Essays on Strategic Behavior in Government-designed Markets PDF Download
Are you looking for read ebook online? Search for your book and save it on your Kindle device, PC, phones or tablets. Download Essays on Strategic Behavior in Government-designed Markets PDF full book. Access full book title Essays on Strategic Behavior in Government-designed Markets by Gastón Illanes. Download full books in PDF and EPUB format.
Author: Gastón Illanes Publisher: ISBN: Category : Languages : en Pages : 151
Book Description
This thesis studies consumer behavior and strategic interactions between firms in markets that were actively designed by governments. In such settings, government intervention is frequent, firms are often constrained in their actions, and consumer behavior may depart from what is predicted by the standard set of assumptions. The chapters of this thesis study how the current set of regulations is affecting market outcomes in different settings and what can be done to improve them. Chapter 1 studies the Chilean pension system, where workers' mandatory contributions are administered by private companies. This market exhibits fee dispersion and low switching rates, which could be explained by firm differentiation or by switching costs. Using a novel combination of revealed preference inequalities and latent variable integration techniques, I find evidence of large switching costs, and that if these costs did not exist prices would fall to around one-half of currently observed levels. Chapter 2 is a pre-cursor to Chapter 1, studying what would be learned from estimating demand in this market using a more standard set of techniques. I find that ignoring switching costs, individual-level heterogeneity, and endogeneity will lead to implausible demand estimates. These results are the key motivation for the use of the more sophisticated methods used in Chapter 1. Finally, Chapter 3, written with Sarah Moshary, studies the privatization of liquor sales in Washington state. It focuses on a natural experiment induced by privatization, which creates exogenous variation in the number of elegible licensees in local liquor markets, generated by a licensure threshold requirement on store size: only stores larger than 10,000 square feet are allowed to sell liquor. We find that this regulation does not alter the total number of liquor outlets within each market. Instead, it shifts the composition of stores. Also, we find that in markets with an additional potential entrant the product mix is shifted towards cheaper products. This confirms concerns that competition in liquor markets leads to greater availability of cheap alcohol, and suggests that regulation has an effect in limiting the availability of those types of products.
Author: Gastón Illanes Publisher: ISBN: Category : Languages : en Pages : 151
Book Description
This thesis studies consumer behavior and strategic interactions between firms in markets that were actively designed by governments. In such settings, government intervention is frequent, firms are often constrained in their actions, and consumer behavior may depart from what is predicted by the standard set of assumptions. The chapters of this thesis study how the current set of regulations is affecting market outcomes in different settings and what can be done to improve them. Chapter 1 studies the Chilean pension system, where workers' mandatory contributions are administered by private companies. This market exhibits fee dispersion and low switching rates, which could be explained by firm differentiation or by switching costs. Using a novel combination of revealed preference inequalities and latent variable integration techniques, I find evidence of large switching costs, and that if these costs did not exist prices would fall to around one-half of currently observed levels. Chapter 2 is a pre-cursor to Chapter 1, studying what would be learned from estimating demand in this market using a more standard set of techniques. I find that ignoring switching costs, individual-level heterogeneity, and endogeneity will lead to implausible demand estimates. These results are the key motivation for the use of the more sophisticated methods used in Chapter 1. Finally, Chapter 3, written with Sarah Moshary, studies the privatization of liquor sales in Washington state. It focuses on a natural experiment induced by privatization, which creates exogenous variation in the number of elegible licensees in local liquor markets, generated by a licensure threshold requirement on store size: only stores larger than 10,000 square feet are allowed to sell liquor. We find that this regulation does not alter the total number of liquor outlets within each market. Instead, it shifts the composition of stores. Also, we find that in markets with an additional potential entrant the product mix is shifted towards cheaper products. This confirms concerns that competition in liquor markets leads to greater availability of cheap alcohol, and suggests that regulation has an effect in limiting the availability of those types of products.
Author: Kaushik Basu Publisher: Oxford University Press, USA ISBN: Category : Business & Economics Languages : en Pages : 246
Book Description
This volume is a collection of the author's inter-disciplinary essays straddling several of the social sciences and also the philosophical foundations of economics. Most essays have a development slant and several make explicit reference to India.
