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on Microeconomics |
| By: | Adam Dominiak; Matthew Kovach; Gerelt Tserenjigmid |
| Abstract: | We study belief revision when information is represented by a set of probability distributions, or general information. General information extends the standard event notion while including qualitative information (A is more likely than B), interval information (A has a ten-to-twenty percent chance), and more. We behaviorally characterize Inertial Updating: the decision maker's posterior is of minimal subjective distance from her prior, given the information constraint. Further, we introduce and characterize a notion of Bayesian updating for general information and show that Bayesian agents may disagree. We also behaviorally characterize f-divergences, the class of distances consistent with Bayesian updating. |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2502.00958 |
| By: | Pongou, Roland; Sidie, Ghislain Junior |
| Abstract: | Ranked voting is an election format in which each voter ranks candidates on a ballot, and individual rankings are aggregated using a general rule to produce a social ranking. This paper proposes a non-cooperative model of this electoral system. The setting allows for unequal voting rights, abstention, and social incomparability of candidates, and each voter's utility is measured by how close his or her true preferences are to the social ranking. The analysis uncovers three main findings. First, it proves the existence of a pure strategy Nash equilibrium. Second, it shows that truthtelling is always a Nash equilibrium regardless of the voting rule and the structure of individual preferences. Third, under mild conditions, truthtelling is Pareto-efficient when voters have strict preferences. Extending the analysis to majoritarian elections with costly voluntary participation shows that truthtelling is an equilibrium if and only if the costs of participation are not too high and the election is tight. The findings have implications for the design of ranked voting systems that are compatible with truthtelling and efficiency while allowing unrestricted freedom in the choice of the voting rule. A reinterpretation of the model in the context of intrapersonal bargaining, where the decision-maker has multiple rational selves, has implications for the occurrence of cyclic individual choices that reflect stable and efficient behavioral patterns. |
| Date: | 2024–07–02 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10837 |
| By: | Rhodes, Andrew; Zhou, Jidong; Zhou, Junjie |
| Abstract: | This paper provides a framework in which a multiproduct ecosystem competes with many single-product firms in both price and innovation. The ecosystem is able to use data collected on one product to improve the quality of its other products. We study the impact of data regulation which either restricts the ecosystem’s cross-product data usage, or which requires it to share data with small firms. Each policy induces small firms to innovate more and set higher prices; it also dampens data spillovers within the ecosystem, reduces the ecosystem’s incentive to collect data and innovate, and potentially increases its prices. As a result, data regulation has an ambiguous impact on consumers, and is more likely to benefit consumers when small firms are relatively more efficient in innovation. A data cooperative among small firms, which helps them to share data with each other, does not necessarily benefit small firms and can even harm consumers. |
| Keywords: | digital ecosystems; innovation; data regulation; data cooperative |
| JEL: | D43 L13 L51 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:130354 |
| By: | Jean-Pierre Drugeon (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 nationale des ponts et chaussées - 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 nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Thai Ha-Huy (Université Paris-Saclay, EPEE - Centre d'Etudes des Politiques Economiques - UEVE - Université d'Évry-Val-d'Essonne - Université Paris-Saclay) |
| Abstract: | This paper provides a framework for understanding preferences over utility streams across different time periods. We analyze preferences for the close future, for the distant future, and a synthesis of both, establishing a representation involving weights over time periods. Examining scenarios where two utility streams cannot be robustly compared to each other, we introduce notions in which one has more "potential" to be preferred over another, which lead to MaxMin, MaxMax, and -MaxMin representations. Finally, we consider temporal bias in the form of violations of stationarity. For close future preferences, we obtain a generalization of quasi-hyperbolic discounting. For distant future preferences, we obtain Banach limits and discuss the relationship with exponential discounting. |
| Keywords: | Axiomatization, Myopia, Multiple discounts, Alpha-MaxMin criteria, Temporal biases, Banach limits |
| Date: | 2023–12 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:halshs-04331306 |
| By: | Maryam Farboodi; Nima Haghpanah; Ali Shourideh |
| Abstract: | We ask when additional data collection by a monopolist to engage in price discrimination monotonically increases or decreases weighted surplus. To answer this question, we develop a model to study endogenous market segmentation subject to residual uncertainty. We give a complete characterization of when data collection is good or bad for surplus, which consists of a reduction of the problem to one with only two demand curves, and a condition for the two-demand-curves case that highlights three distinct effects of information on welfare. These results provide insights into when data collection and usage for price discrimination should be allowed. |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2502.03641 |
| By: | Franz Dietrich (CNRS - Centre National de la Recherche Scientifique, 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 nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Christian List (LMU - Fakultät für Physik - Ludwig-Maximilians-Universität [München/Munich] - LMU - Ludwig-Maximilians University [Munich]) |
| Abstract: | A probability aggregation rule assigns to each profile of probability functions across a group of individuals (representing their individual probability assignments to some propositions) a collective probability function (representing the group's probability assignment). The rule is "non-manipulable" if no group member can manipulate the collective probability for any proposition in the direction of his or her own probability by misrepresenting his or her probability function ("strategic voting"). We show that, except in trivial cases, no probability aggregation rule satisfying two mild conditions (non-dictatorship and consensus preservation) is non-manipulable. |
| Date: | 2024–01 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:halshs-04405495 |
| By: | Khan, Abhimanyu; Pradhan, Sheersh |
