Recursos de colección

Caltech Authors (171.365 recursos)

Repository of works by Caltech published authors.

Group = Social Science Working Papers

Mostrando recursos 1 - 20 de 1.781

  1. Approximate Expected Utility Rationalization

    Echenique, Federico; Imai, Taisuke; Saito, Kota
    We propose a new measure of deviations from expected utility, given data on economic choices under risk and uncertainty. In a revealed preference setup, and given a positive number e, we provide a characterization of the datasets whose deviation (in beliefs, utility, or perceived prices) is within e of expected utility theory. The number e can then be used as a distance to the theory. We apply our methodology to three recent large-scale experiments. Many subjects in those experiments are consistent with utility aximization, but not expected utility maximization. The correlation of our measure with demographics is also interesting, and...

  2. A Characterization of "Phelpsian" Statistical Discrimination

    Chambers, Christopher P.; Echenique, Federico
    We establish that statistical discrimination is possible if and only if it is impossible to uniquely identify the signal structure observed by an employer from a realized empirical distribution of skills. The impossibility of statistical discrimination is shown to be equivalent to the existence of a fair, skill-dependent remuneration for every set of tasks every signal-dependent optimal assignment of workers to tasks. Finally, we connect this literature to Bayesian persuasion, establishing that if the possibility of discrimination is absent, then the optimal signalling problem results in a linear payoff function (as well as a kind of converse).

  3. Statistical Discrimination and Affirmative Action in the Lab

    Dianat, Ahrash; Echenique, Federico; Yariv, Leeat
    We present results from laboratory experiments studying the impacts of affirmative-action policies. We induce statistical discrimination in simple labor-market interactions between rms and workers. We then introduce affirmative-action policies that vary in the size and duration of a subsidy firms receive for hiring discriminated-against workers. These different affirmative-action policies have nearly the same effect and practically eliminate discriminatory hiring practices. However, once lifted, few positive effects remain and discrimination reverts to its initial levels. One exception is lengthy affirmative-action policies, which exhibit somewhat longer-lived effects. Stickiness of beliefs, which we elicit, helps explain the evolution of these outcomes.

  4. Design of Tradable Permit Programs under Imprecise Measurement

    Ledyard, John O.
    If the measurement of production in a commons is accurate and precise, it is possible to design a tradable permit program such that, under a fairly general set of conditions, the market equilibrium is efficient for the given aggregate permit level and everyone is better off after the permit program than before. Often, however, implementation of a tradable permit system is postponed or never undertaken because an inexpensive technology able to provide accurate and precise measurements does not exist. However, there often is an inexpensive technology which accurate but not precise. I study the possibilities for the design of a...

  5. Learning to Alternate

    Arifovic, Jasmina; Ledyard, John O.
    The Individual Evolutionary Learning (IEL) model explains human subjects' behavior in a wide range of repeated games which have unique Nash equilibria. Using a variation of `better response' strategies, IEL agents quickly learn to play Nash equilibrium strategies and their dynamic behavior is like that of humans subjects. In this paper we study whether IEL can also explain behavior in games with gains from coordination. We focus on the simplest such game: the 2 person repeated Battle of Sexes game. In laboratory experiments, two patterns of behavior often emerge: players either converge rapidly to one of the stage game Nash...

  6. A Testbed Experiment of a (Smart) Marked Based, Student Transportation Policy: Non Convexities, Coordination, Non Existence

    Lee, Hsing Yang; Maron, Travis; Plott, Charles R.; Seo, Han
    The paper develops and studies a decentralized mechanism for pricing and allocation challenges typically met with administrative processes. Traditional forms of markets are not used due to conditions associated with market failure, such as complex coordination problems, thin markets, non-convexities including and zero marginal cost due to lumpy transportation capacities. The mechanism rests on an assignment process that is guided by a computational process, enforces rules and channels information feedback to participants. Special, testbed experimental methods produce high levels of efficiency when confronted by individual behaviors that are consistent with traditional models of strategic behavior.

  7. Tick Size, Price Grids and Market Performance: Stable Matches as a Model of Market Dynamics and Equilibrium

    Plott, Charles R.; Roll, Richard; Seo, Han; Zhao, Hao
    This paper reports experiments motivated by ongoing controversies regarding tick size in markets. The minimum tick size in a market dictates discrete values at which bids and asks can be tendered by market participants. All transaction prices must occur at these discrete values, which are established by the rules of each exchange. The simplicity of experiments helps to distinguish among competing models of complex real-world securities markets. We observe patterns predicted by a matching (cooperative game) model. Because a price grid damages the equilibrium of the competitive model, the matching model provides predictions where the competitive model cannot; their predictions...

