Projects & Collaborations 7 foundShow per page10 10 20 50 Hurwicz preferences in decision making under ambiguity Research Project | 2 Project MembersAmbiguity refers to the common situation that the exact probability distribution over events relevant to a decision maker is not objectively known. The Bayesian approach to decision making under ambiguity holds that, nevertheless, all uncertainty can be quantified by a subjective probability distribution and that behavior can be modelled as the maximization of expected utility relative to such a distribution. While the resulting subjective expected utility (SEU) model still reigns supreme in economics, it makes it impossible to study how the presence of ambiguity affects the outcome of economic interactions. To address this concern, recent work on strategic communication and mechanism design has considered the maxmin expected utility (MEU) model of decision making under ambiguity. The MEU model has well-understood axiomatic foundations and is analytically convenient, but is unduly restrictive in that only a ``worst-case scenario'' (obtained by minimizing expected utility over a set of probability distributions) matters for the evaluation of a decision. A natural response to the restrictiveness of the MEU model is to consider the more general alpha-MEU model. In this model, as originally proposed by Hurwicz in the context of decision making under ignorance, decision are evaluated by a convex combination of their performance (here given by the expected utility) under a worst-case and a best-case scenarios. The primary objective of the project is to investigate the class of Hurwicz preferences, i.e., preferences having such a representation. More specifically, we aim to extend existing work on the axiomatic characterization of Hurwicz preferences and to investigate the strategic use of intentional ambiguity by a principal when agents have such preferences. For our axiomatic investigations we will work mostly within the well-established Anscombe-Aumann framework. In this setting, the current state of the literature suggests three promising routes to establish axiomatizations for (specific classes of) Hurwicz preferences. The first is to work within the Choquet expected utility (CEU) model in which the structural conditions on capacities that are necessary and sufficient for an alpha-MEU representation are well-known but have, so far, not been translated successfully into corresponding conditions on preferences. The second is to enrich the Anscombe-Aumann framework by positing that there is an objective, but ambiguous, description of the uncertainty faced by the decision maker (as it is common in experimental settings). The third is to abandon the ``purely behavioral'' approach pursued in much of decision theory and relate preferences to a model of the decison making process. We intend to pursue all three of these approaches. The expected results are novel axiomatizations for Hurwicz preferences, providing better foundations for the alpha-MEU model. The existing literature on the design of ambiguous mechanisms indicates that intentional ambiguity is a very powerful tool to affect the behavior of ambiguity-averse decision makers. The exact role of the assumption of ambiguity aversion for such results is, however, unclear. The purpose of the applied part of the project is gain a better understanding of this issue. The alpha-MEU model is well-suited to do so, because the parameter alpha provides a convenient way to explore the effects of moving away from the extreme case of ambiguity aversion described by the MEU model. While the question motivating this part of a project is a general one, the most obvious starting point for addressing it is the familiar environment of a standard principal-agent problem. In this setting we expect to be able to characterize the best ambiguous mechanism as a function of the parameter alpha and, in particular, identify the conditions under which an ambiguous mechanism cannot improve on the standard solution the principal's problem. Information Design in Contests Research Project | 2 Project MembersContests are one of the most important and pervasive economic institutions in society. Indeed, contests are being employed to allocate various resources or positions, ranging from the award of promotions in companies to the distribution of scholarships among students at universities, or the allocation of research grants to researchers. Within the field of economics the study of contests has a long and successful history. The variety of contests observed in practice is also reflected in the theoretical analysis of these institutions. In a contest there is a number of contestants who compete against each other to win some prize. The details of how the contest is organized, however, play an important role in determining how many parties will want to participate and how much effort they will exert. While contestants typically know what prize they are competing for and how the winner is determined, they may be unaware of the exact number of competitors, their identity or their ability. The designer of a contest can take advantage of this uncertainty and try to better achieve their goal by strategically disclosing information about the environment to the contestants. The goal of this project is to study the role of information in contests and how the designer of a contest can harness this information to their advantage. More specifically, we are interested in competitors' information about each others' types. In order to study this problem, we plan to make use of the recently developed information design approach, also referred to as Bayesian persuasion. The idea is that in incomplete information environments incentives are determined by payoffs and beliefs. A mechanism designer tries to achieve some outcome by manipulating payoffs. In contrast, an information designer manipulates the agents' beliefs by strategically disclosing information about the environment. This research project focuses on the latter within the context of contests and is structured in three parts. First, we take a general approach to information design in