Open Access. Powered by Scholars. Published by Universities.®
- Discipline
Articles 1 - 2 of 2
Full-Text Articles in Economics
Policy With Stochastic Hysteresis, Job Boerma, Georgii Riabov, Aleh Tsyvinski
Policy With Stochastic Hysteresis, Job Boerma, Georgii Riabov, Aleh Tsyvinski
Cowles Foundation Discussion Papers
This paper studies stochastic hysteresis − general dependence on the path of past decisions and shocks. We develop a new methodology for deriving the explicit dynamics of optimal policy with path-dependence and show that stochastic hysteresis changes optimal policy both qualitatively and quantitatively. We showcase our methodology by deriving new results for optimal policy with stochastic habits, tipping points, robustness concerns, limited commitment, and dynamic private information.
Continuous Implementation With Payoff Knowledge, Yi-Chun Chen, Takashi Kunimoto, Yifei Sun
Continuous Implementation With Payoff Knowledge, Yi-Chun Chen, Takashi Kunimoto, Yifei Sun
Research Collection School Of Economics
The literature on robust mechanism design assumes players' knowledge about a fixed payoff environment and investigates global robustness of optimal mechanisms to large changes in the information structure. Acknowledging global robustness as a demanding requirement, we propose continuous implementation as a notion of local robustness. Keeping the assumption of payoff knowledge, we say that an SCF is continuously implementable if there exists a mechanism which yields the outcome close to the desired one for all types close to the planner's initial model. We show that when a generic correlation condition is imposed on the class of interdependent-value environments, any (interim) …