Household Models: An Historical Perspective

This paper is a survey of the literature on theoretical models of the household, paying particular attention to some of the earlier contributions, and using them to place the current state of the theory in perspective. One of its aims is to suggest that the literature’s neglect of Samuelson’s proposal, that households can be modelled as if they maximised a form of social welfare function, was a mistake. However, the idea following directly from the Nash bargaining models, that the household’s preference ordering over the utility profiles of its members depends on exogenous variables, in particular wage rates and non-wage incomes, is an important one. Combined with Samuelson’s proposal, it can be made the basis for a general approach to modelling household decision taking, flexible enough to encompass non-cooperative behaviour and Pareto inefficiencies arising out of the inevitable incompleteness and unenforceability of domestic agreements. We also point out the importance of household production and some of the implications of its neglect in modelling households. Above all, the aim is to provide a deeper understanding of the current theoretical literature on household economics by means of a survey of its history.household behavior, family economics, household welfare, time allocation, labor supply, household production, child care, gender, discrimination, cooperative models, non-cooperative models, trade models, microeconomic history

A survey on intra-household models and evidence

Intra-household models have achieved significant theoretical development and received considerable empirical support within the past decade. This paper is a comprehensive and updated survey on three most influential categories of intra-household models: the Nash cooperative bargaining settings, the collective settings, and the non-cooperative settings. Various models and the latest development within each category are discussed, along with corresponding testable restrictions and limitations. Dynamic cooperative bargaining models and endogenous collective models are introduced as the latest efforts in incorporating a richer set of elements to the intra-household theory. The latest empirical results are summarized along with their policy implications.Intrahousehold economics; bargaining models; collective models

A survey on intra-household models and evidence

Intra-household models have achieved significant theoretical development and received considerable empirical support within the past decade. This paper is a comprehensive and updated survey on three most influential categories of intra-household models: the Nash cooperative bargaining settings, the collective settings, and the non-cooperative settings. Various models and the latest development within each category are discussed, along with corresponding testable restrictions and limitations. Dynamic cooperative bargaining models and endogenous collective models are introduced as the latest efforts in incorporating a richer set of elements to the intra-household theory. The latest empirical results are summarized along with their policy implications

Dynamic Pricing and Inventory Management: Theory and Applications

We develop the models and methods to study the impact of some emerging trends in technology, marketplace, and society upon the pricing and inventory policy of a firm. We focus on the situation where the firm is in a dynamic, uncertain, and (possibly) competitive market environment. The market trends of particular interest to us are: (a) social networks, (b) sustainability concerns, and (c) customer behaviors. The two main running questions this dissertation aims to address are: (a) How these emerging market trends would influence the operations decisions and profitability of a firm; and (b) What pricing and inventory strategies a firm could use to leverage these trends. We also develop an effective comparative statics analysis method to address these two questions under different market trends. Overall, our results suggest that the current market trends of social networks, sustainability concerns, and customer behaviors have significant and interesting impact upon the operations policy of a firm, and that the firm could adopt some innovative pricing and inventory strategies to exploit these trends and substantially improve its profit. Our main findings are: (a) Network externalities (the monopoly setting). We find that network externalities prompt a firm to face the tradeoff between generating current profits and inducing future demands when making the price and inventory decisions, so that it should increase the base-stock level, and to decrease [increase] the sales price when the network size is small [large]. Our extensive numerical experiments also demonstrate the effectiveness of the heuristic policies that leverage network externalities by balancing generating current profits and inducing demands in the near future. (Chapter 2.) (b) Network externalities (the dynamic competition setting). In a competitive market with network externalities, the competing firms face the tradeoff between generating current profits and winning future market shares (i.e., the exploitation-induction tradeoff). We characterize the pure strategy Markov perfect equilibrium in both the simultaneous competition and the promotion-first competition. We show that, to balance the exploitation-induction tradeoff, the competing firms should increase promotional efforts, offer price discounts, and improve service levels. The exploitation-induction tradeoff could be a new driving force for the fat-cat effect (i.e., the equilibrium promotional efforts are higher under the promotion-first competition than those under the simultaneous competition). (Chapter 3.) (d) Trade-in remanufacturing. We show that, with the adoption of the very commonly used trade-in remanufacturing program, the firm may enjoy a higher profit with strategic customers than with myopic customers. Moreover, trade-in remanufacturing creates a tension between firm profitability and environmental sustainability with strategic customers, but benefits both the firm and the environment with myopic customers. We also find that, with either strategic or myopic customers, the socially optimal outcome can be achieved by using a simple linear subsidy and tax scheme. The commonly used government policy to subsidize for remanufacturing alone, however, does not induce the social optimum in general. (Chapter 4.) (d) Scarcity effect of inventory. We show that the scarcity effect drives both optimal prices and order-up-to levels down, whereas increased operational flexibilities (e.g., the inventory disposal and inventory withholding opportunities) mitigate the demand loss caused by high excess inventory and increase the optimal order-up-to levels and sales prices. Our extensive numerical studies also demonstrate that dynamic pricing leads to a much more significant profit improvement with the scarcity effect of inventory than without. (Chapter 5.) (e) Comparative statics analysis method. We develop a comparative statics method to study a general joint pricing and inventory management model with multiple demand segments, multiple suppliers, and stochastically evolving market conditions. Our new method makes componentwise comparisons between the focal decision variables under different parameter values, so it is capable of performing comparative statics analysis in a model where part of the decision variables are non-monotone, and it is well scalable. Hence, our new method is promising for comparative statics analysis in other operations management models. (Chapter 6.