static contests. Second, we allow for information transmission between contestants and study its effect on information design. Third, we move to a dynamic setting and study the information design problem over time. The findings of this project will advance the literature on contest theory and on information design. Moreover, it will foster our understanding of how to best design contests in practice. Conflicts in Context and the Stability of Ownership Research Project | 2 Project MembersThe goal of this project is to understand how behaviour in conflicts over resources and the likelihood that such conflicts occur are impacted by the fact that conflicts do not occur in isolation, but in an environment in which contestants face a sequence of opportunities to acquire resources (either by peaceful means or through conflict) and threats to the resources they already possess. In essence this means that neither the value of resources nor the opportunity cost of engaging in a conflict can be viewed as being exogenous; rather these must be determined in a self-consistent manner as part of the analysis. We plan to do so by embedding game theoretic models of bilateral conflict into the context of a dynamic search and matching model and studying the properties of the resulting equilibria. In particular, we aim to identify conditions under which individuals are more likely to use peaceful means to acquire resources and respect the ownership of resources, thus contributing to the economic theory of the emergence of stable ownership structures when property rights are not (perfectly) legally enforceable. In pursuing this agenda we can and will build on theoretical work in behavioural ecology which has investigated animal conflicts over territories in a framework akin to ours. Evolutionary dynamics of nonlinear public goods games with fluctuating demography Research Project | 2 Project MembersMany situations in real social systems require the collective action of groups of more than two individuals. Public goods games, where individuals face the dilemma of providing or maintaining a public good, are paradigmatic among such multiplayer games. Digestive enzymes in yeast, ATP in heterotrophic microorganisms, alarm calls in meerkats, collective hunting in lions, and open-source software in contemporary humans are typical examples of public goods whose abusive exploitation by non-contributing individuals may lead to the so-called tragedy of the commons: a situation in which as nobody contributes no public good is produced or maintained. Despite the fact that non-linearity and stochasticity are common in nature, most models of evolutionary public goods games assume that the production function is linear and that demographic parameters such as group size are constant. By combining evolutionary game theory and inclusive fitness theory, this project aims at developing a mathematical framework for analyzing the evolutionary dynamics of non-linear public goods games in structured populations with fluctuating demography. Our goal is to identify key demographic and strategic conditions under which cooperation is promoted with respect to baseline scenarios. FV-15 Einbürgerungen in der Schweiz: Wirtschaftstheoretische Implikationen für die Praxis Research Project | 2 Project MembersDie schweizerische Einbürgerungspraxis ist des Öfteren dem Vorwurf willkürlicher Benachteiligung ausgesetzt. Insbesondere die Tatsache, dass je nach Gemeinde die Anträge bestimmter Ausländergruppen höhere Ablehnungsquoten aufweisen, ist immer wieder Gegenstand aufflammender Diskussionen. Doch mikroökonomische Ansätze zeigen, dass ungleiche Auswirkungen auch das Resultat unvoreingenommener Entscheidungen sein können. Ziel dieses Projekts ist es, aufzuzeigen, welcher Ursache die beobachtbaren Unterschiede zuzuschreiben sind. Die Auswertung vorhandener und bei Gemeinden neu zu erhebender Daten liefert Hinweise darauf, ob der Vorwurf mutwilliger Diskriminierung wirtschaftstheoretisch fundiert werden kann. Dabei soll auch aufgezeigt werden, welche weiteren Informationen im Rahmen der Einbürgerungspraxis gegebenenfalls zusätzlich erfasst werden sollten, damit entsprechende Hypothesen empirisch getestet werden können. Game theory and cooperation from economics to evolutionary biology Research Project | 2 Project MembersExplaining cooperative behaviour is a problem for evolutionary theory: although cooperation reduces the relative fitness of the performer it is in evidence at all levels of biological ofganization, from genes cooperating to make up the genome to complex animal societies. This project aims at studying cooperation using game theory and ideas initially developed in economics to analyse strategic behavior. It is by its nature interdisciplinary because it uses models (the volunteer's dilemma, adverse selection, moral hazard, ultimatum game) first developed in economics and in the social sciences to address a long-standing problem in evolutionary game theory; at the same time it uses concepts from evolutionary theory (population dynamics, relative fitness) to add details and address problems that are still unsolved in the social sciences. The project is mainly theoretical, but it includes an experimental part. Steady States in Dynamic Search and Matching Models Research Project | 1 Project MembersDynamic Search and Matching Models have been used to investigate such diverse issues as the duration of unemployment spells in labor markets, the emergence of intermediaries in commodity markets, or the evolution of sex roles in animals. This research project is concerned with the foundations of the models underlying such applications. In particular, we aim to provide general conditions for the existence of steady state equilibria in such models and to relate these to equilibria in simpler, static models. 1 1
