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Abstract: Abstract A principal has n homogeneous objects to allocate to \(I> n\) agents. The principal can allocate at most one good to an agent, and each agent values the good. Agents have private information about the principal’s payoff of allocating the goods. There are no monetary transfers, but the principal may check any agent’s value at a cost. In this setting, we propose a direct mechanism, called the n-ascending mechanism, which balances the benefit of efficient allocation and the cost of checking agents. While such a mechanism itself is not obviously strategy-proof, we show that its outcome is easily implementable by an extensive game which has an equilibrium in obviously dominant strategies. When \(n = 2,\) we show that the 2-ascending mechanism is essentially the unique optimal mechanism that maximizes the principal’s expected net payoff. PubDate: 2023-10-01
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Abstract: Abstract Social dilemmas such as greenhouse gas emission reduction are often characterized by heterogeneity in benefits from solving the dilemma. How should leadership of group members be organized in such a setting' We implement a laboratory public goods experiment with heterogeneous marginal per capita returns from the public good and leading by example that is either implemented exogenously or by self-selection. Our results suggest that both ways of implementing leadership only have small effects on contributions to the public good. Self-selected leaders—in particular self-selected low-benefit leaders—tend to set better examples than imposed leaders, but they are also exploited more strongly by followers. Leaders seem to need additional instruments to be more effective when benefits are heterogeneous. PubDate: 2023-10-01
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Abstract: Abstract This study examines the mechanism design problem for public goods provision in a large economy with n independent agents. We propose a class of dominant-strategy incentive compatible and ex-post individually rational mechanisms, which we call the adjusted mean-thresholding (AMT) mechanisms. We show that when the cost of provision grows slower than the \(\sqrt{n}\) -rate, the AMT mechanisms are both eventually ex-ante budget balanced and asymptotically efficient. When the cost grows faster than the \(\sqrt{n}\) -rate, in contrast, we show that any incentive compatible, individually rational, and eventually ex-ante budget balanced mechanism must have provision probability converging to zero and hence cannot be asymptotically efficient. The AMT mechanisms have a simple form and are more informationally robust when compared to, for example, the second-best mechanism. This is because the construction of an AMT mechanism depends only on the first moment of the valuation distribution. PubDate: 2023-10-01
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Abstract: Abstract In two-player Tullock contests with endogenous timing of moves, the weak player moves early and the strong player follows. This order of moves is the third-best outcome for a contest organiser as it leads to a contest with lower aggregate effort compared to a contest where the players move in reverse order (first best) or simultaneously (second best). We propose that if the contest organiser—who does not know ex ante which player is the strong and which is the weak one—offers a lower price (effort cost) to the player(s) who choose(s) to exert effort early, she can achieve a greater payoff by affecting the contestants’ sequence of moves. We show that there exists no price that generates the first-best outcome. However, there is a price (or a range of prices) that induces both players to move early and receive it, leading to the second-best outcome. We also discuss the case where both players move early but only one receives the low price, e.g., lobbying or Instagram “giveaway” contests. PubDate: 2023-10-01
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Abstract: Abstract We study the relationships between two well-known social choice concepts, namely the principle of social acceptability introduced by Mahajne and Volij (Soc Choice Welf 51(2):223–233, 2018), and the majoritarian compromise rule introduced by Sertel (Lectures notes in microeconomics, Bogazici University, 1986) and studied in detail by Sertel and Yılmaz (Soc Choice Welf 16(4):615–627, 1999). The two concepts have been introduced separately in the literature in the spirit of selecting an alternative that satisfies most individuals in single-winner elections. Our results in this paper show that the two concepts are so closely related that the interaction between them cannot be ignored. We show that the majoritarian compromise rule always selects a socially acceptable alternative when the number of alternatives is even and we provide a necessary and sufficient condition so that the majoritarian compromise rule always selects a socially acceptable alternative when the number of alternatives is odd. Moreover, we show that when we restrict ourselves to the three well-studied classes of single-peaked, single-caved, and single-crossing preferences, the majoritarian compromise rule always picks a socially acceptable alternative whatever the number of alternatives and the number of voters. PubDate: 2023-10-01
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Abstract: Abstract Groups of voters have more possibilities to influence the voting result than separate individuals. However, there is a problem with coordinating their actions. This paper considers manipulation by groups of voters who have the same preferences. If a voting result is more preferable for voters of a particular group provided that all its members use the same strategy (report the same insincere preference), then each of these members has an incentive to manipulate. If there is a chance that they will become worse off in case only a subset of the whole group manipulates, then manipulation is unsafe. For several voting rules we study conditions on the numbers of voters and alternatives which allow for an unsafe manipulation or which make manipulation always safe. PubDate: 2023-10-01
