Pub Date : 2024-03-28DOI: 10.1016/j.geb.2024.03.016
Huiyi Guo
The paper examines information structures that can guarantee full surplus extraction via collusion-proof mechanisms. Our collusion-proofness notion requires that there does not exist any coalition whose manipulation can affect the mechanism designer's payoff. When the mechanism designer is restricted to using standard Bayesian mechanisms, we show that under almost every prior distribution of agents' types, there exist payoff structures under which there is no collusion-proof full surplus extracting mechanism. However, when ambiguous mechanisms are allowed, we provide a weak necessary and sufficient condition on the prior such that collusion-proof full surplus extraction can be guaranteed. Thus, the paper sheds light on how the collusion-proofness requirement resolves the full surplus extraction paradox of Crémer and McLean, 1985, Crémer and McLean, 1988 and how engineering ambiguity in mechanism rules restores the paradox.
{"title":"Collusion-proof mechanisms for full surplus extraction","authors":"Huiyi Guo","doi":"10.1016/j.geb.2024.03.016","DOIUrl":"https://doi.org/10.1016/j.geb.2024.03.016","url":null,"abstract":"<div><p>The paper examines information structures that can guarantee full surplus extraction via collusion-proof mechanisms. Our collusion-proofness notion requires that there does not exist any coalition whose manipulation can affect the mechanism designer's payoff. When the mechanism designer is restricted to using standard Bayesian mechanisms, we show that under almost every prior distribution of agents' types, there exist payoff structures under which there is no collusion-proof full surplus extracting mechanism. However, when ambiguous mechanisms are allowed, we provide a weak necessary and sufficient condition on the prior such that collusion-proof full surplus extraction can be guaranteed. Thus, the paper sheds light on how the collusion-proofness requirement resolves the full surplus extraction paradox of <span>Crémer and McLean, 1985</span>, <span>Crémer and McLean, 1988</span> and how engineering ambiguity in mechanism rules restores the paradox.</p></div>","PeriodicalId":48291,"journal":{"name":"Games and Economic Behavior","volume":"145 ","pages":"Pages 263-284"},"PeriodicalIF":1.1,"publicationDate":"2024-03-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140343690","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-03-27DOI: 10.1016/j.geb.2024.03.014
Iwan Bos , Marco A. Marini , Riccardo D. Saulle
This paper examines capacity-constrained oligopoly pricing with sellers who seek myopic improvements. We employ the Myopic Stable Set solution concept and establish the existence of a unique pure-strategy price solution for any given level of capacity. This solution is shown to coincide with the set of pure-strategy Nash equilibria when capacities are large or small. For an intermediate range of capacities, it predicts a price interval that includes the mixed-strategy support. This stability concept thus encompasses all Nash equilibria and offers a pure-strategy solution when there is none in Nash terms. It particularly provides a behavioral rationale for different pricing patterns, including Edgeworth price cycles and states of hyper-competition with supply shortages. We also analyze the impact of a change in firm size distribution. A merger among the biggest firms may lead to more price dispersion as it increases the maximum and decreases the minimum myopically stable price.
{"title":"Myopic oligopoly pricing","authors":"Iwan Bos , Marco A. Marini , Riccardo D. Saulle","doi":"10.1016/j.geb.2024.03.014","DOIUrl":"https://doi.org/10.1016/j.geb.2024.03.014","url":null,"abstract":"<div><p>This paper examines capacity-constrained oligopoly pricing with sellers who seek myopic improvements. We employ the Myopic Stable Set solution concept and establish the existence of a unique pure-strategy price solution for any given level of capacity. This solution is shown to coincide with the set of pure-strategy Nash equilibria when capacities are large or small. For an intermediate range of capacities, it predicts a price interval that includes the mixed-strategy support. This stability concept thus encompasses all Nash equilibria and offers a pure-strategy solution when there is none in Nash terms. It particularly provides a behavioral rationale for different pricing patterns, including Edgeworth price cycles and states of hyper-competition with supply shortages. We also analyze the impact of a change in firm size distribution. A merger among the biggest firms may lead to more price dispersion as it increases the maximum and decreases the minimum myopically stable price.</p></div>","PeriodicalId":48291,"journal":{"name":"Games and Economic Behavior","volume":"145 ","pages":"Pages 377-412"},"PeriodicalIF":1.1,"publicationDate":"2024-03-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://www.sciencedirect.com/science/article/pii/S0899825624000459/pdfft?md5=115c54119f0ff5d03f281dc3dc00088b&pid=1-s2.0-S0899825624000459-main.pdf","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140534896","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-03-26DOI: 10.1016/j.geb.2024.03.010
Péter Biró , Gergely Csáji
We study strong core and Pareto-optimal solutions for multiple partners matching problem under lexicographic preference domains from a computational point of view. The restriction to the two-sided case is called stable many-to-many matching problem and the general one-sided case is called stable fixtures problem. We provide an example to show that the strong core can be empty even for many-to-many problems, and that deciding the non-emptiness of the strong core is NP-hard. On the positive side, we give efficient algorithms for finding a near feasible strong core solution and for finding a fractional matching in the strong core of fractional matchings. In contrast with the NP-hardness result for the stable fixtures problem, we show that finding a maximum size matching that is Pareto-optimal can be done efficiently for many-to-many problems. Finally, we show that for reverse-lexicographic preferences the strong core is always non-empty in the many-to-many case.
