Showing papers in "Economic Theory in 2018"
TL;DR: The irregular N-gon solution as mentioned in this paper is a geometric method for constructing equilibrium distributions in the Colonel Blotto game with heterogeneous battlefield values, generalising known construction methods, and it does particularly well when the battlefield values satisfy some clearly defined regularity conditions.
Abstract: This paper introduces the irregular N-gon solution, a new geometric method for constructing equilibrium distributions in the Colonel Blotto game with heterogeneous battlefield values, generalising known construction methods. Using results on the existence of tangential polygons, it derives necessary and sufficient conditions for the irregular N-gon method to be applied, given the parameters of a Blotto game. The method does particularly well when the battlefield values satisfy some clearly defined regularity conditions. The paper establishes the parallel between these conditions and the constrained integer partitioning problem in combinatorial optimisation. The properties of equilibrium distributions numerically generated using the irregular N-gon method are illustrated. They indicate that the realised allocations, weighted by battlefield value, are less egalitarian and depend more strongly on battlefield values than previously thought. In the context of the US presidential elections, the explicit construction of equilibria provides new insights into the relation between the size of a state and the campaign resources spent there by presidential candidates.
48 citations
TL;DR: In this paper, the authors characterize the unique equilibrium under unlimited and limited capacity, and show that unless the prior strongly favors accepting both proposals, the funding organization is better off when its capacity is limited.
Abstract: An organization must decide which of two proposals to fund. In evaluating the proposals, the organization relies on the agents applying for funding to produce evidence about the merits of their own proposals. When the organization can fund all proposals, each agent engages in an independent game of Bayesian persuasion with the organization, choosing information strategies that maximize the probability of producing evidence in favor of funding. When the organization has limited capacity to implement proposals, the game becomes one of competitive Bayesian persuasion. Producing favorable evidence is not enough to secure funding; an agent must also produce more-favorable evidence than the other agent. We show that an organization’s limited capacity leads agents to produce more (Blackwell) informative evidence than they do when the organization is unconstrained. We fully characterize the unique equilibrium under unlimited and limited capacity, and show that unless the prior strongly favors accepting both proposals, the funding organization is better off when its capacity is limited. The analysis highlights similarities between competitive Bayesian persuasion games and all-pay auctions and generalized Colonel Blotto games.
45 citations
TL;DR: In this article, an English auction with homogeneous ex-ante private information about valuations is studied, and it is shown that the English auction generates more revenue than the Vickrey auction when the number of bidders is sufficiently large and is more efficient when the information acquisition cost is relatively small.
Abstract: An English auction is studied in which bidders can acquire information during the bidding process, allowing for heterogeneity both in ex-ante private information and the cost of information acquisition. The best response has a simple characterization where the optimal information acquisition time is unaffected by the other bidders’ strategies. We prove the existence of an equilibrium in a novel way by characterizing it as a fixed point in the space of bid distributions rather than the space of bid functions. Furthermore, we show that when bidders have homogeneous ex-ante private information about valuations: (1) The English auction generates more revenue than the Vickrey auction when the number of bidders is sufficiently large; and (2) the English auction is more efficient than the Vickrey auction when the information acquisition cost are relatively small. We present numerical simulations that show that these effects can be large. Our findings provide an additional explanation for the popularity of the English auction, even in settings where the bidders’ valuations are independent.
32 citations
TL;DR: In this article, the authors study the long-run spatial distribution of industry using a multi-region core-periphery model with quasi-linear log utility Pfluger and show that a distribution in which industry is evenly dispersed among some of the regions, while the other regions have no industry, cannot be stable.