A Bayesian approach to Hybrid Choice models

Tableau d’honneur de la Faculté des études supérieures et postdoctorales, 2010-2011Les modèles microéconométriques de choix discrets ont pour but d’expliquer le processus du choix individuel des consommateurs parmi un ensemble limité et exhaustive d’options mutuellement exclusives. Les modèles dits de choix hybrides sont une généralisation des modèles de choix discrets standard, où des modèles indépendants plus sophistiqués sont considérés simultanément. Dans cette thèse des techniques d’estimation simultanée sont analysées et appliquées pour un modèle de choix hybride qui, sous la forme d’un système complexe d’équations structurelles généralisées, intègre à la fois des choix discrets et des variables latentes en tant que facteurs explicatifs des processus décisionnels. Ce qui motive l’étude de ce genre de modèles est que pour comprendre le processus du choix il faut incorporer des attitudes, des perceptions et des attributs qualitatifs à l’intérieur de modèles décisionnels économiques conventionnels, tout en prenant ce qui dit la recherche en sciences cognitives ainsi qu’en psychologie sociale. Quoique l’estimation du système d’équations d’un modèle de choix hybride requière l’évaluation d’intégrales multidimensionnelles complexes, on résoudre empiriquement ce problème en applicant la méthode du maximum de vraisemblance simulée. Ensuite on dérive une procédure d’échantillonnage de Gibbs pour l’estimation simultanée bayésienne du modèle qui offre des estimateurs convergents et efficaces. Ceci devient une méthode plus avantageuse comparativement aux méthodes classiques dans un cadre analytique avec un grand nombre de variables latentes. En effet, en vertu de l’approche bayésienne il suffit de considérer des régressions ordinaires pour les variables latentes. Par ailleurs, dériver les intervalles de confiance bayésiennes pour les parts de marché ainsi que pour des dispositions à payer devient trivial. De par sa grande géneralité, le modèle de choix hybride est capable de s’adapter à des situations pratiques. En particulier, la réponse des consommateurs suite à l’innovation technologique est analysée. Par exemple, on étudie les préférences pro-environnementales dans un modèle économique des décisions d’achat de véhicules verts selon lequel les consommateurs soucieux de l’environnement sont prêts à payer davantage pour des véhicules à faibles émissions, en dépit des inconvénients potentiels. En outre, en utilisant un noyau probit et des indicateurs dichotomiques on montre que des connaissances préalables ainsi que des attitudes positives envers l’adoption de nouvelles technologies favorisent l’adoption de la téléphonie IP.Microeconometric discrete choice models aim to explain the process of individual choice by consumers among a mutually exclusive, exhaustive and finite group of alternatives. Hybrid choice models are a generalization of standard discrete choice models where independent expanded models are considered simultaneously. In my dissertation I analyze, implement, and apply simultaneous estimation techniques for a hybrid choice model that, in the form of a complex generalized structural equation model, simultaneously integrates discrete choice and latent explanatory variables, such as attitudes and qualitative attributes. The motivation behind hybrid choice models is that the key to understanding choice comes through incorporating attitudinal and perceptual data to conventional economic models of decision making, taking elements from cognitive science and social psychology. The Bayesian Gibbs sampler I derive for simultaneous estimation of hybrid choice models offers a consistent and efficient estimator that outperforms frequentist full information simulated maximum likelihood. Whereas the frequentist estimator becomes fairly complex in situations with a large choice set of interdependent alternatives with a large number of latent variables, the inclusion of latent variables in the Bayesian approach translates into adding independent ordinary regressions. I also find that when using the Bayesian estimates it is easier to consider behavioral uncertainty; in fact, I show that forecasting and deriving confidence intervals for willingness to pay measures is straightforward. Finally, I confirm the capacity of hybrid choice modeling to adapt to practical situations. In particular, I analyze consumer response to innovation. For instance, I incorporate proenvironmental preferences toward low-emission vehicles into an economic model of purchase behavior where environmentally-conscious consumers are willing to pay more for sustainable solutions despite potential drawbacks. In addition, using a probit kernel and dichotomous effect indicators I show that knowledge as well as a positive attitude toward the adoption of new technologies favor the adoption of IP telephony