{"title":"Strong core and Pareto-optimality in the multiple partners matching problem under lexicographic preference domains","authors":"Péter Biró , Gergely Csáji","doi":"10.1016/j.geb.2024.03.010","DOIUrl":"https://doi.org/10.1016/j.geb.2024.03.010","url":null,"abstract":"<div><p>We study strong core and Pareto-optimal solutions for multiple partners matching problem under lexicographic preference domains from a computational point of view. The restriction to the two-sided case is called stable many-to-many matching problem and the general one-sided case is called stable fixtures problem. We provide an example to show that the strong core can be empty even for many-to-many problems, and that deciding the non-emptiness of the strong core is NP-hard. On the positive side, we give efficient algorithms for finding a near feasible strong core solution and for finding a fractional matching in the strong core of fractional matchings. In contrast with the NP-hardness result for the stable fixtures problem, we show that finding a maximum size matching that is Pareto-optimal can be done efficiently for many-to-many problems. Finally, we show that for reverse-lexicographic preferences the strong core is always non-empty in the many-to-many case.</p></div>","PeriodicalId":48291,"journal":{"name":"Games and Economic Behavior","volume":"145 ","pages":"Pages 217-238"},"PeriodicalIF":1.1,"publicationDate":"2024-03-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://www.sciencedirect.com/science/article/pii/S0899825624000411/pdfft?md5=4a869788f27287d18e0e8840260a5d18&pid=1-s2.0-S0899825624000411-main.pdf","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140328266","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-03-25DOI: 10.1016/j.geb.2024.03.012
Paola Moscariello
I explain puzzles in the school assignment literature using a many-to-one matching model in which participants on one side of the market, the students, are endowed with ego-utilities à la Köszegi (2006). Ego concerns generate a form of information avoidance that results in non-truthful participation in DA matching mechanisms. In particular, students' best replies may be non-monotonic in school ranks. I show that truthful reporting can be restored by imposing a limit on the measure of students that a school can deem acceptable. Furthermore, students may be sensitive to signal garbling, in the sense of Blackwell (1953). In terms of policy, the results imply that admission committees' reliance on application dimensions that are seemingly weak proxies of academic performance may be beneficial. Other implications suggest that affirmative action policies might be beneficial. However, when students' best replies exhibit non-monotonicity in schools' selectivity, such policies might backfire.
