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Articles 181 - 207 of 207
Full-Text Articles in Economic Theory
On Domains That Admit Well-Behaved Strategy-Proof Social Choice Functions, Shurojit Chatterji, Remzi Sanver, Arunava Sen
On Domains That Admit Well-Behaved Strategy-Proof Social Choice Functions, Shurojit Chatterji, Remzi Sanver, Arunava Sen
Research Collection School Of Economics
In this paper, we investigate domains that admit “well-behaved” strategy-proof social choice functions. We show that if the number of voters is even, then every domain that satisfies a richness condition and admits an anonymous, tops-only, unanimous and strategy-proof social choice function, must be semi-single-peaked. Conversely every semi-single-peaked domain admits an anonymous, tops-only, unanimous and strategy-proof social choice function. Semi-single-peaked domains are generalizations of single-peaked domains on a tree introduced by Demange (1982
Implementation With Near Complete Information: The Case Of Subgame Perfection, Takashi Kunimoto, Olivier Tercieux
Implementation With Near Complete Information: The Case Of Subgame Perfection, Takashi Kunimoto, Olivier Tercieux
Research Collection School Of Economics
While monotonicity is a necessary and almost sufficient condition for Nash implementationand often a demanding one, almost any (non-monotonic, for instance) socialchoice rule can be implemented using undominated Nash or subgame perfect equilibrium.By requiring solution concepts to have closed graph in the limit of completeinformation, Chung and Ely (2003) show that only monotonic social choice rules canbe implemented in the closure of the undominated Nash equilibrium correspondence.In this paper, we show that only monotonic social choice rules can be implemented inthe closure of the subgame perfect equilibrium/sequential equilibrium correspondence.Our robustness result helps understand the limits of subgame pefect implementation,which is …
Technology, Unilateral Commitments And Cumulative Emissions Reduction, Shurojit Chatterji, Sayantan Ghosal
Technology, Unilateral Commitments And Cumulative Emissions Reduction, Shurojit Chatterji, Sayantan Ghosal
Research Collection School Of Economics
In this article, we argue that weak property rights over transnational pollution and the limited threat of retaliatory punishments blunts the effectiveness of a broad-based multilateral agreement to deliver the emission reductions required to mitigate climate change. Instead, we propose a policy framework that builds on unilateral commitments, endogenous innovation and technology transfer that could lead to cumulative emissions reduction by altering the participation constraints of nations over time.
Tops-Only Domains, Shurojit Chatterji, Arunava Sen
Tops-Only Domains, Shurojit Chatterji, Arunava Sen
Research Collection School Of Economics
In this paper we consider the standard voting model with a finite set of alternatives A and n voters and address the following question: what are the characteristics of domains D that induce the property that every strategy-proof social choice function f : Dn → A satisfying unanimity, has the tops-only property? We first impose a minimal richness condition which ensures that for every alternative a, there exists an admissible ordering where a is maximal. We identify conditions on D that are sufficient for strategy-proofness and unanimity to imply tops onlyness in the general case of n voters and in …
Utility Functions, Future Consumption Targets And Subsistence Thresholds, Ashok Guha, Brishti Guha
Utility Functions, Future Consumption Targets And Subsistence Thresholds, Ashok Guha, Brishti Guha
Research Collection School Of Economics
If the consumer’s risk aversion behavior varies intertemporally and if the risk aversion coefficient on future consumption becomes very large, the consumer tends to aim at a fixed future consumption target. A by-product is a reinterpretation of subsistence theories of consumption.
Indescribability And Asymmetric Information At The Contracting Stage, Takashi Kunimoto
Indescribability And Asymmetric Information At The Contracting Stage, Takashi Kunimoto
Research Collection School Of Economics
Maskin and Tirole [Maskin, E., Tirole, J., 1999. Unforeseen contingencies and incomplete contracts. Review of Economic Studies, 66, 83–114] show that indescribability does not matter for contractual incompleteness when there is symmetric information both at the contracting stage and at the trading stage. Following their setup, I show that with asymmetric information at both stages, indescribability can matter.
Financial Frictions, Capital Reallocation, And Aggregate Fluctuations, Jürgen Von Hagen, Haiping Zhang
Financial Frictions, Capital Reallocation, And Aggregate Fluctuations, Jürgen Von Hagen, Haiping Zhang
Research Collection School Of Economics
We address an important business cycle fact, i.e., the amplified and hump-shaped responses of output to productivity shocks, in a dynamic general equilibrium model with financial frictions. Models with financial frictions in the current literature have either the amplification mechanism or the propagation mechanism. Our model shows that the dynamic interaction of borrowing constraints, endogenous capital accumulation, and capital reallocation among agents with different productivity constitutes a mechanism through which the effects of productivity shock on aggregate output are amplified and propagated, more in line with the empirical evidence than other related models in the literature.
