News

Myrto Kasioumi (QSMS) will present “The Environmental Kuznets Curve Projections under the Shared Socioeconomic Pathways: A study of future trajectories” on December 6th, 2024, at 10:30 AM, in room QA406.

Abstract:   

The relationship between economic growth and environmental quality, specifically air pollution, has been extensively studied. However, the future dynamics of this relationship are yet to be explored. Economies can evolve in various ways in the future, due to factors such as technological advancement, population growth, education level, and production priorities. With these factors in mind, societies may focus on environmental sustainability, or on the contrary, continue relying on fossil fuels. In addition, future climate change can differ significantly based on human activities, resulting in different global warming scenarios. These future trajectories are described by the Shared Socioeconomic Pathways (SSPs) and Representative Concentration Pathways (RCPs), which outline scenarios for socioeconomic and climate conditions in the future, respectively. This study examines the Environmental Kuznets Curve (EKC) hypothesis within the framework of SSP and RCP scenarios using data from 193 countries over a 120-year period (1980–2100). The research conducted aims to help policymakers identify how different future socioeconomic scenarios and human activities can influence the relationship between growth and environmental sustainability, guiding strategies to achieve both goals simultaneously.

Luca Sandrini will present “Endogenous Peer Based Discrimination” (with Roberto Rozzi) on November 29th, 2024, at 11:00 AM, in room QA323.

Abstract:   

The paper presented in this ZEW Research Seminar considers a dynamic labor market where employers can either be conformist or rational. There are two types of workers. Employers only observe each worker’s type and each type’s expected productivity. The authors examine how employers’ behavioral rules evolve across steps based on static equilibrium outcomes. Behavioral rules evolve according to a fitness depending on the number of conformists and conformists pay a cognitive cost for considering additional information. They find that the two evolutionary stable states are such that either all employers are rational or all of them are conformist: only the second kind of state produces inequalities. External social pressure, the number of jobs, and the magnitude of the conformity cognitive cost influence the likelihood of a society with only conformist employers. Initially, the authors assume equal remuneration among employers and later demonstrate that their results hold even when worker remuneration differs across employers.

Christopher Stapenhurst (QSMS) will present “Red and Gold (with Andrew Clausen and John Moore)” on November 15th, 2024, at 10:30 AM, in room QA406.

Abstract:   

Clausen and Stapenhurst (2024) obtain a lower bound on the cost of the optimal static, bribe-proof mechanism. But what about dynamic mechanisms? We propose a mechanism called “Red and Gold” that uses a nuisance action to deter bribes at arbitrarily small cost. The agent receives either a red or a gold ticket. If the monitor reports shirking then she is asked to guess the colour of the agent’s ticket. If the monitor’s guess is correct, then she receives an arbitrarily small reward, and the agent receives a large fine. Otherwise, the agent gets no fine. It follows that any equilibrium belief of the monitor leaves exactly one of the agent’s types better off rejecting bribes. But then the monitor can perfectly infer the agent’s type, so the type that rejects bribes would be better off accepting them. Hence there can be no bribes in equilibrium.

Noé Ciet (QSMS) will present “Bailout Policies when Banks Compete with Switching Costs (with Marianne Verdier)” on November 22nd, 2024, at 10:30 AM, in room QA406.

Abstract:   

We analyze the effects of bailout policies on borrower surplus in a two-period Hotelling model of competition with switching costs and poaching. Before the second period of competition, banks may sometimes fail or face capacity constraints because of random shocks and uncertain bailouts. If borrowers are myopic, banks reduce the first-period interest rates according to their bailout expectations. We show that banks may reduce the first-period interest rates even more when borrowers anticipate a bank failure in the second period, whereas they may sometimes add a mark-up to the first-period interest rates if borrowers expect the market to remain stable. Higher bailout expectations have a different impact on the interest rates in markets with high and low switching costs. We derive the bailout policy that maximizes borrower surplus and show that it may sometimes be time-inconsistent.

Daniel Rehsmann (University of Vienna) will present “Choose Your Auction: Mechanism Design for a Bidder” (with Dmitriy Knyazev)” on November 11th, 2024, at 10:30 AM, in room QA406.

