T-Space Collection:http://hdl.handle.net/1807/101042014-04-25T00:01:15Z2014-04-25T00:01:15ZCold feetLarry G. Epstein; Boston UniversityIgor Kopylov; UC Irvinehttp://hdl.handle.net/1807/101082007-10-12T12:42:05Z2007-09-05T00:00:00ZTitle: Cold feet
Authors: Larry G. Epstein; Boston University; Igor Kopylov; UC Irvine
Abstract: [This item is a preserved copy. To view the original, visit http://econtheory.org/]
Individuals often lose confidence in their prospects as they approach the `moment of truth.' An axiomatic model of such individuals is provided. The model adapts and extends (by relaxing the Independence axiom) Gul and Pesendorfer's model of temptation and self-control to capture an individual who changes her beliefs so as to become more pessimistic as payoff time approaches. In a variation of the model, the individual becomes more optimistic at an ex post stage in order to feel better about her available options.2007-09-05T00:00:00ZSecure implementationTatsuyoshi Saijo; Osaka UniversityTomas Sjostrom; Rutgers UniversityTakehiko Yamato; Tokyo Institute of Technologyhttp://hdl.handle.net/1807/101072007-10-12T12:42:02Z2007-09-05T00:00:00ZTitle: Secure implementation
Authors: Tatsuyoshi Saijo; Osaka University; Tomas Sjostrom; Rutgers University; Takehiko Yamato; Tokyo Institute of Technology
Abstract: [This item is a preserved copy. To view the original, visit http://econtheory.org/]
Strategy-proofness, requiring that truth-telling be a dominant strategy, is a standard concept in social choice theory. However, this concept has serious drawbacks. In particular, many strategy-proof mechanisms have multiple Nash equilibria, some of which produce the wrong outcome. A possible solution to this problem is to require double implementation in Nash equilibrium and in dominant strategies, i.e., secure implementation. We characterize securely implementable social choice functions and investigate the connections with dominant strategy implementation and robust implementation. We show that in standard quasi-linear environments with divisible private or public goods, there exist surplus-maximizing (non-dictatorial) social choice functions that can be securely implemented.2007-09-05T00:00:00ZUpdating preferences with multiple priorsEran Hanany; Tel Aviv UniversityPeter Klibanoff; Northwestern Universityhttp://hdl.handle.net/1807/101062007-10-12T12:41:59Z2007-09-05T00:00:00ZTitle: Updating preferences with multiple priors
Authors: Eran Hanany; Tel Aviv University; Peter Klibanoff; Northwestern University
Abstract: [This item is a preserved copy. To view the original, visit http://econtheory.org/]
We propose and axiomatically characterize dynamically consistent update rules for decision making under ambiguity. These rules apply to the preferences with multiple priors of Gilboa and Schmeidler (1989), and are the first, for any model of preferences over acts, to be able to reconcile typical behavior in the face of ambiguity (as exemplified by Ellsberg.s paradox) with dynamic consistency for all non-null events. Updating takes the form of applying Bayes. rule to subsets of the set of priors, where the specific subset depends on the preferences, the conditioning event, and the choice problem (i.e., a feasible set of acts together with an act chosen from that set).2007-09-05T00:00:00ZEfficiency in repeated trade with hidden valuationsSusan Athey; Harvard UniversityDavid A. Miller; University of California, San Diegohttp://hdl.handle.net/1807/101052007-10-12T12:41:54Z2007-09-05T00:00:00ZTitle: Efficiency in repeated trade with hidden valuations
Authors: Susan Athey; Harvard University; David A. Miller; University of California, San Diego
Abstract: [This item is a preserved copy. To view the original, visit http://econtheory.org/]
We analyze the extent to which efficient trade is possible in an ongoing relationship between impatient agents with hidden valuations (i.i.d. over time), restricting attention to equilibria that satisfy ex post incentive constraints in each period. With ex ante budget balance, efficient trade can be supported in each period if the discount factor is at least one half. In contrast, when the budget must balance ex post, efficiency is not attainable, and furthermore for a wide range of probability distributions over their valuations, the traders can do no better than employing a posted price mechanism in each period. Between these extremes, we consider a "bank'' that allows the traders to accumulate budget imbalances over time, but only within a bounded range. We construct non-stationary equilibria that allow traders to receive payoffs that approach efficiency as their discount factor approaches one, while the bank earns exactly zero expected profits. For some probability distributions there exist equilibria that yield exactly efficient payoffs for the players and zero profits for the bank, but such equilibria require high discount factors.2007-09-05T00:00:00Z