Tournaments With Ex Post Heterogeneous Agents, Theofanis Tsoulouhas, Kosmas Marinakis
Tournaments With Ex Post Heterogeneous Agents, Theofanis Tsoulouhas, Kosmas Marinakis
Research Collection School Of Economics
This paper compares relative performance evaluation via tournaments to absolute performance evaluation via piece rates when agents are heterogeneous ex post, to make the point that agent heterogeneity compromises the insurance function of tournaments. In particular, we show that the more heterogeneous agents are the less insurance can be offered through tournaments and the less dominant tournaments are over piece rates. Thus, absolute performance piece rates should be preferred when agents are highly heterogeneous. However, even with heterogeneous agents, tournaments become more desirable when the number of agents or the uncertainty about the common shock increases sufficiently.
Wealth Transfer Effects Of Analysts’ Misleading Behavior, Gus De Franco, Hai Lu, Florin P. Vasvari
Wealth Transfer Effects Of Analysts’ Misleading Behavior, Gus De Franco, Hai Lu, Florin P. Vasvari
Research Collection School Of Accountancy
We investigate a sample of 50 firm events, identified in the Global Research Analysts Settlement, in which analysts were discovered to have acted misleadingly ex-post. In this setting, analysts' incentives caused them to issue public disclosures that differed from their private beliefs. We document that these firms' institutional holdings decline significantly during the period in which the analysts issued misleading disclosures. During this period daily small-size trades (a proxy for individual investors) are dominated by buy orders while daily large-size trades (a proxy for institutional investors) are dominated by sell orders. Short interest increases during the event period, consistent with …
Weak Monotonicity Characterizes Deterministic Dominant-Strategy Implementation, Sushil Bikhchandani, Shurojit Chatterji, Ron Lavi, Ahuva Mu'alem, Noam Nisan, Arunava Sen
Weak Monotonicity Characterizes Deterministic Dominant-Strategy Implementation, Sushil Bikhchandani, Shurojit Chatterji, Ron Lavi, Ahuva Mu'alem, Noam Nisan, Arunava Sen
Research Collection School Of Economics
We characterize dominant-strategy incentive compatibility with multidimensional types. A deterministic social choice function is dominant-strategy incentive compatible if and only if it is weakly monotone (W-Mon). The W-Mon requirement is the following: If changing one agent's type (while keeping the types of other agents fixed) changes the outcome under the social choice function, then the resulting difference in utilities of the new and original outcomes evaluated at the new type of this agent must be no less than this difference in utilities evaluated at the original type of this agent.
Message Spaces For Perfect Correlated Equilibria, Shurojit Chatterji, Srihari Govindan
Message Spaces For Perfect Correlated Equilibria, Shurojit Chatterji, Srihari Govindan
Research Collection School Of Economics
We show that a perfect correlated equilibrium distribution of an N-person game, as defined by Dhillon and Mertens (1996) can be achieved using a finite number of copies of the strategy space as the message space.
The Micro-Foundations Of Intertemporal Price Discrimination, Winston T. H. Koh
The Micro-Foundations Of Intertemporal Price Discrimination, Winston T. H. Koh
Research Collection School Of Economics
This paper investigates the optimality of intertemporal price discrimination for a durable-good monopoly in a model where infinitely-lived households face an intertemporal budget constraint, and consume both durable goods and non-durable goods. We prove that the optimal price of the durable good is not constant, and may decrease or increase over time. Some households may choose to purchase the durable good at a later date, and pay lower or higher prices, since the gain in discounted utility of consuming more of the non-durable good more than compensates for the loss in utility from delaying the consumption of the durable good. …
Functional Sunspot Equilibria, Shurojit Chatterji, Subir Chattopadhyay
Functional Sunspot Equilibria, Shurojit Chatterji, Subir Chattopadhyay
Research Collection School Of Economics
Consider a one step forward looking model where agents believe that the equilibrium values of the state variable are determined by a function whose domain is the current value of the state variable and whose range is the value for the subsequent period. An agent's forecast for the subsequent period uses the belief, where the function that is chosen is allowed to depend on the current realization of an extrinsic random process, and is made with knowledge of the past values of the state variable but not the current value. The paper provides (and characterizes) the conditions for the existence …
More Efficient Estimation In Nonparametric Regression With Nonparametric Autocorrelated Errors, Liangjun Su, Aman Ullah
More Efficient Estimation In Nonparametric Regression With Nonparametric Autocorrelated Errors, Liangjun Su, Aman Ullah
Research Collection School Of Economics
We define a three-step procedure for more efficient estimation of the nonparametric regression mean with nonparametric autocorrelated errors. The procedure is based upon a nonparametric prewhitening transformation of the dependent variable that has to be estimated from the data by a local polynomial technique. We establish the asymptotic distribution of our estimator under weak dependence conditions and show that it is more efficient than the conventional local polynomial estimator. Furthermore, we consider criterion functions based on the linear exponential family, which include the local polynomial least squares criterion as a special case. Simulation evidence suggests that significant gains can be …
A New Approach To Robust Inference In Cointegration, Sainan Jin, Peter Phillips, Yixiao Sun
A New Approach To Robust Inference In Cointegration, Sainan Jin, Peter Phillips, Yixiao Sun
Research Collection School Of Economics
A new approach to robust testing in cointegrated systems is proposed using non-parametric HAC estimators without truncation. While such HAC estimates are inconsistent, they still produce asymptotically pivotal tests and, as in conventional regression settings, can improve testing and inference.