Abstract: We study the long-run spatial distribution of industry using a multi-region core–periphery model with quasi-linear log utility Pfluger (Reg Sci Urban Econ 34:565–573, 2004). We show that a distribution in which industry is evenly dispersed among some of the regions, while the other regions have no industry, cannot be stable. A spatial distribution where industry is evenly distributed among all regions except one can be stable, but only if that region is significantly more industrialized than the other regions. When trade costs decrease, the type of transition from dispersion to agglomeration depends on the fraction of workers that are mobile. If this fraction is low, the transition from dispersion to agglomeration is catastrophic once dispersion becomes unstable. If it is high, there is a discontinuous jump to partial agglomeration in one region and then a smooth transition until full agglomeration. Finally, we find that mobile workers benefit from more agglomerated spatial distributions, whereas immobile workers prefer more dispersed distributions. The economy as a whole shows a tendency towards overagglomeration for intermediate levels of trade costs.
26 citations
TL;DR: In this article, the authors consider a model where a population of agents play a coordination game over time, choosing both the action and the network of agents with whom to interact, and they show that when the cost of interacting with a different type is small with respect to the payoff of coordination, the payoff-dominant convention is the only stochastically stable convention; instead, when the costs for interacting with the different types are large, the only stable conventions are those where all agents of one type play the payoffdominant action and all players of the other play the risk-
Abstract: In this paper we study the typical dilemma of social coordination between a risk-dominant convention and a payoff-dominant convention. In particular, we consider a model where a population of agents play a coordination game over time, choosing both the action and the network of agents with whom to interact. The main modeling novelties with respect to the existing literature are: (1) Agents come in two distinct types, (2) the interaction with a different type is costly, and (3) an agent’s type is unobservable prior to interaction. We show that when the cost of interacting with a different type is small with respect to the payoff of coordination, the payoff-dominant convention is the only stochastically stable convention; instead, when the cost of interacting with a different type is large, the only stochastically stable conventions are those where all agents of one type play the payoff-dominant action and all agents of the other type play the risk-dominant action.
22 citations
TL;DR: In this paper, the authors developed an original analysis of deficit monetization in a growth model with transaction costs, in which economic growth interacts with productive public expenditures, and showed that multiplicity cannot be rejected if transaction costs affect both consumption and investment expenditures, with possible indeterminacy of the high BGP.
Abstract: This paper develops an original analysis of deficit monetization in a growth model with transaction costs, in which economic growth interacts with productive public expenditures. This interaction generates two positive balanced growth paths (BGP) in the long run: a high BGP and a low BGP. The transitional dynamics show that multiplicity cannot be rejected if transaction costs affect both consumption and investment expenditures, with possible indeterminacy of the high BGP. Importantly, deficit monetization is shown to reduce the parameter space producing indeterminacy.
22 citations
TL;DR: In this article, the reference transaction is endogenously set as part of a personal equilibrium and is based only on past purchases of same-quality products, assuming that consumers have an uncertain taste for quality and accounting for consumer loss aversion.
Abstract: The uniform pricing puzzle for vertically differentiated media and entertainment products (movies, books, music, mobile apps, etc) is that a firm with market power sells high- and low-quality products at the same price even though quality is perfectly observable and price adjustments are not costly We resolve this puzzle by assuming that consumers have an uncertain taste for quality and accounting for consumer loss aversion in monetary and consumption utilities The novelty of our approach is that the so-called reference transaction is endogenously set as part of a “personal equilibrium” and is based only on past purchases of same-quality products
21 citations
TL;DR: In this article, the authors proposed a non-Bayesian extension of EUT in which subjective probabilities are represented by quantum probabilities, while the preference relation between acts depends on the state of the situation that is the object of the decision.
Abstract: Expected utility theory (EUT) is widely used in economic theory. However, its subjective probability formulation, first elaborated by Savage, is linked to Ellsberg-like paradoxes and ambiguity aversion. This has led various scholars to work out non-Bayesian extensions of EUT which cope with its paradoxes and incorporate attitudes toward ambiguity. A variant of the Ellsberg paradox, recently proposed by Mark Machina and confirmed experimentally, challenges existing non-Bayesian models of decision-making under uncertainty. Relying on a decade of research which has successfully applied the formalism of quantum theory to model cognitive entities and fallacies of human reasoning, we put forward a non-Bayesian extension of EUT in which subjective probabilities are represented by quantum probabilities, while the preference relation between acts depends on the state of the situation that is the object of the decision. We show that the benefits of using the quantum theoretical framework enable the modeling of the Ellsberg and Machina paradoxes, as the representation of ambiguity and behavioral attitudes toward it. The theoretical framework presented here is a first step toward the development of a ‘state-dependent non-Bayesian extension of EUT,’ and it has potential applications in economic modeling.
