Perfect Sequential Reciprocity and Dynamic Consistency

Dufwenberg and Kirchsteiger�s (2004) extends Rabin�s (1993) theory of reciprocity in a dynamic sense, introducing a rule of revision for player�s beliefs. The Sequential Reciprocity Equilibrium [SRE] they define can be dynamically inconsistent. In this article it is argued that such dynamic inconsistency is not intrinsically related to issues of reciprocity, but rather to the particular way the beliefs�updating process is modeled. A refinement of the SRE, which is both dynamically consistent and, it is argued, more sound to assumptions usually made in the literature of information economics and philosophy, is proposed.Reciprocity;� Dynamic Consistency

Collective Bargaining and Walrasian Equilibrium

This paper contributes to the research agenda on non-cooperative foundations ofWalrasian Equilibrium. A class of barganing games in which agents bargain over prices and maximum trading con- straints is considered: It is proved that all the Stationary Sub- game Perfect Equilibria of these games implement Walrasian al- locations as the bargaining frictions vanish. The main novelty of the result is twofold: (1) it holds for any number of agents; (2) it is robust to di¤erent speci�cations of the bargaining process.strategic bargaining; Walrasian Equilibrium

On the structure of rationalizability for arbitrary spaces of uncertainty

Weinstein and Yildiz (Econometrica, 2007) have shown that only very weak predictions are robust to mispecifications of higher order beliefs. Whenever a type has multiple rationalizable actions, any of these actions is uniquely rationalizable for some arbitrarily close type. Hence, refinements of rationalizability are not robust. This negative result is obtained under a richness condition, which essentially means that all common knowledge assumptions on payoffs are relaxed. In many settings this condition entails an unnecessarily demanding robustness test. It is therefore natural to explore the structure of rationalizability when arbitrary common knowledge assumptions are relaxed (i.e., without assuming richness). For arbitrary spaces of uncertainty, and for every player i, I construct a set A_{i}^{∞} of actions that are uniquely rationalizable for some hierarchy of beliefs. The main result shows that for any type t_{i}, and any action a_{i} rationalizable for t_{i}, if a_{i} belongs to A_{i}^{∞} and is justified by conjectures concentrated on A_{-i}^{∞}, then there exists a sequence of types converging to t_{i} for which a_{i} is uniquely rationalizable. This result significantly generalizes Weinstein and Yildiz's. Some of its implications are discussed in the context of auctions, equilibrium refinements and in connection with the literature on global games

A network solution to robust implementation:The case of identical but unknown distributions

Data de publicació electrònica: 24 de gener de 2023We study robust mechanism design in environments in which agents commonly believe that others’ types are identically distributed, but we do not assume that the actual distribution is common knowledge, nor that it is known to the designer. First, we characterize all incentive compatible transfers under these assumptions. Second, we characterize the conditions under which full implementation is possible via direct mechanisms, that only elicit payoff relevant information, and the transfer schemes which achieve it whenever possible. The full implementation results obtain from showing that the problem can be transformed into one of designing a network of strategic externalities, subject to suitable constraints which are dictated by the incentive compatibility requirements.The BSE benefited from the financial support of the Spanish Ministry of Economy and Competitiveness, through the Severo Ochoa Programme for Centres of Excellence in R&D (CEX2019-000915-S). Antonio Penta acknowledges the financial support of the European Research Council, Starting Grant 759424

Web-Based Knowledge Extraction and the Cognitive Characterization of Cultural Groups

The advent of Web 2.0 has provided new opportunities for cultural analysts to understand more about the cognitive characteristics of cultural groups. In particular, user-contributed content provides important indications as to the beliefs, attitudes and values of cultural groups, and this is an important focus of attention for those concerned with the development of cognitively-relevant models. In order to support the exploitation of the Web in the context of cultural modeling activities, it is important to deal with both the large-scale nature of the Web and the current dominance of natural language formats. In this paper, we outline an approach to support the exploitation of the Web in the context of cultural modeling activities. The approach begins with the development of qualitative cultural models (which describe the beliefs, concepts and values of cultural groups), and these models are subsequently used to develop an ontology-based information extraction capability (which harvests model-relevant information from online textual resources). We are currently developing a system to support the approach, and the continued development of this system should enable cultural analysts to more fully exploit the Web for the purpose of developing more accurate, detailed and predictively-relevant cognitive models

Marketing Agencies and Collusive Bidding in Online Ad Auctions

The transition of the advertising market from traditional media to the internet has induced a proliferation of marketing agencies specialized in bidding in the auctions that are used to sell ad space on the web. We analyze how collusive bidding can emerge from bid delegation to a common marketing agency and how this can undermine the revenues and allocative efficiency of both the Generalized Second Price auction (GSP, used by Google and Microsoft-Bing and Yahoo!) and the of VCG mechanism (used by Facebook). We find that, despite its well-known susceptibility to collusion, the VCG mechanism outperforms the GSP auction both in terms of revenues and efficiency

Perfect Sequential Reciprocity and Dynamic Consistency

Dufwenberg and Kirchsteiger�s (2004) extends Rabin�s (1993) theory of reciprocity in a dynamic sense, introducing a rule of revision for player�s beliefs. The Sequential Reciprocity Equilibrium [SRE] they define can be dynamically inconsistent. In this article it is argued that such dynamic inconsistency is not intrinsically related to issues of reciprocity, but rather to the particular way the beliefs�updating process is modeled. A refinement of the SRE, which is both dynamically consistent and, it is argued, more sound to assumptions usually made in the literature of information economics and philosophy, is proposed

Perfect Sequential Reciprocity and Dynamic Consistency

Dufwenberg and Kirchsteiger�s (2004) extends Rabin�s (1993) theory of reciprocity in a dynamic sense, introducing a rule of revision for player�s beliefs. The Sequential Reciprocity Equilibrium [SRE] they define can be dynamically inconsistent. In this article it is argued that such dynamic inconsistency is not intrinsically related to issues of reciprocity, but rather to the particular way the beliefs�updating process is modeled. A refinement of the SRE, which is both dynamically consistent and, it is argued, more sound to assumptions usually made in the literature of information economics and philosophy, is proposed

Collective Bargaining and Walrasian Equilibrium

This paper contributes to the research agenda on non-cooperative foundations ofWalrasian Equilibrium. A class of barganing games in which agents bargain over prices and maximum trading con- straints is considered: It is proved that all the Stationary Sub- game Perfect Equilibria of these games implement Walrasian al- locations as the bargaining frictions vanish. The main novelty of the result is twofold: (1) it holds for any number of agents; (2) it is robust to di¤erent speci�cations of the bargaining process