We study a two-sided marriage market in whic agents have incomplete preferences—i.e., they find some alternatives incomparable. The strong (weak) core consists of matchings wherein no coalition wants to form a new match between themselves, leaving some (all) agents better off without harming anyone. The strong core may be empty, while the weak core can be too large. We propose the concept of "compromise core''—a nonempty set that sits between the weak and the strong cores. Similarly, we define the men-(women-) optimal core and illustrate its benefit in an application to India's engineering college admissions system.
{"title":"Matching with Incomplete Preferences","authors":"Aditya Kuvalekar","doi":"10.2139/ssrn.3560889","DOIUrl":"https://doi.org/10.2139/ssrn.3560889","url":null,"abstract":"We study a two-sided marriage market in whic agents have incomplete preferences—i.e., they find some alternatives incomparable. The strong (weak) core consists of matchings wherein no coalition wants to form a new match between themselves, leaving some (all) agents better off without harming anyone. The strong core may be empty, while the weak core can be too large. We propose the concept of \"compromise core''—a nonempty set that sits between the weak and the strong cores. Similarly, we define the men-(women-) optimal core and illustrate its benefit in an application to India's engineering college admissions system.","PeriodicalId":410371,"journal":{"name":"ERN: Other Microeconomics: Welfare Economics & Collective Decision-Making (Topic)","volume":"154 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-02-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126738632","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We develop a theory of blockchain governance using tools from formal political theory. The software underlying blockchain projects is frequently updated (forked) to implement new policies, and these forks are the subject of our inquiry. We investigate the ways in which the decentralized governance structure and preferences of users influence which policies are implemented, considering network effects as well as user preferences for different policies. We describe several types of forks and identify the strategic conditions necessary for each. We show that network-effects can motivate less moderate policy proposals, and highlight the role of market frictions created by cryptocurrency exchanges in promoting non-contentious forks that are adopted by all users. The model explains counter-intuitive phenomena that have been observed in the governance of blockchain systems.
{"title":"The Political Economy of Blockchain Governance","authors":"Barton E. Lee, Daniel J. Moroz, D. Parkes","doi":"10.2139/ssrn.3537314","DOIUrl":"https://doi.org/10.2139/ssrn.3537314","url":null,"abstract":"We develop a theory of blockchain governance using tools from formal political theory. The software underlying blockchain projects is frequently updated (forked) to implement new policies, and these forks are the subject of our inquiry. We investigate the ways in which the decentralized governance structure and preferences of users influence which policies are implemented, considering network effects as well as user preferences for different policies. We describe several types of forks and identify the strategic conditions necessary for each. We show that network-effects can motivate less moderate policy proposals, and highlight the role of market frictions created by cryptocurrency exchanges in promoting non-contentious forks that are adopted by all users. The model explains counter-intuitive phenomena that have been observed in the governance of blockchain systems.","PeriodicalId":410371,"journal":{"name":"ERN: Other Microeconomics: Welfare Economics & Collective Decision-Making (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-02-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130277419","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Unlike previous studies on electoral investment cycle—the tendency for firms to reduce investment expenditure during an election year relative to nonelection years—that have primarily focused on developed countries, this study documents cycles in private investments in relation to the timing of national elections across a broader set of African countries. The estimation results indicate that during election years, private investment decreases by an average of 16% relative to nonelection years. The results also reveal that private investment falls in the year leading up to an election and increases in the immediate year after an election, consistent with the view that electoral uncertainty deters investments. These findings suggest that electoral investment cycles apply strongly to African countries.
{"title":"A Wait‐And‐See Approach to Investments: Do Elections Play a Role?","authors":"Daniel A. Kanyam","doi":"10.1111/rode.12632","DOIUrl":"https://doi.org/10.1111/rode.12632","url":null,"abstract":"Unlike previous studies on electoral investment cycle—the tendency for firms to reduce investment expenditure during an election year relative to nonelection years—that have primarily focused on developed countries, this study documents cycles in private investments in relation to the timing of national elections across a broader set of African countries. The estimation results indicate that during election years, private investment decreases by an average of 16% relative to nonelection years. The results also reveal that private investment falls in the year leading up to an election and increases in the immediate year after an election, consistent with the view that electoral uncertainty deters investments. These findings suggest that electoral investment cycles apply strongly to African countries.","PeriodicalId":410371,"journal":{"name":"ERN: Other Microeconomics: Welfare Economics & Collective Decision-Making (Topic)","volume":"76 2 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126135027","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
A debate on whether capital grants, and especially European Union (EU) funds, actually contribute to growth has gained prominence lately. This article empirically assesses the relationship between the quality of public investment, capital grants, and growth in a sample of 43 emerging and peripheral economies over 1991–2015. To this end, the contribution of public capital to growth is estimated using efficiency‐adjusted public capital stock series, which reflects the quality of public investment management institutions. In addition, the determinants of effective public investment are analyzed. The results suggest that capital grants contribute positively to effective public investment, and the latter is significant in explaining variations in economic growth. Finally, the article illustrates the impact of raising EU funds absorption on potential growth in emerging and peripheral EU countries.
