T-Space Collection:
http://hdl.handle.net/1807/17329
2014-04-19T00:02:03ZMonopolistic group design with peer effects
http://hdl.handle.net/1807/17333
Title: Monopolistic group design with peer effects
Authors: Simon Board; Department of Economics, University of California Los Angeles
Abstract: [This item is a preserved copy. To view the original, visit http://econtheory.org/]
In a range of settings, private firms manage peer effects by sorting agents into different groups, be they schools, communities, or product categories. This paper considers such a firm, which controls group entry by setting a series of anonymous prices. We show that private provision systematically leads to two distortions relative to the efficient solution: first, agents are segregated too finely; second, too many agents are excluded from all groups. We demonstrate that these distortions are a consequence of anonymous pricing and do not depend upon the nature of the peer effects. This general approach also allows us to assess the way the `returns to scale' of peer technology and the cost of group formation affect the optimal group structure.2009-03-01T00:00:00ZThe Coase conjecture with incomplete information on the monopolist's commitment
http://hdl.handle.net/1807/17332
Title: The Coase conjecture with incomplete information on the monopolist's commitment
Authors: KyungMin Kim; Department of Economics, University of Pennsylvania
Abstract: [This item is a preserved copy. To view the original, visit http://econtheory.org/]
A key to the Coase conjecture is the monopolist's inability to commit to a price, which leads consumers to believe that a high current price will be followed by low future prices. This paper studies the robustness of the Coase conjecture with respect to these beliefs of consumers. In particular, there is uncertainty over whether the monopolist is committed to a price (i.e. she may be a commitment type). Consequently, consumers are no longer certain that the price will change over time. I consider two kinds of commitment types. A behavioral commitment type charges an exogenously given price, while the rational commitment type optimally chooses a price. I show that the Coase conjecture is robust with regard to uncertainty over the monopolist's commitment. When the probability of behavioral types is sufficiently small, as in the original Coase conjecture, the monopolist earns the competitive profit. When the probability of behavioral types is positive, unlike in the original Coase conjecture, there is positive delay. But the delay disappears as the probability approaches zero. When the commitment type is rational, unless the probability of the commitment type is sufficiently high, both normal and committed monopolists charge the competitive price, and thus there is no delay.2009-03-01T00:00:00ZRobust virtual implementation
http://hdl.handle.net/1807/17331
Title: Robust virtual implementation
Authors: Dirk Bergemann; Department of Economics, Yale University; Stephen Morris; Department of Economics, Princeton University
Abstract: [This item is a preserved copy. To view the original, visit http://econtheory.org/]
In a general interdependent preference environment, we characterize when two payoff types can be distinguished by their rationalizable strategic choices without any prior knowledge of their beliefs and higher order beliefs. We show that two payoff types are strategically distinguishable if and only if they satisfy a separability condition. The separability condition for each agent essentially requires that there is not too much interdependence in preferences across agents. A social choice function, mapping payoff type profiles to outcomes, can be robustly virtually implemented if there exists a mechanism such that every equilibrium on every type space achieves an outcome that is arbitrarily close to the outcome generated by the social choice function. This definition is equivalent to requiring virtual implementation in iterated deletion of strategies that are strictly dominated for all beliefs. The social choice function is robustly measurable if strategically indistinguishable payoff types receive the same allocation. We show that ex post incentive compatibility and robust measurability are necessary and sufficient for robust virtual implementation.2009-03-01T00:00:00ZCoalition formation under power relations
http://hdl.handle.net/1807/17330
Title: Coalition formation under power relations
Authors: Michele Piccione; Department of Economics, London School of Economics; Ronny Razin; Department of Economics, London School of Economics
Abstract: [This item is a preserved copy. To view the original, visit http://econtheory.org/]
We analyze the structure of a society driven by power relations. Our model has an exogenous power relation over the set of coalitions of agents. Agents determine the social order by forming coalitions. The power relations determine the ranking of agents in society for any social order. We study a cooperative game in partition function form and introduce a solution concept, the stable social order, which exists and includes the core. We investigate a refinement, the strongly stable social order, which incorporates a notion of robustness to variable power relations. We provide a complete characterization of strongly stable social orders.2009-03-01T00:00:00Z