Economic Theory Commons^™

Strategy-Proofness Of The Probabilistic Serial Rule On Sequentially Dichotomous Domains, Peng Liu

Research Collection School Of Economics

A class of preference domains is proposed: sequentially dichotomous domains. On any sequentially dichotomous domain, the probabilistic serial rule (Bogomolnaia and Moulin (2001)) is sd-strategy-proof. In addition, any sequentially dichotomous domain is maximal for the probabilistic serial rule to be sd-strategy-proof.

Cognitive Performance Across The Life Course Of Bolivian Forager-Farmers With Limited Schooling, Michael Gurven, Eric Fuerstenberg, Benjamin C. Trumble, Jonathan Stieglitz, Bret Beheim, Helen Davis, Hillard Kaplan

ESI Publications

Cognitive performance is characterized by at least two distinct life course trajectories. Many cognitive abilities (e.g. “effortful processing” abilities including fluid reasoning, and processing speed) improve throughout early adolescence and start declining in early adulthood, while other abilities (e.g. “crystallized” abilities like vocabulary breadth) improve throughout adult life, remaining robust even at late ages. Although schooling may impact performance and cognitive “reserve”, it has been argued that these age patterns of cognitive performance are human universals. Here we examine age patterns of cognitive performance among Tsimane forager-horticulturalists of Bolivia, and test whether schooling is related to differences in cognitive performance …

Error Correction Exchange Rate Modeling For Bangladesh, Dipanwita Barai

Open Access Theses & Dissertations

Several error correction models are estimated for analyzing the nominal exchange rate dynamics of Bangladesh between the taka and the United States dollar using annual data. The theoretical frameworks utilized include balance of payments and the monetary construct. The bilateral taka / dollar exchange rate model based on the balance of payments approach exhibits better econometric and statistical traits than the model based on the monetary construct. Out-of-sample simulation indicates, however, that the balance of payments ARDL model does not generate very accurate forecasts for this bilateral exchange rate.

Is Silence The Answer?, Gator Adams

CMC Senior Theses

This study examines the relationship between company management guidance, and ex-ante crash risk over the duration of 2008(Jan 2006-Dec 2009) financial crisis using the implied volatility skew, which is based upon ex-ante volatility implied by the pricing model developed by Black-Scholes (1973). The study finds that over the duration of this crisis period, management guidance decreases with a rise in ex-ante crash risk. Further, the study provides evidence on the relationship of management guidance and earnings volatility, and how that is affected by a firm's industry product concentration based on the Herfindahl-Hirschman Index (HHI) score.

Governance By Economist: An Historical Note On The Keynesian Revolution, Lewis Karstensson

Molasky Family Department of Economics and Real Estate Faculty Research

An inferential analysis of the performance of the United States economy with respect to production, employment, and average price level over the twentieth century by presidential administration.

Mixed-Scale Jump Regressions With Bootstrap Inference, Jia Li, Viktor Todorov, George Tauchen

Research Collection School Of Economics

We develop an efficient mixed-scale estimator for jump regressions using high-frequency asset returns. A fine time scale is used to accurately identify the locations of large rare jumps in the explanatory variables such as the price of the market portfolio. A coarse scale is then used in the estimation in order to attenuate the effect of trading frictions in the dependent variable such as the prices of potentially less liquid assets. The proposed estimator has a non-standard asymptotic distribution that cannot be made asymptotically pivotal via studentization. We propose a novel bootstrap procedure for feasible inference and justify its asymptotic …

When Price Precision Pays In Negotiations, Michael Schaerer

Research Collection Lee Kong Chian School Of Business

When negotiating, is an offer of 99.95 euros better than 100 euros? Our recent study shows that there is no universally true answer to the question of price precision and that the right strategy depends on with whom you are negotiating.