21 citations
TL;DR: In this paper, the authors investigate the effect of increased transparency on prices in the Bertrand duopoly model and show that consumers tend to benefit from increased transparency in the form of increased consumer welfare and increased profits.
Abstract: We investigate the effects of increased transparency on prices in the Bertrand duopoly model. Market transparency is defined as the proportion of consumers that are fully informed about the market and thus not captive to one firm. We consider two main cases of strategic interaction, prices as strategic complements and as strategic substitutes. For the former class of games, conventional wisdom concerning prices is confirmed, in that they decrease with market transparency. Consumer welfare always increases with higher transparency but changes in firms’ profits are ambiguous. For the latter class of games, an increase in market transparency may lead to an increase in one of the prices, which implies ambiguous effects on both consumer welfare and firms’ profits. An example with linear demand for differentiated products is also investigated. The results of the paper shed light on the mixed evidence concerning the effects of the Internet on retail markets and may illuminate some of the ongoing related public policy debates.
19 citations
TL;DR: In this paper, the authors consider an exchange economy where agents have heterogeneous beliefs and assets are long-lived and investigate the coupled dynamics of asset prices and agents' wealth, and prove the existence and uniqueness of a sequence of arbitrage-free market equilibrium prices and provide sufficient conditions for an agent, or a group of agents, to survive or dominate.
Abstract: We consider an exchange economy where agents have heterogeneous beliefs and assets are long-lived, and investigate the coupled dynamics of asset prices and agents’ wealth. We assume that agents hold fixed-mix portfolios and invest on each asset proportionally to its expected dividends. We prove the existence and uniqueness of a sequence of arbitrage-free market equilibrium prices and provide sufficient conditions for an agent, or a group of agents, to survive or dominate. Our main finding is that long-run coexistence of agents with heterogeneous beliefs, leading to asset prices endogenous fluctuations, is a generic outcome of the market selection process.
19 citations
TL;DR: In this paper, the authors extend the Holmstrom and Milgrom model by introducing model uncertainty to study robust long-term contracting and focus on relative performance evaluation, and find that an ambiguity-averse principal increases the agent's exposure to the common shock by reducing the use of relative performance evaluations.
Abstract: We extend the Holmstrom and Milgrom (Econometrica 55:303–328, 1987) model by introducing model uncertainty to study robust long-term contracting and focus on relative performance evaluation Concerns regarding model misspecification induce a tradeoff between incentives and ambiguity sharing, which increases the pay-performance sensitivity When compensation contracts can be written on some additional signal, such as industry average performance, we find that an ambiguity-averse principal increases the agent’s exposure to the common shock by reducing the use of relative performance evaluation Thus, optimal contracting involves effectively paying for luck and our model provides a theoretical explanation for the well-documented lack of relative performance evaluation in CEO compensation from the perspective of model uncertainty
TL;DR: It is proved that every stable choice function is generated by a unique simple choice function, which never excludes more than one alternative, and which simple choice functions give rise to stable choice functions, and a strong relationship between stability and a new property of tournament solutions called local reversal symmetry is proved.
Abstract: A fundamental property of choice functions is stability, which, loosely speaking, prescribes that choice sets are invariant under adding and removing unchosen alternatives. We provide several structural insights that improve our understanding of stable choice functions. In particular, (1) we show that every stable choice function is generated by a unique simple choice function, which never excludes more than one alternative, (2) we completely characterize which simple choice functions give rise to stable choice functions, and (3) we prove a strong relationship between stability and a new property of tournament solutions called local reversal symmetry. Based on these findings, we provide the first concrete tournament—consisting of 24 alternatives—in which the tournament equilibrium set fails to be stable. Furthermore, we prove that there is no more discriminating stable tournament solution than the bipartisan set and that the bipartisan set is the unique most discriminating tournament solution which satisfies standard properties proposed in the literature.
