Are serial Condorcet rules strategy-proof?

Abstract. This paper explores the extent to which majority rule is invulnerable to manipulation by individuals and coalitions, even when majority rule is used to select more than one alternative. The resulting rule may or may not be strategy-proof, depending on the size of the coalitions that can form, and on the nature of the individual preferences over sets of alternatives. No individual can manipulate with respect to a wide family of preferences over sets. The only restriction on the domain of true and revealed individual preferences is that the selection rule is always well defined. Received: 1 November 1999 / Accepted: 7 May 2001 We thank two anonymous referees for suggestions that have significantly improved the paper. We are also grateful to l'Université de Caen for sponsoring a Workshop on Social Choice Theory, where a first draft of this paper was presented in May, 1999, and to the workshop participants for helpful observations. Work on the final version of the paper was done while one of the authors was a guest of the Project on Intergenerational Equity supported by the Ministry of Education, Science, and Technology of Japan. We are grateful to the Ministry and to the project leader, Professor Kotaro Suzumura, for their support.     

Organizational response to environmental regulation: punctuated change or autogenesis?

Theory predicts that when faced with threatening new conditions, managers often attempt to preserve the status quo by creating a buffer between the organization and the outside world. This paper presents evidence that in response to new water pollution regulation, managers indeed created buffers of technology and personnel, but in some organizations this very equipment and personnel initiated a process of incremental change that led to better environmental protection, more efficient production, and in a few cases, entirely new product and production strategies. For public policy, this research suggests that environmental regulators should allow companies time and flexibility to learn and experiment. For organizational theory, this research suggests a link between punctuated‐equilibrium models of organizational dynamics ( Tushman and Romanelli, 1985 ) and theories of self‐organizing systems ( Drazin and Sandelands, 1992 ). That is, management may respond to external changes by attempting to preserve the status quo, but in so doing influence internal deep structures that then cause organizations to gradually evolve to different behaviours and shapes. Copyright © 2000 John Wiley & Sons, Ltd. and ERP Environment     

Some corrections to claims about the literature in Engl and Scotchmer (1996)

Some assertions in Engl and Scotchmer [J. Math. Econ. 26 (1996) 209] concerning prior literature are corrected. In addition, I discuss the differences between the convergence results of Engl and Scotchmer [J. Math. Econ. 26 (1996) 209], and those of this author, alone and with Martin Shubik, dating from 1980. Our prior and concurrent results show that (approximate) -cores of games with many players treat most similar players nearly equally; that is, approximate cores of large games have the equal treatment property. The convergence result of Engl and Scotchmer shows that, in per capita terms, -core payoffs to sufficiently large groups of players can be approximated by equal-treatment payoffs.     

Projection justification of generalized minimum aberration for asymmetrical fractional factorial designs

Recently, Xu and Wu (2001) presented generalized minimum aberration criterion for comparing and selecting general fractional factorial designs. This criterion is defined using a set of _u(D) values, called J-characteristics by us. In this paper, we find a set of linear equations that relate the set of design points to that of J-characteristics, which implies that a factorial design is uniquely determined by its J-characteristics once the orthonormal contrasts are designated. Thereto, a projection justification of generalized minimum aberration is established. All of these conclusions generalize the results for two-level symmetrical factorial designs in Tang (2001).Acknowledgements The authors are grateful to the editor, the associate editor and the referees for their valuable comments. This paper is supported by NNSF of P.R.China grant No. 10171051. and RFDP grant No. 1999005512.     

