Dynamic matching and bargaining: the role of deadlines

We consider a dynamic model where traders in each period are matched randomly into pairs who then bargain about the division of a fixed surplus. When agreement is reached the traders leave the market. Traders who do not come to an agreement return next period in which they will be matched again, as long as their deadline has not expired yet. New traders enter exogenously in each period. We assume that traders within a pair know each other's deadline. We define and characterize the stationary equilibrium configurations. Traders with longer deadlines fare better than traders with short deadlines. It is shown that the heterogeneity of deadlines may cause delay. It is then shown that a centralized mechanism that controls the matching protocol, but does not interfere with the bargaining, eliminates all delay. Even though this efficient centralized mechanism is not as good for traders with long deadlines, it is shown that in a model where all traders can choose which mechanism to

Scoring rules on dichotomous preferences

In this paper, we study individual incentives to report preferences truthfully for the special case when individuals have dichotomous preferences on the set of alternatives and preferences are aggregated in form of scoring rules. In particular, we show that (a) the Borda Count coincides with Approval Voting on the dichotomous preference domain, (b) the Borda Count is the only strategy-proof scoring rule on the dichotomous preference domain, and (c) if at least three individuals participate in the election, then the dichotomous preference domain is the unique maximal rich domain under which the Borda Count is strategy-proof.

The Instrumental voter goes to the news-agent: demand for information, election closeness, and the media

This paper studies the impact of instrumental voting on information demand and mass media behaviour during electoral campaigns. If voters act instrumentally then information demand should increase with the closeness of an election. Mass media are modeled as profit-maximizing firms that take into account information demand, the value of customers to advertisers and the marginal cost of customers. Information supply should be larger in electoral constituencies where the contest is expected to be closer, there is a higher population density, and customers are on average more profitable for advertisers. The impact of electorate size is theoretically undetermined. These conclusions are then tested with comfortable results on data from the 1997 general election in Britain.

Spatial competition between two candidates of different quality: the effects of candidate ideology and private information

This paper examines competition in a spatial model of two-candidate elections, where one candidate enjoys a quality advantage over the other candidate. The candidates care about winning and also have policy preferences. There is two-dimensional private information. Candidate ideal points as well as their tradeoffs between policy preferences and winning are private information. The distribution of this two-dimensional type is common knowledge. The location of the median voter's ideal point is uncertain, with a distribution that is commonly known by both candidates. Pure strategy equilibria always exist in this model. We characterize the effects of increased uncertainty about the median voter, the effect of candidate policy preferences, and the effects of changes in the distribution of private information. We prove that the distribution of candidate policies approaches the mixed equilibrium of Aragones and Palfrey (2002a), when both candidates' weights on policy preferences go to zero.

The provision of quality in a bilateral search market

We accomplish two goals. First, we provide a non-cooperative foundation for the use of the Nash bargaining solution in search markets. This finding should help to close the rift between the search and the matching-and-bargaining literature. Second, we establish that the diversity of quality offered (at an increasing price-quality ratio) in a decentralized market is an equilibrium phenomenon - even in the limit as search frictions disappear.

Search and bargaining in large markets with homogeneous traders

We study pair-wise decentralized trade in dynamic markets with homogeneous, non-atomic, buyers and sellers that wish to exchange one unit. Pairs of traders are randomly matched and bargaining a price under rules that offer the freedom to quit the match at any time. Market equilbria, prices and trades over time, are characterized. The asymptotic behavior of prices and trades as frictions (search costs and impatience) vanish, and the conditions for (non) convergence to walrasian prices are explored. As a side product of independent interest, we present a self-contained theory of non-cooperative bargaining with two-sided, time-varying, outside options.

The effect of candidate quality on electoral equilibrium: an experimental study

When two candidates of different quality compete in a one dimensional policy space, the equilibrium outcomes are asymmetric and do not correspond to the median. There are three main effects. First, the better candidate adopts more centrist policies than the worse candidate. Second, the equilibrium is statistical, in the sense that it predicts a probability distribution of outcomes rather than a single degenerate outcome. Third, the equilibrium varies systematically with the level of uncertainty about the location of the median voter. We test these three predictions using laboratory experiments, and find strong support for all three. We also observe some biases and show that they canbe explained by quantal response equilibrium.