| Abstract: | Empirical studies on the effect of internet on market prices report that market prices have not always reduced in response to increased competition that is induced by the easily and relatively costlessly available market information. In this paper, we provide an explanation for why prices of all goods may not reduce, and in fact, price of some goods may even increase in presence of more market information. Market information not only induces stiffer competition amongst sellers but also makes for better matches between consumers and producers. While the former feature has a tendency to reduce prices, the latter feature may in fact cause prices to rise. The direction in which prices change as more information becomes available depends on the balance of these forces. We analyse this in context of a differentiated market, and characterise how prices change in response to freely available market information. |
| Keywords: | price competition, product match, information, differentiated market |
| JEL: | D43 L13 |
| Date: | 2025–02–01 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123522 |
| By: | Oliver Biggar; Iman Shames |
| Abstract: | The preference graph is a combinatorial representation of the structure of a normal-form game. Its nodes are the strategy profiles, with an arc between profiles if they differ in the strategy of a single player, where the orientation indicates the preferred choice for that player. We show that the preference graph is a surprisingly fundamental tool for studying normal-form games, which arises from natural axioms and which underlies many key game-theoretic concepts, including dominated strategies and strict Nash equilibria, as well as classes of games like potential games, supermodular games and weakly acyclic games. The preference graph is especially related to game dynamics, playing a significant role in the behaviour of fictitious play and the replicator dynamic. Overall, we aim to equip game theorists with the tools and understanding to apply the preference graph to new problems in game theory. |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2502.03546 |
| By: | Gregorio Curello; Sam Jindani |
| Abstract: | We propose a solution to the problem of bargaining with transfers, along with an axiomatisation of the solution. Inefficient allocations in the bargaining set can influence the solution, but are discounted relative to more efficient ones. The key axioms are additivity and a property we call \emph{inverse monotonicity}, which states that adding an allocation to the bargaining set that is worse for a given player than the initial solution cannot benefit that player. |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2502.00308 |
| By: | Paul H. Y. Cheung; Yusufcan Masatlioglu |
| Abstract: | We explore the influence of framing on decision-making, where some products are framed (e.g., displayed, recommended, endorsed, or labeled). We introduce a novel choice function that captures observed variations in framed alternatives. Building on this, we conduct a comprehensive revealed preference analysis, employing the concept of frame-dependent utility using both deterministic and probabilistic data. We demonstrate that simple and intuitive behavioral principles characterize our frame-dependent random utility model (FRUM), which offers testable conditions even with limited data. Finally, we introduce a parametric model to increase the tractability of FRUM. We also discuss how to recover the choice types in our framework. |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2502.00209 |
| By: | René Van den Brink (Department of Economics and Tinbergen Institute - VU University); Dinko Dimitrov (Saarland University); Agnieszka Rusinowska (Centre d'Economie de la Sorbonne, CNRS - Université Paris 1 Panthéon-Sorbonne, Paris School of Economics) |
| Abstract: | Simple games in partition function form are used to model voting situations where a coalition being winning or losing might depend on the way players outside that coalition organize themselves. Such a game is called a plurality voting game if in every partition there is at least one winning coalition. In the present paper, we introduce a power index for this class of voting games and provide an axiomatic characterization. This power index is based on equal weight for every partition, equal weight for every winning coalition in a partition, and equal weight for each player in a winning coalition. Since some of the axioms we develop are conditioned on the power impact of losing coalitions becoming winning in a partition, our characterization heavily depends on a new result showing the existence of such elementary transitions between plurality voting games in terms of single embedded winning coalitions. The axioms restrict then the impact of such elementary transitions on the power of different types of players |
| Keywords: | axiomatization; power index; plurality game; winning coalition |
| JEL: | C71 D62 D72 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:mse:cesdoc:24014 |
| By: | Alex Chernoff; Allen Head; Beverly Lapham |
| Abstract: | We study the determination of market power at the firm and industry levels when heterogeneous firms compete for sales to ex ante homogeneous buyers in a market with both directed and random search and free entry of firms that differ in productivity. Search and the distribution of productivity across active firms generate distributions of equilibrium prices and markups that we relate to variation in the elasticity of demand at the firm level. With directed search at the outset, a shock that raises the matching rate for buyers improves conditions for them and tends to lower markups. Random matching follows sequentially, and the same shock can lower the productivity threshold for operation, pushing up prices and markups for all firms. The net effect on market power can be ambiguous depending on the forces driving matching rates. The distributions of prices and markups respond in equilibrium to changes in common and firm-specific costs, consumption utility, and fixed costs of both entry and operation. We characterize the differential pass-through of these changes to prices and markups at both the firm and market levels. |
| Keywords: | Inflation and prices; Service sector |
| JEL: | D21 D43 E31 L11 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:bca:bocawp:25-7 |
| By: | Clara Calini (Italian Competition Authority - AGCM); Alessandra Catenazzo (Italian Competition Authority - AGCM); Elisabetta Iossa (CEIS & DEF, University of Rome "Tor Vergata" and AGCM) |
| Abstract: | Well-functioning competitive procurement is essential to reach efficiency of public services and public spending. Drawing from the experience of the Autorit`a Garante della Concorrenza e del Mercato, this paper argues that fostering competition in public procurement is most effective when employing a diverse range of tools. First, identifying the functioning of compensatory mechanisms that result in anomalous bidding behaviour, as well as diversifying the sources of information, is important for effectively prosecuting bid rigging ex post and helping contracting authorities detect anticompetitive conduct. Second, ex ante advocacy contributes to enhance the competence of public buyers, helping them design pro-competitive procurement processes. Third, adopting legality rating systems incentivizes compliance with competition law and also helps select the most efficient bidder. The paper makes these points whilst reviewing enforcement practice. |
| Keywords: | Antitrust, Advocacy, Bid rigging, Legality Rating, Public Procurement |
| JEL: | D44 D73 H57 K4 L4 |
| Date: | 2025–02–25 |
| URL: | https://d.repec.org/n?u=RePEc:rtv:ceisrp:594 |