Are technology gatekeepers renewing clusters? Understanding gatekeepers and their dynamics across cluster life cycles

The cluster literature assumes that technology gatekeepers (TGs) shape a district's learning process and its evolution. However, analysis of the resilience of TGs, and their role across different stages of the cluster life cycle (CLC), is absent. Instead, most of the evidence that has been produced is set at a particular stage of the CLC. This article seeks to use a qualitative case study to understand the dynamics of TGs, and their knowledge creation and diffusion capabilities in the CLC renewal period. This is a stage less studied in the literature. Further, the article explores TG resilience across different stages of the CLC. Our results show that not all TGs are resilient and necessary for cluster renewal. In addition, they are not sufficient for fostering disruptions: their manifest reluctance to destroy the status quo and their network centrality makes necessary the entrance of new firms with new knowledge. TGs are necessary because they facilitate a cluster's transition across stages thanks to their powerful control of the most vital aspect of clusters: networks.     

Pre-assigned rents and bureaucratic friction

In this paper we study the endogenous determination of bureaucratic friction in a bureaucratic contest with () and without (n = 1) rent contestability. When n= 1 bureaucratic impediments induce the individual to undertake rent-securing activities at the same level as in the two-player rent-seeking contest. However, under rent contestability the bureaucracy no longer serves as a means of extracting resources from the public. The paper concludes with the study of the effect of ‘net costs’ on bureaucratic friction. It turns out that under cotestability the only reason for creating bureaucratic friction is the ‘negative costs’ it incurs while when n = 1 the effect of the bureaucrat's net costs of generating bureaucratic friction on the optimal degree of such friction is ambiguous. Received: October 30, 2000 / Accepted: December 28, 2001 RID="*" ID="*" The authors are grateful to two anonymous referees for their valuable comments     

Book Reviews

Books reviewed: Louis Albrechts, Jeremy Alden and Artur de Rosa Pires, The changing institutional landscape of planning Robert Boyer and Yves Saillard (eds.), Regulation theory: the state of the art Neil Leach, The hieroglyphics of space: reading and experiencing the modern metropolis Ida Susser (ed.), The Castells reader on cities and social theory Martin Dangerfield, Subregional economic cooperation in Central and Eastern Europe – the political economy of CEFTA Richard Phillips, Diane Watts and David Shuttleton (eds.), De‐centring sexualities: politics and representations beyond the metropolis Michael Pacione,Urban geography: a global perspective     

Core and competitive equilibria: An approach from discrete convex analysis

We extend the assignment market (Shapley and Shubik, 1972; Kaneko, 1976, 1982) by utilizing discrete convex analysis. We consider the market in which buyers and sellers trade indivisible commodities for money. Each buyer demands at most one unit of commodity. Each seller produces multiple units of several types of commodities. We make the quasi-linearity assumption on the sellers, but not on the buyers. We assume that the cost function of each seller is M^♮-convex, which is a concept in discrete convex analysis. We prove that the core and the competitive equilibria exist and coincide in our market model.     

Model uncertainty in cross‐country growth regressions

We investigate the issue of model uncertainty in cross‐country growth regressions using Bayesian Model Averaging (BMA). We find that the posterior probability is spread widely among many models, suggesting the superiority of BMA over choosing any single model. Out‐of‐sample predictive results support this claim. In contrast to Levine and Renelt ( 1992 ), our results broadly support the more ‘optimistic’ conclusion of Sala‐i‐Martin ( 1997b ), namely that some variables are important regressors for explaining cross‐country growth patterns. However, care should be taken in the methodology employed. The approach proposed here is firmly grounded in statistical theory and immediately leads to posterior and predictive inference. Copyright © 2001 John Wiley & Sons, Ltd.     

Book Reviews

Books reviewed: Human Resource Management. Perspectives for the New Era, Colin Fisher Social and Economic Transformation in East Central Europe: Institutions, Property Relations and Social Interests, Roderick Martin Trade Unions at the Crossroads, Guy Vernon Employment Relations and National Culture: Continuity and Change in the Age of Globalisation, Boyd Black     

Proportionally adjusted marginal pricing method to share joint costs

We consider the cost sharing problem with divisible demands of heterogeneous goods. We propose a cost sharing method called Proportionally Adjusted Marginal Pricing (PAMP) method. PAMP is a nonadditive (in the cost function) extension of average cost pricing. We introduce an axiom called Local Independence (LI) and use LI together with Continuity, Proportionality, and Scale Invariance to characterize PAMP. Received: 23 March 2001 / Accepted: 16 November 2001 I thank Yves Sprumont, Hervé Moulin, and Ahmet Alkan for discussions, comments and suggestions. Thanks also go to the associate editor and the referees, whose comments and suggestions greatly improve the paper.     