Jump Regressions, Jia Li, Viktor Todorov, George Tauchen

Research Collection School Of Economics

We develop econometric tools for studying jump dependence of two processes from high-frequency observations on a fixed time interval. In this context, only segments of data around a few outlying observations are informative for the inference. We derive an asymptotically valid test for stability of a linear jump relation over regions of the jump size domain. The test has power against general forms of nonlinearity in the jump dependence as well as temporal instabilities. We further propose an efficient estimator for the linear jump regression model that is formed by optimally weighting the detected jumps with weights based on the …

Bubbles In Experimental Asset Markets, Praveen Kujal, Owen Powell

ESI Working Papers

"One can define a bubble as a persistent increase in the price of an asset over and above its fundamental value with an abrupt fall in prices when no buyers are available to make purchases. The occurrence of market bubbles has a long history, starting with the Dutch Tulip Mania (1624-1637) to the South Sea and Mississippi Bubble (1716-1720), the British Railway Mania (1840´s) to the crash of 1929. Recent events have been the crash of 1987, the dot-com bubble (1990s) to the most recent housing crisis in early 2000. Even though bubbles, and a subsequent crash, may reallocate resources …

Humans’ (Incorrect) Distrust Of Reflective Decisions, Antonio Cabrales, Antonio M. Espín, Praveen Kujal, Stephen Rassenti

ESI Working Papers

Recent experiments suggest that social behavior may be shaped by the time available for decision making. It is known that fast decision making relies more on intuition whereas slow decision making is affected by reflective processes. Little is known, however, about whether people correctly anticipate the effect of intuition vs. reflection on others’ decision making. This is important in everyday situations where anticipating others’ behavior is often essential. A good example of this is the extensively studied Trust Game where the trustor, by sending an amount of money to the trustee, runs the risk of being exploited by the trustee’s …

Capitalism - Oxford University Press, Anwar Shaikh Phd

Archives of Anwar Shaikh

This collection includes:

• Economic processes and time scales in classical tradition(unpublished manuscript), by Anwar Shaikh, PhD, dated 2017-10-03.
  • Typed manuscript outlining four economic adjustment processes within the classical tradition framework, including fast, medium, medium-slow, and slow processes related to selling prices, circulating capital, capacity utilization, profit-rate equalization, and technical change.
  • Handwritten notes by Anwar Shaikh, PhD, titled 4 speeds ↔ 4 instruments, dated 2017-10-04, discussing adjustment mechanisms involving circulating capital, fixed capital, capacity utilization, profit-rate equalization, entry and exit of firms, technical change, and regulating conditions across industries.
  • Handwritten annotations by Anwar Shaikh, PhD, concerning the equalization of …

Luis Daniel Gonzalez, Anwar Shaikh Phd

Archives of Anwar Shaikh

This collection includes:

• Luis Daniel Gonzalez. NA-24-12. 2017.

• Michael Lahr → I-O coefficients have a beta distribution in each column. 2017. Manuscript note credited to Anwar Shaikh, PhD.

• Michael Lahr — Luis Daniel defense. October 31, 2017. Manuscript note credited to Anwar Shaikh, PhD.

• Comments on Chapter 1: constraints, equilibrium, and empirical regularities. October 31, 2017. Manuscript note credited to Anwar Shaikh, PhD.

• Chapter 1: w-r can be linear if ρi’s are linear, in which case the composition of output. Manuscript note credited to Anwar Shaikh, PhD.

• Chapter 1: empirical regularities imply “constraints”. Manuscript …

  ---

  Go to article

Risk Preference, Time Preference, And Salience Perception, Jonathan Leland, Mark Schneider

ESI Working Papers

A model of decision making is introduced that provides a unified approach for predicting choices under risk and over time. The model predicts systematic departures from expected utility and discounted utility using the same mathematical structure and the same psychological intuition and shows that a dozen diverse choice anomalies can be given a common underlying explanation. The model weights attribute differences both by their importance (consistent with expected utility and discounted utility) and by their salience or similarity (consistent with procedural models based on heuristics), and so provides a bridge between rational and heuristic representations of decision making.

