On the evolution of market institutions: the platform design paradox

We study competition among market designers who create new trading platforms, when boundedly rational traders learn to select among them. We ask whether efficient platforms, leading to market - clearing trading outcomes, will dominate the market in the long run. If several market designers are competing, we find that traders learn to select non-market clearing platforms with prices systematically above the market-clearing level, provided at least one such platform is introduced by a market designer. This in turn leads market designers to introduce non-market clearing platforms. Hence platform competition induces non-competitive market outcomes

Like Father, Like Son: Inheriting and Bequeathing

Empirical evidence suggests that parents who have themselves inherited from their own parents are more likely to leave an estate to their children even after controlling for income, wealth and education. This implies an indirect reciprocal behavior between three generations by transmitting the attitude towards bequeathing from one generation to the next. We incorporate such an intergenerational chain into an overlapping generations model and show that the economy might be characterized by multiple steady states involving poverty traps. Individuals will not leave bequests unless per capita income levels exceed a threshold level. In such a situation, an unfunded social security security programme may help to overcome poverty by providing additional old age income out of which to bequeath.Empirische Ergebnisse deuten darauf hin, dass Eltern, die etwas geerbt haben, unabhängig von etwaigen Einkommens- und Vermögenseffekten, eher geneigt sind selbst auch zu vererben. Dies impliziert ein indirekt reziprokes Verhalten zwischen drei Generationen, bei dem die Einstellung gegenüber dem Vererbungsvorgang von einer Generation zur nächsten weitergegeben wird. Wir integrieren eine solche intergenerationale Verknüpfung in ein überlappendes Generationenmodell und zeigen, dass die resultierende Ökonomie durch multiple Gleichgewichte, einschließlich Armutsfallen, charakterisiert werden kann. Individuen vererben nur dann an ihre Nachkommen, wenn das eigene Pro-Kopf-Einkommen hinreichend hoch ist und einen gewissen Schwellenwert überschreitet. In einer solchen Situation kann ein umlagefinanziertes Rentensystem dazu beitragen der Armut zu entkommen, indem es den Individuen zusätzliches Alterseinkommen zur Verfügung stellt, aus dem sie vererben können

Generosity motivated by acceptance - evolutionary analysis of an anticipation game

We here present both experimental and theoretical results for an Anticipation Game, a two-stage game wherein the standard Dictator Game is played after a matching phase wherein receivers use the past actions of dictators to decide whether to interact with them. The experimental results for three different treatments show that partner choice induces dictators to adjust their donations towards the expectations of the receivers, giving significantly more than expected in the standard Dictator Game. Adding noise to the dictators' reputation lowers the donations, underlining that their actions are determined by the knowledge provided to receivers. Secondly, we show that the recently proposed stochastic evolutionary model where payoff only weakly drives evolution and individuals can make mistakes requires some adaptations to explain the experimental results. We observe that the model fails in reproducing the heterogeneous strategy distributions. We show here that by explicitly modelling the dictators' probability of acceptance by receivers and introducing a parameter that reflects the dictators' capacity to anticipate future gains produces a closer fit to the aforementioned strategy distributions. This new parameter has the important advantage that it explains where the dictators' generosity comes from, revealing that anticipating future acceptance is the key to success.SCOPUS: ar.jinfo:eu-repo/semantics/publishe

State dependent choice

We propose a theory of choices that are influenced by the psychological state of the agent. The central hypothesis is that the psychological state controls the urgency of the attributes sought by the decision maker in the available alternatives. While state dependent choice is less restricted than rational choice, our model does have empirical content, expressed by simple "revealed preference" type of constraints on observable choice data. We demonstrate the applicability of simple versions of the framework to economic contexts. We show in particular that it can explain widely researched anomalies in the labour supply of taxi drivers

The performance of stochastic designs in wellbore drilling operations

© 2018, The Author(s). Wellbore drilling operations frequently entail the combination of a wide range of variables. This is underpinned by the numerous factors that must be considered in order to ensure safety and productivity. The heterogeneity and sometimes unpredictable behaviour of underground systems increases the sensitivity of drilling activities. Quite often the operating parameters are set to certify effective and efficient working processes. However, failings in the management of drilling and operating conditions sometimes result in catastrophes such as well collapse or fluid loss. This study investigates the hypothesis that optimising drilling parameters, for instance mud pressure, is crucial if the margin of safe operating conditions is to be properly defined. This was conducted via two main stages: first a deterministic analysis—where the operating conditions are predicted by conventional modelling procedures—and then a probabilistic analysis via stochastic simulations—where a window of optimised operation conditions can be obtained. The outcome of additional stochastic analyses can be used to improve results derived from deterministic models. The incorporation of stochastic techniques in the evaluation of wellbore instability indicates that margins of the safe mud weight window are adjustable and can be extended considerably beyond the limits of deterministic predictions. The safe mud window is influenced and hence can also be amended based on the degree of uncertainty and the permissible level of confidence. The refinement of results from deterministic analyses by additional stochastic simulations is vital if a more accurate and reliable representation of safe in situ and operating conditions is to be obtained during wellbore operations.Published versio