TL;DR: In this article, the authors extend the analysis of price caps in oligopoly markets to allow for sunk entry costs and endogenous entry, and show that certain restrictions on the curvature of demand are sufficient to ensure the existence of a welfare-improving price cap when entry is endogenous.
Abstract: We extend the analysis of price caps in oligopoly markets to allow for sunk entry costs and endogenous entry. In the case of deterministic demand and constant marginal cost, reducing a price cap yields increased total output, consumer welfare, and total welfare, results consistent with those for oligopoly markets with a fixed number of firms. With deterministic demand and increasing marginal cost, these comparative static results may be fully reversed, and a welfare-improving cap may not exist. Recent results in the literature show that for a fixed number of firms, if demand is stochastic and marginal cost is constant, then lowering a price cap may either increase or decrease output and welfare (locally); however, a welfare-improving price cap does exist. In contrast to these recent results, we show that a welfare-improving cap may not exist if entry is endogenous. However, within this stochastic demand environment we show that certain restrictions on the curvature of demand are sufficient to ensure the existence of a welfare-improving cap when entry is endogenous.
TL;DR: In this article, the inside patent holders' optimal licensing problem of non-drastic and (super-) drastic innovations under incomplete information was considered, taking into account restrictions concerning royalty rates and the use of exclusive licenses implied by antitrust rules.
Abstract: We reconsider the inside patent holders’ optimal licensing problem of non-drastic and (super-) drastic innovations under incomplete information, taking into account restrictions concerning royalty rates and the use of exclusive licenses implied by antitrust rules. We employ methods developed in the analysis of license auctions with downstream interaction and optimal control theory. Our analysis differs from the literature which assumed particular patterns of cost reductions across firms induced by the innovation and either complete information or particular probability distributions.
TL;DR: In this paper, the authors analyze the implications of innovation and social interactions on economic growth in a stylized endogenous growth model with heterogeneous research firms and show that when the externality effect is strong enough multiple BGP equilibria may exist, they are metastable and cyclically fluctuate between the low and high BGP as a result of shocks affecting the individual behavior of research firms.
Abstract: We analyze the implications of innovation and social interactions on economic growth in a stylized endogenous growth model with heterogeneous research firms A large number of research firms decide whether to innovate or not, by taking into account what competitors (ie, other firms) do This is due to the fact that their profits partly depend on an externality related to the share of firms which actively engage in research activities Such a share of innovative firms also determines the evolution of technology in the macroeconomy, which ultimately drives economic growth We show that when the externality effect is strong enough multiple BGP equilibria may exist In such a framework, the economy may face a low growth trap suggesting that it may end up in a situation of slow long-run growth; however, such an outcome may be fully solved by government intervention We also show that whenever multiple BGP exist, they are metastable meaning that the economy may cyclically fluctuate between the low and high BGP as a result of shocks affecting the individual behavior of research firms
TL;DR: In this paper, regret-risk-averse and elation-riskseeking people behave as if they had rank-dependent utility preferences with an inverse-S shaped probability weighting function that reproduces estimates existing in the literature.
Abstract: We assume that the ex-post utility of an agent facing a menu of lotteries depends upon the actual payoff together with its forgone best alternative, thereby allowing for the expost emotion of regret. An increase in the risk of regret is obtained when the actual payoff and its forgone best alternative are statistically less concordant in the sense of Tchen (1980). The aversion to any such risk of regret is thus equivalent to the supermodularity of the bivariate utility function. We show that more regret-risk-averse agents are more willing to choose the risky act in a one-risky-one-safe menu, in particular when the payoff of the risky choice is highly skewed. This is compatible with the "possibility effect" that is well documented in prospect theory. Symmetrically, we define the aversion to elationrisk that can prevail when the ex-post utility is alternatively sensitive to the forgone worst payoff. We show that elation-risk-seeking is compatible with the "certainty effect". We finally show that regret-risk-averse and elation-risk-seeking people behave as if they had rank-dependent utility preferences with an inverse-S shaped probability weighting function that reproduces estimates existing in the literature.