Hurwicz preferences in decision making under ambiguity Research Project | 2 Project MembersAmbiguity refers to the common situation that the exact probability distribution over events relevant to a decision maker is not objectively known. The Bayesian approach to decision making under ambiguity holds that, nevertheless, all uncertainty can be quantified by a subjective probability distribution and that behavior can be modelled as the maximization of expected utility relative to such a distribution. While the resulting subjective expected utility (SEU) model still reigns supreme in economics, it makes it impossible to study how the presence of ambiguity affects the outcome of economic interactions. To address this concern, recent work on strategic communication and mechanism design has considered the maxmin expected utility (MEU) model of decision making under ambiguity. The MEU model has well-understood axiomatic foundations and is analytically convenient, but is unduly restrictive in that only a ``worst-case scenario'' (obtained by minimizing expected utility over a set of probability distributions) matters for the evaluation of a decision. A natural response to the restrictiveness of the MEU model is to consider the more general alpha-MEU model. In this model, as originally proposed by Hurwicz in the context of decision making under ignorance, decision are evaluated by a convex combination of their performance (here given by the expected utility) under a worst-case and a best-case scenarios. The primary objective of the project is to investigate the class of Hurwicz preferences, i.e., preferences having such a representation. More specifically, we aim to extend existing work on the axiomatic characterization of Hurwicz preferences and to investigate the strategic use of intentional ambiguity by a principal when agents have such preferences. For our axiomatic investigations we will work mostly within the well-established Anscombe-Aumann framework. In this setting, the current state of the literature suggests three promising routes to establish axiomatizations for (specific classes of) Hurwicz preferences. The first is to work within the Choquet expected utility (CEU) model in which the structural conditions on capacities that are necessary and sufficient for an alpha-MEU representation are well-known but have, so far, not been translated successfully into corresponding conditions on preferences. The second is to enrich the Anscombe-Aumann framework by positing that there is an objective, but ambiguous, description of the uncertainty faced by the decision maker (as it is common in experimental settings). The third is to abandon the ``purely behavioral'' approach pursued in much of decision theory and relate preferences to a model of the decison making process. We intend to pursue all three of these approaches. The expected results are novel axiomatizations for Hurwicz preferences, providing better foundations for the alpha-MEU model. The existing literature on the design of ambiguous mechanisms indicates that intentional ambiguity is a very powerful tool to affect the behavior of ambiguity-averse decision makers. The exact role of the assumption of ambiguity aversion for such results is, however, unclear. The purpose of the applied part of the project is gain a better understanding of this issue. The alpha-MEU model is well-suited to do so, because the parameter alpha provides a convenient way to explore the effects of moving away from the extreme case of ambiguity aversion described by the MEU model. While the question motivating this part of a project is a general one, the most obvious starting point for addressing it is the familiar environment of a standard principal-agent problem. In this setting we expect to be able to characterize the best ambiguous mechanism as a function of the parameter alpha and, in particular, identify the conditions under which an ambiguous mechanism cannot improve on the standard solution the principal's problem.
Information Design in Contests Research Project | 2 Project MembersContests are one of the most important and pervasive economic institutions in society. Indeed, contests are being employed to allocate various resources or positions, ranging from the award of promotions in companies to the distribution of scholarships among students at universities, or the allocation of research grants to researchers. Within the field of economics the study of contests has a long and successful history. The variety of contests observed in practice is also reflected in the theoretical analysis of these institutions. In a contest there is a number of contestants who compete against each other to win some prize. The details of how the contest is organized, however, play an important role in determining how many parties will want to participate and how much effort they will exert. While contestants typically know what prize they are competing for and how the winner is determined, they may be unaware of the exact number of competitors, their identity or their ability. The designer of a contest can take advantage of this uncertainty and try to better achieve their goal by strategically disclosing information about the environment to the contestants. The goal of this project is to study the role of information in contests and how the designer of a contest can harness this information to their advantage. More specifically, we are interested in competitors' information about each others' types. In order to study this problem, we plan to make use of the recently developed information design approach, also referred to as Bayesian persuasion. The idea is that in incomplete information environments incentives are determined by payoffs and beliefs. A mechanism designer tries to achieve some outcome by manipulating payoffs. In contrast, an information designer manipulates the agents' beliefs by strategically disclosing information about the environment. This research project focuses on the latter within the context of contests and is structured in three parts. First, we take a general approach to information design in static contests. Second, we allow for information transmission between contestants and study its effect on information design. Third, we move to a dynamic setting and study the information design problem over time. The findings of this project will advance the literature on contest theory and on information design. Moreover, it will foster our understanding of how to best design contests in practice.