{"title":"Efficiency‐Adjusted Public Capital, Capital Grants, and Growth","authors":"Ernesto Crivelli","doi":"10.1111/rode.12638","DOIUrl":"https://doi.org/10.1111/rode.12638","url":null,"abstract":"A debate on whether capital grants, and especially European Union (EU) funds, actually contribute to growth has gained prominence lately. This article empirically assesses the relationship between the quality of public investment, capital grants, and growth in a sample of 43 emerging and peripheral economies over 1991–2015. To this end, the contribution of public capital to growth is estimated using efficiency‐adjusted public capital stock series, which reflects the quality of public investment management institutions. In addition, the determinants of effective public investment are analyzed. The results suggest that capital grants contribute positively to effective public investment, and the latter is significant in explaining variations in economic growth. Finally, the article illustrates the impact of raising EU funds absorption on potential growth in emerging and peripheral EU countries.","PeriodicalId":410371,"journal":{"name":"ERN: Other Microeconomics: Welfare Economics & Collective Decision-Making (Topic)","volume":"58 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127937399","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this paper, we study the behavioural impact of religious priming by showing participants religious words in a scrambled sentence task before a dictator game and a joy-of-destruction game. We also elicited data on individual religiosity and religious affiliation using a questionnaire. Priming religious words significantly increased pro-social behaviour in the dictator game, and the effect was especially striking among those reporting no religion, atheists and agnostics. The religious prime has no significant effect in mitigating destructive behaviour or own expectations of the other's destruction choice, but both destructive behaviour and expectations correlate positively with the multi-dimensional religiosity measure.
{"title":"Effect of Religious Priming in Prosocial and Destructive Behaviour","authors":"Jipeng Zhang, Elizabeth Brown, Huan Xie","doi":"10.1111/1468-0106.12293","DOIUrl":"https://doi.org/10.1111/1468-0106.12293","url":null,"abstract":"In this paper, we study the behavioural impact of religious priming by showing participants religious words in a scrambled sentence task before a dictator game and a joy-of-destruction game. We also elicited data on individual religiosity and religious affiliation using a questionnaire. Priming religious words significantly increased pro-social behaviour in the dictator game, and the effect was especially striking among those reporting no religion, atheists and agnostics. The religious prime has no significant effect in mitigating destructive behaviour or own expectations of the other's destruction choice, but both destructive behaviour and expectations correlate positively with the multi-dimensional religiosity measure.","PeriodicalId":410371,"journal":{"name":"ERN: Other Microeconomics: Welfare Economics & Collective Decision-Making (Topic)","volume":"92 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127284814","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study examines the relationship between capital account liberalisation and income inequality. Adopting a novel identification strategy, namely a difference-in-difference estimation combined with propensity score matching between the liberalised and closed countries, we provide robust evidence that opening the capital account is associated with an adverse impact on income inequality in developing countries. The main findings are threefold. First, fully liberalising the capital account is associated with a small rise of 0.07-0.30 standard deviations in the Gini coefficient in the short-run and a rise as large as 0.32-0.62 standard deviations in the ten years after liberalisation, on average. Second, widening income inequality is the outcome of the growing income share of the rich at the cost of the poor. The long-term effect of capital account liberalisation includes a reduction in the income share of the poorest half by 2.66-3.79 percentage points and an increase in the income share of the richest 10% by 5.19-8.76 percentage points. Third, the directions and categories of capital account liberalisation matter. Inward capital account liberalisation is more detrimental to income equality than outward capital account liberalisation, and free access to the international equity market exacerbates income inequality the most, while foreign direct investment has an insignificant impact on inequality.
