444 research outputs found
Allocation mechanisms, incentives, and endemic institutional externalities
Whether an economic agent’s decision creates an externality often depends on the institutional context in which the decision was made. Indeed, in orthodox economics, a technological or exogenous externality occurs just in case one agent’s economic welfare or production possibilities are directly affected by the market decisions of other agents. A pecuniary externality occurs just in case one consumer’s economic welfare or producer’s profit is affected indirectly by price changes caused by changes in other agents’ decisions. Similarly, an institutional or endogenous externality may arise whenever allocations are determined by a mechanism that is not strategy proof for some agent. Then even a resource balance constraint creates an institutional externality except in special cases such as when no individual agent’s action can affect market clearing prices — i.e., there are no pecuniary externalities
Which market protocols facilitate fair trading?
The evaluation of an exchange market is a multi-faceted problem. An important criterion is the ability to achieve allocative efficiency. Gode and Sunder (1993) shows that a continuous double auction for singleunit trades leads to an efficient allocation even when the traders exhibit “zero-intelligence”; in other words, market protocols are active contributors in the search for a better outcome. Under reasonable circumstances, most of the commonly used market protocols share the ability to help traders discover an efficient allocation
Mathematical utility theory and the representability of demand by continuous homogeneous functions
The resort to utility-theoretical issues will permit us to propose a constructive procedure for deriving a homogeneous of degree one continuous function that gives raise to a primitive demand function under suitably mild conditions. This constitutes the first self-contained and elementary proof of a necessary and sufficient condition for an integrability problem to have a solution by continuous (subjective utility) functions.info:eu-repo/semantics/publishedVersio
LP-based Covering Games with Low Price of Anarchy
We present a new class of vertex cover and set cover games. The price of
anarchy bounds match the best known constant factor approximation guarantees
for the centralized optimization problems for linear and also for submodular
costs -- in contrast to all previously studied covering games, where the price
of anarchy cannot be bounded by a constant (e.g. [6, 7, 11, 5, 2]). In
particular, we describe a vertex cover game with a price of anarchy of 2. The
rules of the games capture the structure of the linear programming relaxations
of the underlying optimization problems, and our bounds are established by
analyzing these relaxations. Furthermore, for linear costs we exhibit linear
time best response dynamics that converge to these almost optimal Nash
equilibria. These dynamics mimic the classical greedy approximation algorithm
of Bar-Yehuda and Even [3]
Boolean Game with Prioritized Norms
In this paper we study boolean game with prioritized norms. Norms distinguish illegal strategies from legal strategies. Notions like legal strategy and legal Nash equilibrium are introduced. Our formal model is a combination of (weighted) boolean game and so called (prioritized) input/output logic. After formally presenting the model, we use examples to show that non-optimal Nash equilibrium can be avoided by making use of norms.We study various complexity issues related to legal strategy and legal Nash equilibrium
Slutsky Matrix Norms and Revealed Preference Tests of Consumer Behaviour
Given any observed finite sequence of prices, wealth and demand choices, we characterize the relation between its underlying Slutsky matrix norm (SMN) and some popular discrete revealed preference (RP) measures of departures from rationality, such as the Afriat index. We show that testing rationality in the SMN aproach with finite data is equivalent to testing it under the RP approach. We propose a way to "summarize" the departures from rationality in a systematic fashion in finite datasets. Finally, these ideas are extended to an observed demand with noise due to measurement error; we formulate an appropriate modification of the SMN approach in this case and derive closed-form asymptotic results under standard regularity conditions
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