Simple Strategy-Proof Approximately Walrasian Mechanisms

This note provides an indirect analysis of the incentive properties of the Walrasian mechanism. It presents mechanisms under which truth-telling is a dominant strategy in finite exchange economies (in contrast to the Walrasian mechanism) and whose outcomes (generically) approximate Walrasian ones for large economies. These mechanisms provide new insights on the well-know trade-off between efficiency and incentive compatibility in finite economies. Journal of Economic Literature Classification Numbers: D50, D71, D78.     

On the application of the Minkowski-Farkas theorem to sampling designs

In the paper, we consider the following problem: Let {π_k} be a sequence satisfying 0π_kΣ1 (k=1,…, N) and π=n.Tben, is there an unordered sampling design such that, for each k=1,…N, the inclusion probability of unit k is equal to π? It is shown that it can be solved by the straightforward application of the Minkowski-Farkas theorem.     

Generalized M-fluctuation tests for parameter instability

A general class of fluctuation tests for parameter instability in an M-estimation framework is suggested. Tests from this framework can be constructed by first choosing an appropriate estimation technique, deriving a partial sum process of the estimation scores that captures instabilities over time, and aggregating this process to a test statistic by using a suitable scalar functional. Inference for these tests is based on functional central limit theorems, which are derived under the null hypothesis of parameter stability and local alternatives. For (generalized) linear regression models, concrete tests are derived, which cover several known tests for (approximately) normal data but also allow for testing for parameter instability in regressions with binary or count data. The usefulness of the test procedures—complemented by powerful visualizations derived from these—is illustrated using Dow Jones industrial average stock returns, youth homicides in Boston, USA, and illegitimate births in Grossarl, Austria.     

An alternative direct proof of Gibbard’s random dictatorship theorem

We present an alternative proof of the Gibbards random dictatorship theorem with ex post Pareto optimality. Gibbard(1977) showed that when the number of alternatives is finite and larger than two, and individual preferences are linear (strict), a strategy-proof decision scheme (a probabilistic analogue of a social choice function or a voting rule) is a convex combination of decision schemes which are, in his terms, either unilateral or duple. As a corollary of this theorem (credited to H. Sonnenschein) he showed that a decision scheme which is strategy-proof and satisfies ex post Pareto optimality is randomly dictatorial. We call this corollary the Gibbards random dictatorship theorem. We present a proof of this theorem which is direct and follows closely the original Gibbards approach. Focusing attention to the case with ex post Pareto optimality our proof is more simple and intuitive than the original Gibbards proof.Received: 15 October 2001, Accepted: 23 May 2003, JEL Classification: D71, D72Yasuhito Tanaka: The author is grateful to an anonymous referee and the Associate editor of this journal for very helpful comments and suggestions. And this research has been supported by a grant from the Zengin Foundation for Studies on Economics and Finance in Japan.     

Subbalanced games and bargaining sets

Summary. In defining a bargaining set, it is desirable to require that a counterobjecting coalition has a non-empty intersection with the objecting coalition. We refer to this as the intersection property and define a bargaining set, MB ₁, that imposes this property on a variant of the bargaining set defined by Vohra (1991). To study the existence of MB ₁, a new version of the KKM theorem is proposed and the concept of a subbalanced game is introduced. We also provide conditions for the non-emptiness of MB ₂, a bargaining set introduced by Zhou (1994) which imposes the additional restriction that the objecting coalition not be a subset of the counterobjecting coalition.Received: 9 December 2002, Revised: 6 December 2004, JEL Classification Numbers: C71. Correspondence to: Chih ChangThe authors are very grateful to a referee who proposes many helpful comments on both substantive matters and exposition which much improve the paper.     

The envelope theorem for locally differentiable Nash equilibria of finite horizon differential games

Envelope theorems are established for a ubiquitous class of finite horizon differential games. The theorems cover open-loop and feedback information patterns in which the corresponding Nash equilibria are locally differentiable with respect to the parameters of the game. Their relationship with extant envelope results is discussed and an application of them to a generalized capital accumulation game is provided. An important implication of the theorems is that, in general, the archetypal economic interpretation of the costate vector, namely, as the shadow value of the state vector along the Nash equilibrium, is valid for feedback Nash equilibria, but not for open-loop Nash equilibria.     

An application of Stein’s method to limit theorems for pairwise negative quadrant dependent random variables

Stein’s method is used to derive an error in normal approximation for sums of pairwise negative quadrant dependent random variables, but under the assumption of second moment only. This allows us to derive a central limit theorem for pairwise negative quadrant dependent random variables with Lindeberg’s condition. Research supported by Science Foundation of Zhejiang Provincial Education(no. 20060122)     

生态经济的产权基础:一个科斯注释

发展生态经济面临的最大困难是有关经济主体对资源的过多消耗带来压力和在消耗资源生产商品时产生的大量废弃物的排放.以工业废气排放为例,1983年工业废气排放量为63167亿标立方米,2010年比1983年增加456001亿标立方米,增长7.21倍.产权是制度安排的核心之一,生态经济的发展应以合理的产权制度为前提,只有产权给各方利益主体提供了足够的激励与约束,才能促进生态经济的持续发展.如何根据经济运行的实际情况,更好地选择和设计制度,有效调整产权制度来促使外部性内部化,使有关经济主体减少废物、废气的排放,从而使一条生态经济之路,这可能是科斯定理给我们实施可持续发展战略、走生态经济之路的最大启示.     

THE ECONOMICS OF FISCAL DECENTRALIZATION

Abstract There is no complete overview or discussion of the literature of the economics of federalism and fiscal decentralization, even though scholarly interest in the topic has been increasing significantly over recent years. This paper provides a general, brief but comprehensive overview of the main insights from the literature on fiscal federalism and decentralization. In doing so, literature on fiscal federalism and decentralization is grouped into two main approaches: ‘first generation approach’ and ‘an emerging second generation approach’. The discussion generally covers the two notions of fiscal decentralization: ‘fiscal autonomy’ and ‘fiscal importance’ of subnational governments as the background of the most recently developed index of fiscal decentralization in Vo. The relevance of this discussion to any further development of a fiscal decentralization index is briefly noted.