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1.
《Theoretical Economics》2017,12(1):331-376
Modern economies rely heavily on their infrastructure networks. These networks face threats ranging from natural disasters to human attacks. As networks are pervasive, the investments needed to protect them are very large; this motivates the study of targeted defense. What are the “key” nodes to defend to maximize functionality of the network? What are the incentives of individual nodes to protect themselves in a networked environment and how do these incentives correspond to collective welfare? We first provide a characterization of optimal attack and defense in terms of two classical concepts in graph theory: separators and transversals. This characterization permits a systematic study of the intensity of conflict (the resources spent on attack and defense) and helps us identify a new class of networks—windmill graphs—that minimize conflict. We then study security choices by individual nodes. Our analysis identifies the externalities and shows that the welfare costs of decentralized defense in networks can be very large. 相似文献
2.
We characterize a class of dynamic stochastic games that we call separable dynamic games with noisy transitions and establish that these widely used models are protocol invariant provided that periods are sufficiently short. Protocol invariance means that the set of Markov perfect equilibria is nearly the same irrespective of the order in which players are assumed to move within a period. Protocol invariance can facilitate applied work, and renders the implications and predictions of a model more robust. Our class of dynamic stochastic games includes investment games, research and development races, models of industry dynamics, dynamic public contribution games, asynchronously repeated games, and many other models from the extant literature. 相似文献
3.
《Theoretical Economics》2018,13(2):729-760
This paper builds coordination costs, transaction costs, and other aspects of the theory of the firm into a production chain model with an infinite number of ex ante identical producers. The equilibrium determines prices, allocations of productive tasks across firms, firm sizes, and the number of active firms. These prices and allocations match several stylized facts on firm boundaries, vertical integration, and division of the value chain. 相似文献
4.
Under the assumption that individuals know the conditional distributions of signals given the payoff‐relevant parameters, existing results conclude that as individuals observe infinitely many signals, their beliefs about the parameters will eventually merge. We first show that these results are fragile when individuals are uncertain about the signal distributions: given any such model, vanishingly small individual uncertainty about the signal distributions can lead to substantial (nonvanishing) differences in asymptotic beliefs. Under a uniform convergence assumption, we then characterize the conditions under which a small amount of uncertainty leads to significant asymptotic disagreement. 相似文献
5.
《Theoretical Economics》2017,12(2):513-531
Group identification refers to the problem of classifying individuals into groups (e.g., racial or ethnic classification). We consider a multinary group identification model where memberships to three or more groups are simultaneously determined based on individual opinions on who belong to what groups. Our main axiom requires that membership to each group, say the group of J's, should depend only on the opinions on who is a J and who is not (that is, independently of the opinions on who is a K or an L). This shares the spirit of Arrow's independence of irrelevant alternatives and, therefore, is termed independence of irrelevant opinions. Our investigation of multinary group identification and the independence axiom reports a somewhat different message from the celebrated impossibility result by Arrow (1951). We show that the independence axiom, together with symmetry and non‐degeneracy, implies the liberal rule (each person self‐determines her own membership). This characterization provides a theoretical foundation for the self‐identification method commonly used for racial or ethnic classifications. 相似文献
6.
《Theoretical Economics》2017,12(2):731-770
In many markets, sellers advertise their good with an asking price. This is a price at which the seller will take his good off the market and trade immediately, though it is understood that a buyer can submit an offer below the asking price and that this offer may be accepted if the seller receives no better offers. We construct an environment with a few simple, realistic ingredients and demonstrate that, by using an asking price, sellers both maximize their revenue and implement the efficient outcome in equilibrium. We provide a complete characterization of this equilibrium and use it to explore the implications of this pricing mechanism for transaction prices and allocations. 相似文献
7.
《Theoretical Economics》2017,12(3):1349-1391
This paper provides a complete characterization of equilibria in a game‐theoretic version of Rothschild and Stiglitz's (1976) model of competitive insurance. I allow for stochastic contract offers by insurance firms and show that a unique symmetric equilibrium always exists. Exact conditions under which the equilibrium involves mixed strategies are provided. The mixed equilibrium features (i) cross‐subsidization across risk levels, (ii) dependence of offers on the risk distribution, and (iii) price dispersion generated by firm randomization over offers. 相似文献
8.