我用一个多对一匹配模型来解释学校分配文献中的困惑,在这个模型中,市场一方的参与者,即学生,被赋予了类似于 Köszegi(2006 年)的自我效用。对自我的关注会产生一种信息回避,从而导致不真实地参与 DA 匹配机制。特别是,学生的最佳回答在学校排名中可能是非单调的。我的研究表明,通过对学校认为可以接受的学生人数进行限制,可以恢复真实的报告。此外,按照布莱克韦尔(Blackwell,1953 年)的观点,学生可能对信号干扰很敏感。在政策方面,研究结果表明,招生委员会依赖于那些看似学业成绩弱代理变量的申请维度可能是有益的。其他影响还表明,平权行动政策可能是有益的。然而,当学生的最佳答案在学校的选择性中表现出非单调性时,这种政策可能会适得其反。
{"title":"Information avoidance in school choice","authors":"Paola Moscariello","doi":"10.1016/j.geb.2024.03.012","DOIUrl":"https://doi.org/10.1016/j.geb.2024.03.012","url":null,"abstract":"<div><p>I explain puzzles in the school assignment literature using a many-to-one matching model in which participants on one side of the market, the students, are endowed with ego-utilities à la <span>Köszegi</span> (<span>2006</span>). Ego concerns generate a form of information avoidance that results in non-truthful participation in DA matching mechanisms. In particular, students' best replies may be non-monotonic in school ranks. I show that truthful reporting can be restored by imposing a limit on the measure of students that a school can deem acceptable. Furthermore, students may be sensitive to signal garbling, in the sense of <span>Blackwell</span> (<span>1953</span>). In terms of policy, the results imply that admission committees' reliance on application dimensions that are seemingly weak proxies of academic performance may be beneficial. Other implications suggest that affirmative action policies might be beneficial. However, when students' best replies exhibit non-monotonicity in schools' selectivity, such policies might backfire.</p></div>","PeriodicalId":48291,"journal":{"name":"Games and Economic Behavior","volume":"145 ","pages":"Pages 339-355"},"PeriodicalIF":1.1,"publicationDate":"2024-03-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140346847","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-03-25DOI: 10.1016/j.geb.2024.03.009
Yang Sun , Wei Zhao
In a multi-agent contracting problem, agents are linked in performance through two channels, effort spillover, governed by spillover network, and risk correlation, governed by risk structure. Assigning compensation weights on peers' performances can not only filter out common risks but also alter agent's incentives. We study how the network and risk structure jointly determine the optimal linear contract. First, the relative compensation sensitivity is determined by ratio of the dot product, between spillover vector and pure hedge portfolio, to unhedgeable risk. We then propose an index named informativeness along the spillover direction and argue that this index measures how precisely the principal can infer the agent's effort. By showing that both the implemented effort and induced welfare are increasing in the informativeness index, we argue that this index captures how central each agent is in this economy. Finally, results regarding relative sensitivities still hold under optimal contract with bounded compensation.
{"title":"Relative performance evaluation in spillover networks","authors":"Yang Sun , Wei Zhao","doi":"10.1016/j.geb.2024.03.009","DOIUrl":"https://doi.org/10.1016/j.geb.2024.03.009","url":null,"abstract":"<div><p>In a multi-agent contracting problem, agents are linked in performance through two channels, effort spillover, governed by spillover network, and risk correlation, governed by risk structure. Assigning compensation weights on peers' performances can not only filter out common risks but also alter agent's incentives. We study how the network and risk structure jointly determine the optimal linear contract. First, the relative compensation sensitivity is determined by ratio of the dot product, between spillover vector and pure hedge portfolio, to unhedgeable risk. We then propose an index named informativeness along the spillover direction and argue that this index measures how precisely the principal can infer the agent's effort. By showing that both the implemented effort and induced welfare are increasing in the informativeness index, we argue that this index captures how central each agent is in this economy. Finally, results regarding relative sensitivities still hold under optimal contract with bounded compensation.</p></div>","PeriodicalId":48291,"journal":{"name":"Games and Economic Behavior","volume":"145 ","pages":"Pages 285-311"},"PeriodicalIF":1.1,"publicationDate":"2024-03-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140346846","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-03-25DOI: 10.1016/j.geb.2024.03.013
Kenzo Imamura, Yasushi Kawase
We study indivisible goods allocation problems under constraints and provide algorithms to check whether a given matching is Pareto efficient. We first show that the serial dictatorship algorithm can be used to check Pareto efficiency if the constraints are matroid. To prove this, we develop a generalized top trading cycles algorithm. Moreover, we show that the matroid structure is necessary for obtaining all Pareto efficient matchings by the serial dictatorship algorithm. Second, we provide an extension of the serial dictatorship algorithm to check Pareto efficiency under general constraints. As an application of our results to prioritized allocations, we discuss Pareto improving the deferred acceptance algorithm.