Abstract:   

This study discusses the maximization of a bidder’s utility in auctions by leveraging the information about a bidder’s value to formulate the auction’s rules. To make the analysis interesting, the research focuses on auction formats perceived as fair and unbiased, in line with common EU or WTO procurement regulations. In our main setup, we do not allow the auction to pay the bidders and characterize a preferable auction format as a second-price auction with pooling regions. The analysis then extends to include transfers towards bidders and demonstrates how a substantial interim utility can be guaranteed to a bidder without running a deficit in equilibrium. The theory is applied to a model of favoritism, discussing whether forms of preferential treatment in auctions are preventable or detectable.

Márton Benedek (KRTK, Corvinus University) will present “Computing the nucleolus of cooperative games” on October 7th, 2024, at 10:30 AM, in room QA406.

Abstract:   

The nucleolus offers a desirable payoff-sharing solution in cooperative games, thanks to its attractive properties—it always exists and lies in the core (if the core is nonempty), and it is unique. The nucleolus is considered as the most ‘stable’ solution in the sense that it lexicographically minimizes the dissatisfactions among all coalitions. In this talk we are focusing on the different computation methods of the nucleolus: the traditionally most widely employed scheme using a sequence of linear programs (LPs), as well as less traditional methods, such as single-LP and nonlinear approaches, and the state-of-the-art lexicographical descent method. We will also focus on the role of characterization sets, and briefly discuss some of the recent applications.

Toygar Kerman (Corvinus University) will present “Nested Self-Selectivity” (with Semih Koray, Bilkent University) on October 4th, 2024, at 10:30 AM, in room QA406.

Abstract:   

A society that will make a choice from a set of alternatives might also need to choose the choice rule that will be employed to make the choice. In such a situation, the notion of self-selectivity requires a social choice function (SCF) to choose itself among a set of rival SCFs. However, verifying self-selectivity might be difficult as the set of rival SCFs may be very large. We show that self- selectivity of an SCF (that satisfies independence of irrelevant alternatives) relative to some very large sets of SCFs can be verified by checking self-selectivity relative to a much smaller set of SCFs that is nested in the large set. Moreover, we show that if an SCF is self-selective relative to two different sets of rival functions, then it is self-selective relative to the intersection and union of these sets.

Alexander Usvitskiy (HSE University) will present the paper “Support Networks in Contests ” (with Anastasia Antsygina, Mariya Teteryatnikova, James Tremewan) on June 12th, 2024, at 10:30 AM, in room QA406.

Abstract:   

Many real-life competitive environments allow for a third party to be indirectly involved in the competition through supporting one or both conflicting parties. Such support can come from trade partners, colleagues, or allies, who can in turn benefit from the supported party’s success. In this paper we model such environments by introducing a two-stage game, in which two competing players have an opportunity to form pairwise support links with the third player before proceeding to the contest stage. We analyze under what conditions agents have incentives to form support links in view of the future conflict, what networks (if any) can be pairwise stable, and how the structure of support network affects players’ individual and total efforts in the contest. Our main result is that stable network connectivity is nonmonotone in the supporter’s benefit from the supported party’s success. Specifically, we find that as the benefit increases, network connectivity rises as linking becomes more attractive to the supporter, but then it falls as linking becomes less attractive to the competing players – the comparative statics which we test with a laboratory experiment.

Boris Knapp (Corvinus University of Budapest) will present the paper “Price Discrimination via Waiting Lists” on June 10th, 2024, at 10:30 AM, in room QA406.

Abstract:   

Several markets, in particular some for luxury products, exhibit long periods of excess demand. In the short run, prices below the market clearing price can be explained by demand uncertainty or sticky prices, for example. In the long run, however, they are much more challenging to rationalize. This paper shows that a monopoly can use a covert tying practice that takes the form of a priority list to increase its profits beyond the standard monopoly profit. The market outcome is characterized by a (relatively) low price of the luxury good and a priority list that grants only some consumers the right to purchase it.