| 1. |
- Abraham, Arpad, et al.
(författare)
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On the first-order approach in principal agent models with hidden borrowing and lending
- 2011
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Ingår i: Journal of Economic Theory. - : Elsevier BV. - 0022-0531 .- 1095-7235. ; 146:4, s. 1331-1361
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Tidskriftsartikel (refereegranskat)abstract
- We provide sufficient conditions for the validity of the first-order approach for two-period dynamic moral hazard problems where the agent can save and borrow secretly. The first-order approach is valid if the following conditions hold: (i) the agent has non-increasing absolute risk aversion utility (NIARA), (ii) the output technology has monotone likelihood ratios (MLR), and (iii) the distribution function of output is log-convex in effort (LCDF). Moreover, under these three conditions, the optimal contract is monotone in output. We also investigate a few possibilities of relaxing these requirements.
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| 2. |
- Alger, Ingela, et al.
(författare)
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Evolution of preferences in structured populations: Genes, guns, and culture
- 2020
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Ingår i: Journal of Economic Theory. - : Elsevier. - 1095-7235 .- 0022-0531. ; 185
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Tidskriftsartikel (refereegranskat)abstract
- During human evolution, individuals interacted mostly within small groups that were connected by limited migration and sometimes by conflicts. Which preferences, if any, will prevail in such scenarios? Building on population biology models of spatially structured populations, and assuming individuals' preferences to be their private information, we characterize those preferences that, once established, cannot be displaced by alternative preferences. We represent such uninvadable preferences in terms of fitness and in terms of material payoffs. At the fitness level, individuals can be regarded to act as if driven by a mix of self-interest and a Kantian motive that evaluates own behavior in the light of the consequences for own fitness if others adopted this behavior. This Kantian motive is borne out from (genetic or cultural) kin selection. At the material-payoff level, individuals act as if driven in part by self-interest and a Kantian motive (in terms of material payoffs), but also in part by other-regarding preferences towards other group members. This latter motive is borne out of group resource constraints and the risk of conflict with other groups. We show how group size, the migration rate, the risk of group conflicts, and cultural loyalty shape the relative strengths of these motives.
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| 3. |
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| 4. |
- Cerreia-Vioglio, Simone, et al.
(författare)
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A canon of probabilistic rationality
- 2021
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Ingår i: Journal of Economic Theory. - : Elsevier BV. - 0022-0531 .- 1095-7235. ; 196
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Tidskriftsartikel (refereegranskat)abstract
- We prove that a random choice rule satisfies Luce's Choice Axiom if and only if its support is a choice correspondence that satisfies the Weak Axiom of Revealed Preference, thus it consists of alternatives that are optimal according to some preference, and then random choice occurs according to a tie-breaking mechanism among such alternatives that satisfies Renyi's Conditioning Axiom. Our result shows that the Choice Axiom is, in a precise formal sense, a probabilistic version of the Weak Axiom. It thus supports Luce's view of his own axiom as a "canon of probabilistic rationality."
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| 5. |
- Groneck, Max, et al.
(författare)
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A life-cycle model with ambiguous survival beliefs
- 2016
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Ingår i: Journal of Economic Theory. - : Elsevier. - 1095-7235 .- 0022-0531. ; 162, s. 137-180
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Tidskriftsartikel (refereegranskat)abstract
- Based on a cognitive notion of neo-additive capacities reflecting likelihood insensitivity with respect to survival chances, we construct a Choquet Bayesian learning model over the life-cycle that generates a motivational notion of neo-additive survival beliefs expressing ambiguity attitudes. We embed these neo-additive survival beliefs as decision weights in a Choquet expected utility life-cycle consumption model and calibrate it with data on subjective survival beliefs from the Health and Retirement Study. Our quantitative analysis shows that agents with calibrated neo-additive survival beliefs (i) save less than originally planned, (ii) exhibit undersaving at younger ages, and (iii) hold larger amounts of assets in old age than their rational expectations counterparts who correctly assess their survival chances. Our neo-additive life-cycle model can therefore simultaneously accommodate three important empirical findings on household saving behavior.
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| 6. |
- Grossmann, Volker, et al.
