On Rationalizable Outcomes in Private-Value First-Price Discrete Auctions

In this paper, we extend the result of Dekel and Wollinsky ("Rationalizable Outcomes of Large Private-Value First-Price Discrete Auctions" Games and Economic Behavior, 2003) on rationalizable outcomes in first-price auctions. Dekel and Wollinsky show that under certain conditions, each player chooses a unique bid conditional on her valuation. Their result however depends on the assumption that the number of players is sufficiently large (relative to the number of available bids). We first provide a different set of sufficient conditions for the uniqueness result. We then show that for the independent (possibly asymmetric) private value case, (i) the result holds if the distributions are such that the inverse hazard rate is sufficiently high for each valuation, implying that auctions need not necessarily be large, and (ii) if the distributions satisfy the conditions of Dekel and Wollinsky, they always satisfy oursFirst-Price Auctions, Rationalizability, Dominance

Subjective probabilities: psychological evidence and economic applications

Real-life decision makers are often forced to estimate the likelihood of uncertain future events. Usually, economists assume that agents behave as though they are fully rational, employing statistical rules to assess probabilities, and that they maximize expected utility. Psychological studies, however, have shown that people tend not to adhere to these rationality postulates. We review three rules of thumb taken from the psychology literature that people have been shown to rely on when assessing the likelihood of uncertain events. We construct a simple model of belief formation that incorporates these rules and present one formal and two illustrative applications in which these psychological phenomena cause deviations from anticipated economic outcomes.Economic conditions ; Prediction (Psychology)

Subjective probabilities: psychological theories and economic applications

Abbigail J. Chiodo, Massimo Guidolin, Michael T. Owyang, and Makoto Shimoji> Real-life decisionmakers are often forced to estimate the likelihood of uncertain future events. Usually, economists assume that these agents behave in a fully rational manner, employing statistical rules to assess probabilities, and that they maximize expected utility. Psychological studies, however, have shown that people do not tend to behave as rational models would predict. The authors review three rules of thumb taken from the psychology literature that people rely on when assessing the likelihood of uncertain events. The authors construct a simple model of belief formation that incorporates these rules and then present one formal and three illustrative applications showing how these psychological phenomena cause deviations from anticipated economic outcomes.Economic conditions ; Prediction (Psychology)

Setting an exam as an information design problem

We take a teacher's exam-setting task as an information design problem. Specifically, the teacher chooses a conditional distribution of grades given students' types. After observing their exam results, each student updates her belief regarding her type via Bayes' rule and chooses an action. Students' reactions to the same exam result could be different, depending on their heterogeneous prior beliefs. The teacher's objective is to persuade students to take a certain action (e.g., applying to universities), which some may not choose without an exam. The teacher adopts different grade distributions, depending on the teacher's and the students' heterogeneous prior beliefs

Aggregatibacter actinomycetemcomitans Omp29 Is Associated with Bacterial Entry to Gingival Epithelial Cells by F-Actin Rearrangement

The onset and progressive pathogenesis of periodontal disease is thought to be initiated by the entry of Aggregatibacter actinomycetemcomitans (Aa) into periodontal tissue, especially gingival epithelium. Nonetheless, the mechanism underlying such bacterial entry remains to be clarified. Therefore, this study aimed to investigate the possible role of Aa outer membrane protein 29 kD (Omp29), a homologue of E. coli OmpA, in promoting bacterial entry into gingival epithelial cells. To accomplish this, Omp29 expression vector was incorporated in an OmpA-deficient mutant of E. coli. Omp29+/OmpA− E. coli demonstrated 22-fold higher entry into human gingival epithelial line cells (OBA9) than Omp29−/OmpA− E. coli. While the entry of Aa and Omp29+/OmpA− E. coli into OBA9 cells were inhibited by anti-Omp29 antibody, their adherence to OBA9 cells was not inhibited. Stimulation of OBA9 cells with purified Omp29 increased the phosphorylation of focal adhesion kinase (FAK), a pivotal cell-signaling molecule that can up-regulate actin rearrangement. Furthermore, Omp29 increased the formation of F-actin in OBA9 cells. The internalization of Omp29-coated beads and the entry of Aa into OBA9 were partially inhibited by treatment with PI3-kinase inhibitor (Wortmannin) and Rho GTPases inhibitor (EDIN), both known to convey FAK-signaling to actin-rearrangement. These results suggest that Omp29 is associated with the entry of Aa into gingival epithelial cells by up-regulating F-actin rearrangement via the FAK signaling pathway

On forward induction in money-burning games

We first consider money-burning games studied by Ben-Porath and Dekel [6]. We show that iterative weak dominance and extensive form rationalizability yield the same unique outcome in this class of games. This result suggests that weak dominance captures the forward induction logic implied by extenisve form rationalizability. Next, we consider an example of entry model by Arvan [1] to demonstrate the power of forward induction. In this example, despite the presence of multiple equilibria, forward induction chooses a unique outcome.Conditional dominance, Rationalizability, Weak dominance, Forward induction, Money-burning games.