Some Patterns Of Market Shares Of Brands Within And Across Product Categories, Rajeev Kohli, Raaj Sah
Some Patterns Of Market Shares Of Brands Within And Across Product Categories, Rajeev Kohli, Raaj Sah
Research Collection School Of Economics
This paper: (i) reports an empirical regularity in the market shares of brands; (ii) presents a theoretical framework for understanding the observed regularity; (iii) adduces additional empirical consequences of the framework, which are some counterintuitive relationships among market shares of brands across different product categories; and (iv) presents empirical evidence for these consequences, thus providing additional support for the theoretical framework. Our cross-sectional data on market shares consists of 1171 brands in 91 product categories of foods and sporting goods sold in the US. If we assign a lower rank to a brand with a higher market share, then the …
The Micro-Foundations Of Intertemporal Price Discrimination, Winston T. H. Koh
The Micro-Foundations Of Intertemporal Price Discrimination, Winston T. H. Koh
Research Collection School Of Economics
This paper investigates the optimality of intertemporal price discrimination for a durable-good monopoly in a model where infinitely-lived households face an intertemporal budget constraint, and consume both durable goods and non-durable goods. We prove that the optimal price of the durable good is not constant, and may decrease or increase over time. Some households may choose to purchase the durable good at a later date, and pay lower or higher prices, since the gain in discounted utility of consuming more of the non-durable good more than compensates for the loss in utility from delaying the consumption of the durable good.
L S Penrose's Limit Theorem: Tests By Simulation, Pao-Li Chang, Vincent Chua, Moshe Machover
L S Penrose's Limit Theorem: Tests By Simulation, Pao-Li Chang, Vincent Chua, Moshe Machover
Research Collection School Of Economics
LS Penrose’s limit theorem (PLT) – which is implicit in Penrose [5, p. 72] and for which he gave no rigorous proof – says that, in simple weighted voting games, if the number of voters increases indefinitely while existing voters retain their weights and the relative quota is pegged, then – under certain conditions – the ratio between the voting powers of any two voters converges to the ratio between their weights. Lindner and Machover [3] prove some special cases of PLT; and conjecture that the theorem holds, under rather general conditions, for large classes of weighted voting games, various …
Future Fiscal And Budgetary Shocks, Hian Teck Hoon, Edmund S. Phelps
Future Fiscal And Budgetary Shocks, Hian Teck Hoon, Edmund S. Phelps
Research Collection School Of Economics
We study here the effects of future tax and budgetary shocks on present levels of economic activity and real interest rates in a nonmonetary and possibly non-Ricardian economy. The paper first takes up an (unanticipated) temporary tax cut to be effective on a given future date—a delayed debt bomb. The sudden prospect of this future-dated shock causes at once a drop in the (unit) value placed on the firms’ business asset, the customer, and accordingly on the price of shares—with the result that the hourly wage, hours worked and GDP drop in tandem. This paradox of reduced activity through announcement …
Bargaining And Competition Revisited, Takashi Kunimoto, Roberto Serrano
Bargaining And Competition Revisited, Takashi Kunimoto, Roberto Serrano
Research Collection School Of Economics
We show the robustness of the Walrasian result obtained in models of bargaining in pairwise meetings. Restricting trade to take place only in pairs, most of the assumptions made in the literature are dispensed with. These include assumptions on preferences (differentiability, monotonicity, strict concavity, bounded curvature), on the set of agents (dispersed characteristics) or on the consumption set (allowing only divisible goods).
