Theoretical Economics

doi: 10.3982/TE133FMpmid: N/A

doi: 10.3982/TE133BMpmid: N/A

Gallo, Oihane; Inarra, Elena

doi: 10.3982/TE2870pmid: N/A

This paper introduces a model of coalition formation with claims. It assumes that agents have claims over the outputs that they could produce by forming coalitions. Outputs are insufficient to meet the claims and are rationed by a rule whose proposals of division induce each agent to rank the coalitions in which she can participate. As a result, a hedonic game of coalition formation emerges. Using resource monotonicity and consistency, we characterize the continuous rationing rules that induce hedonic games that admit core stability.

Olszewski, Wojciech; Safronov, Mikhail

doi: 10.3982/TE2434pmid: N/A

We study a class of chip strategies in repeated games of incomplete information. This class generalizes the strategies studied by Möbius () in the context of a favor‐exchange model and the strategies studied in our companion paper, Olszewski and Safronov (). In two‐player games, if players have private values and their types evolve according to independent Markov chains, then under very mild conditions on the stage game, the efficient outcome can be approximated by chip‐strategy equilibria when the discount factor tends to 1. We extend this result (assuming stronger conditions) to stage games with any number of players. Chip strategies can be viewed as a positive model of repeated interactions, and the insights from our analysis seem applicable in similar contexts, not covered by the present analysis.

Phelan, Christopher; Rustichini, Aldo

doi: 10.3982/TE2719pmid: N/A

This paper examines the set of Pareto efficient allocations in a finite period Mirrlees economy; each period represents a lifetime for an agent who cares about the utility of his descendants. In making Pareto comparisons, we use an interim concept of efficiency and consider an individual as indexed not only by his date of birth but also by the history of events up to his birth, including his own type. That is, we assume the child of a high skilled parent is a different person than the child of a low skilled parent, even if both children have the same skill level. Our contributions are characterization of these efficient allocations and their implementation.

Ehlers, Lars; Westkamp, Alexander

doi: 10.3982/TE2547pmid: N/A

A set of indivisible objects is allocated among agents with strict preferences. Each object has a weak priority ranking of the agents. A collection of priority rankings, a priority structure, is solvable if there is a strategy‐proof mechanism that is constrained efficient, i.e., that always produces a stable matching that is not Pareto‐dominated by another stable matching. We characterize all solvable priority structures satisfying the following two restrictions: (A)Either there are no ties or there is at least one four‐way tie.(B)For any two agents i and j, if there is an object that assigns higher priority to i than to j, there is also an object that assigns higher priority to j than to i. We show that there are at most three types of solvable priority structures: The strict type, the house allocation with existing tenants (HET) type, where, for each object, there is at most one agent who has strictly higher priority than another agent, and the task allocation with unqualified agents (TAU) type, where, for each object, there is at most one agent who has strictly lower priority than another agent. Out of these three, only HET priority structures are shown to admit a strongly group‐strategy‐proof and constrained efficient mechanism.

Cherchye, Laurens; Demuynck, Thomas; De Rock, Bram

doi: 10.3982/TE2733pmid: N/A

We define necessary and sufficient conditions on prices and incomes under which quantity choices can violate SARP (strong axiom of revealed preference) but not WARP (weak axiom of revealed preference). As SARP extends WARP by additionally imposing transitivity on the revealed preference relation, this effectively defines the conditions under which transitivity adds bite to the empirical analysis. For finite data sets, our characterization takes the form of a triangular condition that must hold for all three‐element subsets of normalized prices, and which is easy to verify in practice. For infinite data sets, we formally establish an intuitive connection between our characterization and the concept of Hicksian aggregation. We demonstrate the practical use of our conditions through two empirical illustrations.

Roketskiy, Nikita

doi: 10.3982/TE2492pmid: N/A

I develop a model of collaboration between tournament participants in which agents collaborate in pairs, and an endogenous structure of collaboration is represented by a weighted network. The agents are forward‐looking and capable of coordination; they value collaboration with others and higher tournament rankings. I use von Neumann–Morgenstern stable sets as a solution. I find stable networks in which agents collaborate only within exclusive groups. Both an absence of intergroup collaboration and excessive intragroup collaboration lead to inefficiency. I provide a necessary and sufficient condition for the stability of efficient outcomes in winner‐takes‐all tournaments. I show that the use of transfers does not repair efficiency.

Bardhi, Arjada; Guo, Yingni

doi: 10.3982/TE2834pmid: N/A

A fully committed sender seeks to sway a collective adoption decision through designing experiments. Voters have correlated payoff states and heterogeneous thresholds of doubt. We characterize the sender‐optimal policy under unanimity rule for two persuasion modes. Under general persuasion, evidence presented to each voter depends on all voters' states. The sender makes the most demanding voters indifferent between decisions, while the more lenient voters strictly benefit from persuasion. Under individual persuasion, evidence presented to each voter depends only on her state. The sender designates a subgroup of rubber‐stampers, another of fully informed voters, and a third of partially informed voters. The most demanding voters are strategically accorded high‐quality information.

Martimort, David; Semenov, Aggey; Stole, Lars A.

doi: 10.3982/TE2266pmid: N/A

We characterize the complete set of equilibrium allocations to an intrinsic common agency screening game as the set of solutions to self‐generating optimization programs. We provide a complete characterization of equilibrium outcomes for regular environments by relying on techniques developed elsewhere for aggregate games and for the mechanism design delegation literature. The set of equilibria includes those with nondifferentiable payoffs and discontinuous choices, as well as equilibria that are smooth and continuous in types. We identify one equilibrium, the maximal equilibrium, which is the unique solution to a self‐generating optimization program with the largest (or “maximal”) domain, and the only equilibrium that is supported with biconjugate (i.e., least‐concave) tariffs. The maximal equilibrium exhibits a n‐fold distortion caused by each of the n principal's non‐cooperative behavior in overharvesting the agent's information rent. Furthermore, in any equilibrium, over any interval of types in which there is full separation, the agent's equilibrium action corresponds to the allocation in the maximal equilibrium. Under reasonable conditions, the maximal equilibrium maximizes the agent's information rent within the class of equilibrium allocations. When the principals' most‐preferred equilibrium allocation differs from the maximal equilibrium, we demonstrate that the agent's choice function exhibits an interval of bunching over the worst agent types, and elsewhere corresponds to the maximal allocation. The optimal region of bunching trades off the principals' desire to constrain inefficient n‐fold marginalizations of the agent's rent against the inefficiency of pooling agent types.