Archives 2022-2023

Location and time: Maison des Sciences Economiques, Room S17, 12-13h

Title :  On Future Allocations of Scarce Ressources without Explicit Rates of Discount

Summary: In this paper, we show that by merely fixing upper bounds and lower bounds for the stream of consumptions, we can compute the exact planning of these consumptions without explicit time discounting. The same principle applied to future reimbursement of a debt allows to determine the optimal planning, without an explicit time discounting as soon as we assume it to be strictly increasing. Therefore, one gets an allocation satisfying some kind of intergenerational fairness since the highest effort is supported by the first generations and then it decreases for the remaining ones. 


Location and time: Maison des Sciences Economiques, Room S17, 12-13h

Title :  Topology of political systems and compromise

Summary: We consider a basic model of political structure, given by the viable configurations of its forces (agents). When the full configuration is not viable a compromise must be searched for. We model a political structure as a simplicial complex where a viable configuration is a simplex. A represented compromise is a viable configuration obtained by the withdrawal of some agents in favor of other agents acting as representatives. A delegated compromise is a more elaborated version of a compromise obtained by iteration of the process of delegation. Existence of such compromises depends on the discrete topology of the simplicial complex. In the paper, we study represented and delegated compromises in their dependence on the combinatorial structure of the viable configurations, and in particular we show that existence of a delegated compromise is equivalent to strong contractibility of the simplicial complex.


Based on the article by  J. Abdou and H. Keiding


A qualitative theory of conflict resolution and political compromise

Mathematical Social Sciences 98 (2019) 15–25

Location and time: Maison des Sciences Economiques, Room S17, 12-13h

Title :  The taxation of couples (with F. Bierbrauer, A. Peischl and D. Weishaar)

Summary: This paper studies the tax treatment of singles and couples. We use two different approaches. One is tailored to the analysis of systems that stick to the principle that the tax base for couples is the sum of their incomes. One is tailored to the analysis of reforms towards individual taxation. We study the US federal income tax since the 1960s through the lens of this framework. We find that, for the recent past, realizing efficiency gains requires to lower marginal tax rates for secondary earners. We also find that revenue-neutral reforms towards individual taxation are in the interest of couples with high secondary earnings while couples with low secondary earnings are worse off. The support for such a reform recently passed the majority threshold. It is rejected, however, by a Rawlsian social welfare function. Thus, there is a tension between Rawlsian and Feminist notions of social welfare.

Location and time: Maison des Sciences Economiques, Room S17, 12-13h

Title :  Time Inconsistent Preferences with Time Dependent Relative Risk Aversion: a Model with some Macroeconomic Applications

Summary: This paper proposes a model of intertemporal preferences where the relative risk aversion depends on the time horizon of the agent. The agent is supposed to evaluate risk in the short run with a relative risk aversion coefficient which differs from its long run value. As preferences are no more time consistent, decisions are the solution of a game between the successive selves.  The model is applied to the problem of the optimal choice of saving with a risky interest rate and to the equity premium puzzle. A time-dependent risk aversion may help to solve the puzzle.

Location and time: Maison des Sciences Economiques, Room 115 , 12-13h

Title : Negative results in science : blessing or (winner’s) curse   

Summary:  Two players receiving independent signals on a risky project with common value compete to be the first to invest. We characterize the equilibrium of this preemption game as the publicity of signals varies. Private signals create a winner's curse: the first mover suspects that his rival might have privately received adverse information, hence exited. To compensate, players seek more evidence supporting the project, resulting in later investment. A conservative planner concerned with avoiding unprofitable investments may then prefer private signals. Our results suggest that policy interventions should primarily tackle winner-takes-all competition, and regulate transparency only once competition is sufficiently mild.

