Theoretical Economics

doi: 10.3982/te164bmpmid: N/A

doi: 10.3982/te164fmpmid: N/A

Kumar, Ujjwal; Roy, Souvik; Sen, Arunava; Yadav, Sonal; Zeng, Huaxia

doi: 10.3982/te4177pmid: N/A

The paper considers a voting model where each voter's type is her preference. The type graph for a voter is a graph whose vertices are the possible types of the voter. Two vertices are connected by an edge in the graph if the associated types are “neighbors.” A social choice function is locally strategy‐proof if no type of a voter can gain by misrepresentation to a type that is a neighbor of her true type. A social choice function is strategy‐proof if no type of a voter can gain by misrepresentation to an arbitrary type. Local‐global equivalence (LGE) is satisfied if local strategy‐proofness implies strategy‐proofness. The paper identifies a condition on the graph that characterizes LGE. Our notion of “localness” is perfectly general. We use this feature of our model to identify notions of localness according to which various models of multidimensional voting satisfy LGE. Finally, we show that LGE for deterministic social choice functions does not imply LGE for random social choice functions.

Barelli, Paulo; Duggan, John

doi: 10.3982/te3243pmid: N/A

Harris, Reny, and Robson (1995) added a public randomization device to dynamic games with almost perfect information to ensure existence of subgame perfect equilibria (SPE). We show that when Nature's moves are atomless in the original game, public randomization does not enlarge the set of SPE payoffs: any SPE obtained using public randomization can be “decorrelated” to produce a payoff‐equivalent SPE of the original game. As a corollary, we provide an alternative route to a result of He and Sun (2020) on existence of SPE without public randomization, which in turn yields equilibrium existence for stochastic games with weakly continuous state transitions.

Doğan, Battal; Ehlers, Lars

doi: 10.3982/te4257pmid: N/A

We investigate efficient and minimally unstable Pareto improvements over the deferred acceptance (DA) mechanism—a popular school choice mechanism that is stable but not efficient. We show that there is no Pareto improvement over the DA mechanism that is minimally unstable among efficient assignments when the stability comparison is based on counting the number of blocking pairs. Our main result characterizes the priority profiles for which there exists a Pareto improvement over the DA assignment that is minimally unstable among efficient assignments. We further consider an alternative natural stability comparison based on the set of blocking students who are involved in at least one blocking pair, show that the impossibilities remain, and characterize the possibility domain of priority profiles.

Garrett, Daniel F.

doi: 10.3982/te4293pmid: N/A

In the context of a canonical agency model, we study the payoff implications of introducing optimally structured incentives. We do so from the perspective of an analyst who does not know the agent's preferences for responding to incentives, but does know that the principal knows them. We provide, in particular, tight bounds on the principal's expected benefit from optimal incentive contracting across feasible values of the agent's expected rents. We thus show how economically relevant predictions can be made robustly given ignorance of a key primitive.

Azrieli, Yaron

doi: 10.3982/te4017pmid: N/A

We study the design of contracts that incentivize experts to collect information and truthfully report it to a decision maker. We depart from most of the previous literature by assuming that the transfers cannot depend on the realized state or on the ex post payoff of the decision maker. The contract thus has to induce the experts to “monitor each other” by making the transfers contingent on the entire vector of reports. We characterize the least costly contract that implements any given vector of efforts and derive the cost function for the decision maker. We then study properties of optimal contracts by comparing the value of information and its cost.

Kivinen, Steven; Tumennasan, Norovsambuu

doi: 10.3982/te4229pmid: N/A

Strategy‐proofness (SP) is a sought‐after property in social choice functions because it ensures that agents have no incentive to misrepresent their private information at both the interim and ex post stages. Group strategy‐proofness (GSP), however, is a notion that is applied to the ex post stage but not to the interim stage. Thus, we propose a new notion of GSP, coined robust group strategy‐proofness (RGSP), which ensures that no group benefits by deviating from truth telling at the interim stage. We show for the provision of a public good that the Minimum Demand rule (Serizawa (1999)) satisfies RGSP when the production possibilities set satisfies a particular topological property. In the problem of allocating indivisible objects, an acyclicity condition on the priorities is both necessary and sufficient for the Deferred Acceptance rule to satisfy RGSP, but is only necessary for the Top Trading Cycles rule. For the allocation of divisible private goods among agents with single‐peaked preferences (Sprumont (1991)), only free disposal, group replacement monotonic rules within the class of sequential allotment rules satisfy RGSP.

Kolotilin, Anton; Li, Hongyi

doi: 10.3982/te3734pmid: N/A

We study a communication game between an informed sender and an uninformed receiver with repeated interactions and voluntary transfers. Transfers motivate the receiver's decision‐making and signal the sender's information. Although full separation can always be supported in equilibrium, partial or complete pooling is optimal if the receiver's decision‐making is highly responsive to information. In this case, the receiver's decision‐making is disciplined by pooling states where she is most tempted to defect.

Schlag, Karl H.; Zapechelnyuk, Andriy

doi: 10.3982/te3994pmid: N/A

We study sequential search without priors. Our interest lies in decision rules that are close to being optimal under each prior and after each history. We call these rules robust. The search literature employs optimal rules based on cutoff strategies, and these rules are not robust. We derive robust rules and show that their performance exceeds 1/2 of the optimum against binary independent and identically distributed (i.i.d.) environments and 1/4 of the optimum against all i.i.d. environments. This performance improves substantially with the outside option value; for instance, it exceeds 2/3 of the optimum if the outside option exceeds 1/6 of the highest possible alternative.