics, University of Surrey); Benny Moldovanu (Department of Economics, University of Bonn); Philipp Strack (Department of Economics, Yale University, New Haven); Mengxi Zhang (Departmentof Economics, University of Bonn) |
| 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. A 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]). |
| Date: | 2023–06 |
| URL: | http://d.repec.org/n?u=RePEc:ajk:ajkdps:242&r=mic |
| By: | Khan, Abhimanyu; Peeters, Ronald |
| Abstract: | We develop a framework to analyse stability of cartels in differentiated Cournot oligopolies when multiple cartels may exist in the market. The consideration of formation of multiple cartels is in direct contrast to the existing literature which assumes, without further justification, that at most a single cartel may be formed, and we show that this consideration has markedly different implications for cartel stability. We define a cartel configuration to be stable if: (i) a firm in a cartel does not find it more profitable to leave the cartel and operate independently, (ii) a firm that operates independently does not find it more profitable to join an existing cartel, (iii) a firm in a cartel does not find it more profitable to join another existing cartel or form a new cartel with an independent firm, and (iv) two independent firms do not find it more profitable to form a new cartel. We show that now, when multiple cartels may exist in the market, a single cartel is never stable. |
| Keywords: | multiple cartels; stability; differentiated market. |
| JEL: | C70 D43 L13 |
| Date: | 2023–06–26 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:117766&r=mic |
| By: | Rey, Patrick; Iossa, Elisabetta; Loertscher, Simon; Leslie M. Marx, |
| Abstract: | While antitrust authorities strive to detect, prosecute, and thereby deter collusive conduct, entities harmed by that conduct are also advised to pursue their own strategies to deter collusion. The implications of such delegation of deterrence have largely been ignored, however. In a procurement context, we find that buyers may prefer to accommodate rather than deter collusion among their suppliers. We also show that a multi-market buyer, such as a centralized procurement authority, may optimally deter collusion when multiple independent buyers would not, consistent with the view that “large” buyers are less susceptible to collusion. |
| Keywords: | Collusion; Cartel; Auction; Procurement; Reserves; Sustainability and initiation of collusion; Coordinated effects |
| JEL: | D44 D82 H57 L41 |
| Date: | 2023–06–05 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:128130&r=mic |