Recursos de colección

Caltech Authors (160.010 recursos)

Repository of works by Caltech published authors.

Group = Social Science Working Papers

Mostrando recursos 1 - 20 de 1.601

  1. The Polarization of American Politics

    Poole, Keith T.; Rosenthal, Howard
    Elected officials in the United States appear to represent relatively extreme support coalitions rather than the interests of middle-of-the-road voters. This contention is supported by analysis of variance of liberal-conservative positions in the United States Senate from 1959 to 1980. Within both the Democratic and the Republican parties, there is considerable variation in liberal-conservative positions, but two senators from the same state and party tend to be very similar. In contrast, two senators from the same state but from different parties are highly dissimilar, suggesting that each party represents an extreme support coalition in the state. Moreover, the distribution of...

  2. Land Rents and Agricultural Productivity: The Paris Basin, 1450-1789

    Hoffman, Philip T.
    Using evidence from a sample of over 800 leases, this paper examines the productivity of farming in the Paris Basin between 1450 and 1789. Existing evidence about productivity is unreliable, the paper argues, and the leases provide historians with a new and valuable source for the study of productivity and economic growth. Much of the paper is devoted to a defense of the method employed with the leases, which point to spurts of spectacular growth on local farms but also stunning setbacks during times of war and increased taxation. The paper concludes with analysis of the causes of economic growth...

  3. Land Rents and Agricultural Productivity: The Paris Basin, 1450-1789

    Hoffman, Philip T.
    Using evidence from a sample of over 800 leases, this paper examines the productivity of farming in the Paris Basin between 1450 and 1789. Existing evidence about productivity is unreliable, the paper argues, and the leases provide historians with a new and valuable source for the study of productivity and economic growth. Much of the paper is devoted to a defense of the method employed with the leases, which point to spurts of spectacular growth on local farms but also stunning setbacks during times of war and increased taxation. The paper concludes with analysis of the causes of economic growth...

  4. Vertigo: Comparing Structural Models of Imperfect Behavior in Experimental Games

    El-Gamal, Mahmoud; Palfrey, Thomas R.
    This paper investigates learning in games with one-sided incomplete information using laboratory data from a game which we call the game of Vertigo. The predicted Bayes-Nash equilibrium behavior of the agents in this type of game generates overly strong restrictions on the data, including the zero likelihood problem: certain actions should never be observed. To circumvent statistical problems, and to allow for deviations from perfectly rational behavior, we introduce the possibility of players making errors when choosing their actions. We compare two competing models depending on whether players take the errors in actions into consideration when formulating their strategies. We...

  5. EPA's New Emissions Trading Mechanism: A Laboratory Evaluation

    Cason, Timothy N.; Plott, Charles R.
    The EPA has designed a new call auction institution for trading allowances to emit sulfur dioxide. This paper reports twelve laboratory markets that investigate trader behavior in this new institution and evaluate its performance relative to the more commonly observed uniform price call market. We find that the uniform price call market (1) is more efficient, (2) induces more truthful revelation of underlying values and costs, (3) provides more accurate price information, and (4) is more responsive to and recovers more quickly from changes in underlying market conditions. All of these differences result from the intense strategic manipulation incentives of the EPA auction. Under -the EPA auction...

  6. Ambiguity Made Precise: A Comparative Foundation

    Ghirardato, Paolo; Marinacci, Massimo
    The theory of subjective expected utility (SEU) has been recently extended to allow ambiguity to matter for choice. We propose a notion of absolute ambiguity aversion by building on a notion of comparative ambiguity aversion. We characterize it for a preference model which encompasses some of the most popular models in the literature. We next build on these ideas to provide a definition of unambiguous act and event, and show the characterization of the latter. As an illustration, we consider the classical Ellsberg 3-color urn problem and find that the notions developed in the paper provide intuitive answers.

  7. Markets for Contracts: Experiments Exploring the Compatibility of Games and Markets for Games

    Plott, Charles R.; Williamson, Dean V.
    The research presented here explores the relationship between games and the economic environment in which the game might be embedded. In particular, the focus is on a market institution in which agents buy and sell rights to participate in a follow-on stage of strategic interaction. Many instruments found in markets, such as insurance contracts and warranties, have that property and motivate the study. The central question posed is how the game and the market, two different types of processes, interact. Traditionally two sets of theory are applied to each of the separate processes: one relates to price formation in the...