(författare)
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Distributional consequences of surging housing rents
- 2021
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Ingår i: Journal of Economic Theory. - : Elsevier. - 0022-0531 .- 1095-7235. ; 196
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Tidskriftsartikel (refereegranskat)abstract
- The trajectories of real housing rents and real house prices have shown an upward sloping trend in most industrialized countries since WW2. The burden of rising housing rents is likely to be distributed unequally because income-poor households devote a larger share of their consumption expenditures on housing than income-rich households. This inverse relation between income and the expenditure share of housing is labeled Schwabe's law. We analyze how the dynamics in housing rents affect household welfare, accounting for Schwabe's law and the endogeneity of housing rents in general equilibrium. We show analytically that Schwabe's law amplifies heterogeneous welfare effects that operate through housing rent changes. We then study how zoning deregulation affects household welfare in general equilibrium. Zoning deregulation triggers a temporarily slower growth in housing rents and house prices. The representative household experiences a welfare gain of 0.37 percent. This welfare effect is unequally distributed at the micro-level. The highest welfare gain amounts to 12.52 percent, while the highest welfare loss amounts to 1.63 percent. Lower housing rent growth drives most of the overall welfare gain, and Schwabe's law is responsible for most of the variation in the welfare gain across households.
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| 7. |
- Han, Jungsuk, et al.
(författare)
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Searching for information
- 2018
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Ingår i: Journal of Economic Theory. - : Elsevier. - 1095-7235 .- 0022-0531. ; 175, s. 342-373
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Tidskriftsartikel (refereegranskat)abstract
- This paper provides a search-based information acquisition framework using an urn model with an asymptotic approach. The underlying intuition of the model is simple: when the scope of information search is more limited, marginal search efforts produce less useful information due to redundancy, but commonality of information among different agents increases. Consequently, limited information searchability induces a trade-off between an information source's precision and its commonality. In a “beauty contest” game with endogenous information acquisition, this precision-commonality trade-off generates non-fundamental volatility through the channel of information acquisition. © 2018 Elsevier Inc.
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| 8. |
- Helsley, Robert W., et al.
(författare)
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Social networks and interactions in cities
- 2014
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Ingår i: Journal of Economic Theory. - : Elsevier BV. - 0022-0531 .- 1095-7235. ; 150, s. 426-466
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Tidskriftsartikel (refereegranskat)abstract
- We examine how interaction choices depend on the interplay of social and physical distance, and show that agents who are more central in the social network, or are located closer to the geographic center of interaction, choose higher levels of interactions in equilibrium. As a result, the level of interactivity in the economy as a whole will rise with the density of links in the social network and with the degree to which agents are clustered in physical space. When agents can choose geographic locations, there is a tendency for those who are more central in the social network to locate closer to the interaction center, leading to a form of endogenous geographic separation based on social distance. We also show that the market equilibrium is not optimal because of social externalities. We determine the value of the subsidy to interactions that could support the first-best allocation as an equilibrium. Finally, we interpret our model in terms of labor-market networks and show that the lack of good job contacts would be here a structural consequence of the social isolation of inner-city neighborhoods.
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| 9. |
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| 10. |
- Häckner, Jonas, et al.
(författare)
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Welfare effects of taxation in oligopolistic markets
- 2016
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Ingår i: Journal of Economic Theory. - : Elsevier BV. - 0022-0531 .- 1095-7235. ; 163, s. 141-166
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Tidskriftsartikel (refereegranskat)abstract
- This paper discusses how marginal costs of public funds are related to various market characteristics under imperfect competition. Under a quite general tax scheme, these costs turn out to be lower the wider the firms' product ranges, the lower the degree of market concentration and the lower the degree of product differentiation. Moreover, marginal costs of taxation are lower in Bertrand markets compared to Cournot markets. In cases when marginal costs of public funds cannot easily be assessed we ask if pass-through rates can provide useful information for policy makers. The market characteristics that we analyze are shown to have opposite effects on pass-through and marginal costs of public funds. It is also demonstrated that the marginal cost of public funds is generally lower for ad valorem taxes than for unit taxes. The main results are based on a linear demand system, but a number of extensions confirm that our main results are reasonably robust.
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