scholarly journals Selling with evidence

2019 ◽  
Vol 14 (2) ◽  
pp. 345-371
Author(s):  
Frédéric Koessler ◽  
Vasiliki Skreta
Keyword(s):  
Asymmetric Information ◽  
Product Quality ◽  
Optimal Allocation ◽  
Pareto Optimal ◽  
Principal Problem ◽  
Equilibrium Allocation ◽  
Interdependent Values ◽  
Ex Ante ◽  
Private Value ◽  
Posted Price

We study the informed‐principal problem in a bilateral asymmetric information trading setting with interdependent values and quasi‐linear utilities. The informed seller proposes a mechanism and voluntarily certifies information about the good's characteristics. When the set of certifiable statements is sufficiently rich, we show that there is an ex ante profit‐maximizing selling procedure that is an equilibrium of the mechanism proposal game. In contrast to posted price settings, the allocation obtained when product characteristics are commonly known (the unravelling outcome) may not be an equilibrium allocation, even when all buyer types agree on the ranking of product quality. Our analysis relies on the concept of strong Pareto optimal allocation, which was originally introduced by Maskin and Tirole (1990) in private value environments.

Optimal Allocation of Risk for Portfolios

2014 ◽  
Vol 644-650 ◽  
pp. 6067-6070
Author(s):  
Hong Wei Liu ◽  
Cai Bo Xiao
Keyword(s):  
Representation Theorem ◽  
Optimal Allocation ◽  
Pareto Optimal ◽  
Risk Allocation ◽  
Equivalent Conditions

In this paper, we propose a framework of the optimal risk allocation, under the pareto optimal we give equivalent conditions and provided its representation theorem under Pareto-optimal allocation, Which is an extension of the ones introduced by Ludger Rüschendorf (2006).

Is the local wheat market a ‘market for lemons’? Certifying the supply of individual wheat farmers in Ethiopia

2021 ◽  
Author(s):  
Banawe Plambou Anissa ◽  
Gashaw Abate ◽  
Tanguy Bernard ◽  
Erwin Bulte
Keyword(s):  
Asymmetric Information ◽  
Willingness To Pay ◽  
Wheat Quality ◽  
High Quality ◽  
Auction Design ◽  
Market For Lemons ◽  
Wheat Market ◽  
Ex Ante

Abstract Bulking and mixing of smallholder supply dilutes incentives to supply high quality. We introduce wheat ‘grading and certification shops’ in Ethiopia and use an auction design to gauge willingness-to-pay (WTP) for certification. Bids correlate positively with wheat quality, and ex ante notification of the opportunity of certification improves wheat quality. These findings suggest that local wheat markets resemble a ‘market for lemons’, crippled by asymmetric information. However, aggregate WTP for grading and certification services does not re-coup the sum of fixed, flow and variable costs associated with running a single certification shop.

scholarly journals Existence of an interim and ex-ante minimax point for an asymmetric information game

2010 ◽  
Vol 108 (1) ◽  
pp. 4-6
Author(s):  
Marialaura Pesce ◽  
Nicholas C. Yannelis
Keyword(s):  
Asymmetric Information ◽  
Ex Ante ◽  
Minimax Point

ALTERNATIVE MONETARY POLICIES IN A TURNPIKE ECONOMY

2010 ◽  
Vol 14 (5) ◽  
pp. 727-762 ◽  
Author(s):  
Rodolfo Manuelli ◽  
Thomas J. Sargent
Keyword(s):  
Money Supply ◽  
Optimal Policy ◽  
Optimal Allocation ◽  
Price Level ◽  
Optimal Rate ◽  
Pareto Optimal ◽  
Monetary Policies

This paper modifies a Townsend turnpike model by letting agents stay at a location long enough to trade some consumption loans, but not long enough to support a Pareto-optimal allocation. Monetary equilibria exist that are nonoptimal in the absence of a scheme to pay interest on currency at a particular rate. Paying interest on currency at the optimal rate delivers a Pareto-optimal allocation, but a different one than the allocation for an associated nonmonetary centralized economy. The price level remains determinate under an optimal policy. We study the response of the model to “helicopter drops” of currency, steady increases in the money supply, and restrictions on private intermediation.

scholarly journals Balancing ecosystem services with energy and food security – Assessing trade-offs from reservoir operation and irrigation investments in Kenya's Tana Basin

