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on Microeconomics |
| By: | Leandro Arozamena (UTDT-CONICET); Juan José Ganuza (Universitat Pompeu Fabra); Federico Weinschelbaum (UTDT-CONICET) |
| Abstract: | A sponsor –e.g. a government agency– uses a procurement auction to select a supplier who will be in charge of the execution of a contract. That contract is incomplete: it may be renegotiated once the auction’s winner has been chosen. We examine a setting where one firm may bribe the agent in charge of monitoring contract execution so that the former is treated preferentially if renegotiation actually occurs. If a bribe is accepted, the corrupt firm will be more aggressive at the initial auction and thus win with a larger probability. We show that the equilibrium probability of corruption is larger when the initial contract is less complete, and when the corrupt firm’s cost is more likely to be similar to her rivals’. In addition, we examine how this influences the sponsor’s incentives when designing the initial contract. |
| Keywords: | Auctions, Cost overruns, Procurement, Renegotiation, Corruption |
| JEL: | C72 D44 D82 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:aoz:wpaper:334 |
| By: | Maryam Saeedi; Yikang Shen; Ali Shourideh |
| Abstract: | We examine the strategic interaction between an expert (principal) maximizing engagement and an agent seeking swift information. Our analysis reveals: When priors align, relative patience determines optimal disclosure -- impatient agents induce gradual revelation, while impatient principals cause delayed, abrupt revelation. When priors disagree, catering to the bias often emerges, with the principal initially providing signals aligned with the agent's bias. With private agent beliefs, we observe two phases: one engaging both agents, followed by catering to one type. Comparing personalized and non-personalized strategies, we find faster information revelation in the non-personalized case, but higher quality information in the personalized case. |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2407.19127 |
| By: | Mark Whitmeyer; Cole Williams |
| Abstract: | In this paper, we reveal that the signal representation of information introduced by Gentzkow and Kamenica (2017) can be applied profitably to dynamic decision problems. We use this to characterize when one dynamic information structure is more valuable to an agent than another, irrespective of what other dynamic sources of information the agent may possess. Notably, this robust dominance is equivalent to an intuitive dynamic version of Brooks, Frankel, and Kamenica (2022)'s reveal-or-refine condition. |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2407.16648 |
| By: | Anderlini, Luca; Felli, Leonardo; Piccione, Michele |
| Abstract: | How do mechanisms that enforce cooperation emerge in a society where none are available and agents are endowed with just raw power that allows a more powerful agent to expropriate a less powerful one? We study a model where expropriation is costly and agents can choose whether to engage in surplus-augmenting cooperation or engage in expropriation. While in bilateral relations, if cooperation is not overwhelmingly productive and expropriation is not too costly, the latter will prevent cooperation, when there are three or more agents, powerful ones can become enforcers of cooperation for agents ranked below them. In equilibrium they will expropriate smaller amounts from multiple weaker cooperating agents who in turn will not deviate for fear of being expropriated more heavily because of their larger expropriation proceeds. Surprisingly, the details of the power structure are irrelevant for the existence of equilibria with enforcement provided that enough agents are present and one is ranked above all others. These details are instead key to the existence of other highly noncooperative equilibria that are obtained in certain cases. |
| Keywords: | Jungle, power structures, enforcement, rule of law |
| JEL: | C79 D00 D01 D31 K19 K40 K49 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:wzbmbh:301156 |
| By: | Canishk Naik; Daniel Reck |
| Abstract: | We consider the optimal policy problem of a benevolent planner, who is uncertain about an individual's true preferences because of inconsistencies in revealed preferences across behavioral frames. We adapt theories of expected utility maximization and ambiguity aversion to characterize the planner's objective, which results in welfarist criteria similar to social welfare functions, with intrapersonal frames replacing interpersonal types. Under paternalistic risk aversion or ambiguity aversion, a policy is less desirable to the planner, holding all else fixed, when it leads to more disagreement about welfare from revealed preferences. We map some examples of behavioral models into our framework and describe how this notion of robustness plays out in applied settings. |
| JEL: | D60 H0 I3 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32813 |
| By: | Maximilian Kasy; Jann Spiess |
| Abstract: | What is the purpose of pre-analysis plans, and how should they be designed? We model the interaction between an agent who analyzes data and a principal who makes a decision based on agent reports. The agent could be the manufacturer of a new drug, and the principal a regulator deciding whether the drug is approved. Or the agent could be a researcher submitting a research paper, and the principal an editor deciding whether it is published. The agent decides which statistics to report to the principal. The principal cannot verify whether the analyst reported selectively. Absent a pre-analysis message, if there are conflicts of interest, then many desirable decision rules cannot be implemented. Allowing the agent to send a message before seeing the data increases the set of decisions rules that can be implemented, and allows the principal to leverage agent expertise. The optimal mechanisms that we characterize require pre-analysis plans. Applying these results to hypothesis testing, we show that optimal rejection rules pre-register a valid test, and make worst-case assumptions about unreported statistics. Optimal tests can be found as a solution to a linear-programming problem. |
| Keywords: | pre-analysis plans, statistical decisions, implementability |
| JEL: | C18 D80 I23 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11258 |
| By: | Gong, Doudou; Dietzenbacher, Bas (RS: GSBE other - not theme-related research, QE Math. Economics & Game Theory) |
| Abstract: | In many models of resource allocation, agents are characterized by certain rights, needs, or demands. We impose the requirement that all agents who are not fully compensated are assigned the same amount, and explore it in the models of claims problems, division problems with single-peaked preferences, and division problems with single-dipped preferences. In combination with other well-known properties, we obtain respective axiomatizations of the well- known constrained equal awards rule, the uniform rule, and two families of rules for the single-dipped model. |
| JEL: | D63 D71 |
| Date: | 2024–08–19 |
| URL: | https://d.repec.org/n?u=RePEc:unm:umagsb:2024010 |