  8. On the Behavioral Foundations of the Law of Supply and Demand: Human Convergence and Robot Randomness

    Brewer, Paul J.; Huang, Maria; Nelson, Brad; Plott, Charles R.
    In a seminal series of papers, Gode and Sunder [1993, b, 1996] have explored the relationship between limited rationality, market institutions and the general equilibration of markets to the competitive equilibrium. Their fundamental discovery is that within the classical double auction market institution only the weakest elements of rationality need to be present for markets to exhibit high allocative efficiency and price convergence. While Gode and Sunder place more emphasis on allocative efficiency than on price convergence, the apparent price convergence increases the agreement between their simulation results and observed price convergence in single isolated periods of double auction markets...

  9. Increasing Cooperation in Prisoner's Dilemmas by Establishing a Precedent of Efficiency in Coordination

    Camerer, Colin F.; Knez, Mark
    Coordination games have multiple Nash equilibria (i.e., sets of strategies which are best responses to one another). In ``weak-link" coordination games players choose a number 1-7. Their payoff is increasing in the minimum number (or weakest link) and decreasing in the difference between their number and the minimum. Choosing 7 is an ``efficient" equilibrium because it gives everybody a higher payoff than any other coordinated choice. Higher-payoff equilibria are riskier, however, so the game expresses the tradeoff between group efficiency and personal risk present in many social and organizational settings. We tested whether choosing efficiently in a weak-link game increases cooperative play in a subsequent prisoner's dilemma...

  10. The Simultaneous, Ascending Auction: Dynamics of Price Adjustment in Experiments and in the U.K. 3G Spectrum Auction

    Plott, Charles R.; Salmon, Timothy C.
    In this paper we develop a model of the behavior of bidders in simultaneous ascending auctions based on two principles: principle of surplus maximization and the principle of bid minimization. These principles lead to models of both price dynamics and equilibration, leading to disequilibrium structural equations that can be used for estimating bidder values. The intention behind the development of this methodology is to provide an auctioneer a method of extracting information during an auction about possible closing prices. We first benchmark the performance of the model with data from experimental auctions and then apply it to the U.K. UMTS...

  11. Principles of network development and evolution: An experimental study

    Callander, Steven; Plott, Charles R.
    This paper reports on an experimental investigation of the evolution of networks and the individual decision making processes that guide it. Since there is no history of experimental work on network formation, part of the paper is devoted to the formulation of problems that can be examined experimentally. The results are that networks, composed of decentralized decision makers, are capable of overcoming complex coordination and learning problems and converge to stationary configurations. While stationarity is frequently observed, such an achievement is not guaranteed and when it doesn’t occur significant and persistent inefficiencies can result. The models of equilibration based on...

  12. Aging and decision making: A comparison between neurologically healthy elderly and young individuals

    Kovalchik, Stephanie; Camerer, Colin F.; Grether, David M.; Plott, Charles R.; Allman, John M.
    We report the results of experiments on economic decisions with two populations, one of healthy elderly individuals (average age 82) and one of younger students (average age 20). We examine confidence, decisions under uncertainty, differences between willingness to pay and willingness to accept and the theory of mind (strategic thinking). Our findings indicate that the older adults’ decision behavior is similar to that of young adults, contrary to the notion that economic decision making is impaired with age. Choices over lotteries do not reflect the age differences previously reported in the psychology and biology literature. Moreover, some of the demonstrated decision behaviors suggest that the elderly individuals are...

  13. Price Controls, Non-Price Quality Competition, and the Nonexistence of Competitive Equilibrium

    Hatfield, John William; Plott, Charles R.; Tanaka, Tomomi
    We investigate how price ceilings and floors affect outcomes in continuous time, double auction markets with discrete goods and multiple qualities. Since competitive equilibria need not exist in markets with price controls, we investigated the nature of non-price competition and how markets might evolve in its presence. We develop a quality competition model based on matching theory. Equilibria always exist in such price-constrained markets; moreover, they naturally correspond to competitive equilibria when competitive equilibria exist. Additionally, we characterize the set of equilibria in the presence of price restrictions. In a series of experiments, we find that market outcomes closely conform to the predictions of the model. In particular,...