2014 ◽  
Vol 18 (8) ◽  
pp. 3259-3277 ◽  
Author(s):  
A. P. Hurford ◽  
J. J. Harou
Keyword(s):  
Ecosystem Services ◽  
Optimal Allocation ◽  
Search Algorithm ◽  
Management Strategies ◽  
Decision Makers ◽  
Pareto Optimal ◽  
Management Problem ◽  
Economic Sectors ◽  
Trade Off ◽  
Trade Offs

Abstract. Competition for water between key economic sectors and the environment means agreeing allocations is challenging. Managing releases from the three major dams in Kenya's Tana River basin with its 4.4 million inhabitants, 567 MW of installed hydropower capacity, 33 000 ha of irrigation and ecologically important wetlands and forests is a pertinent example. This research seeks firstly to identify and help decision-makers visualise reservoir management strategies which result in the best possible (Pareto-optimal) allocation of benefits between sectors. Secondly, it seeks to show how trade-offs between achievable benefits shift with the implementation of proposed new rice, cotton and biofuel irrigation projects. To approximate the Pareto-optimal trade-offs we link a water resources management simulation model to a multi-criteria search algorithm. The decisions or "levers" of the management problem are volume-dependent release rules for the three major dams and extent of investment in new irrigation schemes. These decisions are optimised for eight objectives covering the provision of water supply and irrigation, energy generation and maintenance of ecosystem services. Trade-off plots allow decision-makers to assess multi-reservoir rule-sets and irrigation investment options by visualising their impacts on different beneficiaries. Results quantify how economic gains from proposed irrigation schemes trade-off against the disturbance of ecosystems and local livelihoods that depend on them. Full implementation of the proposed schemes is shown to come at a high environmental and social cost. The clarity and comprehensiveness of "best-case" trade-off analysis is a useful vantage point from which to tackle the interdependence and complexity of "water-energy-food nexus" resource security issues.

scholarly journals On the market for “Lemons”: quality provision in markets with asymmetric information

2020 ◽  
Vol 7 (1) ◽  
Author(s):  
Konstantinos Giannakas ◽  
Murray Fulton
Keyword(s):  
Asymmetric Information ◽  
Product Quality ◽  
Market For Lemons ◽  
Economic Result ◽  
Quality Product ◽  
Quality Provision

AbstractAkerlof’s “Lemons” paper provides a seminal economic result suggesting that, in markets with asymmetric information where product quality is unobservable by consumers prior to purchase and use, the introduction of a low-quality product will drive its higher quality counterpart(s) out of the market. In this paper we identify some empirically relevant cases/conditions under which the introduction of a low-quality product does not drive its higher quality substitutes out of the market but, instead, ends-up coexisting with them.

scholarly journals Improving Nash Social Welfare Approximations

2020 ◽  
Vol 68 ◽  
pp. 225-245
Author(s):  
Peter McGlaughlin ◽  
Jugal Garg
Keyword(s):  
Social Welfare ◽  
Optimal Allocation ◽  
Focal Point ◽  
Market Equilibrium ◽  
Fair Division ◽  
Pareto Optimal ◽  
Indivisible Goods ◽  
Market Prices ◽  
Economic Concept ◽  
Strongly Polynomial

We consider the problem of fairly allocating a set of indivisible goods among n agents. Various fairness notions have been proposed within the rapidly growing field of fair division, but the Nash social welfare (NSW) serves as a focal point. In part, this follows from the ‘unreasonable’ fairness guarantees provided, in the sense that a max NSW allocation meets multiple other fairness metrics simultaneously, all while satisfying a standard economic concept of efficiency, Pareto optimality. However, existing approximation algorithms fail to satisfy all of the remarkable fairness guarantees offered by a max NSW allocation, instead targeting only the specific NSW objective. We address this issue by presenting a 2 max NSW, Prop-1, 1/(2n) MMS, and Pareto optimal allocation in strongly polynomial time. Our techniques are based on a market interpretation of a fractional max NSW allocation. We present novel definitions of fairness concepts in terms of market prices, and design a new scheme to round a market equilibrium into an integral allocation in a way that provides most of the fairness properties of an integral max NSW allocation.

Sign in / Sign up

Export Citation Format

Share Document