Book Reviews

Book reviewed in this article: Katznelson, I. 1981: City trenches. Urban politics and the patterning of class in the United States. Law, C. 1981: British regional development since world war I. Lee, M.-G. editor, 1981: Toward a new community life: reports of the international Research Seminar on the Sae Maul Movement. Martin, R. L. editor, 1981: Regional wage inflation and unemployment. National Committee on Pilot Schemes to Combat Poverty 1981: Final report. Pilot schemes to combat poverty in Ireland 1974–80 Newton, K. 1980: Balancing the books: financing problems of local government in west Europe. Sharpe, L. J. editor, 1981: The local fiscal crisis in western Europe: myths and realities. Pacione, M. editor, 1981: Problems and planning in third world cities. Saunders, P. 1981: Social theory and the urban question.     

Implementing optimal procurement auctions with exogenous quality

In this paper, we consider the implementation of the optimal procurement auction outcome when there is a trade-off between price and quality for the buyer. The quality proposals of the competing firms are assumed to be exogenous and common knowledge. After defining the optimal auction, we characterize the discriminatory first score auction and the modified second score auction implementing it when the buyer is assumed to have the same information as the firms. Then we consider an auction which requires no specific information from the buyer and show that a second score auction followed by a negotiation stage can implement the optimal auction outcome under this more realistic assumption. Received: 30 March 2001 / Accepted: 14 December 2001 I am grateful to the anonymous referees for comments on an earlier version of this paper. The usual disclaimer applies.     

von Neumann/Morgenstrn Decision Making and Harsanyi's Theory of Justice: After Rawls and Nozick If It Risks Personal Freedom and Individual Liberty,Can It Be Really Just?

Abstract . John C. Harsanyi has developed a theory of justice based on the von Neumann-Morgenstern (vN-M) theory of decision making under uncertainty. Instead of applying the vN-M theory strictly, however, Harsanyi proposes to modify his approach so as to exclude decisions which seem to be the result of rashness, strong excitement and other circumstances which might hinder rational choice. The result is a theory of justice which is internally inconsistent and potentially hostile to liberty and individual freedom.     

Hidden Cities

Books reviewed in this article: Borden, Iain, Joe Kerr and Jane Rendell (eds.) with Alicia Pivaro The unknown city: contesting architecture and social space Coutard, Olivier (ed.) The governance of large technical systems Easterling, Keller Organization space: landscapes, highways, and houses in America Melosi, Martin V. The sanitary city: urban infrastructure in America from colonial times to the present     

Solomon's Dilemma: An experimental study on dynamic implementation

This paper reports an experimental investigation on two mechanisms for the so-called King Solomon Dilemma, where one of them fails to implement the social choice rule dynamically. We compare the two mechanisms in terms of their welfare, incentive and learning properties.Received: 9 October 2000, Accepted: 13 February 2003, JEL Classification: C70, C78The authors are grateful to José Agulló, Paolo Battigalli, Ted Bergstrom, Ken Binmore, Sandro Brusco, Antonio Cabrales, Francesco Feri, Leo Hurwicz, Raffaele Miniaci, Miguel Angel Meléndez, Juan Mora, Juan D. Moreno-Ternero and seminar participants at the universities of Alicante and Trento for stimulating comments. We also thank an anonymous referee for thoughtful comments and, in particular, for raising questions that led to run additional sessions that significantly improved Sect. 4.4. Usual disclaimers apply. The first version of this paper was written while Giovanni Ponti was visiting the Department of Economics at UCSB. He thanks the Department for providing hospitality, encouragement and funding to run some experimental sessions. Financial support was also provided by CICYT (BEC2001-0980) and by the Instituto Valenciano de Investigaciones Económicas (IVIE).     