  8. Mimicking Portfolios

    Roll, Richard; Srivastava, Akshay
    Mimicking portfolios have many applications in the practice of finance. Here, we present a new method for constructing them. We illustrate its application by creating portfolios that mimic individual NYSE stocks. On the construction date, a mimicking portfolio exactly matches its target stock's exposures (betas) to a set of ETFs, which serve as proxies for global factors, and the portfolio has much lower idiosyncratic volatility than its target. Mimicking portfolios require only modest subsequent rebalancing in response to instabilities in target assets and assets used for portfolio construction. Although composed here exclusively of equities, mimicking portfolios show potential for mimicking...

  9. On the Use of Ordinal Data in Correlation Analysis

    Grether, David M.
    Comment on Labovitz ASR June, 1970.

  10. The economic theory of a professional sports league

    Quirk, James P.; El-Hodiri, Mohamed M.
    This chapter applies economic theory to the analysis of the business operations of a professional sports league. Special emphasis is given to the implications of the player reservation system-the rules structure for the distribution of playing strengths among the teams in a league-since partisans of professional sports claim that this system is essential to the goal of "equalizing competitive playing strengths" among teams.

  11. The competitive equilibrium: A qualitative analysis

    Quirk, James P.
    In value and Capital, Hicks [1] discussed the comparative statics properties of the competitive equilibrium in two qualitatively specified cases: (i) the case in which all commodities are “gross substitutes,” i.e., an increase in the price of commodity i leads to an increase in excess demand for commodity j (i ≠ j); (ii) the “Morishima” case in which all commodities obey the rules “substitutes of substitutes are substitutes, complements of substitutes and substitutes of complements are complements, and complements of complements are substitutes.” In his comparative statics analysis, Hicks assumed that equilibrium positions of the competitive economy were characterized by...

  12. Errors in variables and serially correlated disturbances in distributed lag models

    Grether, David M.; Maddala, G. S.
    [No abstract]

  13. Markets in licenses and efficient pollution control programs

    Montgomery, W. David
    [Introduction] Artificial markets have received some attention as a means of remedying market failure and, in particular, dealing with pollution from various sources. Arrow has demonstrated that when externalities are present in a general equilibrium system, a suitable expansion of the commodity space would lead to Pareto optimality by bringing externalities under the control of the price system. Since his procedure is to define new commodities, each of which is identified by the type of externality, the person who produces it and the person who suffers it, his conclusion is pessimistic. Each market in the newly defined commodities involves but one buyer and one seller, and no forces exist...

  14. On the asymptotic properties of some two-step procedures for estimating distributed lag models

    Grether, David M.; Maddala, G. S.
    It is by now well known that in the presence of lagged dependent variables and serially correlated errors certain two-step procedures are not asymptotically as efficient as the method of Maximum Likelihood (ML). In the present paper we discuss three two-step procedures that have been suggested in the literature and show that not only are the two-step procedures inefficient when compared with the ML method, but in some cases may not be more efficient than the first step of the two-step procedure.

  15. Resource allocation, information cost and the form of government intervention.

    Krier, James E.; Montgomery, W. David
    [No abstract]

  16. Hicksian Stability and Walras' Law

    Quirk, James P.; Habibagahi, Hamid
    [No abstract]

  17. Electoral margins, constituency influence, and policy moderation: A critical assessment

    Fiorina, Morris P.
    [No abstract]

  18. The paradox of not voting: A decision theoretic analysis

    Ferejohn, John A.; Fiorina, Morris P.
    Various analysts have noted that the decision to vote in mass elections is difficult to justify from the standpoint of an expected utility maximization model. Put simply, the probability that a citizen's vote will affect the outcome is so small that the expected gains from voting are outweighed by the costs in time and effort. Such analyses treat rational behavior as synonymous with expected utility maximization. In this paper we show that an alternative criterion for decision making under uncertainty, minimax regret, specifies voting under quite general conditions. Both two and three candidate plurality elections are considered. Interestingly, a minimax...

  19. An economic analysis of team movements in professional sports

    Quirk, James P.
    [No abstract]

  20. Correlations with ordinal data

    Grether, David M.
    [No abstract]

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