Location and time: Maison des Sciences Economiques, Room S17, 12-13h

Title :  Cost signaling games: rationality and evolution (with J. Hofbauer)

Summary: The theory of costly signaling (Spence 1973), also known under the name of the Handicap Principle (Zahavi 1975), is a well-established paradigm in economics and theoretical biology. Nevertheless, while costly-signaling games have been extensively studied in classical, rationality-oriented game theory, evolutionary dynamics in costly-signaling games are relatively unexplored. In this paper, we give a comprehensive account of evolutionary dynamics in two basic classes of games with two states of nature, two signals, and two possible reactions in response to signals: a model with differential signaling costs (as in Spence's 1973 model), and a model with differential benefits from success (similarly as in Milgrom and Roberts's 1986, respectively Grafen's 1990 model). We first use index theory to give a necessary condition for dynamic stability of the equilibria in these games. Then, we study in more detail the replicator dynamics and to some extent the best-response dynamics. Finally, we relate our findings to equilibrium analysis based on classical, rationality-oriented, methods of equilibrium refinement.

Location and time: Maison des Sciences Economiques, Room 115, 12-13h

Title : Combinatorial aspects of capacities and TU-games on finite sets

Summary:  (Normalized) capacities on a finite set N of n elements are monotone functions from 2^R to [0,1], well-known in decision making, in game theory (monotone TU-games), as well as in combinatorial optimization. Despite their simple definition, they induce complex structures, most of them being incompletely known. The talk will emphasize several examples. We show that the set of capacities is an order polytope whose vertices are the so-called simple games, whose number is unknown beyond n=8. Its partition into simplices is related to the number of linear extensions of the Boolean lattice 2^N, unknown beyond n=7. This question is related to the random generation of capacities in a uniform way, which will be developed in the talk. Lastly, an important concept in decision making and game theory is the one of core of capacity or a TU-game. Its nonemptiness is related to the notion of minimal balanced collections, whose number is not known beyond n=7.

Location and time: Maison des Sciences Economiques, room 115

Title :  Approval voting versus proportional threshold methods so far and yet so near

Summary:  This paper provides the first axiomatic characterization of a class of certification methods, dubbed proportional threshold methods, that builds on consistency properties across populations and profiles of binary opinions. We then compare proportional threshold methods with the approval voting method. We formally outline the similarities and differences of these two collective decision processes and provide an axiomatic characterization of the approval voting method that, perhaps surprisingly, is closely related to the one of the proportional threshold methods.

Location and time: Maison des Sciences Economiques, Room 115 , 12-13h

Title :  Choice-based foundations of ordered-logit (with J. Apesteguia)

Summary: We provide revealed preference foundations to ordered logit, for discrete and continuous decision problems. In both cases, the axiomatizations are based on a simple property that reflects the additivity of cumulative logits.


Location and time: Maison des Sciences Economiques, Room 115 , 12-13h

Title : On the Political Economy of Economic Integration

Summary: We consider a general equilibrium model with vertical preferences for one good and two identical countries each with one firm initially. Citizens in each country vote either for economic integration (or openness) or for autarky. A decision for free trade is effective only when bilateral. Each citizen in each country is potentially a consumer, a worker and a shareholder in the domestic firm. Citizens differ with respect to their preference for quality and labor ability. Free trade always lowers (increases) social welfare in the low (high)-quality country, with a positive overall effect. The vote outcome however depends on the majority vote in the low-quality country, as the high-quality country always votes for openness. The outcome thus depends in a complex way on the degree of concentration of the ownership structure in the low-quality country and the relative dispersion of the citizens with respect to their preference for quality and labor ability. The decentralized decision through voting yields a complex outcome, suggesting an explanation for the observed diversity of views on the merits of free trade.

Location and time: Maison des Sciences Economiques, Room 115 , 12-13h

Title :  Corporate Culture and Organizational Fragility


Summary: Complex organizations accomplish tasks through many steps of collaboration among workers. Corporate culture supports collaborations by establishing norms and reducing misunderstandings. Because a strong corporate culture relies on costly, voluntary investments by many workers, we model it as an organizational public good, subject to standard free-riding problems, which become severe in large organizations. Our main finding is that voluntary contributions to culture can nevertheless be sustained, because an organization’s equilibrium productivity is endogenously highly sensitive to individual contributions. However, the completion of complex tasks is then necessarily fragile to small shocks that damage the organization’s culture.