Conflicts in Context and the Stability of Ownership Research Project | 2 Project MembersThe goal of this project is to understand how behaviour in conflicts over resources and the likelihood that such conflicts occur are impacted by the fact that conflicts do not occur in isolation, but in an environment in which contestants face a sequence of opportunities to acquire resources (either by peaceful means or through conflict) and threats to the resources they already possess. In essence this means that neither the value of resources nor the opportunity cost of engaging in a conflict can be viewed as being exogenous; rather these must be determined in a self-consistent manner as part of the analysis. We plan to do so by embedding game theoretic models of bilateral conflict into the context of a dynamic search and matching model and studying the properties of the resulting equilibria. In particular, we aim to identify conditions under which individuals are more likely to use peaceful means to acquire resources and respect the ownership of resources, thus contributing to the economic theory of the emergence of stable ownership structures when property rights are not (perfectly) legally enforceable. In pursuing this agenda we can and will build on theoretical work in behavioural ecology which has investigated animal conflicts over territories in a framework akin to ours.
Evolutionary dynamics of nonlinear public goods games with fluctuating demography Research Project | 2 Project MembersMany situations in real social systems require the collective action of groups of more than two individuals. Public goods games, where individuals face the dilemma of providing or maintaining a public good, are paradigmatic among such multiplayer games. Digestive enzymes in yeast, ATP in heterotrophic microorganisms, alarm calls in meerkats, collective hunting in lions, and open-source software in contemporary humans are typical examples of public goods whose abusive exploitation by non-contributing individuals may lead to the so-called tragedy of the commons: a situation in which as nobody contributes no public good is produced or maintained. Despite the fact that non-linearity and stochasticity are common in nature, most models of evolutionary public goods games assume that the production function is linear and that demographic parameters such as group size are constant. By combining evolutionary game theory and inclusive fitness theory, this project aims at developing a mathematical framework for analyzing the evolutionary dynamics of non-linear public goods games in structured populations with fluctuating demography. Our goal is to identify key demographic and strategic conditions under which cooperation is promoted with respect to baseline scenarios.
FV-15 Einbürgerungen in der Schweiz: Wirtschaftstheoretische Implikationen für die Praxis Research Project | 2 Project MembersDie schweizerische Einbürgerungspraxis ist des Öfteren dem Vorwurf willkürlicher Benachteiligung ausgesetzt. Insbesondere die Tatsache, dass je nach Gemeinde die Anträge bestimmter Ausländergruppen höhere Ablehnungsquoten aufweisen, ist immer wieder Gegenstand aufflammender Diskussionen. Doch mikroökonomische Ansätze zeigen, dass ungleiche Auswirkungen auch das Resultat unvoreingenommener Entscheidungen sein können. Ziel dieses Projekts ist es, aufzuzeigen, welcher Ursache die beobachtbaren Unterschiede zuzuschreiben sind. Die Auswertung vorhandener und bei Gemeinden neu zu erhebender Daten liefert Hinweise darauf, ob der Vorwurf mutwilliger Diskriminierung wirtschaftstheoretisch fundiert werden kann. Dabei soll auch aufgezeigt werden, welche weiteren Informationen im Rahmen der Einbürgerungspraxis gegebenenfalls zusätzlich erfasst werden sollten, damit entsprechende Hypothesen empirisch getestet werden können.
Game theory and cooperation from economics to evolutionary biology Research Project | 2 Project MembersExplaining cooperative behaviour is a problem for evolutionary theory: although cooperation reduces the relative fitness of the performer it is in evidence at all levels of biological ofganization, from genes cooperating to make up the genome to complex animal societies. This project aims at studying cooperation using game theory and ideas initially developed in economics to analyse strategic behavior. It is by its nature interdisciplinary because it uses models (the volunteer's dilemma, adverse selection, moral hazard, ultimatum game) first developed in economics and in the social sciences to address a long-standing problem in evolutionary game theory; at the same time it uses concepts from evolutionary theory (population dynamics, relative fitness) to add details and address problems that are still unsolved in the social sciences. The project is mainly theoretical, but it includes an experimental part.
Steady States in Dynamic Search and Matching Models Research Project | 1 Project MembersDynamic Search and Matching Models have been used to investigate such diverse issues as the duration of unemployment spells in labor markets, the emergence of intermediaries in commodity markets, or the evolution of sex roles in animals. This research project is concerned with the foundations of the models underlying such applications. In particular, we aim to provide general conditions for the existence of steady state equilibria in such models and to relate these to equilibria in simpler, static models.
