理论论文

In the context of one-to-one matching markets, we study myopic-farsighted stable sets, which are internally and externally stable when myopic agents consider immediate payoffs from their deviations, while farsighted agents anticipate counter-deviations and consider final payoffs. We constructively prove the existence of a (rational expectations) myopic-farsighted stable set, in which farsighted agents receive a single payoff while myopic agents may receive multiple payoffs. Our existence result extends to settings with enforcing coalitions of arbitrary size, yielding coalitional myopic-farsighted stable sets, and to settings where not all members of an enforcing coalition must strictly gain, yielding myopic-farsighted weakly stable sets. When all farsighted agents have unit demand, our results also extend to many-to-one matching markets. As a key corollary, we provide a foundation for the efficiency-adjusted deferred acceptance algorithm by showing that its outcome constitutes a singleton myopic-farsighted stable set when one side is farsighted and the other is myopic.

This paper theoretically and empirically studies the interaction of search and application approval in credit markets. Risky borrowers internalize the probability that their application is rejected and behave as if they had high search costs. Thus, “overpayment” may be a poor proxy for consumer sophistication since it partly represents rational search in response to rejections. Contrary to standard search models, our model implies (1) endogenous adverse selection through the search and application approval process, (2) a possibly non‐monotone or non‐decreasing relationship between search and realized interest, default, and application approval rates, and (3) search costs estimated from transaction prices alone are biased. We find support for the model's predictions using a unique data set detailing search behavior of mortgage borrowers. Estimating the model, we find that screening is informative and search is costly. Counterfactual analyses reveal that tightening lending standards and discrimination through application rejection both increase equilibrium interest rates. This increase in realized interest rates is in part due to strategic complementarity in bank rate setting.

May's theorem (1952), a celebrated result in social choice, provides the foundation for majority rule. May's crucial assumption of symmetry, often thought of as a procedural equity requirement, is violated by many choice procedures that grant voters identical roles. We show that a weakening of May's symmetry assumption allows for a far richer set of rules that still treat voters equally. We show that such rules can have minimal winning coalitions comprising a vanishing fraction of the population, but not less than the square root of the population size. Methodologically, we introduce techniques from group theory and illustrate their usefulness for the analysis of social choice questions.

We conduct an experiment to study whether individuals save more when information about the progress toward their self-set savings goal is shared with another village member (a “monitor”). We develop a reputational framework to explore how a monitor's effectiveness depends on her network position. Savers who care about whether others perceive them as responsible should save more with central monitors, who more widely disseminate information, and proximate monitors, who pass information to individuals with whom the saver interacts frequently. We randomly assign monitors to savers and find that monitors on average increase savings by 36%. Consistent with the framework, more central and proximate monitors lead to larger increases in savings. Moreover, information flows through the network, with 63% of monitors telling others about the saver's progress. Fifteen months after the conclusion of the experiment, other villagers have updated their beliefs about the saver's responsibility in response to the intervention.

Private information is at the heart of many economic activities. For decades, economists have assumed that individuals are willing to misreport private information if this maximizes their material payoff. We combine data from 90 experimental studies in economics, psychology, and sociology, and show that, in fact, people lie surprisingly little. We then formalize a wide range of potential explanations for the observed behavior, identify testable predictions that can distinguish between the models, and conduct new experiments to do so. Our empirical evidence suggests that a preference for being seen as honest and a preference for being honest are the main motivations for truth‐telling.

More and more economists are finding both empirical and experimental evidence of economic behavior that is well beyond classical economics. In particular, empirical evidence ( Jullien and Salanié (2000)) and experimental evidence ( Kahneman and Tversky (1979)) supported the importance of risk loving, ambiguity loving, and related behavior in economics. However, these types of preferences have not been analyzed in the general equilibrium literature with a finite number of agents because non-convexity of preferences creates difficulty in proving existence of equilibrium. The main result in this paper provides a set of conditions under which equilibrium exists in such economies. We show that uncertainty of aggregate wealth, as well as some dominance of the endowment of the risk averters in the economy, play a role in the existence of Arrow–Debreu equilibria. This result can be extended to ambiguity in the sense of CEU, Smooth Ambiguity, and Variational Preference.

We provide the first analysis of altruism in networks. Agents are embedded in a fixed network and care about the well‐being of their network neighbors. Depending on incomes, they may provide financial support to their poorer friends. We study the Nash equilibria of the resulting game of transfers. We show that equilibria maximize a concave potential function. We establish existence, uniqueness of equilibrium consumption, and generic uniqueness of equilibrium transfers. We characterize the geometry of the network of transfers and highlight the key role played by transfer intermediaries. We then study comparative statics. A positive income shock to an individual benefits all. For small changes in incomes, agents in a component of the network of transfers act as if they were organized in an income‐pooling community. A decrease in income inequality or expansion of the altruism network may increase consumption inequality.

We provide general conditions under which principal-agent problems with either one or multiple agents admit mechanisms that are optimal for the principal. Our results cover as special cases pure moral hazard and pure adverse selection. We allow multidimensional types, actions, and signals, as well as both financial and non-financial rewards. Our results extend to situations in which there are ex ante or interim restrictions on the mechanism, and allow the principal to have decisions in addition to choosing the agent's contract. Beyond measurability, we require no a priori restrictions on the space of mechanisms. It is not unusual for randomization to be necessary for optimality and so it (should be and) is permitted. Randomization also plays an essential role in our proof. We also provide conditions under which some forms of randomization are unnecessary.