Consider a network game with linear best responses and spillovers between players, and let agents endogenously choose their links. A planner considers interventions to subsidize actions and/or links between players, aiming to maximize a welfare function depending on equilibrium actions. The structure of the optimal intervention depends on whether links provide non-negative intrinsic value to agents. When they do, it is optimal to focus only on subsidizing actions. When the intrinsic value of links is negative, we give conditions for including link subsidies to be optimal. This reverses the basic structure of the optimal intervention in settings with exogenous links.
Sports are one of the most significant products of the entertainment industry, accounting for a large portion of all television (and even platform) viewing. Consequently, the sale of broadcasting and media rights is the most important source of revenue for professional sports clubs. We survey the economic literature dealing with this issue, with a special emphasis on the crucial problem that arises with the allocation of revenues when they are raised from the collective sale of broadcasting rights.
This paper studies a durable goods monopoly with multiple provision levels, free disposability, and zero marginal cost. We establish a Folk-Theorem-type result: as parties become sufficiently patient, equilibrium seller payoffs contains an interval bounded below by the lowest-type buyer's efficient surplus and above by the maximal static payoff under incentive-compatible mechanisms guaranteeing that type efficient provision. This multiplicity arises because free disposability and zero marginal cost render the efficient provision level non-unique. Our analysis demonstrates how structural features common in information goods can undermine the Coase conjecture.
We study price regulation for a monopolist operating in networked markets with demand spillovers. Achieving efficiency requires price reductions proportional to consumers' Katz-Bonacich centralities, which generally cannot be implemented by commonly used price regulations. Moreover, these regulations become asymptotically welfare neutral as spillovers grow. Nevertheless, some price regulations may still benefit consumers. In particular, average-price regulation robustly increases consumer surplus. By contrast, banning price discrimination increases consumer surplus only when more central consumers have higher intrinsic willingness to pay.
In this working paper, I developed a suite of macroeconomic models that shed light on the intricate relationship between economic development, health, and fertility. These innovative models conceptualize health as an intermediate good, paving the way for new interpretations of dynamic socio-economic phenomena, particularly the non-monotonic effects of health on economic and population growth. The evolving dynamic interactions among economic growth, population, and health during the early stages of human development have been well interpreted in this research.
This paper focuses on finite-player incomplete information games where players may hold mutually inconsistent beliefs without a common prior. We introduce absolute continuity of beliefs, extending the classical notion of absolutely continuous information in Milgrom and Weber (1985), and prove that Bayesian equilibria exist under broad conditions. Examples illustrate practical applications of our findings.
I propose the new axiom of Indifferent Points (IP) that can replace continuity axioms in classical expected utility representations under the Independence Axiom over a finite set of prices. IP asserts the existence of a set of indifferent points that span a hyperplane. In the case of three prices, often used for illustrations, the decision maker only needs to show indifference between two distinct lotteries. IP does not imply any of the established continuity axioms and is even strictly weaker than mixture continuity and solvability.
Modern macroeconomic models, particularly those grounded in Rational Expectation Dynamic Stochastic General Equilibrium (DSGE), operate under the assumption of fully rational decision-making. This paper examines the impact of behavioral factors on the communication index/sentiment index of the US Federal Reserve. [Upon receiving the review comments, I found some technical errors in the paper. I shall update it accordingly. Please do not cite this paper without author's permission.]
Theorem 1 in Bikhchandani & Segal (2011; Theoretical Economics) suggests that a complete, transitive, monotonic, and continuous preference is regret based if and only if it is expected utility. Their Proposition 1 suggests that transitivity and continuity of a regret-based preference implies an equivalence condition: if random variables $X$ and $Y$ have the same distribution, then $X\sim Y$. We give counterexamples to Proposition 1.
This paper studies the (group) strategy-proofness aspect of two-sided matching markets under stability. For a one-to-one matching market, we show an equivalence between individual and group strategy-proofness under stability. We obtain this equivalence assuming the domain satisfies a richness condition. However, the result cannot be extended to the many-to-one matching markets. We further consider a setting with single-peaked preferences and characterize all domains compatible for stability and (group) strategy-proofness.