TL;DR: In this article, preference for randomization in social settings was investigated, in which the dictator chooses probabilistically between two allocations for herself and an anonymous recipient, and substantial proportions of subjects choosing to randomize under various circumstances.
Abstract: We experimentally investigate preference for randomization in social settings, in which the dictator chooses probabilistically between two allocations for herself and an anonymous recipient. We observe substantial proportions of subjects choosing to randomize under various circumstances. The observed patterns have rich implications for various assumptions in social preference models and shed light on recent studies on ex-ante and ex-post social preferences.
TL;DR: The authors studied the effect of immigration on host countries' school system and student outcomes and found that there is a negative effect of immigrant pupils on native students and that the increasing shares of immigrant students are associated with the decline of school resources and quality.
Abstract: This paper presents a tractable model to study the effect of immigration on host countries’ school system and student outcomes. In our model, education quality and student outcomes are determined endogenously by the interaction of parents, schools and policy-makers deciding educational resources. Immigration decisions are based on economic factors, immigration policy, as well as on “parental motivation” (parents’ concerns about their children education achievement). The model yields results that are consistent with central empirical regularities of the school effects of immigration: (1) there is a negative effect of immigrant pupils on native students; (2) the increasing shares of immigrant students are associated with the decline of school resources and quality; (3) the school performance of immigrant children is positively associated with immigration costs; and (4) school achievement increases in parental motivation and those immigrant children with highly motivated parents tend to outperform native children. Importantly, our analysis clarifies under which conditions these empirical regularities take place and emphasizes that the effect of immigration on native pupils is mediated by the way the school system reacts to changes in class composition.
TL;DR: Field tests were conducted on two new information aggregation mechanism designs designed to collect information held as intuitions about opening weekend box office revenues for movies in Australia that produces a predicted probability distribution over box office amounts that is indistinguishable from the actual revenues.
Abstract: Field tests were conducted on two new information aggregation mechanism designs. The mechanisms were designed to collect information held as intuitions about opening weekend box office revenues for movies in Australia. The principles on which the mechanisms operate and their capacity to collect information are explored. A pari-mutuel mechanism produces a predicted probability distribution over box office amounts that is, with the exception of very small films, indistinguishable from the actual revenues. The second mechanism is based on guessing the guesses of others and when applied under conditions where incentives for accuracy are unavailable still performs well against data.
TL;DR: In this paper, the authors propose the needs priority rule to share the cost of unreliable non-rival projects (i.e., unreliable projects) between those who end up being served.
Abstract: Users share the cost of unreliable non-rival projects (items). For instance, industry partners pay today for RD the Needs Priority rule splits the cost first between those agents for whom an item is critical ex post, or if there are no such agents between those who end up being served.
TL;DR: In this paper, a theory of price discrimination based on consumer loss aversion is proposed, where a seller offers a menu of bundles before a consumer learns his willingness to pay, and the consumer experiences gain-loss utility with reference to his prior (rational) expectations about contingent consumption.
Abstract: This paper proposes a theory of price discrimination based on consumer loss aversion. A seller offers a menu of bundles before a consumer learns his willingness to pay, and the consumer experiences gain–loss utility with reference to his prior (rational) expectations about contingent consumption. With binary consumer types, the seller finds it optimal to abandon screening under an intermediate range of loss aversion if the low willingness-to-pay consumer is sufficiently likely. We also identify sufficient conditions under which partial or full pooling dominates screening with a continuum of types. Our predictions are consistent with several observed practices of price discrimination.
TL;DR: The authors analyzes the equilibrium and welfare properties of an economy characterized by uncertainty and payoff externalities using a general model that nests several applications and shows that the welfare effect of increasing the precision of the noise in the public signal has the same sign with endogenous or exogenous public information.
