Four Essays in Economic Theory

This thesis comprises four essays that belong to different strands of the theoretical economic literature. Chapter 1 and Chapter 2 study two-sided one-to-one matching markets with quasi-linear utility and multi-dimensional heterogeneity. Chapter 1 investigates the efficiency properties of two-sided investments and in particular the sources and limitations of potential investment coordination failures in large two-sided economies with competitive post-investment market. Chapter 2 scrutinizes a novel two-sided matching model with a finite number of agents and two-sided private information about exogenously given attributes. Chapter 3 is a note on the optimal size of fixed-prize research tournaments that seeks to fill two important gaps in an influential paper by Fullerton and McAfee (1999), and Chapter 4 studies the impact of incomplete information on the problem of maximizing revenue in a dynamic version of the knapsack problem, which is a classical combinatorial resource allocation problem with numerous economic applications

Revenue maximization in the dynamic knapsack problem

We analyze maximization of revenue in the dynamic and stochastic knapsack problem where a given capacity needs to be allocated by a given deadline to sequentially arriving agents. Each agent is described by a two-dimensional type that reflects his capacity requirement and his willingness to pay per unit of capacity. Types are private information. We first characterize implementable policies. Then we solve the revenue maximization problem for the special case where there is private information about per-unit values, but capacity needs are observable. After that we derive two sets of additional conditions on the joint distribution of values and weights under which the revenue maximizing policy for the case with observable weights is implementable, and thus optimal also for the case with two-dimensional private information. In particular, we investigate the role of concave continuation revenues for implementation. We also construct a simple policy for which per-unit prices vary with requested weight but not with time, and prove that it is asymptotically revenue maximizing when available capacity/ time to the deadline both go to infinity. This highlights the importance of nonlinear as opposed to dynamic pricing.Knapsack, revenue maximization, dynamic mechanism design

The multiplier effect in two-sided markets with bilateral investments

Agents in a finite two-sided market make costly investments and are then matched assortatively based on these investments. Besides signaling complementary types, investments also generate benefits for partners. We shed light on quantitative properties of the equilibrium investment behavior. The bilateral external benefits induce an investment multiplier effect. This multiplier effect depends in a complex way on agents\u27 uncertainty about their rank within their own market side and on their uncertainty about the types and investments of potential partners. We study how the multiplier effect depends on market size and how it interacts with other important factors such as the costs of investment and the signaling incentives induced by competition for more desirable partners. We use our results to characterize equilibrium utilities in large markets. For small markets, our results lead to bounds on the hold-up problem

Evaluation of the deaths secondary to entrapment under the debris in the Van earthquake

AbstractIntroductionAn earthquake occurred on October 23, 2011 at 13:41 in the Van city of Turkey. According to the Kandilli Observatory and Earthquake Research Institute, the magnitude of this earthquake was measured as 7.2 on the Richter scale. The earthquake caused deaths and injuries due to entrapment under the debris. This study has been planned in order to evaluate the features of these deaths and to discuss the obtained data comparatively with the literature.Materials and methodsExternal examination of the corpses and autopsy reports drawn up for Van Attorney Generalship in the city center were evaluated retrospectively.ResultsTotally 51 deaths secondary to the entrapment under the debris were analyzed. Twenty-seven cases (52.9%) were females and 24 cases (47.1%) were males. All the deaths occurred in houses or workplaces. The causes of deaths were as follows: head trauma together with visceral organ laceration in 30 cases (58.8%), mechanic asphyxia in 14 cases (27.5%) and the crush syndrome in seven cases (13.7%). Deaths due to the crush syndrome occurred after victims’ were rescued alive after having been under the debris.ConclusionTraumatic findings are usually generalized and extensive in deaths related with earthquakes. Multiple fractures of cranial bones, ribs, extremities and injuries of visceral organs and major vessels are determined in the external examination. On the other hand, forensic pathologists should not disregard the diagnosis of the crush syndrome in traumatic deaths, especially if the trauma is secondary to the entrapment under the debris following an earthquake

Surplus Division and Efficient Matching

Abstract We study a transferable utility two-sided matching model with a finite number of agents who are characterized by privately known attributes that jointly determine the surplus of each potential partnership. We ask the following question: for what divisions of surplus within matched pairs is it possible to design a mechanism that determines additional payments when agents compete for partners under incomplete information and induces information revelation leading to an efficient (surplus-maximizing) matching? Our main result shows that the only robust rules compatible with efficient matching are those that divide realized surplus in a fixed proportion, independently of the attributes of the pair's members: to enable efficient match formation in cases with complementary, multi-dimensional attributes, it is necessary that each agent expects to get the same fixed percentage of surplus in every conceivable match. A more permissive result is obtained for one-dimensional attributes and supermodular surplus functions

Surplus Division and Efficient Matching

Abstract We study a two-sided matching model with a finite number of agents who are characterized by privately known attributes that jointly determine the match surplus of each potential partnership. Utility functions are quasi-linear, and monetary transfers among agents are feasible. We ask the following question: for what divisions of surplus within matched pairs is it possible to set up a centralized mechanism that matches agents efficiently (in a surplus-maximizing way) and makes truthful revelation of private information incentive compatible? Our main result shows that when surplus exhibits complementarities with regard to multi-dimensional attributes, essentially only fixed proportion divisions are compatible with efficient match formation. In other words, it is necessary that each agent expects to get the same fixed percentage of surplus in every conceivable match, independently of the attributes of the pair's members. A more permissive result is obtained for one-dimensional attributes and supermodular surplus functions