Author: Aaron Luke Bodoh-Creed Publisher: ISBN: Category : Languages : en Pages :
Book Description
The focus of this dissertation is the role of information in the determination of market outcomes. The first essay provides a novel framework for studying large market mechanisms with an application to the information aggregation properties of uniform price auctions. The second essay analyzes a model of mood and associative memory and shows that this bias could explain anomalous results in the behavioral finance and organizational behavior literatures. The third and final essay analyzes ambiguity aversion and how it affects outcomes in general mechanisms. The first essay, "Mean Field Approximation of Large Games, " provides a general framework for approximating the equilibria of games with many participants using analytically tractable nonatomic limit games. We prove that if the game is continuous, then the set of equilibria is upper hemicontinuous in the number of agents. This implies that we can use equilibrium strategies of the limit game as an approximation of the equilibrium actions of the agents in the large finite game. We argue that this continuity property implies that generic large, continuous markets are almost competitive in the limit. We use our framework to analyze multi-unit demand uniform price auctions with both a common value component and bidders who value successive units as complements. We show that these auctions fully reveal the state of the world asymptotically and result in ex post efficient allocations with arbitrarily high probability in the asymptotic limit. As a second application, we provide a framework for approximating large stochastic games using dynamic competitive equilibria with applications to macroeconomics, industrial organization, engineering and computer science. The second essay, "Mood and Associative Memory, " examines the biases in memory caused by an agent's affective state. Within the psychology literature, it is a well established fact that decision makers in a positive emotional state are optimistic about the odds of positive random events and agents in a negative emotional state are pessimistic. By building a mathematical model firmly grounded on psychological primitives, we develop a behavioral decision theory framework that can be utilized in a wide range of microeconomic models. We apply our model to study employee morale and clarify a severely conflicted literature on morale within the Organizational Behavior literature. We also show that biases in memory are a potential explanation for a wide range of asset pricing anomalies such as excess volatility, short run underreaction and long run overreaction to news, and the influence of non-fundamental events. Our model provides a tool for policy makers to analyze the effects of biases in memory on the response of agents to firms, markets, and government policies and can be used to identify situations in which either public or private intervention may be required to ameliorate the effects of the agents' errors in judgment. The third and final essay, "Ambiguous Beliefs and Mechanism Design, " explores the effects of ambiguity aversion, also known as Knightian Uncertainty, on mechanism design theory. Knightian uncertainty refers to risk within the economy that is not characterized by a stochastic process commonly known to the agents. Compelling psychological data, such as the classical Ellsberg Paradox, have shown that agents reveal a strong aversion to Knightian Uncertainty above and beyond the risk aversion considered in neoclassical microeconomic theory. Policy makers ought to be especially concerned about the effects of ambiguity aversion, neglected in traditional studies of mechanism and market design, in situations where the agents are unfamiliar with the mechanism and the economic environment the mechanism creates. We unify the Multiple Prior Expected Utility (MEU) model of ambiguity aversion with the tools of contract theory to provide a general framework to analyze the effects of ambiguity aversion in market settings and use these tools to assess the effect of ambiguity aversion on auctions and bargaining problems. We show that the first and second price auction cannot be ranked when the agents are ambiguity averse, derive the optimal auction format, and study the effects of ambiguity on auction entry. We also prove that ambiguity aversion can be efficiency enhancing in ex ante budget balanced mechanisms and revenue enhancing in ex post efficient bargaining mechanisms.
Author: Markus Thomas Münter Publisher: UTB ISBN: 3825259080 Category : Business & Economics Languages : en Pages : 421
Book Description
Microeconomics is not applied math – frameworks in this book are regularly in use in daily managerial practice and strategic decision-making. Numerous case studies cover price discrimination, economies of scale, digital business models, game theory, dealing with uncertainty, entry barriers or sunk costs – all of which are crucial for understanding market dynamics and competitive behaviour.