Location and time: Maison des Sciences Economiques, Room 115 , 12-13h

Title : Grabbing the forbidden fruit: Restriction-sensitive choice (with N. Boissonnet)

Summary: Restricting individuals’ access to some goods may steer their desire toward their substitutes, a phenomenon known as the forbidden fruit effect. We propose and study a model of restriction-sensitive choice (RSC) that rationalizes such behaviors and that is compatible with the prominent psychological explanations: reactance theory and commodity theory. We show how ingredients of our model can be identified from choice data, namely, from choice reversals caused by the removal of options. We give an axiomatic characterization of RSC. We also derive a preference ordering over opportunity sets for agents whose final choices follow our procedure. Three applications are then analyzed. We show that our model can accommodate the emergence of conspiracy theories and the backlash of integration policy targeted toward minorities. We finally study a principal’s delegation problem to an agent whose choice is an RSC. We find thatthe effect on the agent’s welfare is ambiguous.

Location and time: Maison des Sciences Economiques, Room 115 , 12-13h

Title :  More Competition to Alleviate Poverty? A General Equilibrium Model and An Empirical Study

Summary: In this paper, we theoretically and empirically analyze the impact of competition on poverty. We consider a general equilibrium framework with vertical preferences and compare poverty in a Monopoly setting versus a Duopoly setting considering explicitly the ownership structure. Poverty is measured by the size of the population living below an absolute poverty line. Theoretical results show that the impact of competition on poverty is contingent to the ownership structure, the poverty line and the relative dispersion of the individuals with respect to their intensity of preference for quality and sensitivity to effort: competition can improve or worsen poverty depending on the model's parameters. Empirical findings for the three poverty lines are consistent to some extent with our theoretical results.

Location and time: Maison des Sciences Economiques, Room 115 , 12-13h

Title : Expected total utilitarianism is implied by individual and social dominance (with J. Gustafsson and D. Spears)

Summary: We provide a new axiomatic path to expected total utilitarianism, which is a core economic framework for evaluating policies and social welfare under variable population and social risk. Our innovation is a previously unrecognized combination of weak assumptions that yields expected total utilitarianism. We show that two dimensions of weak dominance (over risk and individuals) characterize a social welfare function with two dimensions of additive separability. So, social expected utility emerges merely from social statewise dominance (given other axioms). Moreover, total utilitarianism arises merely from individual stochastic dominance, which is assumed only for lives certain to exist (so this axiom does not compare life against non-existence). Further, without assuming individual preferences, we derive that the social order respects individual-level expected utility. We additionally apply our result to time-separable macroeconomic growth accounting and to individual risky choice. Our result provides an important foundation for evaluating climate change, growth, and global depopulation.

Location and time: Maison des Sciences Economiques, Room 115 , 12-13h

Title : Games in Product Form and Kuhn's Equivalence Theorem (joint work with Benjamin Heymann and Jean-Philippe Chancelier)

Summary: In this talk, we introduce games in product form (GPF, based on Witsenhausen intrinsic model) as an alternative to games in extensive form (GEF, based on Kuhn's tree model). We advocate the relevance of GPF for game theory by: 

We illustrate its theoretical interest by providing a classification of information structures, a definition of perfect recall, a definition of behavioral strategies "à la Aumann" and by proving a Kuhn's Equivalence Theorem for GPF.

Location and time: Maison des Sciences Economiques, S17 , 12-13h

Title :  Incomplete Markets with a Countable Number of States: Equilibrium and No-Arbitrage

Summary:  In this paper, we prove that the two-period model  $\grave{a}$ la Hart with an incomplete market has an equilibrium when the number of states of nature is infinitely countable. Moreover, under some restrictions on the returns matrix, an equilibrium asset price is a no-arbitrage price. Conversely, we consider a sequence of equilibria corresponding to an increasing number of states associated with a given no-arbitrage asset price. If the limit, for the product topology, of the sequence of commodity prices is different from zero, then the limits of these prices and of the allocations (assets, commodities) constitute, together with the given asset price, an equilibrium with an infinitely countable number of states. 

