Hector Chade
(Arizona State University)
“TBA”
Tag: Microeconomics seminar
Inference from Outcomes in the Market for Lemons
Nenad Kos
(University Bocconi)
“Inference from Outcomes in the Market for Lemons”
Abstract: This paper studies inference from equilibrium outcomes in a market for lemons. The model is a posted-price adverse-selection environment: a monopsonist offers a price to a continuum of sellers, each of whom privately observes the quality of her good, which affects the buyer’s value, and decides whether to trade. We ask what an analyst who knows players’ preferences can infer about the latent quality distribution, surplus, and welfare from observing an equilibrium price and, possibly, the quantity traded. The key observation is that the price is a revealed choice: if the buyer optimally posted the observed price, then every alternative price must have yielded weakly lower payoff, generating equilibrium inequalities that restrict the unobserved distribution. We characterize the boundaries of the set of distributions consistent with a price–quantity pair, or with a price alone, through extremal distributions obtained from binding optimality constraints. These bounds imply sharp ranges for producer surplus, consumer surplus, total welfare, and deadweight loss. The analysis shows that sparse market data can have nontrivial welfare content once the equilibrium logic of the lemons model is imposed. In the private-values benchmark, the problem reduces to standard monopoly pricing and admits a simple stochastic-dominance characterization.
Face to Face 15.2.71 – Room 15.1.39
Nenad Kos
(University Bocconi)
“Inference from Outcomes in the Market for Lemons”
Abstract: This paper studies inference from equilibrium outcomes in a market for lemons. The model is a posted-price adverse-selection environment: a monopsonist offers a price to a continuum of sellers, each of whom privately observes the quality of her good, which affects the buyer’s value, and decides whether to trade. We ask what an analyst who knows players’ preferences can infer about the latent quality distribution, surplus, and welfare from observing an equilibrium price and, possibly, the quantity traded. The key observation is that the price is a revealed choice: if the buyer optimally posted the observed price, then every alternative price must have yielded weakly lower payoff, generating equilibrium inequalities that restrict the unobserved distribution. We characterize the boundaries of the set of distributions consistent with a price–quantity pair, or with a price alone, through extremal distributions obtained from binding optimality constraints. These bounds imply sharp ranges for producer surplus, consumer surplus, total welfare, and deadweight loss. The analysis shows that sparse market data can have nontrivial welfare content once the equilibrium logic of the lemons model is imposed. In the private-values benchmark, the problem reduces to standard monopoly pricing and admits a simple stochastic-dominance characterization.
Face to Face 15.2.71 – Room 15.1.39
TBA
TBA
On the Inefficiency of Social Learning
Florian Brandl
(University of Bonn)
“On the Inefficiency of Social Learning“
Abstract: We study whether a social planner can restore efficient learning a finite expected number of incorrect actions in the canonical sequential social learning model. Agents act in order, each choosing one of two actions based on a private signal and the social information they observe. The planner controls the social information disclosed to each agent and offers transfers contingent on the agent’s action. We show that whenever learning is inefficient without intervention, no combination of disclosure and transfers restores efficient learning at finite cost: the planner must offer subsidies approaching the full value of a correct decision to infinitely many agents, so the expected total offered transfer is infinite. In particular, no disclosure policy alone restores efficiency. Offered transfers, however, differ from realized payments: since a transfer is paid only when the agent takes the subsidized action, the planner can achieve efficient learning while keeping the expected total realized payment arbitrarily small.
Face to Face 15.2.71 – Room 15.1.39
Florian Brandl
(University of Bonn)
“On the Inefficiency of Social Learning“
Abstract: We study whether a social planner can restore efficient learning a finite expected number of incorrect actions in the canonical sequential social learning model. Agents act in order, each choosing one of two actions based on a private signal and the social information they observe. The planner controls the social information disclosed to each agent and offers transfers contingent on the agent’s action. We show that whenever learning is inefficient without intervention, no combination of disclosure and transfers restores efficient learning at finite cost: the planner must offer subsidies approaching the full value of a correct decision to infinitely many agents, so the expected total offered transfer is infinite. In particular, no disclosure policy alone restores efficiency. Offered transfers, however, differ from realized payments: since a transfer is paid only when the agent takes the subsidized action, the planner can achieve efficient learning while keeping the expected total realized payment arbitrarily small.
Face to Face 15.2.71 – Room 15.1.39
Socially optimal rating design
Helene Mass
(University of Vienna)
“Socially optimal rating design”
Face to Face 15.2.71 – Room Seminar 15.1.39
Helene Mass
(University of Vienna)
“Socially optimal rating design”
Face to Face 15.2.71 – Room Seminar 15.1.39
Collusion without Patience
Toomas Hinnosaar
(University of Nottingham)
“Collusion without Patience”
Abstract: Tacit collusion is usually linked to repeated interactions between patient firms. We show that it can also arise in a one-shot duopoly. When firms choose capacities and face outsourcing contracts with minimum order quantities, gaps in feasible outputs allow commitment not to sell intermediate quantities. For a range of parameters, there exists a collusive equilibrium in which both firms produce less and earn more than under competition. Three other equilibria can also arise: competitive, leadership, and miscoordination. We then extend the model to general two-sided limited commitment and show that it yields the same set of equilibria.