Three essays on mechanism design, information design and collective decision-making

Cette thèse étudie plusieurs sujets dans la théorie microéconomique, en mettant l’accent sur l’intégration du contrôle de l’information dans la conception des mécanismes, la vérification de la robustesse des mécanismes et la création d’une base pour une prise de décision collective incohérente. Ce travail permet d’optimiser la transmission et l’acquisition de l’information dans les communications organisationnelles, la publicité et la conception de politiques. Il met également en lumière la façon dont les décisions de groupe inconsistantes découlent de l’hétérogénéité des membres du groupe et propose des moyens de restaurer l’efficacité. La thèse comprend trois chapitres, chacun étant autonome et pouvant être lu séparément. Le premier chapitre étudie un environnement de conception de mécanisme dans lequel le principal a le contrôle sur les informations des agents concernant un état pertinent. Le principal s’engage à une politique de divulgation d’informations où chaque agent observe un signal privé, tandis que le principal n’observe directement ni l’état vrai ni le profil du signal. Les exemples incluent (1)l’évaluation si un nouveau produit correspond aux préférences des consommateurs grâce à leurs commentaires sur les essais de produits échantillon, et (2)la collecte de renseignements en autorisant les enquêteurs à recueillir divers aspects de l’information. J’établis l’optimalité d’une politique de divulgation individuellement non informative et révélatrice, où (i)chaque agent n’obtient aucune nouvelle information sur l’état après avoir observé la réalisation de son propre signal, mais (ii)le principal peut néanmoins déduire l’état réel des rapports des agents sur leurs signaux. En outre, cette politique de divulgation optimale admet une mise en œuvre simple et intuitive (comme certains types d’expériences en aveugle, ou des restrictions sur l’accès à certaines informations) sous des hypothèses supplémentaires. Si l’attention est limitée aux paramètres linéaires, je caractérise une classe d’environnements (y compris ceux qui satisfont aux conditions de régularité standard dans la conception des mécanismes) où un résultat d’équivalence est maintenu entre la divulgation privée et la divulgation publique. Le deuxième chapitre, co-écrit avec Takuro Yamashita, est motivé par Chung et Ely (2007) qui établissent les fondements maxmin et bayésien des mécanismes de stratégie dominante dans les environnements d’enchères `a valeur privée. Nous montrons d’abord que les résultats de fondation similaires pour les mécanismes ex post restent vrais même avec des valeurs interdépendantes si l’interdépendance n’est que cardinale. Inversement, si l’environnement présente une interdépendance ordinale, ce qui est typiquement le cas avec les environnements multidimensionnels, alors en général, les mécanismes ex post n’ont pas de fondement. C’est-à-dire qu’il existe un mécanisme non ex post qui réalise des recettes attendues strictement plus élevées que le mécanisme ex post optimal, quelles que soient les croyances élevées des agents. Le troisième chapitre montre que l’incohérence dynamique dans la prise de décision collective peut provenir de l’hétérogénéité des options extérieures des membres du groupe (c.-à -d. Coûts d’opportunité que les individus doivent payer pour rejoindre le groupe) même si les individus partagent le même temps exponentiel préférence. Ce modèle d’incohérence dynamique endogène facilite l’analyse des conséquences sur le bien-être, puisque les préférences individuelles en fonction du temps permettent une mesure bien définie du bien-être social. Nous caractérisons en outre la politique de divulgation d’informations bayésienne-persuasion optimale, qui prend la forme de règles révélatrices supérieures, pour atténuer la distorsion du bien-être causée par des décisions collectives incohérentes. Notre cadre s’avère très adaptable à divers contextes, tels que la fourniture d’équipements publics et l’affectation au travail d’équipe.This thesis investigates several topics in Microeconomic Theory, with a focus on incorporating information control into mechanism design, checking the robustness of mechanisms, and providing a foundation for inconsistent collective decision-making. This work helps to