Abstract: This paper analyzes the equilibrium and welfare properties of an economy characterized by uncertainty and payoff externalities using a general model that nests several applications. Agents receive a private signal and an endogenous public signal, which is a noisy aggregate of individual actions, and causes an information externality. Agents in equilibrium underweight private information for a larger payoff parameter region in relation to when public information is exogenous. In addition, the socially optimal endogenous degree of coordination is lower than the socially optimal exogenous degree of coordination. The welfare effect of increasing the precision of the noise in the public signal has the same sign with endogenous or exogenous public information, but its magnitude differs. The social value of private information may be overturned in relation to when public information is exogenous: from positive to negative if agents in equilibrium coordinate more than is implied by the socially optimal exogenous degree of coordination, and the opposite if they coordinate less.
TL;DR: In this article, the authors characterize stochastic choice influenced by the objective or subjective positions of alternatives in a menu, and define an index of rationality that is relevant to a preference for commitment.
Abstract: The purpose of this study is to characterize stochastic choice influenced by the objective or subjective positions of alternatives in a menu. The main theorem axiomatizes the anticipated stochastic choice (ASC) representation, wherein the decision maker maximizes the expected utility by the cognitive control of a probability measure over mental states that trigger the ex post choice of alternatives. A key prerequisite for this axiomatization is that the randomization between menus is identified with their perfectly correlated mixture, which includes only mixtures of specific alternative pairs. The essential uniqueness of an ASC representation defines an index of rationality that is relevant to a preference for commitment. Special cases of ASC include exact utility maximization, uncontrolled stochastic choice, trembling hands, and choice with limited attention. Furthermore, ASC accommodates potentially stochastic choice anomalies such as the attraction effect, cyclical choice, and position effects.
TL;DR: In this paper, the authors consider two models of economic growth with exhaustible natural resources and agents heterogeneous in their time preferences and show that every competitive equilibrium converges to a balanced-growth equilibrium with the long-run rate of growth being determined by the discount factor of the most patient agents.
Abstract: We consider two models of economic growth with exhaustible natural resources and agents heterogeneous in their time preferences. In the first model, we assume private ownership of natural resources and show that every competitive equilibrium converges to a balanced-growth equilibrium with the long-run rate of growth being determined by the discount factor of the most patient agents. In the second model, natural resources are public property and the resource extraction rate is determined by majority voting. For this model, we define an intertemporal voting equilibrium and prove that it also converges to a balanced-growth equilibrium. In this scenario, the long-run rate of growth is determined by the median discount factor. Our results suggest that if the most patient agents do not constitute a majority of the population, private ownership of natural resources results in a higher rate of growth than public ownership. At the same time, private ownership leads to higher inequality than public ownership, and if inequality impedes growth, then the public property regime is likely to result in a higher long-run rate of growth. However, an appropriate redistributive policy can eliminate the negative impact of inequality on growth.
TL;DR: In this article, the authors characterize monotone comparative statics in different directions in finite-dimensional Euclidean space by extending the monotonicity theorem of Milgrom and Shannon (Econometrica 62(1):157-180, 1994) to constraint sets ordered in Quah's set order.
Abstract: Many questions of interest in economics can be stated in terms of monotone comparative statics: If a parameter of a constrained optimization problem increases, when does its solution increase as well. We characterize monotone comparative statics in different directions in finite-dimensional Euclidean space by extending the monotonicity theorem of Milgrom and Shannon (Econometrica 62(1):157–180, 1994) to constraint sets ordered in Quah (Econometrica 75(2):401–431, 2007)’s set order. Our characterizations are ordinal and retain the same flavor as their counterparts in the standard theory, showing new connections to the standard theory and presenting new results. The results are highlighted with several applications (in consumer theory, producer theory, and game theory) which were previously outside the scope of the standard theory of monotone comparative statics.
TL;DR: This article showed that the discrete-time version of the one-sector optimal growth model with elastic labor supply and standard monotonicity and convexity assumptions on technology and preferences can have periodic solutions of any period as well as chaotic solutions.