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Abstract: Abstract The theoretical literature on public school choice proposes centralized mechanisms that assign children to schools on the basis of parents’ preferences and the priorities children have for different schools. The related experimental literature analyzes in detail how various mechanisms fare in terms of welfare and stability of the resulting matchings, yet often provides only aggregate statistics of the individual behavior that leads to these outcomes (i.e., the degree to which subjects tell the truth in the induced simultaneous move game). In this paper, we show that the quantal response equilibrium (QRE) adequately describes individual behavior and the resulting matching in three constrained problems for which the immediate acceptance mechanism and the student-optimal stable mechanism coincide. Specifically, the comparative statics of the logit-QRE with risk-neutral and expected-payoff-maximizing agents capture the directional changes of subject behavior and the prevalence of the different stable matchings when cardinal payoffs (i.e., relative preference intensities) are modified in the experiment. PubDate: 2023-10-01
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Abstract: Abstract We consider the division of a territory into administrative jurisdictions responsible for providing a set of goods to its residents. We deduce the optimal architecture of public governance (i.e. the division of government into several levels, the distribution of services among them, their number of jurisdictions and the capacity of their administrations), which depends on citizens preferences regarding the quality of public services. We compare it to a decentralized government where each jurisdiction is free to choose the capacity and scope of its administration. The resulting architecture generally involves more countries with fewer levels of administration than the optimal one. Our results allow us to estimate citizen preferences for the U.S. We find that the country is divided into two zones (“Northeast and West” and “Midwest and South”) whose estimated values are statistically different. PubDate: 2023-10-01
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Abstract: Abstract We study individual aversion to health and income inequality in three European countries (the United Kingdom, Germany, and Italy), its determinants and especially, the effects of exposure to three types of COVID-19 specific shocks affecting individuals’ employment status, their income and health. Next, using evidence of representative samples of the population in the UK, we compare levels of health- and income-inequality aversion in the UK between the years 2016 and 2020. We document evidence of a significant increase in inequality aversion in both income and health domains. However, we show that inequality aversion is higher in the income domain than in the health domain. Furthermore, we find that inequality aversion in both domains increases in age and education and decreases in income and risk appetite. However, people directly exposed to major health shocks during the COVID-19 pandemic generally exhibited lower levels of aversion to both income and health inequality. Finally, we show that inequality aversion was significantly higher among those exposed to higher risk of COVID-19 mortality who experienced major health shocks during the pandemic. PubDate: 2023-10-01
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Abstract: Abstract This paper studies electoral competition between two non-ideological parties when voters are free to trade votes for money. We find that allowing for vote trading has significant policy consequences, even if trade does not actually take place in equilibrium. In particular, the parties’ equilibrium platforms are found to converge (hence, there is no reason for vote trading) to the ideal policy of the mid-range voter, instead of converging to the peak of the median voter (as they do when vote trading is forbidden). That is, a market for votes may not change the outcome only by redistributing the political power among voters when the parties’ policy proposals are fixed (e.g., Casella et al. in J Polit Econ 120:593–658, 2012, etc.), but also by acting as an invisible hand—modifying parties’ incentives when platform choice is endogenous. PubDate: 2023-09-19
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Abstract: Abstract We study a contest design problem in which a designer chooses how many Tullock contests to have, how much to award to each contest, and which contestants (of high or low type) should be assigned to which contest. Our main result is that a single grand contest maximizes total effort. We consider three extensions. First, when the designers’ objective changes to maximizing the effort submitted by the winning contestant, we find that the optimal design involves the high-type contestants being assigned to a set of pairwise contests. Second, under multiple participations (a player’s effort is valid in multiple contests, as in several applications), running a contest open to all, along with a parallel contest open only to low types, increases total effort over a single grand contest. Third, tilting the playing field (a player’s effort is multiplied by a tilting factor) in favor of low types increases total effort in a single grand contest, even more than what is possible with multiple participations; thus, in applications, a quota reserved for traditionally disadvantaged categories results in lower total effort than a grand contest that optimally handicaps advantaged categories. PubDate: 2023-09-13
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Abstract: Abstract In this note, we report on a Condorcet domain of record-breaking size for n = 8 alternatives. We show that there exists a Condorcet domain of size 224 and that this is the largest possible size for 8 alternatives. Our search also shows that this domain is unique up to isomorphism. In this note we investigate properties of the new domain and relate them to various open problems and conjectures. PubDate: 2023-09-05
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Abstract: Abstract We study a model in which a single object is to be allocated among a set of agents whose valuations are interdependent. We define signal-ranking mechanisms and show that if the signal-ranking allocation rule satisfies a combinatorial condition and the valuation functions are additively separable, there exist budget-balanced and ex-post incentive compatible signal-ranking mechanisms. For a restricted setting, we show that the worst-case efficient mechanism of Long et al. (Games Econ Behav 105:9–39, 2017) continues to be worst-case efficient. We also give an example to show that their mechanism is no longer optimal when restrictions are relaxed. PubDate: 2023-08-30