{"title":"Efficient matching under general constraints","authors":"Kenzo Imamura, Yasushi Kawase","doi":"10.1016/j.geb.2024.03.013","DOIUrl":"https://doi.org/10.1016/j.geb.2024.03.013","url":null,"abstract":"<div><p>We study indivisible goods allocation problems under constraints and provide algorithms to check whether a given matching is Pareto efficient. We first show that the serial dictatorship algorithm can be used to check Pareto efficiency if the constraints are matroid. To prove this, we develop a generalized top trading cycles algorithm. Moreover, we show that the matroid structure is necessary for obtaining all Pareto efficient matchings by the serial dictatorship algorithm. Second, we provide an extension of the serial dictatorship algorithm to check Pareto efficiency under general constraints. As an application of our results to prioritized allocations, we discuss Pareto improving the deferred acceptance algorithm.</p></div>","PeriodicalId":48291,"journal":{"name":"Games and Economic Behavior","volume":"145 ","pages":"Pages 197-207"},"PeriodicalIF":1.1,"publicationDate":"2024-03-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140320670","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-03-25DOI: 10.1016/j.geb.2024.03.011
Hlafo Alfie Mimun , Matteo Quattropani , Marco Scarsini
We consider finite two-player normal form games with random payoffs. Player A's payoffs are i.i.d. from a uniform distribution. Given , for any action profile, player B's payoff coincides with player A's payoff with probability p and is i.i.d. from the same uniform distribution with probability . This model interpolates the model of i.i.d. random payoff used in most of the literature and the model of random potential games. First we study the number of pure Nash equilibria in the above class of games. Then we show that, for any positive p, asymptotically in the number of available actions, best response dynamics reaches a pure Nash equilibrium with high probability.
我们考虑的是具有随机回报的有限双人正则表达式博弈。玩家 A 的收益是均匀分布的 i.i.d.。给定 p∈[0,1],对于任何行动轮廓,棋手 B 的收益与棋手 A 的收益重合的概率为 p,并且是来自同一均匀分布的 i.i.d.,概率为 1-p。这个模型插值了大多数文献中使用的 i.i.d. 随机报酬模型和随机潜在博弈模型。首先,我们研究上述博弈中纯纳什均衡的数量。然后,我们证明,对于任意正 p,在可用行动的数量上,渐近地,最佳响应动力学以很高的概率达到纯纳什均衡。
{"title":"Best-response dynamics in two-person random games with correlated payoffs","authors":"Hlafo Alfie Mimun , Matteo Quattropani , Marco Scarsini","doi":"10.1016/j.geb.2024.03.011","DOIUrl":"https://doi.org/10.1016/j.geb.2024.03.011","url":null,"abstract":"<div><p>We consider finite two-player normal form games with random payoffs. Player A's payoffs are i.i.d. from a uniform distribution. Given <span><math><mi>p</mi><mo>∈</mo><mo>[</mo><mn>0</mn><mo>,</mo><mn>1</mn><mo>]</mo></math></span>, for any action profile, player B's payoff coincides with player A's payoff with probability <em>p</em> and is i.i.d. from the same uniform distribution with probability <span><math><mn>1</mn><mo>−</mo><mi>p</mi></math></span>. This model interpolates the model of i.i.d. random payoff used in most of the literature and the model of random potential games. First we study the number of pure Nash equilibria in the above class of games. Then we show that, for any positive <em>p</em>, asymptotically in the number of available actions, best response dynamics reaches a pure Nash equilibrium with high probability.</p></div>","PeriodicalId":48291,"journal":{"name":"Games and Economic Behavior","volume":"145 ","pages":"Pages 239-262"},"PeriodicalIF":1.1,"publicationDate":"2024-03-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://www.sciencedirect.com/science/article/pii/S0899825624000423/pdfft?md5=210e529807e504366613291f47d43844&pid=1-s2.0-S0899825624000423-main.pdf","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140328267","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-03-24DOI: 10.1016/j.geb.2024.03.007
Tsz-Ning Wong , Lily Ling Yang , Xin Zhao
We consider a model of collective persuasion, in which members of an advisory committee with private continuous signals vote on a policy change. A decision maker then decides whether to adopt the change upon observing each vote. Information transmission between the committee and the decision maker is possible if and only if there exists an informative equilibrium in which the decision maker only adopts the policy change after a unanimous vote. Similarly, full information aggregation is achievable if and only if such an equilibrium exists when the size of the committee is large enough. We further discuss why our continuous-signal model produces results different from discrete-signal models.
