Can forgetful sellers be better off? Impact of information in an ultimatum price-setting game with learning

This paper introduces learning dynamics into a posted-offer pricing game, in which sellers observe past-period transactions before announcing a take-it or leave-it price, and buyers either accept or reject the announced price. We consider the impact that seller access to information regarding past transaction has on the long-term prices, and show that when sellers have imperfect information about the past, the long-term average sale price may be higher than when sellers perfectly observe the entire history of the game. It follows that limiting seller information can improve their long-term average welfare, and total long- term average sales revenue. This has interesting implications regarding firm incentives to provide information to their managers and sales agents.learning, posted price games, limited memory, management incentives

An Application Game with Fees and Time Costs

In an application game, agents decide whether to apply for the prize, and reviewing applica- tions allows the decision maker to learn agent qualifications and award prizes to qualified agents. The decision maker finds reviewing applications costly, and prefers not to review applications from agents with sufficiently low probability of being qualified. Positive application fees and time delays can assure that only those with a high-enough probability of being qualified apply for prizes. Applied to the journal submission process, in which tenured and untenured academic authors are affected differently by time delays, the model shows that using time delays instead of higher submission fees benefits tenured authors at the expense of both untenured authors and journal quality. Applied to the process of applying for a permit when there are both rich and poor potential applicants, the model shows that the decision maker should impose both application fees and time delays (e.g., red tape). In this case, eliminating fees benefits poor agents, while it harms rich agents and the decision maker; eliminating red tape benefits rich agents, while it harms poor agents and the decision maker.journal submission, red tape, application fees

Competition for Access and Full Revelation of Evidence

A decision maker must divide a prize between multiple agents. The prize may be divisible (e.g., a budget, pork-barrel spending) in which case he prefers to award larger shares of the prize to relatively more-qualified agents, or it may be non-divisible (e.g., jobs, college admissions) in which case he prefers to award the limited number of prizes to the most-qualified agents. He is, however, ex ante uncertain about agent qualications. Agents may directly reveal verifiable evidence about their qualifications to the decision maker only if the decision maker grants them \access" (e.g., he takes time to review their applications, hold interviews, or conduct an investigation). The time-constrained decision maker must decide which agents receive access, as he cannot grant access to everyone. One way to award access is through a competition, where agents submit payments (e.g., time, money) and higher payments correspond to a greater likelihood of receiving access. The analysis shows that there always exists competition for access mechanisms in which the decision maker becomes fully informed about the qualifications of all agents (even though only some agents reveal their qualifications through access). That is, the decision maker can award access in such a way that he always becomes fully informed and chooses his preferred prize allocation. The paper derives such full-revelation mechanisms, and determines when awarding access through a traditional all-pay auction is sufficient for full revelation.Verifiable evidence disclosure, hard information, all-pay auction, handicap auction, access, lobbying

Sniping to Avoid the Endowment Eect in Auctions

An endowment effect can result in both multiple bidding and sniping in auctions. It can cause players to bid multiple times and overpay for items. Sniping is a rational response for experienced bidders looking to avoid the endowment effect.auction, eBay, multiple bidding, sniping, endowment effect

Access Fees in Politics

This paper develops a game-theoretic model of lobbying in which a politician sells access to interest groups. The politician sets an access fee, or the minimum contribution necessary to secure access, and an interest group that pays this fee can share verifiable evidence in favor of its preferred policy. The more the politician knows about interest group evidence, the better able he is to identify and implement the welfare-maximizing policy. In equilibrium, a wealthy interest group must pay more for access than an otherwise similar poor group; and a group involved with an important issue must pay less than an otherwise similar group involved with a less-important issue. The politician sets higher-than-optimal access fees in order to increase contributions. A contribution limit can improve constituent welfare by lowering the price of access, which tends to result in a more-informed politician. However, a limit can also decrease the range of issues for which the politician is willing to sell access, thereby reducing politician information and constituent welfare. Although the optimal limit is binding for some issues, it is never optimal to ban contributions.Lobbying, campaign contributions, contribution limits, political access, hard information, evidence disclosure

Should We Tax or Cap Political Contributions? A Lobbying Model with Policy Favors and Access

This paper develops a model of political contributions in which a politician can either sell policy favors, or sell access. Access allows interest groups to share hard information with the politician in support of their preferred policy. Here selling access maximizes policy utility, while selling policy favors maximizes total contributions. Imposing a binding contribution limit makes it more likely that the politician sells access, which can improve expected constituent welfare. However, a contribution limit distorts the signals associated with the contributions, which tends to result in worse policy. Alternatively, a tax on political contributions can ensure that the politician sells access without distorting his information. Therefore, from the viewpoint of a representative constituent, a tax on contributions is strictly preferred to a contribution limit or no reform. The politician, however, may prefer regulation in the form of a contribution limit, even when a tax is better for the constituent.Lobbying, campaign finance reform, political access, bid caps, verfiable information, evidence disclosure

Learning more by doing less

Self-interested agents (e.g., interest groups, researchers) produce verifiable evidence in an attempt to convince a principal (e.g., legislator, funding organization) to act on their behalf (e.g., introduce legislation, fund research). Agents provide less informative evidence than the principal prefers since doing so maximizes the probability the principal acts in their favor. If the principal faces budget or other constraints that limit the number of agents whose proposals she can support, then agents produce more-accurate evidence as they compete for priority. Under reasonable conditions, the principal is better off when her capacity to act is limited.strategic search, evidence production, persuasion, lobbying

100 Horsemen and the Empty City: A Game Theoretic Exploration of Deception in Chinese Military Legend

game theory, signaling game, bluffing, deterrence, deception

The Hot Hand, Competitive Experience, and Performance Differences by Gender

Using data on junior golf tournaments, we find evidence that the “hot hand” does exist, and that its prevalence decreases as golfers gain experience. This provides an explanation as to why studies that consider professional athletes conclude that the hot hand does not exist. We also show that females are much more likely to experience the hot hand compared with similar males, and provide evidence that this disparity is driven by differences in competitive experience. As golfers’ experience increases, gender dissimilarities disappear. We argue that exposure to competition may also drive other gender differences identified in competitive environments.

Persistence of power: Repeated multilateral bargaining with endogenous agenda setting authority

We extend a simple repeated, multilateral bargaining model to allow successful agenda setters to hold on to power as long as they maintain the support of a majority of other committee members. Theoretically and experimentally, we compare this Endogenous Power environment with a standard Random Power environment in which agenda setters are appointed randomly each period. Although the theoretical analysis predicts that the two environments are outcome equivalent, the experimental analysis shows substantial differences in behavior and outcomes across the games. The Endogenous Power environment results in the formation of more stable coalitions, less-equitable budget allocations, the persistence of power across periods, and higher long-run inequality than the Random Power environment. We present evidence that the stationary equilibrium refinements traditionally used in the literature fail to predict behavior in either game