201 research outputs found
Demystifying the 'Metric Approach to Social Compromise with the Unanimity Criterion'
In a recent book and earlier studies, Donald Saari well clarifies the source of three classical impossibility theorems in social choice and proposes possible escape out of these negative results. The objective of this note is to illustrate the relevance of these explanations in justifying the metric approach to the social compromise with the unanimity criterion.social choice, impossibility theorems, metric approach to compromise with the unanimity criterion
Equity and Effectiveness of Optimal Taxation in Contests under an All-Pay Auction
The means of contest design may include differential taxation of the prize. This paper establishes that, given a revenue-maximizing contest designer who faces a balanced-budget constraint, the optimal taxation scheme corresponding to an all-pay auction is appealing in two senses. First, it ensures exceptional equitable final prize valuations. Second, it is effective; it yields total contestants’ efforts that are larger than those obtained under almost any Tullock-type lottery. Furthermore, when a budget surplus is allowed, the superiority of optimal taxation under the APA is preserved in terms of equity and effectiveness relative to optimal taxation under any contest success function.contest design, revenue maximization, balanced-budget constraint, budget surplus, optimal differential taxation, endogenous stakes, all-pay auction, lottery
Prize Sharing in Collective Contests
The characteristics of endogenously determined sharing rules and the group-size paradox are studied in a model of group contest with the following features: (i) The prize has mixed private-public good characteristics. (ii) Groups can differ in marginal cost of effort and their membership size. (iii) In each group the members decide how much effort to put without observing the sharing rules of the other groups. It is shown that endogenous determination of group sharing rules completely eliminates the group-size paradox, i.e. a larger group always attains a higher winning probability than a smaller group, unless the prize is purely private. In addition, an interesting pattern of equilibrium group sharing rules is revealed: the group attaining the lower winning probability is the one choosing the rule giving higher incentives to the members.collective contest, mixed public-good prize, endogenous sharing rules, the group-size paradox
Framing-Based Choice: A Model of Decision-Making Under Risk
In this study we propose an axiomatic theory of decision-making under risk that is based on a new approach to the modeling of framing that focuses on the subjective statistical dependence between prizes of compared lotteries. Unlike existing models that allow objective statistical dependence, as in Regret Theory, in our model the emphasis is on alternative subjective statistical dependence patterns that are induced by alternative descriptions of the lotteries, i.e., by alternative framing. A distinct advantage of the proposed general descriptive model of choice is its ability to adequately explain a wide variety of behaviors and, in particular, several well-known paradoxes of different types.framing, statistical dependence, non-expected utility, expected value of lottery interchange
Optimum Contracts for Research Personnel, Research Employment, and the Establishment of "Rival" Enterprises
This paper considers the problem of hiring scientists for research and development projects when one takes explicit account of the fact that the scientist may be able to use the information acquired during the project in a rival enterprise. Management's problem is to determine an optimum labor policy for its project. The policy consists of an employment decision and a labor contract. Given optimum behavior, it is straightforward to analyze the effect of the potential for mobility of scientific personnel on project profitability and on research employment. We also formalize conditions under which one would expect to observe a scientist leaving his employer to set up (or join) a rival.
Demystifying the 'metric approach to social compromise with the unanimity criterion'
In a recent book and earlier studies, Donald Saari well clarifies the source of three classical impossibility theorems in social choice and proposes possible escape out of these negative results. The objective of this note is to illustrate the relevance of these explanations in justifying the metric approach to the social compromise with the unanimity criterion
Effort and Performance in Public-Policy Contests
Government intervention often gives rise to contests in which the possible ‘prizes’ are determined by the existing status-quo and some new public- policy proposal . In this paper we study the general class of such two-player public-policy contests and examine the effect of a change in the proposed policy, a change that may affect the payoffs of the two contestants, on their effort and performance. We extend the existing comparative statics studies that focus on the effect of changes either in the value of the prize in symmetric contests or in one of the contestants’ valuation of the prize in asymmetric contests. Our results hinge on the relationship between the strategic own-stake (“income”) effect and the strategic rival’s-stake (“substitution”) effect. This relationship is determined by three types of ability and stakes asymmetry between the contestants. In particular, we specify the asymmetry condition under which a more restrained government intervention that reduces the contestants’ prizes has the perverse effect of increasing their aggregate lobbying efforts.public-policy contests, policy reforms, lobbying efforts, strategic own-stake effect, strategic rival’s-stake (“substitution”) effect.
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