  14. Public Choice and the development of modern laboratory experimental method in economics and political science

    Plott, Charles R.
    The paper is an account of the development of laboratory experimental methods in the early 1970s as influenced by the fields of Public Choice and Social Choice. Just a few key experiments conducted during a period when no experimental markets research was taking place, provide a bridge with the subsequent, rapid, growth of experimental economics. A new focus on public goods and externalities, as opposed to private goods traditionally used in economics experiments, required new representations of the commodity space and preference inducement methods. The importance of voting and collective decision making processes dictated the testing of equilibrium concepts from...

  15. Information transfer and aggregation in an uninformed committee: A model for the selection and use of biased expert advice

    Plott, Charles R.; Llewellyn, Morgan
    A committee of five uses majority rule for decisions on two public goods. Individual committee member preferences depend on a state of nature that is unknown to the committee members but the state of nature is known to two experts who have preferences about committee decisions. Experts have no vote on the committee but provide a recommendation to the committee at the opening of a meeting. Two experts who have known, opposing biases are selected – a dyadic mechanism. The results reveal that experts do not tell the truth but committee decisions are as if committee members know what the...

  16. Generalized Portfolio Performance Measures: Optimal Overweighting of Fees Relative to Sample Returns

    Levy, Moshe; Roll, Richard
    Performance measures such as alpha and the Sharpe ratio are typically based on sample returns net of fees. This implies the same weighting to sample returns and to fees. However, sample return parameters are noisy estimates of true parameters, while fees are known with certainty. Thus, intuition suggests that fees should be given more weight than sample returns. We formalize this intuition, and derive the optimal overweighting of fees. We show that the resulting generalized performance measures are better predictors of future net performance than the standard performance measures, and they better explain future fund flows.

  17. The CMS Auction: Experimental Studies of a Median-Bid Procurement Auction with Nonbinding Bids

    Merlob, Brian; Plott, Charles R.; Zhang, Yuanjun
    We report on the experimental results of simple auctions with (i) a median-bid pricing rule and (ii) non-binding bids (winning bids can be withdrawn) – the two central pillars of the competitive bidding program designed by the Centers for Medicare & Medicaid Services (CMS). Comparisons between the performance of the CMS auction and the performance of the excluded-bid auction reveal the problematic nature of the CMS auction. The CMS auction fails to generate competitive prices of goods and fails to satisfy demand. In all proposed efficiency measures, we find the excluded-bid auction significantly outperforms the CMS auction.

  18. The Continuous Combinatorial Auction Architecture

    Plott, Charles R.; Lee, Hsing Yang; Maron, Travis
    The paper reviews the prominent features of a continuous, combinatorial auction. The Section 1 is an introduction that provides some background research and overview. The continuous combinatorial auction evolved in response to experience with combinatorial auctions based on bidding rounds. The background material helps with the contrasts related to auction architectures. Section 2 consists of a few background definitions. Section 3 develops the rules and procedures, which are central features of the mechanism. Section 4 outlines important operational features such as information and query functions. As should become clear, the continuous combinatorial auction does not compute or even use prices per item. The fashioning of bids on packages...

  19. Social Learning with Private and Common Values

    Goeree, Jacob K.; Palfrey, Thomas R.; Rogers, Brian W.
    We consider an environment where individuals sequentially choose among several actions. The payoff to an individual depends on her action choice, the state of the world, and an idiosyncratic, privately observed preference shock. Under weak conditions, as the number of individuals increases, the sequence of choices always reveals the state of the world. This contrasts with the familiar result for pure common-value environments where the state is never learned, resulting in herds or informational cascades. The medium run dynamics to convergence can be very complex and non-monotone: posterior beliefs may be concentrated on a wrong state for a long time,...

  20. The Banks Set and the Uncovered Set in Budget Allocation Problems

    Dutta, Bhaskar; Jackson, Matthew O.; Le Breton, Michel
    We examine how a society chooses to divide a given budget among various regions, projects or individuals. In particular, we characterize the Banks set and the Uncovered Set in such problems. We show that the two sets can be proper subsets of the set of all alternatives, and at times are very pointed in their predictions. This contrasts with well-known "chaos theorems," which suggest that majority voting does not lead to any meaningful predictions when the policy space is multidimensional.

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