55 research outputs found
Conjugate information disclosure in an auction with learning
We consider a single-item, independent private value auction environment with two bidders: a leader, who knows his valuation, and a follower, who privately chooses how much to learn about his valuation. We show that, under some conditions, an ex-post efficient revenue-maximizing auction—which solicits bids sequentially—partially discloses the leader's bid to the follower, to influence his learning. The disclosure rule that emerges is novel; it may reveal to the follower only a pair of bids to which the leader's actual bid belongs. The identified disclosure rule, relative to the first-best, induces the follower to learn less when the leader's valuation is low and more when the leader's valuation is high
Schelling's Spatial Proximity Model of Segregation Revisited
Schelling [1969, 1971a, 1971b, 1978] presented a microeconomic model showing how an integrated city could unravel to a rather segregated city, notwithstanding relatively mild assumptions concerning the individual agents' preferences, i.e., no agent preferring the resulting segregation. We examine the robustness of Schelling's model, focusing in particular on its driving force: the individual preferences. We show that even if all individual agents have a strict preference for perfect integration, best-response dynamics will lead to segregation. What is more, we argue that the one-dimensional and two-dimensional versions of Schelling's spatial proximity model are in fact two qualitatively very different models of segregation.Neighborhood segregation, Myopic Nash Equilibria, Best-response dynamics, Markov chain, Limit-behavior.
Free Riding on Altruism and Group Size
It is shown that altruism does not affect the equilibrium provision of public goods although altruism takes the form of unconditional commitment to contribute. The reason is that altruistic contributions completely crowd out selfish contributions. That is, egoists free ride on altruism. It is also shown that public goods are less likely to be provided in larger groups.Free Riding, Public good, Altruism
An optimal auction with moral hazard
Abstract
We consider a single-item, independent private value auction environment with two bidders: the leader, who knows his valuation, and the follower, who exerts an effort that affects the probability distribution of his valuation, which he then learns. We provide sufficient conditions under which an ex-post efficient revenue-maximizing auction solicits bids sequentially and partially discloses the leader’s bid to the follower, thereby influencing the follower’s effort. This disclosure rule, which is novel, is non-monotone and prescribes sometimes revealing only a pair to which the leader’s bid belongs and sometimes revealing the bid itself. The induced effort distortion relative to the first-best is discussed
Dynamic project selection
We study a normative model of an internal capital market, used by a company to choose between its two divisions’ pet projects. Each project’s value is initially unknown to all but can be dynamically learned by the corresponding division. Learning can be suspended or resumed at any time and is costly. We characterize an internal capital market that maximizes the company’s expected cash flow. This market has indicative bidding by the two divisions, followed by a spell of learning and then firm bidding, which occurs at an endogenous deadline or as soon as either division requests it
Strategic behaviour in Schelling dynamics: theory and experimental evidence
In this paper we experimentally test Schelling’s (1971) segregation model and obtain the striking result of full segregation in most of the cases. In addition, we extend Schelling’s model theoretically by adding strategic behaviour and moving costs. We obtain a unique subgame perfect equilibrium in which rational agents facing moving costs may find it optimal not to move (anticipating other participants’ movements). This equilibrium is far from full segregation. We run experiments for this extended Schelling model, and find that the percentage of full segregated societies is notably reduced when the cost of moving is high, but it is not affected when it is low, relative to the baseline with costless moving. We also find that the degree of segregation depends on the distribution of strategic subjects relative of a baseline model where moving is costless
Dynamics of Transformation from Segregation to Mixed Wealth Cities
We model the dynamics of the Schelling model for agents described simply by a
continuously distributed variable - wealth. Agents move to neighborhoods where
their wealth is not lesser than that of some proportion of their neighbors, the
threshold level. As in the case of the classic Schelling model where
segregation obtains between two races, we find here that wealth-based
segregation occurs and persists. However, introducing uncertainty into the
decision to move - that is, with some probability, if agents are allowed to
move even though the threshold level condition is contravened - we find that
even for small proportions of such disallowed moves, the dynamics no longer
yield segregation but instead sharply transition into a persistent mixed wealth
distribution. We investigate the nature of this sharp transformation between
segregated and mixed states, and find that it is because of a non-linear
relationship between allowed moves and disallowed moves. For small increases in
disallowed moves, there is a rapid corresponding increase in allowed moves, but
this tapers off as the fraction of disallowed moves increase further and
finally settles at a stable value, remaining invariant to any further increase
in disallowed moves. It is the overall effect of the dynamics in the initial
region (with small numbers of disallowed moves) that shifts the system away
from a state of segregation rapidly to a mixed wealth state.
The contravention of the tolerance condition could be interpreted as public
policy interventions like minimal levels of social housing or housing benefit
transfers to poorer households. Our finding therefore suggests that it might
require only very limited levels of such public intervention - just sufficient
to enable a small fraction of disallowed moves, because the dynamics generated
by such moves could spur the transformation from a segregated to mixed
equilibrium.Comment: 12 pages, 7 figure
Emergence of metapopulations and echo chambers in mobile agents
Multi-agent models often describe populations segregated either in the physical space, i.e. subdivided in metapopulations, or in the ecology of opinions, i.e. partitioned in echo chambers. Here we show how the interplay between homophily and social influence controls the emergence of both kinds of segregation in a simple model of mobile agents, endowed with a continuous opinion variable. In the model, physical proximity determines a progressive convergence of opinions but differing opinions result in agents moving away from each others. This feedback between mobility and social dynamics determines to the onset of a stable dynamical metapopulation scenario where physically separated groups of like-minded individuals interact with each other through the exchange of agents. The further introduction of confirmation bias in social interactions, defined as the tendency of an individual to favor opinions that match his own, leads to the emergence of echo chambers where different opinions can coexist also within the same group. We believe that the model may be of interest to researchers investigating the origin of segregation in the offline and online world
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