Abstract: It is shown that the discrete-time version of the neoclassical one-sector optimal growth model with elastic labor supply and standard monotonicity and convexity assumptions on technology and preferences can have periodic solutions of any period as well as chaotic solutions. The optimality of these non-monotonic solutions is traced back to strong income effects. When technology and preferences are parameterized as it is commonly done in quantitative macroeconomic studies, these phenomena cannot occur.
TL;DR: The authors showed that under choice-unacclimating (i.e., fixed) expectations both symmetric and asymmetric equilibria exist for all degrees of loss aversion, and that a symmetric equilibrium also exists if players follow their preferred credible plan and the weight attached to psychological gain-loss utility does not strongly outweigh the weight put on material utility.
Abstract: Many insights regarding rank-order tournaments rest upon contestants’ behavior in symmetric equilibria. As shown by Gill and Stone (Games Econ Behav 69:346–364, 2010), however, symmetric equilibria may not exist if contestants are expectation-based loss averse and have choice-acclimating expectations. We show that under choice-unacclimating—i.e., fixed—expectations both symmetric and asymmetric equilibria exist for all degrees of loss aversion. Importantly, a symmetric equilibrium also exists if players follow their preferred credible plan and the weight attached to psychological gain–loss utility does not strongly outweigh the weight put on material utility. Hence, for fixed expectations a focus on symmetric equilibria seems justifiable even if contestants are expectation-based loss averse.
TL;DR: In this paper, the authors focus on strategic voters who have a preference for strategic ambiguity, and show that the amount of disclosure may have a non-monotonic effect on both the accuracy of the decision and the welfare of the voters.
Abstract: When committees make decisions, voting rules are coupled with one of three disclosure rules: open voting, in which each committee member’s individual vote is revealed; anonymous voting, in which only an anonymized tally is publicized; and secret voting, in which only the outcome is disclosed. I focus on strategic voters who have a preference for strategic ambiguity, and show that the amount of disclosure may have a non-monotonic effect on both the accuracy of the decision and the welfare of the voters. In particular, anonymous voting can yield both lower accuracy and higher welfare than both open and secret voting.
TL;DR: In this article, a decomposition into maximal domains of comparability is characterized and used to link optimization of incomplete preferences with maximization of local utility functions, and larger maximal domains correspond to more decisive preferences.
Abstract: I study incomplete preferences as a means to represent indecisiveness. A decomposition into maximal domains of comparability is characterized and used to link optimization of incomplete preferences with maximization of local utility functions. Larger maximal domains are shown to correspond to more decisive preferences. The decomposition can be uniquely recovered from choice data under standard assumptions. Applications to different models within decision theory are discussed.
TL;DR: In this article, a multistep monotone map approach is developed to characterize minimal state-space recursive equilibrium for a broad class of infinite horizon dynamic general equilibrium models with positive externalities, dynamic complementarities, public policy, equilibrium indeterminacy, and sunspots.
Abstract: We develop a new multistep monotone map approach to characterize minimal state-space recursive equilibrium for a broad class of infinite horizon dynamic general equilibrium models with positive externalities, dynamic complementarities, public policy, equilibrium indeterminacy, and sunspots. This new approach is global, defined in the equilibrium version of the household’s Euler equation, applies to economies for which there are no known existence results, and existing methods are inapplicable. Our methods are able to distinguish different structural properties of recursive equilibria. In stark contrast to the extensive body of existing work on these models, our methods make no appeal to the theory of smooth dynamical systems that are commonly applied in the literature. Actually, sufficient smoothness to apply such methods cannot be established relative to the set of recursive equilibria. Our partial ordering methods also provide a qualitative theory of equilibrium comparative statics in the presence of multiple equilibrium. These robust equilibrium comparison results are shown to be computable via successive approximations from subsolutions and supersolutions in sets of candidate equilibrium function spaces. We provide applications to an extensive literature on local indeterminacy of dynamic equilibrium.