optimize information transmission and acquisition in organizational communications, advertisement and policy design. It also sheds light on how inconsistent group decisions derive from heterogeneity in group members, and proposes ways to restore efficiency. The thesis consists of three chapters, each of which is self-contained and can be read separately. The first chapter studies a mechanism design environment where the principal has control over the agents’ information about a payoff-relevant state. The principal commits to an information disclosure policy where each agent observes a private signal, while the principal directly observes neither the true state nor the signal profile. Examples include (1) assessing whether a new product matches consumers’ preferences through their feedback on sample product trials, and (2) gathering intelligence by authorizing investigators to collect various aspects of information. I establish optimality of individually uninformative and aggregately revealing disclosure policy, where (i) each agent obtains no new information about the state after observing any realization of his own signal, but (ii) the principal can nevertheless infer the true state from the agents’ reports about their signals. Furthermore, this optimal disclosure policy admits simple and intuitive implementation (such as certain types of blinded experiments, or restrictions on access to certain information) under additional assumptions. If attention is restricted to linear settings, I characterize a class of environments (including those satisfying the standard regularity conditions in mechanism design) where an equivalence result holds between private disclosure and public disclosure.The second chapter, co-authored with Takuro Yamashita, is motivated by Chung and Ely (2007), who establish maxmin and Bayesian foundations for dominant-strategy mechanisms in private-value auction environments. We first show that similar foundation results for ex post mechanisms hold true even with interdependent values if the interdependence is only cardinal. Conversely, if the environment exhibits ordinal interdependence, which is typically the case with multi-dimensional environments, then in general, ex post mechanisms do not have foundation. That is, there exists a non-ex-post mechanism that achieves strictly higher expected revenue than the optimal ex post mechanism, regardless of the agents’ high-order beliefs. The third chapter shows that dynamic inconsistency in collective decision-making can derive from heterogeneity in group members’ outside options (i.e. opportunity costs that individuals have to pay in order to join the group), even if individuals share the same exponentially discounting time preference. This model of endogenous dynamic inconsistency facilitatesthe analysis of welfare consequences, since time-consistent individual preferences allow for a well-defined measurement of social welfare. We further characterize the optimal Bayesian persuasion information disclosure policy, which takes the form of upper revealing rules, to alleviate the welfare distortion caused by inconsistent collective decisions. Our framework proves to be highly adaptable to various contexts, including provision of public facilities and assignment on team work

Decisions under Risk, Uncertainty and Ambiguity: Theory and Experiments

I combine theory, experiments and econometrics to undertake the task of disentangling the subtleties and implications of the distinction between risk, uncertainty and ambiguity. One general conclusion is that the elements of this methodological trilogy are not equally advanced. For example, new experimental tools must be developed to adequately test the predictions of theory. My dissertation is an example of this dynamic between theoretical and applied economics

Solving Multi-objective Integer Programs using Convex Preference Cones

Esta encuesta tiene dos objetivos: en primer lugar, identificar a los individuos que fueron víctimas de algún tipo de delito y la manera en que ocurrió el mismo. En segundo lugar, medir la eficacia de las distintas autoridades competentes una vez que los individuos denunciaron el delito que sufrieron. Adicionalmente la ENVEI busca indagar las percepciones que los ciudadanos tienen sobre las instituciones de justicia y el estado de derecho en Méxic