{"title":"Voting to persuade","authors":"Tsz-Ning Wong , Lily Ling Yang , Xin Zhao","doi":"10.1016/j.geb.2024.03.007","DOIUrl":"https://doi.org/10.1016/j.geb.2024.03.007","url":null,"abstract":"<div><p>We consider a model of collective persuasion, in which members of an advisory committee with private continuous signals vote on a policy change. A decision maker then decides whether to adopt the change upon observing each vote. Information transmission between the committee and the decision maker is possible if and only if there exists an informative equilibrium in which the decision maker only adopts the policy change after a unanimous vote. Similarly, full information aggregation is achievable if and only if such an equilibrium exists when the size of the committee is large enough. We further discuss why our continuous-signal model produces results different from discrete-signal models.</p></div>","PeriodicalId":48291,"journal":{"name":"Games and Economic Behavior","volume":"145 ","pages":"Pages 208-216"},"PeriodicalIF":1.1,"publicationDate":"2024-03-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://www.sciencedirect.com/science/article/pii/S0899825624000381/pdfft?md5=ae9b52dbf230fd512855acee11cbb219&pid=1-s2.0-S0899825624000381-main.pdf","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140320669","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-03-21DOI: 10.1016/j.geb.2024.03.005
Sean M. Collins, Duncan James
Highest stoppage games in economics—first price sealed bid auction and Dutch auction, among others—have produced striking puzzles, including violation of revenue equivalence between auctions and adjustment of behavior across interfaces. The latter is also observed in risk elicitation. Here, we use existing puzzles to shed light on each other, by nesting auction and risk tasks in a common environment. We find behavior consistent with a spatial interface imparting the same relevant auction-theoretic surplus and probability information as does an interactive numerical calculation tool. Empirical revenue equivalence (respectively, risky choice) can thus be altered by design.
{"title":"Hidden in plain sight: Payoffs, probability, space, and time in isomorphic tasks","authors":"Sean M. Collins, Duncan James","doi":"10.1016/j.geb.2024.03.005","DOIUrl":"https://doi.org/10.1016/j.geb.2024.03.005","url":null,"abstract":"<div><p>Highest stoppage games in economics—first price sealed bid auction and Dutch auction, among others—have produced striking puzzles, including violation of revenue equivalence between auctions and adjustment of behavior across interfaces. The latter is also observed in risk elicitation. Here, we use existing puzzles to shed light on each other, by nesting auction and risk tasks in a common environment. We find behavior consistent with a spatial interface imparting the same relevant auction-theoretic surplus and probability information as does an interactive numerical calculation tool. Empirical revenue equivalence (respectively, risky choice) can thus be altered by design.</p></div>","PeriodicalId":48291,"journal":{"name":"Games and Economic Behavior","volume":"145 ","pages":"Pages 117-136"},"PeriodicalIF":1.1,"publicationDate":"2024-03-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140297016","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-03-21DOI: 10.1016/j.geb.2024.03.008
Yi-Chun Chen , Gaoji Hu
This paper extends the Bayesian stability notion of Liu (2020) to define the Bayesian stability of a market state, which consists of a matching outcome and an information structure. The information structure can be arbitrarily heterogeneous and can accommodate learning among agents. We first establish that a Bayesian stable matching function of Liu (2020) can be recast as Bayesian stable market states with homogeneous information. We then illustrate the usefulness of such an extension by (i) refining Liu's Bayesian efficiency notion to define the Bayesian efficiency of a market state and (ii) generalizing his result—that Bayesian stable matching functions are Bayesian efficient—to an analogous one for market states. More importantly, we show that (iii) a decentralized matching process converges to a Bayesian stable market state and thereby offer a decentralized foundation for Liu's Bayesian stable matching function.
{"title":"Bayesian stable states","authors":"Yi-Chun Chen , Gaoji Hu","doi":"10.1016/j.geb.2024.03.008","DOIUrl":"10.1016/j.geb.2024.03.008","url":null,"abstract":"<div><p>This paper extends the Bayesian stability notion of <span>Liu (2020)</span> to define the Bayesian stability of a <em>market state</em>, which consists of a matching outcome and an information structure. The information structure can be arbitrarily heterogeneous and can accommodate learning among agents. We first establish that a Bayesian stable matching function of <span>Liu (2020)</span> can be recast as Bayesian stable market states with homogeneous information. We then illustrate the usefulness of such an extension by (i) refining Liu's Bayesian efficiency notion to define the Bayesian efficiency of a market state and (ii) generalizing his result—that Bayesian stable matching functions are Bayesian efficient—to an analogous one for market states. More importantly, we show that (iii) a decentralized matching process converges to a Bayesian stable market state and thereby offer a decentralized foundation for Liu's Bayesian stable matching function.</p></div>","PeriodicalId":48291,"journal":{"name":"Games and Economic Behavior","volume":"145 ","pages":"Pages 102-116"},"PeriodicalIF":1.1,"publicationDate":"2024-03-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140281418","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}