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Abstract: Abstract We characterize the assignment games which admit a population monotonic allocation scheme (PMAS) in terms of efficiently verifiable structural properties of the nonnegative matrix that induces the game. We prove that an assignment game is PMAS-admissible if and only if the positive elements of the underlying nonnegative matrix form orthogonal submatrices of three special types. In game theoretic terms it means that an assignment game is PMAS-admissible if and only if it contains either a veto player or a dominant veto mixed pair, or the game is a composition of these two types of special assignment games. We also show that in PMAS-admissible assignment games all core allocations can be extended to a PMAS, and the nucleolus coincides with the tau-value. PubDate: 2023-08-21
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Abstract: Abstract Shortlisting is the task of reducing a long list of alternatives to a (smaller) set of best or most suitable alternatives. Shortlisting is often used in the nomination process of awards or in recommender systems to display featured objects. In this paper, we analyze shortlisting methods that are based on approval data, a common type of preferences. Furthermore, we assume that the size of the shortlist, i.e., the number of best or most suitable alternatives, is not fixed but determined by the shortlisting method. We axiomatically analyze established and new shortlisting methods and complement this analysis with an experimental evaluation based on synthetic and real-world data. Our results lead to recommendations which shortlisting methods to use, depending on the desired properties. PubDate: 2023-08-11
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Abstract: Abstract In this study, we introduce an experimental approach to study the causal impact of trust on economic performance. We ask if trust can serve as a coordination device to help poor economies escape a poverty trap and, if so, whether such an impact is universal regardless of their initial levels of development. We follow Lei and Noussair (2002, 2007) and design a decentralized market economy that has the structure of an optimal growth model where output is allocated between consumption and saving over a sequence of periods. As in Lei and Noussair (2007), a threshold externality is introduced to generate two equilibria where the Pareto-inferior equilibrium is considered as a poverty trap. We find that trust matters in that it is more likely for high-trust economies, generated with an endogenous matching procedure, to escape the poverty trap. But we also find that the likelihood to escape depends partially on the initial endowment condition. Trust has a much weaker impact on the economies whose initial capital and output are below the Pareto-inferior equilibrium, suggesting that formal institutions and/or policy measures may be needed to engineer a “big push” for these least developed economies. PubDate: 2023-08-06
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Abstract: Abstract We tackle the question of the role of pivotality in voter turnout decisions by testing for the first time whether the occurrence of a tied election generates information spillovers onto nearby localities’ subsequent elections. First, we develop a model where voters update their beliefs regarding the probability of their vote being decisive upon observing earlier elections’ outcomes. Next, by exploiting Italian mayoral elections ending in close outcomes during the past two decades and the quasi-experimental conditions created by the staggered electoral calendar, we find a substantial impact on voter turnout rates of exposure to spillovers from tied elections. PubDate: 2023-08-04
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Abstract: Abstract We show that prominent centrality measures in network analysis are all based on additively separable and linear treatments of statistics that capture a node’s position in the network. This enables us to provide a taxonomy of centrality measures that distills them to varying on two dimensions: (i) which information they make use of about nodes’ positions, and (ii) how that information is weighted as a function of distance from the node in question. The three sorts of information about nodes’ positions that are usually used—which we refer to as “nodal statistics”—are the paths from a given node to other nodes, the walks from a given node to other nodes, and the geodesics between other nodes that include a given node. Using such statistics on nodes’ positions, we also characterize the types of trees such that centrality measures all agree, and we also discuss the properties that identify some path-based centrality measures. PubDate: 2023-08-01
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Abstract: Abstract How does moral awareness affect people’s fairness judgments' Using a simple model of identity utility, I predict that if individuals differ in their personal fairness ideals (equality versus efficiency), reflecting over what one thinks is right should not only make people’s choices less selfish but also more polarized. On the other hand, people’s desire for conforming with the behavior of their peers could help mitigate polarization. I test these conjectures in a laboratory experiment, in which participants can pursue different fairness ideals. I exogenously vary (i) whether participants are prompted to state their moral opinions behind the veil of ignorance, and (ii) whether they are informed about the behavior of their peers. I find that moral introspection makes choices more polarized, reflecting even more divergent moral opinions. The increase in polarization coincides largely with a widening of revealed gender differences as introspection makes men’s choices more efficiency-oriented and women’s more egalitarian. Disclosing the descriptive norm of the situation is not capable of mitigating the polarization. PubDate: 2023-08-01
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Abstract: Abstract This paper studies the implications of imposing unanimity and local incentive compatibility on a deterministic social choice function. In an environment with strict ordinal preferences over a finite set of alternatives, we find that tops-onlyness and full incentive compatibility necessarily follow from unanimity and local incentive compatibility in sparsely connected domains. Furthermore, we identify a property of preference domains that completely characterizes dictatorial domains within sparsely connected domains. PubDate: 2023-08-01
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