A Flexible And Customizable Method For Assessing Cognitive Abilities, Andrea Civelli, Cary Deck

ESI Working Papers

Raven's Progressive Matrices are a broadly used tool for measuring cognitive ability. This paper develops and validates a set of nonverbal puzzles that can be viewed as an extension of or substitute for the well-known Ravens tasks. Specifically, we describe the characteristics of our puzzles and provide a calibration of the matrices in terms of response accuracy and response time as a function of these characteristics. Then we directly compare within-subject performance on our puzzles and Ravens tasks. Finally, we replicate a previous experimental paper, substituting our puzzles for the Ravens matrices, and show the two tools have similar predictive …

Minimal Frames And Transparent Frames For Risk, Time, And Uncertainty, Jonathan Leland, Mark Schneider, Nathaniel Wilcox

ESI Working Papers

It has been argued that behavior differs between transparent and nontransparent representations of a decision. However, the notion of a ‘transparent representation’ has not been precisely defined. We address this gap by providing formal definitions of ‘transparent frames’ for risk and time, establishing their uniqueness, presenting an approach to construct such frames, and comparing these framesto the ‘standard’ presentation format. Our typology of frames provides a logic for predicting systematic shifts in risk and time preferences as well as changes in the violation rates of rational choice theory. We conduct an experiment for choice under risk to investigate the framing …

All-Pay Auctions With Ties, Alan Gelder, Dan Kovenock, Brian Roberson

ESI Working Papers

We study the two-player, complete information all-pay auction in which a tie ensues if neither player outbids the other by more than a given amount. In the event of a tie, each player receives an identical fraction of the winning prize. Thus players engage in two margins of competition: losing versus tying, and tying versus winning. Two pertinent parameters are the margin required for victory and the value of tying relative to winning. We fully characterize the set of Nash equilibria for the entire parameter space. For much of the parameter space, there is a unique Nash equilibrium which is …

A Perspective On Electronic Alternatives To Traditional Currencies, Gabriele Camera

ESI Working Papers

The institution of money is rapidly evolving thanks to developments in computer-based cryptography. Technological advances have made possible the creation of cost-effective electronic alternatives to banknotes and coins, which are the traditional physical currencies. This document aims to describe — based on scientific literature — the use and characteristics of money, some of the problems associated with issuing a new currency or a new payment instrument, and the possible comparative advantages of a central bank in leading the way relative to private issuers.

Asymmetric Social Norms, Gabriele Camera, Alessandro Gioffré

ESI Working Papers

Studies of cooperation in infinitely repeated matching games focus on homogeneous economies, where full cooperation is efficient and any defection is collectively sanctioned. Here we study heterogeneous economies where occasional defections are part of efficient play, and show how to support those outcomes through contagious punishments.

Sharing Sequential Values In A Network, Ruben Juarez, Chiu Yu Ko, Jingyi Xue

Research Collection School Of Economics

Consider a sequential process where agents have individual values at every possible step. A planner is in charge of selecting steps and distributing the accumulated aggregate values among agents. We model this process by a directed network where each edge is associated with a vector of individual values. This model applies to several new and existing problems, e.g., developing a connected public facility and distributing total values received by surrounding districts; selecting a long-term production plan and sharing final profits among partners of a firm; choosing a machine schedule to serve different tasks and distributing total outputs among task owners. …

Using Experiments To Compare The Predictive Power Of Models Of Multilateral Negotiations, Cary Deck, Charles J. Thomas

ESI Working Papers

We conduct unstructured negotiations in a laboratory experiment designed to empirically assess the predictive power of three approaches to modeling the multilateral negotiations observed in diverse strategic settings. For concreteness we consider two sellers negotiating with a buyer who wants to make only one trade, with the modeling approaches distinguished by whether the buyer negotiates with the sellers sequentially, simultaneously, or in a “take-it-or-leave-it” fashion. Our experiment features two scenarios within which the three approaches have observationally distinct predictions: a differentiated scenario with one high-surplus and one low-surplus seller, and a homogeneous scenario with identical high-surplus sellers. In both scenarios …