Author: Haimeng Zhang Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
Firms are key participants in the market. Compared to individual consumers, firms, particularly those with significant market power, are often seen by economists as more resourceful to overcome information frictions, more likely to retain past information and less susceptible to bounded rationality. As a result, firms are capable of acting as sophisticated strategic players. Under the assumption of being driven by a clearly defined profit motive, firms may behave strategically when interacting with other market participants, including consumers, other firms and governments. Understanding firms' strategic behaviors is a critical step in assessing market efficiency, analyzing the wellbeing of consumers, and designing or evaluating government policies. This dissertation consists of three essays that analyze firms' strategic behaviors in different settings. Chapter 1 studies firms' strategic interactions in government organized spectrum auctions. In these ascending-bid auctions, firms as bidders are able to communicate their private information with one another using jump bidding as signals. The signals are credible since bidders with lower private information incur a higher ex ante cost for choosing a jump bid with any given size. This prevents the bidders with lower private information from mimicking those with higher private information. In equilibrium, the signaling model predicts lower expected revenue to the seller, in this case the government, than in the "open exit" model in which jump bidding is not allowed. Using data from a spectrum auction held by the Federal Communications Commission in the United States, the mean valuation estimated using the signaling model is higher compared to that of the open exit model. This implies that if bidders are indeed using jump bids as signals, ignoring it leads to estimates of the mean values that are biased downwards. This result is consistent with the prediction of the theoretical model that bidders pay lower prices with jump bidding than in an open exit auction. I estimate that if jump bidding was prohibited, the government could have had 8% higher revenues from the auction. In Chapter 2, my coauthors and I evaluate a government policy that subsidizes the agricultural equipment rental markets in India. We observe that private rental firms favor farmers located in dense areas and demanding higher machine-hours because equipment needs to be moved in space. Using our own census of 40,000 farmers, we document that costly delays and price dispersion in rentals are ubiquitous, and that small-scale farmers are rationed out by private rental firms. This rationing could be detrimental to aggregate productivity if small farmers have the highest marginal return to capital. A government subsidized first-come-first-served dispatch system grants small-scale farmers timely access to equipment at the expense of travel time. In a calibrated model of frictional rental services, optimal queueing and service dispatch we show that, while the constrained efficient allocation prioritizes large-holder farmers, small-scale farmers in dense areas are valuable because they help maximize capacity utilization. Through counterfactuals, we show that when the induced increase in subsidized equipment supply is high enough, service finding rates for small-farmers increase relative to large-holders farmers even when providers prioritize large-scale. In Chapter 3, I offer an alternative explanation to the existing theories on why firms make the strategic decision to carry out planned obsolescence. Planned obsolescence refers to the practice of firms choosing durability levels for their products below the cost-efficient ones. Motivated by the Phoebus cartel, whose reason for engaging in planned obsolescence cannot be explained by existing theories, I introduce a new theory that centers on an important concept from behavioral economics: present-biased preferences. I construct a theoretical model which demonstrates ...
Author: Kalyan Chatterjee Publisher: World Scientific ISBN: 9814447587 Category : Business & Economics Languages : en Pages : 229
Book Description
Bargaining in the Shadow of the Market — Selected Papers on Bilateral and Multilateral Bargaining consists of selected research in bargaining carried out by Kalyan Chatterjee by himself and with various co-authors. Chatterjee has been one of the earliest researchers to work on noncooperative bargaining theory and has contributed to bilateral bargaining with parties having private information as well as multilateral coalition formation models. Some of his work in each of these areas finds place here.The main theme of this collection of papers is the nature of negotiations when participants have alternatives to continue negotiating, either by beginning negotiations with a different partner or set of partners or by engaging in time-consuming search for such partners. Chapters in this book include: a noncooperative theory of coalitional bargaining and features a laboratory experiment relevant to this theory as well as an extension to political negotiations, search for alternative partners, the effect of markets and bargaining on incentives of players to invest in the partnership and related papers on incentive compatibility, arbitration and a dynamic model of negotiation. The book also includes a new introduction that puts these papers in the context of the broader literature in the field.
Author: Gastón Illanes
Author: Gastón Illanes
Author: Johannes Viehmann
Author: Sihong Zhang
Author: Kaushik Basu
Author: Aaron Luke Bodoh-Creed
Author: 
Author: Markus Thomas Münter
Author: OECD
Author: Haimeng Zhang
Author: Kalyan Chatterjee