Author: Imre Dimény

Hanyi Wang  (University of California, San Diego) will present her paper “Beyond Borders: The Impact of Embodied Carbon Policy Costs on Industrial Firm Performance” on February 2nd at 11:00 AM, room QA406.

Abstract:   

While policymakers generally regard carbon pricing as effective and efficient, the average price of emissions worldwide remains low. A major concern is that unilateral enhancement of carbon policy could negatively impact firms’ competitiveness and performance. This paper investigates the impact of carbon policy on industrial firm outcomes in Europe, introducing a novel measure of embodied carbon policy costs that incorporates multi-region input-output linkages. In contrast to prior studies that have found limited effects from direct carbon policy costs, the inclusion of indirect costs via the global value chain leads to findings here that include a decrease in firm employment and output and an increase in total factor productivity and investment. These impacts tend to be more pronounced for small firms and for capital-intensive firms. Finally, a novel test for input substitution in this context estimates the extent to which carbon policy costs drive European industrial sectors to source inputs from countries lacking carbon regulations.

Nadine Hahn (Katholieke Universiteit Leuven) will present her paper “Who Is in the Driver’s Seat? Markups, Markdowns, and Profit Sharing in the Car Industry” on January 31st at 11:00 AM, room QA406.

Abstract:   

I develop a general framework for markup and markdown estimation that allows for profit sharing along value chains without making assumptions on conduct between vertically related firms. I derive the conditions under which the markup and markdown estimates relate to the firms’ equilibrium bargaining weights. To account for vertical and horizontal product differentiation in the production function estimation, I include plant-level prices and employ car characteristics as demand-based quality controls. Between 2002 and 2018, the European car manufacturers’ margins on their input and product markets combined were stable around 10% to 15% on average. The manufacturers’ share of the margin on the input market, however, depends on the car segments in which they produce. The suppliers’ share depends negatively on the variety of their product portfolio and depends positively on their relationship intensity to car manufacturers. The analysis shows that the manufacturers’ bargaining weights decreased during crisis years, such as the financial crisis in 2007 or the diesel gate scandal in 2015.

Evgeniya Kudinova (London School of Economics and Political Science) will present her paper on “Exploration, Exploitation, Amelioration: Experimentation with Endogenously Changing Arms” on January 24th at 11:00 AM, room QA406.

Abstract:   

I analyse how economic agents adapt to new risky opportunities, such as new technologies, when the agents can invest in increasing the likelihood of a successful outcome, while also learn about its original quality. I build on a single risky arm Poisson bandit environment and explore how the ability to endogenously change the arm, by investing, affects the incentives for experimentation. More specifically, I assume that successful investment turns a bad arm into a good one. As opposed to standard good news Poisson bandits, I find that beliefs may evolve non-monotonically and that the agent may get stuck on a certain belief and invest at some intensity until the news arrives. In the context of adaptation, this means that the agent may keep pursuing the new opportunity forever despite not reaching a success for a long time, in contrast to necessarily giving up according to the traditional experimentation models. This creates discontinuity in the long-term outcomes of experimentation and suggests strong implications for innovation design and organisational strategies for technological adaptation.

Evangelia Spantidaki (Universitat Pompeu Fabra) will present her paper on “How Narcissists Match and Play in Games” on January 25th at 11:00 AM, room QA405.

Abstract:   

I investigate experimentally how subjects choose their partners and how they play depending on their personality characteristics. In particular, I study the role of narcissism within the context of games of collaboration, fairness, and competition. I find that no matter how narcissistic participants are, they tend to prefer to be matched with less narcissistic individuals in all games. Participants’ level of narcissism significantly predicts behavior in all contexts. The higher their level of narcissism, the less they contribute in a public goods game, the smaller the offer in an ultimatum game, and the poorer the performance in competition is. In the context of collaboration, participants adjust their behavior based on the characteristics of their partner; the more narcissistic the partner, the less they contribute. Subjects do not adapt their behavior in the context of competition and fairness. This paper sheds light on the under-investigated topic of matching and economic behavior of individuals across different levels of narcissism.

Martin Černý (Charles University, Department of Applied Mathematics) will present his paper on “Dealing with uncertainty in cooperative game theory” on December 18th at 11:00 AM, room QA406.

