Category: Event

Gabriel Ziegler (University of Edinburgh) will present “Bounded Reasoning and Rationalizability” on April 4th, 2025, at 10:30 AM, in room QA405.

Abstract:

We examine the connections between bounded reasoning approaches in game theory—such as level-k and cognitive hierarchy models—using tools from epistemic game theory. We demonstrate that these classic models are subsumed by an overarching ∆-rationalizability framework, in which the ∆ restriction transparently constrains the first-order beliefs of bounded types only, thereby clarifying how agents reason. Our formalization retains the standard behavioral predictions of level-k and cognitive hierarchy models, while avoiding reliance on an exogenous bound on iterative reasoning. By substituting arbitrary iterative assumptions with precise belief restrictions, we provide a unified and transparent foundation for analyzing bounded rationality. These insights extend in a much more delicate way to dynamic settings, where we further explore a novel role of epistemic priority in such contexts.

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Somogyi Róbert (Department of Finance) will present “Deceptive Counterfeits and Consumer Protection” (with Johannes Johnen and Gianmarco Luu) on March 28th, 2025, at 10:30 AM, in room QA405.

Abstract:

Deceptive counterfeits—fake products that closely mimic originals in price and appearance—are a growing concern in e-commerce, posing risks to consumers and brands. Dangerous examples include fake pharmaceuticals, electronics, and car parts that can cause serious harm. This paper develops a theoretical model to examine digital platforms’ incentives to combat such fakes. We compare two enforcement strategies: prosecuting counterfeit sellers and consumer information campaigns. While seller prosecution consistently benefits consumers, information campaigns can have unintended consequences, sometimes increasing counterfeit purchases due to price adjustments by fake sellers. Our findings provide insights into the challenges of protecting consumers in digital marketplaces.

Siting (Estee) Lu (University of Edinburgh) will present “Costly Job Search with Inattentive Workers” on March 27th, 2025, at 3:00 PM (CET) via Microsoft Teams.

Join the seminar: Meeting Link

Abstract:

Labour market mismatch can arise from workers having limited attention. I propose a Generalized Partially Directed Search model, extending on existing literature by allowing inattentive workers to have diverse priors and heterogeneous attention costs. I show that mismatch can be inherited from bias in workers’ default search strategies, and heterogeneous attention costs could contribute to greater variability in the equilibrium outcomes. I also explore equilibrium multiplicity that was not adequately analyzed in previous studies. Equilibria where workers adopt different application strategies may generate both higher market efficiency and lower monopsony power than when workers employ the same application strategies. This information-theoretic approach to model job search offers new policy insights on the basis of attention.

Nour Chalhoub (Arizona State University) will present “Returns when Product Inspection is a Choice” on May 5th, 2025, at 10:30 AM (CET) via Microsoft Teams.

Join the seminar: Meeting Link

Abstract:

This paper examines a seller’s profit maximizing return policy in a setting where consumers can inspect a product before purchasing and return it if it fails to meet their expectations. The model incorporates (1) heterogeneity in customers’ taste preferences, (2) uncertainty about product valuation prior to purchase, and (3) the costs associated with inspection. My result suggests that all these three factors interact in the optimal solution: the buyer’s option to costly inspect the product compels the seller to offer a strictly positive return that changes with the degree of heterogeneity among the buyers. On the seller side, I show that the seller has a strict preference over the buyers’ inspection behavior. Furthermore, I also show that there exists a nontrivial region of parameter values for which the outcomes of the optimal menu weakly improve the outcome of the seller and the buyers as the inspection cost increases

Pinaki Mandal (Arizona State University) will present “Equivalence between Individual and Group Strategy-Proofness under Stability” on March 17th, 2025, at 4:00 PM (CET) via Microsoft Teams. Join the seminar: Meeting Link

Abstract:

When policymakers implement mechanisms in real-world institutions, they often prefer strategy-proof mechanisms over manipulable ones. For example, the Boston School Committee replaced the Boston mechanism with the student-proposing deferred acceptance algorithm in July 2005 to eliminate students’ incentives to misrepresent their preferences over schools. However, strategy-proof mechanisms are not always immune to manipulations by potential coalitions, even if these coalitions are small and easy to coordinate. This issue is mitigated under group strategy-proof mechanisms.

This paper studies group strategy-proofness in stable matching mechanisms within two-sided matching markets, where both sides of the market have strategic agents. In the context of a one-to-one matching market, we demonstrate that incorporating strategy-proofness in any stable matching mechanism not only removes the incentive for individual agents to manipulate but also eliminates the incentive for any group of agents to do so—even if the group includes agents from both sides of the market—thereby ensuring group strategy-proofness. This result holds under sufficiently varied domains. Additionally, we explore the potential extension of these findings to many-to-one matching markets.

Bea Ahumada (University of Pittsburgh) will present “Excuses and Redistribution” on March 5th, 2025, at 11:00 AM, in room QA323.

