Matching Items (871)
Filtering by
- Status: Published
ContributorsBritten, Benjamin, 1913-1976 (Composer)
Description
This dissertation presents three essays in economics. Firstly, I study the problem of allocating an indivisible good between two agents under incomplete information. I provide a characterization of mechanisms that maximize the sum of the expected utilities of the agents among all feasible strategy-proof mechanisms: Any optimal mechanism must be a convex combination of two fixed price mechanisms and two option mechanisms. Secondly, I study the problem of allocating a non-excludable public good between two agents under incomplete information. An equal-cost sharing mechanism which maximizes the sum of the expected utilities of the agents among all feasible strategy-proof mechanisms is proved to be optimal. Under the equal-cost sharing mechanism, when the built cost is low, the public good is provided whenever one of the agents is willing to fund it at half cost; when the cost is high, the public good is provided only if both agents are willing to fund it. Thirdly, I analyze the problem of matching two heterogeneous populations. If the payoff from a match exhibits complementarities, it is well known that absent any friction positive assortative matching is optimal. Coarse matching refers to a situation in which the populations into a finite number of classes, then randomly matched within these classes. The focus of this essay is the performance of coarse matching schemes with a finite number of classes. The main results of this essay are the following ones. First, assuming a multiplicative match payoff function, I derive a lower bound on the performance of n-class coarse matching under mild conditions on the distributions of agents' characteristics. Second, I prove that this result generalizes to a large class of match payoff functions. Third, I show that these results are applicable to a broad class of applications, including a monopoly pricing problem with incomplete information, as well as to a cost-sharing problem with incomplete information. In these problems, standard models predict that optimal contracts sort types completely. The third result implies that a monopolist can capture a large fraction of the second-best profits by offering pooling contracts with a small number of qualities.
ContributorsShao, Ran (Author) / Manelli, Alejandro (Thesis advisor) / Chade, Hector (Thesis advisor) / Schlee, Edward (Committee member) / Kovrijnykh, Natalia (Committee member) / Arizona State University (Publisher)
Created2011
ContributorsBritten, Benjamin, 1913-1976 (Composer)
ContributorsBritten, Benjamin, 1913-1976 (Composer)
ContributorsBritten, Benjamin, 1913-1976 (Composer)
Description
Economists, political philosophers, and others have often characterized social preferences regarding inequality by imagining a hypothetical choice of distributions behind "a veil of ignorance". Recent behavioral economics work has shown that subjects care about equality of outcomes, and are willing to sacrifice, in experimental contexts, some amount of personal gain in order to achieve greater equality. We review some of this literature and then conduct an experiment of our own, comparing subjects' choices in two risky situations, one being a choice for a purely individualized lottery for themselves, and the other a choice among possible distributions to members of a randomly selected group. We find that choosing in the group situation makes subjects significantly more risk averse than when choosing an individual lottery. This supports the hypothesis that an additional preference for equality exists alongside ordinary risk aversion, and that in a hypothetical "veil of ignorance" scenario, such preferences may make subjects significantly more averse to unequal distributions of rewards than can be explained by risk aversion alone.
ContributorsTheisen, Alexander Scott (Co-author) / McMullin, Caitlin (Co-author) / Li, Marilyn (Co-author) / DeSerpa, Allan (Thesis director) / Schlee, Edward (Committee member) / Baldwin, Marjorie (Committee member) / Barrett, The Honors College (Contributor) / Department of Economics (Contributor) / School of Mathematical and Statistical Sciences (Contributor) / Economics Program in CLAS (Contributor) / School of Historical, Philosophical and Religious Studies (Contributor)
Created2014-05
Description
One decision procedure dominates a given one if it performs well on the entire class of problems the given decision procedure performs well on, and then goes on to perform well on other problems that the given decision procedure does badly on. Performing well will be defined as generating higher expected utility before entering a problem. In this paper it will be argued that the timeless decision procedure dominates the causal
and evidential decision procedures. It will also be argued in turn that the updateless decision procedure dominates the timeless decision procedure. The difficulties of formalizing a modern variant of the ”smoking gene” problem will then be briefly examined.
and evidential decision procedures. It will also be argued in turn that the updateless decision procedure dominates the timeless decision procedure. The difficulties of formalizing a modern variant of the ”smoking gene” problem will then be briefly examined.