Abstract:   

Incomplete cooperative games generalise the classical model of cooperative games by omitting the values of some of the coalitions. This allows to incorporate uncertainty into the model and study the underlying games as well as possible payoff distribution based only on the partial information. In this paper we perform a systematic study of incomplete games, focusing on two important classes of cooperative games: positive and convex games. Regarding positivity, we generalise previous results for a special class of minimal incomplete games to general setting. We characterise non-extendability to a positive game by the existence of a certificate and provide a description of the set of positive extensions using its extreme games. The results are then used to obtain explicit formulas for several classes of incomplete games with special structures. The second part deals with convexity. We begin with considering the case of non-negative minimal incomplete games. Then we survey existing results in the related theory of set functions, namely providing context to the problem of completing partial functions. We provide a characterisation of extendability and a full description of the set of symmetric convex extensions. The set serves as an approximation of the set of convex extensions. Finally, we outline an entirely new perspective on a connection between incomplete cooperative games and cooperative interval games.

Krisztina Katona (University of Technology Sydney) will present his paper on “Essays in electricity market design and semi-structural price modelling” on December 4th at 11:00 AM, room QA406.

Abstract:   

Electricity market designs across the world are complex, diverse and constantly evolving frameworks of policies, with multidisciplinary theoretical work underpinning them. The fast transforming landscape of the electricity sector driven by cutting-edge optimization theory and the global commitment to meet emission goals calls for re-evaluating existing electricity market designs and price models. This thesis contributes to this discussion. To start, the first essay describes the general features of electricity markets. The second essay delves into an in-depth review of the market design of Australia’s National Electricity Market (NEM). This is followed by the third essay that presents a novel bid stack electricity price model that replaces the widely used exponential supply functions with hyperbolic ones to permit price negativity. Finally, focusing on the Pennsylvania-New Jersey-Maryland Interconnection (PJM) in the United States, the Balancing Market (BM) in Great Britain and the NEM in Australia, the fourth essay infers prices along the supply curves using largely the same optimization algorithms as the respective market operators do to assess the degree of supply monotonicity and compare welfare in these markets.

Marieke Pahlke  (Institute of Operations and Decision Sciences, Corvinus University) will present his paper on “Dynamic Consistency in Ambiguous Dutch Auctions” on November 27th at 11:00 AM, room QA406.

Abstract:   

We study a decreasing price auction with an ambiguity-neutral seller and two ambiguity-averse buyers. Due to the dynamic structure, buyers learn about the valuation of the opponent buyer during the auction. We characterize a belief formation process that allows buyers to consider their knowledge of the information structure. This process leads to a rectangular ex-ante belief set and implies dynamically consistent behavior. Then, we show that the seller can extract almost all surplus even if buyers behave dynamically consistently. Further, in our setting, buyers accept higher prices compared to a consistent planning approach.

Anastas Tenev  (Institute of Economics, Corvinus University) will present his paper on “Directed Reciprocity Subverts Altruism in Highly Adaptive Populations” on November 20th at 11:00 AM, room QA406.

Abstract:   

Directed reciprocity is generally considered to be a powerful driver for cooperation. Using extensive simulations within an established stylized framework, we test the strength of this relationship. We confirm that directed reciprocity boosts cooperation, but only in the case of relatively inert populations. For highly adaptive populations we find the opposite: directed reciprocity impedes cooperation. 

Luca Sandrini (Research Center of QSMS, BME) will present: “Protecting secrets with organizational innovations “ on March 14th at 2:30 PM, room QA 406.

Abstract:   

I propose a theory of the determinants of organizational innovation which considers it as a device to lower workers’ autonomy in the production process and their ability to collect information about it. In particular, I show that firms may have incentives to increase their control over the workforce to limit spillovers of potentially valuable information if they cannot limit workers’ mobility. I design a theoretical model where firms decide how to organize the workforce to reach a target level of productivity. I assume workers’ effort increases productivity at the organizational level, but it may reduce workers learning if excessive. When firms face the threat of information spillovers regarding their secrets, they are keener to intensify control over the workforce to limit it. From a policy perspective, I show banning laws restricting workers’ mobility might be an incomplete policy, as companies would find alternative mechanisms other than legal protections to defend against appropriation.