Mechanisms for Risk Averse Agents, Without Loss

Auctions in which agents' payoffs are random variables have received increased attention in recent years. In particular, recent work in algorithmic mechanism design has produced mechanisms employing internal randomization, partly in response to limitations on deterministic mechanisms imposed by computational complexity. For many of these mechanisms, which are often referred to as truthful-in-expectation, incentive compatibility is contingent on the assumption that agents are risk-neutral. These mechanisms have been criticized on the grounds that this assumption is too strong, because "real" agents are typically risk averse, and moreover their precise attitude towards risk is typically unknown a-priori. In response, researchers in algorithmic mechanism design have sought the design of universally-truthful mechanisms --- mechanisms for which incentive-compatibility makes no assumptions regarding agents' attitudes towards risk. We show that any truthful-in-expectation mechanism can be generically transformed into a mechanism that is incentive compatible even when agents are risk averse, without modifying the mechanism's allocation rule. The transformed mechanism does not require reporting of agents' risk profiles. Equivalently, our result can be stated as follows: Every (randomized) allocation rule that is implementable in dominant strategies when players are risk neutral is also implementable when players are endowed with an arbitrary and unknown concave utility function for money.Comment: Presented at the workshop on risk aversion in algorithmic game theory and mechanism design, held in conjunction with EC 201

Moral commitment: Does it reduce or enhance the response to social norms? Evidence from an experiment on earnings management

Social norms play a powerful role in guiding managerial behavior. For example, prior work has established the power of injunctive (prescriptive) norms in areas where views on what is right and wrong widely differ, such as earnings management (EM). Existing work highlights the effects of social norms on the average norm addressee. However, little is known about individual differences in reactions to injunctive norms. That is, who is more malleable, and who resists more? In this research, we conduct an experiment on EM to study such potential differences in individual responses to social norms. We find that participants with a strong commitment to honesty react less to both EM-disapproving and EM-approving injunctive norms. These findings have implications for the theoretical and empirical analysis of managerial behavior and for the use of injunctive social norms as steering tools for truthful reporting

On Rational Delegations in Liquid Democracy

Liquid democracy is a proxy voting method where proxies are delegable. We propose and study a game-theoretic model of liquid democracy to address the following question: when is it rational for a voter to delegate her vote? We study the existence of pure-strategy Nash equilibria in this model, and how group accuracy is affected by them. We complement these theoretical results by means of agent-based simulations to study the effects of delegations on group's accuracy on variously structured social networks.Comment: 17 pages, 3 figures. This paper (without Appendix) appears in the proceedings of AAAI'1

Information Sharing in Credit Markets: A Survey

Information sharing about borrowers' characteristics and their indebtedness can have important effects on credit markets activity. First, it improves the banks' knowledge of applicants' characteristics and permits a more accurate prediction of their repayment probabilities. Second, it reduces the informational rents that banks could otherwise extract from their customers. Third, it can operate as a borrower discipline device. Finally, it eliminates borrowers' incentive to become over-indebted by drawing credit simultaneously from many banks without any of them realizing. Understanding the effects of information sharing also helps to shed light on some key issues in the design of a credit information system, such as the relationship between public and private mechanisms, the dosage between black and white information sharing, and the "memory" of the system. Merging the insights from theoretical models with the lessons of experience, one can avoid serious pitfalls in the design of credit information systems.information sharing, credit markets

A Bridge between Liquid and Social Welfare in Combinatorial Auctions with Submodular Bidders

We study incentive compatible mechanisms for Combinatorial Auctions where the bidders have submodular (or XOS) valuations and are budget-constrained. Our objective is to maximize the \emph{liquid welfare}, a notion of efficiency for budget-constrained bidders introduced by Dobzinski and Paes Leme (2014). We show that some of the known truthful mechanisms that best-approximate the social welfare for Combinatorial Auctions with submodular bidders through demand query oracles can be adapted, so that they retain truthfulness and achieve asymptotically the same approximation guarantees for the liquid welfare. More specifically, for the problem of optimizing the liquid welfare in Combinatorial Auctions with submodular bidders, we obtain a universally truthful randomized $O(\log m)$-approximate mechanism, where $m$ is the number of items, by adapting the mechanism of Krysta and V\"ocking (2012). Additionally, motivated by large market assumptions often used in mechanism design, we introduce a notion of competitive markets and show that in such markets, liquid welfare can be approximated within a constant factor by a randomized universally truthful mechanism. Finally, in the Bayesian setting, we obtain a truthful $O(1)$-approximate mechanism for the case where bidder valuations are generated as independent samples from a known distribution, by adapting the results of Feldman, Gravin and Lucier (2014).Comment: AAAI-1

Corporate Fraud, Governance and Auditing

We analyze corporate fraud in a model where managers have superior information but, due to private benefits from empire building, are biased against liquidation. This may induce them to misreport information and even bribe auditors when liquidation would be value-increasing. To restrain fraud, shareholders optimally choose auditing quality and the performance sensitivity of managerial pay, taking into account external corporate governance and auditing regulation. For given managerial pay, it is optimal to rely on auditing when external governance is in an intermediate range. When both auditing and managerial incentive pay are used, worse external governance must be balanced by heavier reliance on both of these incentive mechanisms. In designing managerial pay, equity can improve managerial incentives while options worsen them.accounting fraud, auditing, managerial compensation, corporate governance, regulation

Quality of life in autistic spectrum disorder

The limitations of using survival rates and symptom levels as the only outcome variables in clinical practice and research have become evident, particularly with people who have a lifelong and incurable disorder, such as Autistic Spectrum Disorder (ASD). For them, a more important consideration may be whether an intervention has the result of making life more of less 'worth living'. As such, quality of life (QOL) is increasingly seen as a key consideration in evaluating services, the ethical debate regarding health care resource allocation, when testing the effectiveness of new treatments and the development of clinical guidelines for these groups of people. However, factors contributing to QOL for people with ASD are not yet understood, and have to date received little attention by researchers. As such, there is currently no ASD-specific QOL assessment scale described in the literature. This thesis describes the development and validation of such a scale.The research presented here included 15 adults with a diagnosis of Asperger's Syndrome, High-Functioning Autism and High-Functioning ASD without a learning disability associated with Grampian Autistic Society, a family member or key worker for participants, 15 control participants attending a local community centre, and professionals within the field of ASD. The scale development was based on the literature of QOL assessment in other relevant disorders. Face/content validity was investigated through a developed feedback questionnaire given to the participants with ASD, their indentified proxies and the professionals in the field (n=46). There is currently no 'gold standard' for measuring QOL in ASD. Therefore, in order to investigate the concurrent validity of the QOL-ASD, the well-established generic measures WHOQOL-BREF and EQ-5D were used (n=30). To assess the QOL-ASD's test-retest validity, the scale was given again to the participants 7 days after the initial assessment (n=30).Due to the small number of participants included, the results presented here should be interpreted with caution, and could be considered as a pilot of a larger scale study. These results indicate that the QOL-ASD has good face/content validity, good concurrent validity, good test-retest validity and good internal consistency. A significant positive relationship between the QOL-ASD and age was detected.The preliminary results of the research into the QOL-ASD indicate that this scale is valid and reliable as a tool to measure QOL in ASD, and as such some evidence has been found to support its use in clinical practice and research with this group