Free triples, large indifference classes and the majority rule

We present a new domain of preferences under which the majority relation is always quasi-transitive and thus Condorcet winners always exist. We model situations where a set of individuals must choose one individual in the group. Agents are connected through some relationship that can be interpreted as expressing neighborhood, and which is formalized by a graph. Our restriction on preferences is as follows: each agent can freely rank his immediate neighbors, but then he is indifferent between each neighbor and all other agents that this neighbor "leads to". Hence, agents can be highly perceptive regarding their neighbors, while being insensitive to the differences between these and other agents which are further removed from them. We show quasi-transitivity of the majority relation when the graph expressing the neighborhood relation is a tree. We also discuss a further restriction allowing to extend the result for more general graphs. Finally, we compare the proposed restriction with others in the literature, to conclude that it is independent of any previously discussed domain restriction.

Voting by committees with exit

We study the problem of a society choosing a subset of new members from a finite set of candidates (as in Barberà, Sonnenschein, and Zhou, 1991). However, we explicitly consider the possibility that initial members of the society (founders) may want to leave it if they do not like the resulting new society. We show that, if founders have separable (or additive) preferences, the unique strategy-proof and stable social choice function satisfying voters' sovereignty (on the set of candidates) is the one where candidates are chosen unanimously and no founder leaves the society.

Mediation incomplete information bargaining with filtered communication

We analyze a continuous-time bilateral double auction in the presence of two-sided incomplete information and a smallest money unit. A distinguishing feature of our model is that intermediate concessions are not observable by the adversary: they are only communicated to a passive auctioneer. An alternative interpretation is that of mediated bargaining. We show that an equilibrium using only the extreme agreements always exists and display the necessary and sufficient condition for the existence of (perfect Bayesian) equilibra which yield intermediate agreements. For the symmetric case with uniform type distribution we numerically calculate the equilibria. We find that the equilibrium which does not use compromise agreements is the least efficient, however, the rest of the equilibria yield the lower social welfare the higher number of compromise agreements are used.

Voting by committees under constraints

We consider social choice problems where a society must choose a subset from a set of objects. Specifically, we characterize the families of strategy-proof voting procedures when not all possible subsets of objects are feasible, and voters' preferences are separable or additively representable.

Candidate stability and voting correspondences

We study the incentives of candidates to enter or to exit elections in order to strategically affect the outcome of a voting correspondence. We extend the results of Dutta, Jackson and Le Breton (2000), who only considered single-valued voting procedures by admitting that the outcomes of voting may consist of sets of candidates. We show that, if candidates form their preferences over sets according to Expected Utility Theory and Bayesian updating, every unanimous and non dictatorial voting correspondence violates candidate stability. When candidates are restricted to use even chance prior distributions, only dictatorial or bidictatorial rules are unanimous and candidate stable. We also analyze the implications of using other extension criteria to define candidate stability that open the door to positive results.

A marxian model of the breakdown of capitalism

This paper sets out a Marxian model that is based on the one by Stephen Marglin with one sector and continuous substitution. It is extended by adding technical progress and land as a factor of production. It is then shown that capital accumulation causes the preconditions for the breakdown of capitalism to emerge; that is, it causes the organic composition of capital to rise, the rate of profit to fall and the rate of exploitation to rise. A compressed history of the idea of the breakdown of capitalism is then set out and an explanation is given as to how the model relates to this and how it may serve as the basis for further research.

Classical horizontal inequity and reranking: an integrated approach

The last 20 years have seen a significant evolution in the literature on horizontal inequity (HI) and have generated two major and "rival" methodological strands, namely, classical HI and reranking. We propose in this paper a class of ethically flexible tools that integrate these two strands. This is achieved using a measure of inequality that merges the well-known Gini coefficient and Atkinson indices, and that allows a decomposition of the total redistributive effect of taxes and transfers in a vertical equity effect and a loss of redistribution due to either classical HI or reranking. An inequality-change approach and a money-metric cost-of-inequality approach are developed. The latter approach makes aggregate classical HI decomposable across groups. As in recent work, equals are identified through a nonparametric estimation of the joint density of gross and net incomes. An illustration using Canadian data from 1981 to 1994 shows a substantial, and increasing, robust erosion of redistribution attributable both to classical HI and to reranking, but does not reveal which of reranking or classical HI is more important since this requires a judgement that is fundamentally normative in nature.