AbstractThe activated renin–angiotensin system induces a prothrombotic state resulting from the imbalance between coagulation and fibrinolysis. Angiotensin II is the central effector molecule of the activated renin–angiotensin system and is degraded by the angiotensin-converting enzyme 2 to angiotensin (1–7). The novel coronavirus infection (classified as COVID-19) is caused by the new coronavirus SARS-CoV-2 and is characterized by an exaggerated inflammatory response that can lead to severe manifestations such as acute respiratory distress syndrome, sepsis, and death in a proportion of patients, mostly elderly patients with preexisting comorbidities. SARS-CoV-2 uses the angiotensin-converting enzyme 2 receptor to enter the target cells, resulting in activation of the renin–angiotensin system. After downregulating the angiotensin-converting enzyme 2, the vasoconstrictor angiotensin II is increasingly produced and its counterregulating molecules angiotensin (1–7) reduced. Angiotensin II increases thrombin formation and impairs fibrinolysis. Elevated levels were strongly associated with viral load and lung injury in patients with severe COVID-19. Therefore, the complex clinical picture of patients with severe complications of COVID-19 is triggered by the various effects of highly expressed angiotensin II on vasculopathy, coagulopathy, and inflammation. Future treatment options should focus on blocking the thrombogenic and inflammatory properties of angiotensin II in COVID-19 patients.
In this note we consider situations of (multidimensional) spatial majority voting. We show that under some assumptions usual in this literature, with an even number of voters if the core of the voting situation is singleton (and in the interior of the policy space) then the element in the core is never a Condorcet winner. This is in sharp contrast with what happens with an odd number of voters: in that case, under identical assumptions, it is well known that if the core of the voting situation is non-empty then the single element in the core is the Condorcet winner as well.
This paper studies the organization of communication between biased senders and a receiver. Senders can misreport their private information at a cost. Efficiency is achieved by clearing information asymmetries without incurring costs. Results show that only one communication protocol is efficient, robust to collusion, and free from unnecessary complexities. This protocol has a simple, adversarial, and public structure. It always induces efficient equilibria, for which a closed-form characterization is provided. The findings are relevant for the design of organizations that seek to improve decision-making while limiting wasteful influence activities.
Two spatial equilibria, agglomeration and dispersion, in a continuous space core-periphery model are examined to discuss which equilibrium is socially preferred. It is shown that when transport cost is lower than a critical value, the agglomeration equilibrium is preferable in the sense of Scitovszky, while when the transport cost is above the critical value, the two equilibria can not be ordered in the sense of Scitovszky.
This note provides a critical discussion of the \textit{Critical Cost-Efficiency Index} (CCEI) as used to assess deviations from utility-maximizing behavior. I argue that the CCEI is hard to interpret, and that it can disagree with other plausible measures of "irrational" behavior. The common interpretation of CCEI as wasted income is questionable. Moreover, I show that one agent may have more unstable preferences than another, but seem more rational according to the CCEI. This calls into question the (now common) use of CCEI as an ordinal and cardinal measure of degrees of rationality.
We propose and develop an algebraic approach to revealed preference. Our approach dispenses with non algebraic structure, such as topological assumptions. We provide algebraic axioms of revealed preference that subsume previous, classical revealed preference axioms, as well as generate new axioms for behavioral theories, and show that a data set is rationalizable if and only if it is consistent with an algebraic axiom.
This paper studies the advance-purchase game when a consumer has belief-based loss-averse preferences, introducing a novel perspective by incorporating reference updating. It demonstrates that loss aversion increases the consumer's willingness to pre-purchase. Moreover, the paper endogenizes the seller's price-commitment behavior in the advance-purchase problem. The analysis reveals that the seller will commit to his spot price even with no obligation to do so, a behavior previously assumed in the literature.
In an auction each party bids a certain amount and the one which bids the highest is the winner. Interestingly, auctions can also be used as models for other real-world systems. In an all pay auction all parties must pay a forfeit for bidding. In the most commonly studied all pay auction, parties forfeit their entire bid, and this has been considered as a model for expenditure on political campaigns. Here we consider a number of alternative forfeits which might be used as models for different real-world competitions, such as preparing bids for defense or infrastructure contracts.
We consider a model for decision making based on an adaptive, k-period, learning process where the priors are selected according to Von Neumann-Morgenstern expected utility principle. A preference relation between two prospects is introduced, defined by the condition which prospect is selected more often. We show that the new preferences have similarities with the preferences obtained by Kahneman and Tversky (1979) in the context of the prospect theory. Additionally, we establish that in the limit of large learning period, the new preferences coincide with the expected utility principle.
We study a model of vendors competing to sell a homogeneous product to customers spread evenly along a circular city. This model is based on Hotelling's celebrated paper in 1929. Our aim in this paper is to present a necessary and sufficient condition for the equilibrium. This yields a representation for the equilibrium. To achieve this, we first formulate the model mathematically. Next, we prove that the condition holds if and only if vendors are equilibrium.