Location and time: Maison des Sciences Economiques, S17 , 12-13h

Title :TBA

Summary:  TBA

Location and time: Maison des Sciences Économiques, S17 , 12-13h

Title : Description-dependent choices (with D. Borie)

Summary:  We propose a theory of choice that accounts for the class of framing effects where a preference reversal is due to different descriptions of the same alternatives. These framing effects violate the principle of “description invariance” which is implicit in the standard theory of choice. We make this principle explicit by taking descriptions of alternatives (instead of alternatives per se) as the primary objects of choice. We then explore several ways to relax description invariance to see the different preferences that are generated and we pay specific attention to the role played by the Weak Axiom of Revealed Preference in description-invariant and description-dependent choices. Finally, we extend our theory under risk to show how it can generate risk attitudes that are dependent on descriptions.


Location and time: Maison des Sciences Économiques, S17 , 12-13h

Title :Random choice with status quo bias

Summary

This is a preliminary work, joint with Tigran Melkonyan and Zvi Safra, aiming to introduce status quo bias (and subsequently other types of framings or nudges) into random choice models. Existing models of status quo bias (Masatlioglu and Ok, 2005; 2013) are cast in a deterministic choice framework and, consequently, the status quo often has an extreme effect on choice. Adopting a random choice setting therefore seems more plausible. We thus introduce status quo options in the random expected utility model of Gul and Pesendorfer (2006), define and axiomatize a representation where the status quo affects choice probabilities through utility penalties.


Location and time: Maison des Sciences Économiques, S17 , 12-13h

Title : Root Dominance

SummaryRoot dominance is an intermediate dominance relation between weak and strict dominances. In addition to weak dominance, root dominance requires strict dominance on all profiles where an opponent plays a best response to the dominating strategy. The iterated elimination of root dominated strategies (IERDS) outcome refines the iterated elimination of strictly dominated strategies (IESDS) outcome, and IERDS is an order independent procedure in finite games, contrary to the iterated elimination of weakly dominated strategies (IEWDS). In addition, IERDS does not face the inconsistency that we call mutability. That is, IERDS does not alter the dominance relation between two strategies like IEWDS does. Finally, we introduce a rationality concept which corresponds to root undominated strategies. This rationality concept is induced by perturbations of the game such that a player believes the strategies he is considering might be observable by his opponent. Thus, beliefs are strategy-dependent. We discuss the links between our concept and other concepts established in various literatures such as the conjectural variations theory.


Friday,  September 22nd  Hervé Moulin  (University of Glasgow)

Location and time: Maison des Sciences Économiques, S17 , 12-13h

Title : Minimising externalities ex ante and mechanism design

Summary: We revisit in the fair division context the fundamental normative trade-off between the liberal (Coasian) resolution of interpersonal externalities by decentralised person to person negotiations, apt to discover new unforeseen solutions and promote cooperation; and the regulated approach under the rule of a centrally designed mechanism, completely eliminating unscripted interactions.

At the ex ante stage where the other agents' characteristics are unknown, the difference in welfare between my worst and best cases scenarios is the extent of interpersonal externalities I can be subject to. As a solution of the normative trade-off above we submit that the role of the mechanism designer should be limited to the minimisation of this gap.

Maximising the worst case welfare, discussed first in mathematical cake-cutting stories more than 75 years ago is probably the simplest and most versatile normative principle in fair division. Minimising the best case welfare is an equally legitimate concern. It is not spiteful when the eventual outcome is efficient: allowing you higher potential gains ex ante must reduce those of some other agent(s).

In most fair division problems, the designer can choose from a menu of maximal lower guarantees (my worst case welfare as a function of my characteristics) and/or minimal upper guarantees. Discovering these menus is a hard mathematical question, even in many simple instances. We do it in two iconic examples: the commons problem with homogenous inputs and outputs, and the allocation of indivisible goods (or bads) with transfers. Thre results confirm the prominence of some familiar division rules and discover new ones.