ContributorsHintze, Daniel Edward (Author) / Armendt, Brad (Thesis director) / Schlee, Edward (Committee member) / DeSerpa, Allan (Committee member) / Barrett, The Honors College (Contributor) / Economics Program in CLAS (Contributor)
Created2014-05
Description
I conduct a two-fold study on the relationship between adverse selection and nonlinear pricing in competitive insurance markets. First, I reassess empirical evidence of adverse selection in life insurance with the Health and Retirement Study (HRS) data used by Cawley and Philipson (1999). Specifically, I evaluate the shape of the premium schedule and present indications of quantity premia beyond a certain coverage level. The observed pricing schedule appears like the "backward-S-shaped" curve described by Chade and Schlee (2012); I discuss why this result cannot be entirely explained by fixed costs of underwriting. Second, I critique the arguments against adverse selection in existing literature by modifying the Rothschild and Stiglitz (1976) model of competitive insurance markets. I present several existing models and a new framework to explain how adverse selection and quantity discounts can coexist in equilibrium. These modifications deviate from the standard models of competitive insurance, but produce plausible hypotheses with conclusions contrary to conventional theoretical results.
ContributorsMahan, Scott Alexander (Author) / Schlee, Edward (Thesis director) / Silverman, Daniel (Committee member) / School of Mathematical and Statistical Sciences (Contributor) / Economics Program in CLAS (Contributor) / Barrett, The Honors College (Contributor)
Created2017-05
Description
I began this thesis because I was confused about economics. I wondered why there were so many different models. I didn't understand how they fit together. I was also confused by the assumptions being made. For instance, the assumption that humans are rational utility-maximizers did not seem to agree with my own experiences. With my director Dr. Edward Schlee's help, my thesis has become an inquiry into the state of economic methodology, both in theory and in practice. The questions that drive this paper are: How do economists choose between theories? What is the purpose of economic theory? What is the role of empirical data in assessing models? What role do assumptions play in theory evaluation, and should assumptions make sense? Part I: Methodology is the theoretical portion of the paper. I summarize the essential arguments of the two main schools of thought in economic methodology, and argue for an updated methodology. In Part II: A case study: The expected utility hypothesis, I examine methodology in practice by assessing a handful of studies that seek to test the expected utility hypothesis. Interestingly, I find that there is a different between what economists say they are doing, and what they actually seem to be doing. Throughout this paper, I restrict my analysis to microeconomic theory, simply because this is the area with which I am more familiar. I intend this paper to be a guide for my fellow students and rising economists, as well as for already practicing economists. I hope it helps the reader better understand methodology and improve her own practice.
ContributorsKang, Dominique (Author) / Schlee, Edward (Thesis director) / Schoellman, Todd (Committee member) / Boerner, Rochus (Committee member) / Barrett, The Honors College (Contributor)
Created2013-05
Description
Previous studies about the effects of regulatory institutions on the outcomes of regulation have resulted in a lack of consensus on the nature of these impacts. This paper seeks to resolve some of this ambiguity by analyzing two dimension of electric utility regulatory outcomes, prices and reliability, with a broader panel of explanatory variables and with a Hausman-Taylor regression technique. The results suggest that elected regulators and deregulated electricity markets result in worse reliability outcomes for consumers without strong evidence that either institution secures lower electricity prices. Incorporating these insights into a theoretical model of regulation could give more detailed insight into how to create regulatory institutions that can optimize the outcomes of governance.
ContributorsCrust, Erin Elizabeth (Author) / Schlee, Edward (Thesis director) / Hobijn, Bart (Committee member) / School of Civic & Economic Thought and Leadership (Contributor) / Economics Program in CLAS (Contributor) / School of Mathematical and Statistical Sciences (Contributor) / Barrett, The Honors College (Contributor)
Created2021-05