Abstract:

This study explores how, when income inequality is perceived to arise from both effort and luck, excuses (self-serving belief distortions) can influence acceptance of inequality. In a controlled laboratory setting involving a real-effort task, participants make redistribution decisions between themselves and a partner. The study varied the degree of uncertainty about the role of effort and luck in determining initial earnings endowments.

Belief elicitations indicate that increased uncertainty caused participants to be more likely to attribute their partner’s success to luck. Furthermore, the use of excuses (attributing others’ outcomes to luck) was found to reduce willingness to redistribute earnings to their partners. These findings highlight how excuses about the role of luck versus effort may contribute to the persistence of inequality even if many individuals have meritocratic principles, and how variation in the degree of uncertainty about the causes of inequality, across individuals or societies, may contribute to different degrees of biased beliefs and inequality.

The paper also provides evidence of excuses in another sense: According to a structural model of fairness views, individuals tend to adopt a fairness view—egalitarian, meritocratic, or libertarian—to justify an allocation that benefits themselves.

Marina Rizzi (University of Turin) will present “Self-Regulation of Social Media and the Evolution of Content: a Cross-Platform Analysis” on February 28th, 2025, at 11:00 AM, in room QA405.

Abstract:   

This paper investigates the effectiveness of Twitter’s policy against racist hate speech, introduced in December 2020, in reducing abusive content. Using a dataset of 8 million tweets from users discussing race-related topics, and machine learning techniques to identify instances of hate speech and racist hate speech, I find a significant reduction in abusive content in Twitter, especially from racist users, after the policy’s implementation. Additionally, using a dataset of users with accounts on both Twitter and Parler, a less regulated social media platform, I examine whether abusive behavior shifted to Parler following the policy change. Findings suggest an overall increase in hate speech on Parler post-policy, in particular for users that were active in Twitter in those months. Text analysis methods indicate a possible shift in topics between the two platforms. These results highlight the complexity of online content regulation and the potential for spillover effects to alternative platforms.

Johannes Gessner (University of Mannheim) will present “Shifting Gears: Environmental Regulation in the Car Industry and Technological Change Among Suppliers” on February 24th, 2025, at 11:00 AM, in room QA405.

Abstract:   

Decarbonizing industries to mitigate climate change requires technological change. Innovation by suppliers can play a crucial role in this transition, particularly when suppliers have expertise in zero-emission technologies.

In this paper, I study the effect of environmental regulation in a downstream industry on the innovation outcomes of suppliers in the context of the European CO2 emission standard for passenger cars. I construct a novel data set that links administrative data on car manufacturer compliance to supplier patent data using information on automotive supply chains. To identify the causal effect of changes in the stringency of the emission standard, I leverage the heterogeneous exposure of automotive suppliers to changes in the composition of the European car market in the aftermath of the 2015 Volkswagen diesel scandal. Exposure to more stringent environmental regulation increases innovation for zero-emission vehicle technologies among existing suppliers. In addition, the likelihood that car manufacturers form new supply chain links to firms with expertise in technologies to reduce vehicle emissions increases in response to more stringent environmental regulation. These results suggest that environmental regulation induces economically significant technology spillovers for regulated firms.

Markus Althanns (ETH Zurich) will present “Strategic Debt in a Monetary Economy” on February 21th, 2025, at 11:00 AM, in room QA406.

Abstract:   

We analyze in a general-equilibrium framework how producers improve their bargaining position vis-à-vis consumers through debt. By indebting themselves, producers compel consumers in bilateral matches to partially bear their debt burden. Consumers who attach little value to producers’ goods are not willing to do so, so that some bilateral matches fail to result in trade. Producers account for this extensive-margin channel, but only to the extent that it affects themselves; they ignore the negative effect on consumers. A Pigouvian tax on debt resolves this externality and, in its absence, monetary policy mitigates the externality by deviating from the Friedman rule. We calibrate the model to U.S. data and quantify optimal nominal interest rates at levels up to 0.5 percent. Although there is ample empirical evidence for the use of debt to leverage bargaining power, we show that there are better contracts to achieve this.

Hector Hermida Rivera (QSMS) will present “Self-Equivalent Voting Rules” on February 7th, 2025, at 10:30 AM, in room QA406.

Abstract:   

In this paper, I introduce a novel stability axiom for stochastic voting rules—called self-equivalence—by which a society considering whether to replace its voting rule using itself will choose not do so. I then show that under the unrestricted strict preference domain, a voting rule satisfying the democratic principles of anonymity, optimality, monotonicity and neutrality is self-equivalent if and only if it is proportional (i.e., uniform random dictatorship). Thus, any society that desires stability and adheres to the aforementioned democratic principles is bound to either employ proportional voting rule or decide whether to change its voting rule using a voting rule other than itself.