Behavioral implications of shortlisting procedures

We consider two-stage “shortlisting procedures” in which the menu of alternatives is first pruned by some process or criterion and then a binary relation is maximized. Given a particular first-stage process, our main result supplies a necessary and sufficient condition for choice data to be consistent with a procedure in the designated class. This result applies to any class of procedures with a certain lattice structure, including the cases of “consideration filters,” “satisficing with salience effects,” and “rational shortlist methods.” The theory avoids background assumptions made for mathematical convenience; in this and other respects following Richter’s classical analysis of preference-maximizing choice in the absence of shortlisting

Heuristics for deciding collectively rational consumption behavior.

We consider the computational problem of testing whether observed household consumption behavior satisfies the Collective Axiom of Revealed Preferences (CARP). We propose a graph such that the existence of a node-partitioning giving rise to two induced subgraphs that are acyclic implies that the data satisfy CARP. Furthermore, we propose and implement heuristics that are quite fast, that can be used to check reasonably large datasets for CARP and that can be of particular interest when used prior to computationally demanding approaches. Finally, from the computational results we conclude that these heuristics can be effective in testing CARP.Collective model of household consumption; Collective Axiom of Revealed; Preference; Pareto efficiency; Directed graph; Graph coloring; Graph partitioning; Acyclic subgraph; Heuristics;

Heuristics for deciding collectively rational consumption behavior

We consider the computational problem of testing whether observed household consumption behavior satisfies the Collective Axiom of Revealed Preferences (CARP). We propose a graph such that the existence of a node-partitioning giving rise to two induced subgraphs that are acyclic implies that the data satisfy CARP. Furthermore, we propose and implement heuristics that are quite fast, that can be used to check reasonably large datasets for CARP and that can be of particular interest when used prior to computationally demanding approaches. Finally, from the computational results we conclude that these heuristics can be effective in testing CARP.Collective model of household consumption; Collective Axiom of Revealed Preference; Pareto efficiency; Directed graph; Graph coloring; Graph partitioning; Acycli subgraph; Heuristics.

A simple axiomatics of dynamic play in repeated games

This paper proposes an axiomatic approach to study two-player infinitely repeated games. A solution is a correspondence that maps the set of stage games into the set of infinite sequences of action profiles. We suggest that a solution should satisfy two simple axioms: individual rationality and collective intelligence. The paper has three main results. First, we provide a classification of all repeated games into families, based on the strength of the requirement imposed by the axiom of collective intelligence. Second, we characterize our solution as well as the solution payoffs in all repeated games. We illustrate our characterizations on several games for which we compare our solution payoffs to the equilibrium payoff set of Abreu and Rubinstein (1988). At last, we develop two models of players' behavior that satisfy our axioms. The first model is a refinement of subgame-perfection, known as renegotiation proofness, and the second is an aspiration-based learning model.Axiomatic approach, repeated games, classification of games, learning, renegotiation

EXPERIMENTAL MARKETS AND ENVIRONMENTAL POLICY

Experimental markets can be a useful tool to guide and evaluate environmental policy. This paper reviews four experiments to illustrate. Two institutional experiments are considered-Coasian bargaining with positive transaction costs, and a gaming experiment of dynamic choice in a conflict. Two valuation experiments are also discussed-the impact of sequential reduction mechanisms on the value of risk, and experimental auction markets to elicit the value of safer food.Environmental Economics and Policy,