《Theoretical Economics》2017,12(2):863-908
Distributional constraints are important in many market design settings. Prominent examples include the minimum manning requirements at each Army branch in military cadet matching and diversity considerations in school choice, whereby school districts impose constraints on the demographic distribution of students at each school. Standard assignment mechanisms implemented in practice are unable to accommodate these constraints. This leads policymakers to resort to ad hoc solutions that eliminate blocks of seats ex ante (before agents submit their preferences) to ensure that all constraints are satisfied ex post (after the mechanism is run). We show that these current solutions ignore important information contained in the submitted preferences, resulting in avoidable inefficiency. We then introduce new dynamic quotas mechanisms that result in Pareto superior allocations while at the same time respecting all distributional constraints and satisfying important fairness and incentive properties. We expect the use of our mechanisms to improve the performance of matching markets with distributional constraints in the field. 相似文献
9.
Makoto Nirei 《Theoretical Economics》2015,10(3):953-985
This study demonstrates that the interactions of firm‐level indivisible investments give rise to aggregate fluctuations without aggregate exogenous shocks. When investments are indivisible, aggregate capital is determined by the number of firms that invest. I develop a method to derive the closed‐form distribution of the number of investing firms when each firm's initial capital level varies stochastically. This method shows that idiosyncratic shocks may lead to nonvanishing aggregate fluctuations when the number of firms tends to infinity. I incorporate this mechanism in a dynamic general equilibrium model with indivisible investment and predetermined goods prices. The model features no aggregate exogenous shocks, and the fluctuation is driven by idiosyncratic productivity shocks. Numerical simulations show that the model generates aggregate fluctuations comparable to the business cycles in magnitude and correlation structure under standard calibration. 相似文献
10.
《Theoretical Economics》2017,12(3):1057-1087
I propose a simple model of signed network formation, where agents make friends to extract payoffs from weaker enemies. The model thereby accounts for the interplay between friendship and alliance on one hand and enmity and antagonism on the other. Nash equilibrium configurations are such that either everyone is friends with everyone or agents can be partitioned into different sets, where agents within the same set are friends and agents in different sets are enemies. Any strong Nash equilibrium must be such that a single agent is in an antagonistic relationship with everyone else. Furthermore, I show that Nash equilibria cannot be Pareto ranked. This paper offers a game‐theoretic foundation for a large body of work on signed networks, called structural balance theory, which has been studied in sociology, social psychology, bullying, international relations, and applied physics. The paper also contributes to the literature on contests and economics of conflict. 相似文献
11.
We study optimal incentive contracts with multiple agents when performance is evaluated by a reviewer. The reviewer may be biased in favor of the agents, but the degree of bias is unknown to the principal. We show that a contest, which is a contract in which the principal fixes a set of prizes to be allocated to the agents, is optimal. By using a contest, the principal can commit to sustaining incentives despite the reviewer's potential leniency bias. The optimal effort profile can be uniquely implemented by an all‐pay auction with a cap. Our analysis has implications for various applications, such as the design of worker compensation or the allocation of research grants. 相似文献
12.
《Theoretical Economics》2018,13(1):39-60
The case for progressive income taxation is often based on the classic result of Jakobsson, 1976 and Fellman, 1976, according to which progressive and only progressive income taxes—in the sense of increasing average tax rates on income—ensure a reduction in income inequality. This result has been criticized on the grounds that it ignores the possible disincentive effect of taxation on work effort, and the resolution of this critique has been a longstanding problem in public finance. This paper provides a normative rationale for progressivity that takes into account the effect of an income tax on labor supply. It shows that a tax schedule is inequality reducing only if it is progressive—in the sense of increasing marginal tax rates on income—and identifies a necessary and sufficient condition on primitives under which progressive and only progressive taxes are inequality reducing. 相似文献
13.
We propose the use of machine learning methods to estimate inequality of opportunity and to illustrate that regression trees and forests represent a substantial improvement over existing approaches: they reduce the risk of ad hoc model selection and trade off upward and downward bias in inequality of opportunity estimates. The advantages of regression trees and forests are illustrated by an empirical application for a cross-section of 31 European countries. We show that arbitrary model selection might lead to significant biases in inequality of opportunity estimates relative to our preferred method. These biases are reflected in both point estimates and country rankings. 相似文献
14.
This paper explores the dynamics of nation‐building policies and the conditions under which a state can promote a shared national identity on its territory. A forward‐looking central government that internalizes identity dynamics shapes them by choosing the level of state centralization. Homogenization attempts are constrained by political unrest, electoral competition and the intergenerational transmission of identities within the family. We find nation‐building efforts are generally characterized by fast interventions. We show that a zero‐sum conflict over resources pushes long‐run dynamics toward homogeneous steady states and extreme levels of (de)centralization. We also find the ability to foster a common identity is highly dependent on initial conditions, and that country‐specific historical factors can have a lasting impact on the long‐run distribution of identities. 相似文献
15.