Face to Face 15.2.71 – Room 15.1.39
Toomas Hinnosaar
(University of Nottingham)
“Collusion without Patience”
Abstract: Tacit collusion is usually linked to repeated interactions between patient firms. We show that it can also arise in a one-shot duopoly. When firms choose capacities and face outsourcing contracts with minimum order quantities, gaps in feasible outputs allow commitment not to sell intermediate quantities. For a range of parameters, there exists a collusive equilibrium in which both firms produce less and earn more than under competition. Three other equilibria can also arise: competitive, leadership, and miscoordination. We then extend the model to general two-sided limited commitment and show that it yields the same set of equilibria.
Face to Face 15.2.71 – Room 15.1.39
The Design and Price of Certification (joint with Yucheng Shang and Ryo Shirakawa)
Mikael Mäkimattila
(Aalto University)
“The Design and Price of Certification (joint with Yucheng Shang and Ryo Shirakawa)”
- Abstract: We consider the design and pricing of certification contracts. A certifier offers a menu of tests to a sender, who holds partial private information about an unknown state and seeks to persuade a receiver. The selling mechanism gives information to the receiver through two channels: the actual informativeness of the tests and the sender’s choice. In the revenue-maximizing menu, senders whose beliefs exceed an upper threshold purchase a common test, while senders whose beliefs fall below a lower threshold purchase no test. Those with intermediate beliefs purchase distinct tests, so test choice perfectly reveals the sender’s private information. All sender types who purchase a test are indifferent across all options in the menu, and the receiver obtains zero surplus. We also analyze how the results change if the certifier can conceal which test the sender selects.
Face to Face 15.2.71 – Room 15.1.39
Mikael Mäkimattila
(Aalto University)
“The Design and Price of Certification (joint with Yucheng Shang and Ryo Shirakawa)”
- Abstract: We consider the design and pricing of certification contracts. A certifier offers a menu of tests to a sender, who holds partial private information about an unknown state and seeks to persuade a receiver. The selling mechanism gives information to the receiver through two channels: the actual informativeness of the tests and the sender’s choice. In the revenue-maximizing menu, senders whose beliefs exceed an upper threshold purchase a common test, while senders whose beliefs fall below a lower threshold purchase no test. Those with intermediate beliefs purchase distinct tests, so test choice perfectly reveals the sender’s private information. All sender types who purchase a test are indifferent across all options in the menu, and the receiver obtains zero surplus. We also analyze how the results change if the certifier can conceal which test the sender selects.
Face to Face 15.2.71 – Room 15.1.39
Networks and Norms (joint with Matteo Marsili, Intentional Center of Theoretical Physics, Trieste)
Fernando Vega-Redondo
(Chinese University of Hong Kong)
“Networks and Norms (joint with Matteo Marsili, Intentional Center of Theoretical Physics, Trieste)”
ABSTRACT: The co-evolution of social networks and social norms gives rise to a wide range of dynamic behavior. For, as our model highlights, networks not only support the rise of new norms but also tend to block significant changes in established ones. This is why history often shows that, before prevailing norms can be dislodged, incumbent networks must erode. Over time, therefore, the evolution of norms tends to display long phases of slow change, sporadically punctuated by short periods of fast network adjustment in which new norms arise and then gain a robust foothold. Our theoretical framework, by accommodating different time scales, sheds light of how such a rise and fall of norms and networks unfold.
Room 15.1.39
Fernando Vega-Redondo
(Chinese University of Hong Kong)
“Networks and Norms (joint with Matteo Marsili, Intentional Center of Theoretical Physics, Trieste)”
ABSTRACT: The co-evolution of social networks and social norms gives rise to a wide range of dynamic behavior. For, as our model highlights, networks not only support the rise of new norms but also tend to block significant changes in established ones. This is why history often shows that, before prevailing norms can be dislodged, incumbent networks must erode. Over time, therefore, the evolution of norms tends to display long phases of slow change, sporadically punctuated by short periods of fast network adjustment in which new norms arise and then gain a robust foothold. Our theoretical framework, by accommodating different time scales, sheds light of how such a rise and fall of norms and networks unfold.
Room 15.1.39
Pure backward induction reasoning in dynamic games
Andrés Perea
(Maastricht University)
“Pure backward induction reasoning in dynamic games”
Face to Face 15.2.36 – Room 15.1.39
Andrés Perea
(Maastricht University)
“Pure backward induction reasoning in dynamic games”
Face to Face 15.2.36 – Room 15.1.39
The War of Attrition under Uncertainty: Theory and Robust Testable Implications » with Jean-Paul Décamps and Fabien Gensbittel
Thomas Mariotti
(TSE)
“The War of Attrition under Uncertainty: Theory and Robust Testable Implications » with Jean-Paul Décamps and Fabien Gensbittel”
Face-to-face Seminar 15.2.71 – Room Seminar 15.1.39
Thomas Mariotti
(TSE)
“The War of Attrition under Uncertainty: Theory and Robust Testable Implications » with Jean-Paul Décamps and Fabien Gensbittel”