Review of Economic Design 

About: Review of Economic Design is an academic journal published by Springer Science+Business Media. The journal publishes majorly in the area(s): Common value auction & Nash equilibrium. It has an ISSN identifier of 1434-4742. Over the lifetime, 522 publications have been published receiving 7315 citations.

The Theory of Contests: a survey

Abstract: This paper provides an introduction to the theory of contests in a unified framework. In particular we present the basic model and study its main properties from which we derive various applications. The literature on this topic is vast and we make no attempt to cover all issues. Therefore many good papers and interesting topics are not covered. The interested reader can consult the surveys of Nitzan (1994) and Konrad (2006) for additional issues and references. A part of economics (e.g., general equilibrium) studies situations where property rights are well defined and agents voluntarily trade rights over goods or produce rights for new goods. This approach has produced very important insights into the role of markets in resource allocation such as the existence and efficiency of competitive equilibrium, the optimal specialization under international trade, the role of prices in providing information to the agents, etc. There are other situations, though, where agents do not trade but rather fight over property rights. In these situations agents can influence the outcome of the process by means of certain actions such as investment in weapons, bribing judges/politicians, hiring lawyers, etc. These situations are called Contests. The literature has developed

Social and institutional factors as determinants of economic growth: Evidence from the United States counties*

Abstract: In the search for explanations of persistent differences in economic growth rates, the conditional convergence growth model has introduced the possibility of incorporating a wide set of factors as determinants of growth. Controlling for spatial dependence, we assess the contribution of differences in social and institutional variables on growth rates of per capita income for counties in the United States. The empirical results indicate that, ceteris paribus, social and institutio variables explain some of the differences in convergence rates among counties. In particular, (i) ethnic diversity is associated with faster rates of economic growth; (ii) higher levels of income inequality are associated with lower rates; and (iii) higher levels of social capital have a positive effect on economic growth rates.

Spatial Social Networks

Abstract: We introduce a spatial cost topology in the network formation model analyzed by Jackson and Wolinsky, Journal of Economic Theory (1996), 71: 44–74. This cost topology might represent geographical, social, or individual differences. It describes variable costs of establishing social network connections. Participants form links based on a cost-benefit analysis. We examine the pairwise stable networks within this spatial environment. Incentives vary enough to show a rich pattern of emerging behavior. We also investigate the subgame perfect implementation of pairwise stable and efficient networks. We construct a multistage extensive form game that describes the formation of links in our spatial environment. Finally, we identify the conditions under which the subgame perfect Nash equilibria of these network formation games are stable.

Auctions with endogenous participation

Abstract: We study endogenous-participation auctions where bidders only know the number of potential participants. After seeing their values for the object, potential participants decide whether or not to enter the auction. They may not want to enter the auction since they have to pay participation costs. We characterize equilibrium bidding strategies and entry decisions for both first- and second-price sealed-bid auctions when participation is endogenous. We show that there is a pure strategy entry equilibrium where only bidders with values greater than a certain cut-off point actually bid. In this context, both types of auctions generate the same expected revenue. We also show that, contrary to the predictions of the fixed number of bidders literature, the seller's expected revenue may decrease when the number of potential participants increases. In addition, we show that it is optimal for the seller to charge an entry fee, which contrasts with results from the existing literature on auctions with entry. As in the fixed-n literature, we show that first-price auctions generate more expected revenue than second-price auctions when buyers are risk-averse. Finally, we characterize the optimal auction – the auction that maximizes the seller's expected revenue – by using a direct revelation mechanism. The optimal auction involves a reserve price larger than the optimal reserve price in the fixed-n literature. The winner's payment is the second highest bid less the participation cost and losers receive a subsidy equal to the participation cost.

A strategic analysis of network reliability

Abstract: We consider a non-cooperative model of information networks where communication is costly and not fully reliable. We examine the nature of Nash networks and efficient networks.