International Journal of Economic Theory最新文献

We study interactions between campaign spending and ideology in an election where two parties compete over an electorate with ideologically biased voters. The parties target voters with costly persuasive effort, which, together with ideology, defines the party each voter votes for. In equilibrium, the joint distribution of party expenditures reaches a maximum for a specific value of the ideological bias, which identifies the focus of the campaign, that is, the group most heavily targeted by the campaign. This focus shifts from swing voters to the strongest partisans of the party with the smaller budget, as the gap between party budgets increases.

This paper examines the Random Utility Model (RUM) in repeated stochastic choice settings where decision-makers lack full information about payoffs. We propose a gradient-based learning algorithm that embeds RUM into an online decision-making framework. Our analysis establishes Hannan consistency for a broad class of RUMs, meaning the average regret relative to the best fixed action in hindsight vanishes over time. We also show that our algorithm is equivalent to the Follow-The-Regularized-Leader method, offering an economically grounded approach to online optimization. Applications include modeling recency bias and characterizing coarse correlated equilibria in normal-form games.

This paper develops a differentiated duopoly model to investigate the optimal environmental R&D (ER&D) risk choices of firms with cross-ownership under an emission tax. The results show that when firms hold shares in each other, cross-ownership incentivizes firms to undertake greater ER&D risks. The private incentive for ER&D risk is lower than the social incentive when the emission tax rate is low relative to the marginal environmental damage. However, a higher share of cross-ownership can bring the private optimum closer to the social optimum under certain conditions. We also find that under unilateral shareholding, a firm partially owned by its rival assumes higher ER&D risk than the firm owning its shares, but both take on less risk than under cross-ownership. Finally, we show that ER&D risk is higher under Bertrand competition than under Cournot competition.

This paper explores the government's role in higher education policy within a dual economy, where skilled workers invest in higher education while unskilled workers do not. The novel question is whether the government should refrain from subsidizing higher education while imposing regulations, supporting a restricted, elitist system. I demonstrate that under an optimal linear income tax, government favors a restricted system. Through simulations, I show that this result also holds under a nonlinear system. Concerning developing countries, their preference for a restricted system is even more pronounced, and if trapped in a low equilibrium, international institutions can provide enhancing social welfare subsidies.

This paper analyzes, in the institutional context of globalized market economies, the competition between skilled and unskilled workers and between workers and capital owners (“capitalists”). We consider a directed technical change model with R&D and relocation of production from an innovative to a follower region. Relocations leverage the follower region's comparative advantages and improve resource allocation on a global scale. Consequently, resources are freed up for R&D, benefiting internationally available technological knowledge and ensuring higher economic growth and wages, with reduced inter-region wage inequality. These effects can be enhanced by governmental actions promoting relocations or the producers' market power. Relocations benefit all economic agents' welfare through larger consumption levels and economic growth. But the actions of a region's government promoting market power impacts workers' and capitalists' welfare differently. The workers' welfare is affected by market power through two effects of opposite signs (it penalizes consumption but favors economic growth), while the capitalists' welfare is always improved by more market power. Accordingly, both capitalists and workers favor market power, but the former favor it more than the latter. Lower economic growth exacerbates the circumstances leading to conflict between workers and capitalists.

This paper develops a competitive Ramsey–Cass–Koopmans framework in which an infectious disease is considered. A lockdown is introduced to control the disease spread. Considering the dynamics, a stable limit cycle can emerge near the endemic steady-state, through a Hopf bifurcation, when the share of infectives increases sufficiently the marginal utility of consumption. Particularly, we prove that it is possible to tune the lockdown to simultaneously obtain the limit cycle disappearance and the disease eradication (Bogdanov–Takens bifurcation). In this sense, the lockdown allows hitting two birds with one stone.

We study a simple asset accumulation problem in which instantaneous utility depends not only on current consumption but also on anticipated future consumption. This feature of the preferences renders them dynamically inconsistent. We solve the model under the assumptions that the decision maker (i) is aware of the dynamic inconsistency and (ii) lacks commitment power (sophisticated approach). It is shown that asset growth under these assumptions always exceeds the corresponding growth rate under commitment.

We model a stochastic dynamic optimization problem for the government and bank, targeting growth and inflation. These significant objectives are not necessarily aligned. We use a dynamic strategic interaction model under uncertainty, where the two parties involved take decisions alternately. We posit a suitable cost of deviation and joint value function to be optimized. We also demonstrate target achievability and provide real empirical and simulated numerical results that support our conclusions. We highlight that duality leads to a trade-off and, due to staggered decision making, fluctuations in target achievement are inevitable and not proof of inefficiency.