{"title":"Does Capital Account Liberalization Affect Income Inequality?","authors":"Xiang Li, Dan Su","doi":"10.2139/ssrn.3404691","DOIUrl":"https://doi.org/10.2139/ssrn.3404691","url":null,"abstract":"This study examines the relationship between capital account liberalisation and income inequality. Adopting a novel identification strategy, namely a difference-in-difference estimation combined with propensity score matching between the liberalised and closed countries, we provide robust evidence that opening the capital account is associated with an adverse impact on income inequality in developing countries. The main findings are threefold. First, fully liberalising the capital account is associated with a small rise of 0.07-0.30 standard deviations in the Gini coefficient in the short-run and a rise as large as 0.32-0.62 standard deviations in the ten years after liberalisation, on average. Second, widening income inequality is the outcome of the growing income share of the rich at the cost of the poor. The long-term effect of capital account liberalisation includes a reduction in the income share of the poorest half by 2.66-3.79 percentage points and an increase in the income share of the richest 10% by 5.19-8.76 percentage points. Third, the directions and categories of capital account liberalisation matter. Inward capital account liberalisation is more detrimental to income equality than outward capital account liberalisation, and free access to the international equity market exacerbates income inequality the most, while foreign direct investment has an insignificant impact on inequality.","PeriodicalId":410371,"journal":{"name":"ERN: Other Microeconomics: Welfare Economics & Collective Decision-Making (Topic)","volume":"8 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-01-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126828177","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
For object reallocation problems, if preferences are strict but otherwise unrestricted, the Top Trading Cycle rule (TTC) is the leading rule: It is the only rule satisfying efficiency, the endowment lower bound, and strategy-proofness; moreover, TTC coincides with the core. However, on the subdomain of single-peaked preferences, Bade (2019a) defines a new rule, the "crawler", which also satisfies the first three properties. Our first theorem states that the crawler and a naturally defined "dual" rule are actually the same. Next, for object allocation problems, we define a probabilistic version of the crawler by choosing an endowment profile at random according to a uniform distribution, and applying the original definition. Our second theorem states that this rule is the same as the "random priority rule" which, as proved by Knuth (1996) and Abdulkadiroglu and S"onmez (1998), is equivalent to the "core from random endowments".
{"title":"The Crawler: Two Equivalence Results for Object (Re)Allocation Problems When Preferences are Single-Peaked","authors":"Y. Tamura, Hadi Hosseini","doi":"10.2139/ssrn.3503893","DOIUrl":"https://doi.org/10.2139/ssrn.3503893","url":null,"abstract":"For object reallocation problems, if preferences are strict but otherwise unrestricted, the Top Trading Cycle rule (TTC) is the leading rule: It is the only rule satisfying efficiency, the endowment lower bound, and strategy-proofness; moreover, TTC coincides with the core. However, on the subdomain of single-peaked preferences, Bade (2019a) defines a new rule, the \"crawler\", which also satisfies the first three properties. Our first theorem states that the crawler and a naturally defined \"dual\" rule are actually the same. Next, for object allocation problems, we define a probabilistic version of the crawler by choosing an endowment profile at random according to a uniform distribution, and applying the original definition. Our second theorem states that this rule is the same as the \"random priority rule\" which, as proved by Knuth (1996) and Abdulkadiroglu and S\"onmez (1998), is equivalent to the \"core from random endowments\".","PeriodicalId":410371,"journal":{"name":"ERN: Other Microeconomics: Welfare Economics & Collective Decision-Making (Topic)","volume":"74 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-12-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134371513","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
A growing body of normative work explores how deference to people’s choices might be reconciled with behavioral findings about human error. This work has strong implications for economic analysis of law, cost-benefit analysis, and regulatory policy. in light of behavioral findings, regulators should adopt a working presumption in favor of respect for people’s self-regarding choices, but only if those choices are adequately informed and sufficiently free from behavioral biases. The working presumption should itself be rebuttable on welfare grounds, with an understanding that the ends that people choose might make their lives go less well. For example, people might die prematurely or suffer from serious illness, and what they receive in return might not (on any plausible account of welfare) be nearly enough. The underlying reason might involve a lack of information or a behavioral bias, identifiable or not, in which case intervention can fit with the working presumption; but the real problem might involve philosophical questions about the proper understanding of welfare, and about what it means for people to have a good life.
{"title":"Back to Mill? Behavioral Welfare Economics","authors":"C. Sunstein","doi":"10.2139/ssrn.3499180","DOIUrl":"https://doi.org/10.2139/ssrn.3499180","url":null,"abstract":"A growing body of normative work explores how deference to people’s choices might be reconciled with behavioral findings about human error. This work has strong implications for economic analysis of law, cost-benefit analysis, and regulatory policy. in light of behavioral findings, regulators should adopt a working presumption in favor of respect for people’s self-regarding choices, but only if those choices are adequately informed and sufficiently free from behavioral biases. The working presumption should itself be rebuttable on welfare grounds, with an understanding that the ends that people choose might make their lives go less well. For example, people might die prematurely or suffer from serious illness, and what they receive in return might not (on any plausible account of welfare) be nearly enough. The underlying reason might involve a lack of information or a behavioral bias, identifiable or not, in which case intervention can fit with the working presumption; but the real problem might involve philosophical questions about the proper understanding of welfare, and about what it means for people to have a good life.","PeriodicalId":410371,"journal":{"name":"ERN: Other Microeconomics: Welfare Economics & Collective Decision-Making (Topic)","volume":"191 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-12-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133444847","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We characterize the mixed-strategy equilibria for the bargaining game in which two players simultaneously bid for a share of a pie and receive shares proportional to their bids, or zero if the bids sum to more than 100%. Of particular interest is the symmetric equilibrium in which each player's support is a single interval. This consists of a convex increasing density f1(p) on [a, 1-a] and an atom of probability at a, and is unique for given a ∈ (0, .5). The two outcomes with highest probability are breakdown and a 50-50 split. We use the same approach to characterize all symmetric and asymmetric equilibria (such as "hawk-dove") that mix over a finite set of bids and for general sharing rules. We extend Malueg's 2010 proof of existence to uniqueness of equilibria with any "balanced" compact set A ∈ (0,1) as bid supports (but do not characterize them).