Local Coordination And Market Equilibria, Shurojit Chatterji, Sayantan Ghosal
Local Coordination And Market Equilibria, Shurojit Chatterji, Sayantan Ghosal
Research Collection School Of Economics
We reformulate the local stability analysis of market equilibria in a competitive market as a local coordination problem in a market game, where the map associating market prices to best-responses of all traders is common knowledge and well-defined both in and out of equilibrium. Initial expectations over market variables differ from their equilibrium values and are not common knowledge. This results in a coordination problem as traders use the structure of the market game to converge back to equilibrium. We analyse a simultaneous move and a sequential move version of the market game and explore the link with local rationalizability.
Dictatorial Domains, Navin Aswal, Shurojit Chatterji, Arunava Sen
Dictatorial Domains, Navin Aswal, Shurojit Chatterji, Arunava Sen
Research Collection School Of Economics
In this paper, we introduce the notion of a linked domain and prove that a non-manipulable social choice function defined on such a domain must be dictatorial. This result not only generalizes the Gibbard-Satterthwaite Theorem but also demonstrates that the equivalence between dictatorship and non-manipulability is far more robust than suggested by that theorem. We provide an application of this result in a particular model of voting. We also provide a necessary condition for a domain to be dictatorial and use it to characterize dictatorial domains in the cases where the number of alternatives is three.
Incentive Compatibility In Multi-Unit Auctions, Sushil Bikhchandani, Shurojit Chatterji, Arunava Sen
Incentive Compatibility In Multi-Unit Auctions, Sushil Bikhchandani, Shurojit Chatterji, Arunava Sen
Research Collection School Of Economics
We characterize incentive compatibility in multi-unit auctions with multi-dimensional types. An allocation mechanism is incentive compatible if and only if it is nondecreasing in marginal utilities (NDMU). The notion of incentive compatibility we adopt is dominant strategy in private value models and ex post incentive compatibility in models with interdependent values. NDMU is the following requirement: if changing one buyer’s type, while keeping everyone else’s types the same, changes this buyer’s allocation then the new allocation must be relatively more attractive (or relatively less unattractive) to this buyer. We also establish a price characterization of incentive compatible mechanisms.
Is Ricardo's Essay On Profits A Precursor Of The New Trade Theory?, Hian Teck Hoon
Is Ricardo's Essay On Profits A Precursor Of The New Trade Theory?, Hian Teck Hoon
Research Collection School Of Economics
This paper carefully analyzes a passage of Ricardo’s Essay on Profits ([1815] 1923), which suggests that he clearly understood the effects of both interindustry as well as intraindustry trade. In the context of the Essay model, Ricardo argues that free interindustry trade involving an exchange of manufactures for agricultural good (from England’s point of view) raises the rate of profit through lowering the relative price of the agricultural good. On the other hand, where trade involves simply an exchange of manufactures for manufactures, these being produced under conditions of economies of scale (division of labour in manufactures (pg. 25 of …
Temporary Equilibrium Dynamics With Bayesian Learning, Shurojit Chatterji
Temporary Equilibrium Dynamics With Bayesian Learning, Shurojit Chatterji
Research Collection School Of Economics
This paper examines the stability of deterministic steady states in a class of economies where the state variable is one dimensional and where agents use Bayesian techniques to form expectations. The dynamics with learning are locally convergent if the prior mean is close to a stable perfect-foresight root having modulus less than 1 and if the prior beliefs are held with enough confidence. The dynamics are, however, divergent if the prior mean or the variance of the prior distribution is sufficiently large
Fallibility And Sequential Decision-Making, Winston T. H. Koh
Fallibility And Sequential Decision-Making, Winston T. H. Koh
Research Collection School Of Economics
Individuals typically make errors in evaluating information. In this paper, we consider a project selection problem, where fallible managers screen projects sequentially, and provide independent opinions on its quality. We compare the relative performance of the hierarchy and polyarchy when η (n > 2) managers are employed to evaluate projects. In addition to generalizing the existing results on the optimal screening standards, I discuss and characterize the optimal organizational size, and how the relative desirability of the two sequential decision processes are affected by changing the project quality. Finally, I also discuss the effect of variable evaluation costs on the optimal …
Differential Tariffs, Negative Value-Added And The Theory Of Effective Protection, Augustine H. H. Tan
Differential Tariffs, Negative Value-Added And The Theory Of Effective Protection, Augustine H. H. Tan
Research Collection School Of Economics
This article examines the implications for effective protection(EP) theory of allowing variable factor proportions and general equilibrium repercussions. The first claim of EP theory, is that it provides a measure of the maximum proportionate increase in factor rewards permitted by a tariff structure, as compared to a free trade regime. EP rates predict only a particular direction of resource flows whereas general equilibrium analysis, with variable input coefficients, indicates that flows contrary to EP prediction are possible. Two examples are provided, first, where there is a uniform tariff on final goods; and second, where one final sector has a higher …