We present a generalization of the standard random‐search model of unemployment in which firms hire multiple workers and in which the hiring process is time‐consuming as well as costly. We follow Stole and Zwiebel (1996a, 1996b) and assume that wages are determined by continuous bargaining between the firm and its employees. The model generates a nontrivial dispersion of firm sizes; when firms' production technologies exhibit decreasing returns to labor, it also generates wage dispersion, even when all firms and all workers are ex ante identical. We characterize the steady‐state equilibrium and show that, with a suitably chosen distribution of ex ante heterogeneity across firms, it is consistent with several important stylized facts about the joint distribution of firm size, firm growth, and wages in the U.S. economy. We also conduct a numerical investigation of the out‐of‐steady‐state dynamics of our model. We find that the responses of unemployment and of the vacancy‐to‐unemployment ratio to a shock to labor productivity can be somewhat more persistent than in the Mortensen–Pissarides benchmark where each firm employs a single worker. 相似文献
16.
Consider the problem of maximizing the revenue from selling a number of goods to a single buyer. We show that, unlike the case of one good, when the buyer's values for the goods increase, the seller's maximal revenue may well decrease. We then identify two circumstances where monotonicity does obtain: when optimal mechanisms are deterministic and symmetric, and when they have submodular prices. Next, through simple and transparent examples, we clarify the need for and the advantage of randomization when maximizing revenue in the multiple‐good versus the one‐good case. Finally, we consider “seller‐favorable” mechanisms, the only ones that matter when maximizing revenue. They are essential for our positive monotonicity results, and they also circumvent well known nondifferentiability issues. 相似文献
17.
《Theoretical Economics》2018,13(2):697-727
How much information should a central bank (CB) have about (i) policy objectives and (ii) operational shocks to the effect of monetary policy? We consider a version of the Barro–Gordon credibility problem in which monetary policy signals an inflation‐biased CB's private information on both these dimensions. We find that greater CB competence—more private information—about policy objectives is desirable while greater competence about operational shocks need not be. When the CB has less private information about operational shocks, the public infers that monetary policy depends more on the CB's information about objectives. Inflation expectations become more responsive to monetary policy, which mitigates the CB's temptation to produce surprise inflation. 相似文献
18.
We show that the class of preferences satisfying the gross substitutes condition of [Kelso and Crawford, 1982] is strictly larger than the class of endowed assignment valuations of [Hatfield and Milgrom, 2005], thus resolving the open question posed by the latter paper. In particular, our result implies that not every substitutable valuation function can be “decomposed” into a combination of unit‐demand valuations. 相似文献
19.
We develop a tractable dynamic model of productivity growth and technology spillovers that is consistent with the emergence of real world empirical productivity distributions. Firms can improve productivity by engaging in in‐house research and developmenmt (R&D) or, alternatively, by trying to imitate other firms' technologies, subject to the limits of their absorptive capacities. The outcome of both strategies is stochastic. The choice between in‐house R&D and imitation is endogenous, and is based on firms' profit maximization motive. Firms closer to the technological frontier face fewer imitation opportunities, and choose in‐house R&D, while firms farther from the frontier try to imitate more productive technologies. The resulting balanced‐growth equilibrium features persistent productivity differences even when starting from ex ante identical firms. The long‐run productivity distribution can be described as a traveling wave with tails following a Pareto distribution as can be observed in the empirical data. 相似文献
20.
Mira Frick 《Theoretical Economics》2016,11(3):757-772
Motivated by the literature on “choice overload,” we study a boundedly rational agent whose choice behavior admits a monotone threshold representation: There is an underlying rational benchmark, corresponding to maximization of a utility function v, from which the agent's choices depart in a menu‐dependent manner. The severity of the departure is quantified by a threshold map δ, which is monotone with respect to set inclusion. We derive an axiomatic characterization of the model, extending familiar characterizations of rational choice. We classify monotone threshold representations as a special case of Simon's theory of “satisficing,” but as strictly more general than both Tyson's (2008) “expansive satisficing” model as well as Fishburn, 1975 and Luce's (1956) model of choice behavior generated by a semiorder. We axiomatically characterize the difference, providing novel foundations for these models. 相似文献