{"title":"Splitting a Pie: Mixed Strategies in Bargaining Under Complete Information","authors":"C. Connell, E. Rasmusen","doi":"10.2139/ssrn.3492465","DOIUrl":"https://doi.org/10.2139/ssrn.3492465","url":null,"abstract":"We characterize the mixed-strategy equilibria for the bargaining game in which two players simultaneously bid for a share of a pie and receive shares proportional to their bids, or zero if the bids sum to more than 100%. Of particular interest is the symmetric equilibrium in which each player's support is a single interval. This consists of a convex increasing density <i>f<sub>1</sub>(p)</i> on [<i>a</i>, 1-<i>a</i>] and an atom of probability at <i>a</i>, and is unique for given <i>a</i> ∈ (0, .5). The two outcomes with highest probability are breakdown and a 50-50 split. We use the same approach to characterize all symmetric and asymmetric equilibria (such as \"hawk-dove\") that mix over a finite set of bids and for general sharing rules. We extend Malueg's 2010 proof of existence to uniqueness of equilibria with any \"balanced\" compact set <i>A</i> ∈ (0,1) as bid supports (but do not characterize them).","PeriodicalId":410371,"journal":{"name":"ERN: Other Microeconomics: Welfare Economics & Collective Decision-Making (Topic)","volume":"56 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-11-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121663673","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
R. Ali, Jeff Luckstead, Alvaro Durand‐Morat, E. Wailes
This paper develops a farm household model of heterogeneous Malaysian rice farmers. The model determines the domestic price of milled rice in equilibrium. The model is simulated to analyze the effects of free trade, self‐sufficiency achieved through trade policy, and the impact of free trade and self‐sufficiency when rice productivity expands. The ex ante results for free trade predict that total rice supply rises as the increase in imports offsets the decrease in domestic production, causing the domestic price of milled rice to fall by 15.8 percent. While this price decrease generates negative income effects for rice farmers, it leads to an expansion of consumption of milled rice by both the farm and urban populations. The results for self‐sufficiency through heightened tariffs predict that production for domestic rice farmers increases. However, with fewer imports, total rice supply falls, causing the domestic price of rice to increase by 41.5 percent. Because free trade is politically unfeasible and trade‐driven self‐sufficiency policies contract total rice consumption, boosting rice production through research and development is an effective way for Malaysia to increase the total supply of rice while limiting its dependence on imports.
{"title":"The Impacts of Trade and Self‐Sufficiency Policies on Heterogeneous Rice Farms in Malaysia","authors":"R. Ali, Jeff Luckstead, Alvaro Durand‐Morat, E. Wailes","doi":"10.1111/rode.12618","DOIUrl":"https://doi.org/10.1111/rode.12618","url":null,"abstract":"This paper develops a farm household model of heterogeneous Malaysian rice farmers. The model determines the domestic price of milled rice in equilibrium. The model is simulated to analyze the effects of free trade, self‐sufficiency achieved through trade policy, and the impact of free trade and self‐sufficiency when rice productivity expands. The ex ante results for free trade predict that total rice supply rises as the increase in imports offsets the decrease in domestic production, causing the domestic price of milled rice to fall by 15.8 percent. While this price decrease generates negative income effects for rice farmers, it leads to an expansion of consumption of milled rice by both the farm and urban populations. The results for self‐sufficiency through heightened tariffs predict that production for domestic rice farmers increases. However, with fewer imports, total rice supply falls, causing the domestic price of rice to increase by 41.5 percent. Because free trade is politically unfeasible and trade‐driven self‐sufficiency policies contract total rice consumption, boosting rice production through research and development is an effective way for Malaysia to increase the total supply of rice while limiting its dependence on imports.","PeriodicalId":410371,"journal":{"name":"ERN: Other Microeconomics: Welfare Economics & Collective Decision-Making (Topic)","volume":"18 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115018924","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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