We Ran One Regression*

The controversy over the selection of ‘growth regressions’ was precipitated by some remarkably numerous ‘estimation’ strategies, including two million regressions by Sala‐i‐Martin [American Economic Review (1997b) Vol. 87, pp. 178–183]. Only one regression is really needed, namely the general unrestricted model, appropriately reduced to a parsimonious encompassing, congruent representation. We corroborate the findings of Hoover and Perez [Oxford Bulletin of Economics and Statistics (2004) Vol. 66], who also adopt an automatic general‐to‐simple approach, despite the complications of data imputation. Such an outcome was also achieved in just one run of PcGets, within a few minutes of receiving the data set in Fernández, Ley and Steel [Journal of Applied Econometrics (2001) Vol. 16, pp. 563–576] from Professor Ley.     

Stochastic Jacobian and Riccati ODE in affine term structure models

In affine term structure models (ATSM) the stochastic Jacobian under the forward measure plays a crucial role for pricing, as discussed in Elliott and van der Hoek (Finance Stoch 5:511–525, 2001). Their approach leads to a deterministic integro-differential equation which, apparently, has the advantage of by-passing the solution to the Riccati ODE obtained by the standard Feynman-Kac argument. In the generic multi-dimensional case, we find a procedure to reduce such integro-differential equation to a non linear matrix ODE. We prove that its solution does necessarily require the solution of the vector Riccati ODE. This result is obtained proving an extension of the celebrated Radon Lemma, which allows us to highlight a deep relation between the geometry of the Riccati flow and the stochastic calculus of variations for an ATSM. We are grateful to two anonymous referees for their careful reading of the paper.     

Price-induced technical progress in 80 years of US agriculture

This paper presents a theory of technical progress that interprets the price-induced conjecture of Hicks. It provides also an exhaustive set of comparative statics conditions that constitute the scaffolding for an empirical test of the theory. A crucial assumption is that entrepreneurs make decisions about techniques on the basis of expected information about prices and quantities. Another assumption is that these decisions are made in order to fulfill a profitability objective. The novelty of our approach is that expected relative prices enter the production function as shifter of the technology frontier. The consequence of this assumption is an expansion of the traditional Shephard lemma that is useful for identifying the portion of input quantities that has been determined by the conjecture of price-induced technical progress (PITP). The theory is applied to a sample of 80 years of US agriculture. Three versions of the general model are presented. The first version deals only with expected relative prices. The empirical results do not reject the PITP hypothesis. The second and third versions introduce lagged expected relative prices, lagged R&D expenditures and lagged extension expenditures as explanatory variables of the portion of the input quantities that may be attributable to technical progress. I acknowledge invaluable discussions on this subject held over several years with Michael R. Caputo. I also acknowledge the use of the theory and its justifications that were presented in previous papers by Paris and Caputo (2001) and by Caputo and Paris (2005). All the errors are mine. I dedicate this paper to my wife, Carlene, who died of a rare cancer on May 5, 2001.     

Nash bargaining in ordinal environments

We analyze the implications of Nash’s (Econometrica 18:155–162, 1950) axioms in ordinal bargaining environments; there, the scale invariance axiom needs to be strenghtened to take into account all order-preserving transformations of the agents’ utilities. This axiom, called ordinal invariance, is a very demanding one. For two-agents, it is violated by every strongly individually rational bargaining rule. In general, no ordinally invariant bargaining rule satisfies the other three axioms of Nash. Parallel to Roth (J Econ Theory 16:247–251, 1977), we introduce a weaker independence of irrelevant alternatives (IIA) axiom that we argue is better suited for ordinally invariant bargaining rules. We show that the three-agent Shapley–Shubik bargaining rule uniquely satisfies ordinal invariance, Pareto optimality, symmetry, and this weaker IIA axiom. We also analyze the implications of other independence axioms.