Working Papers

• Strategy-proof allocation mechanisms for economies with public goods (with María José Moscoso), Revision May 2010.
Abstract: We show that strategy-proof allocation mechanisms for economies with public goods are dictatorial -- i.e., they always select an allocation in their range that maximizes the welfare of the same single individual (the dictator). Further, strategy-proof and efficient allocation mechanisms are strongly dictatorial -- i.e., they select the dictator's preferred allocation on the entire feasible set. Thus, our results reveal the extent to which the conflict between individual incentives and other properties that may be deemed desirable (e.g., fairness, equal treatment, distributive justice) pervades resource allocation problems. (Full text.)

• Auctions with Heterogeneous Entry Costs (con John Wooders), University of Arizona Working Paper #08-05.
Abstract: It is well known that if bidders have independent private values and homogeneous entry costs a …rst- or second-price auction with a reserve price equal to the seller’s value maximizes social surplus and seller revenue, and leaves bidders with no surplus. Further, in the mixed strategy entry equilibrium, social surplus and seller revenue decrease with the number of bidders. We show that when entry costs are heterogeneous (and private information) the revenue maximizing reserve price is above the seller’s value, a positive inspection fee (and a reserve price equal to the seller’s value) generates even more revenue, and in either case bidders capture informational rents. Further, seller revenue and social surplus may either increase or decrease with the number of bidders. Nevertheless, seller revenue is asymptotically the same whether entry costs are homogeneous or heterogeneous. Our results are framed in terms of screeningvalues rather than reserve prices, and apply to any standard auction. (Full text.)


Artículos Publicados

Non-Cooperative Game Theory
• Two problems in applying Ljung's `projection algorithms' to the analysis of decentralized learning (con M. Walker), Journal of Economic Theory (1994) 62: 420-427.
Abstract: We show that Ljung's projection algorithms, which have recently been used by economists to establish convergence to rational expectations equilibrium, do not seem to apply to learning or forecasting behavior that one would normally call "decentralized." If the algorithm is defined in a way that allows individuals to have differing information, then Ljung's theorem does not apply. And even if a similar theorem could be proved that would allow for differing information, there remains a Lyapunov-like condition that is central to Ljung's projection method and which requires that individual beliefs be narrowly related to the equilibrium and to one another. (Full text.)

• Convergence theorems for a class of recursive stochastic algorithms (con M. Walker). In J. Ledyard (Ed.): The Economics of Informational Decentralization: Complexity, Efficiency and Stability; Kluwer Academic Publisher, Amsterdam, 1995.
Abstract: For linear versions of two kinds of algorithms introduced by Ljung for estimation and forecasting, we provide a unified treatment and uncluttered theorems and proofs.  These kinds of algorithms have already been used by several authors to model the process by which participants might learn their parts in an economic or strategic equilibrium and to investigate the question whether the learning process converges to expectations that are in equilibrium.  The clarity we bring to the analysis should make it relatively easy to apply such algorithms and should serve as a foundation for determining whether particular \3non\1linear algorithms of this kind converge. This clarity enables us, in particular, to (a) give a correct proof for both projection and nonprojection algorithms in the linear case;  (b) suggest how a central assumption can be strengthened so that an existing incorrect proof for more general algorithms might be made valid;  and (c) identify the obstacle to proving convergence for "decentralized" projection algorithms.( Full text.)

• Coalition-proof equilibrium (con J. Wooders), Games and Economic Behavior (1996) 17: 80-112.
Abstract: We characterize the agreements that the players of a noncooperative game may reach when they can communicate prior to play, but they cannot reach binding agreements: A coalition-proof equilibrium is a correlated strategy from which no coalition has an improving and self-enforcing deviation. We show that any correlated strategy whose support is contained in the set of actions that survive the iterated elimination of strictly dominated strategies and weakly Pareto dominates every other correlated strategy whose support is contained in that set, is a coalition-proof equilibrium. Consequently, the unique equilibrium of a dominance solvable game is coalition-proof. (Full text.)

• An experimental study of communication and cooperation in noncooperative games (con J. Wooders), Games and Economic Behavior (1998) 24: 47-76.
Abstract: This paper reports the results of an experiment designed to test the usefulness of alternative solution concepts to explain players' behavior in noncooperative games with preplay communication. In the experiment subjects communicate by plain conversation prior to playing a simple game. In this setting, we find that the presumption of individualistic and independent behavior underlying the concept of Nash equilibrium is inappropriate. Instead, we observe behavior to be coordinated and correlated. Statistical tests reject Nash equilibrium as an explanation of observed play. The coalition proof correlated equilibrium of the game, however, explains the data when the possibility of errors by players is introduced. (Full text.)

• Uniform Continuity of the Value for Zero-Sum Games with Differential Information (con E. Einy, O. Haimanko y B. Shitovitz), Mathematics of Operations Research (2008) 33: 552-560.
Abstract: We establish uniform continuity of the value for zero-sum games with differential information, when the distance between changing information fields of each player is measured by the Boylan pseudo-metric. We also show that the optimal strategy correspondence is upper semi-continuous when the information fields of players change (even with the weak topology on players' strategy sets), and is approximately lower semi-continuous. (Full text.)

• On the Existence of Bayesian Cournot Equilibrium (con E. Einy, O. Haimanko y B. Shitovitz), Games and Economic Behavior (2010) 68: 77-94.2008.
Abstract: We show that when firms have incomplete information about the market demand and their costs, a (Bayesian) Cournot equilibrium in pure strategies may not exist, or be unique. In fact, we are able to construct surprisingly simple and robust examples of duopolies with these features. However, we also find some sufficient conditions for existence, and for uniqueness, of Cournot equilibrium in a certain class of industries. More general results arise when negative prices are possible. (Full text.)


Cooperative Game Theory
• The least core, kernel, and bargaining sets of large games (con E. Einy y D. Monderer), Economic Theory (1998) 11: 585-602.
Abstract: We study the least core, the kernel and bargaining sets of coaliotional games with a countable set of players. We show that the least core of a continuous superadditive game with a countable set of players is a non-empty (norm-compact) subset of the space of all countably additive measures. Then we show that in such games the intersection of the prekernel and the least core is non-empty. Finally, we show that the Aumann-Maschler and the Mas-Colell bargaining sets contain the set of all countably additivepayo€ measures in the prekernel.  (Full text.)

• The core of a class of non-atomic games which arise in economic applications (con E. Einy y B. Shitovitz), International Journal of Game Theory (1999) 28: 1-14.
Abstract: We study the core of a non-atomic game v which is uniformly continuous with respect to the DNA-topology and continuous at the grand coalition. Such a game has a unique DNA-continuous extension v on the space
B1 of ideal sets. We show that if the extension v is concave then the core of the game v is non-empty v is homogeneous of degree one along the diagonal of B1. We use this result to obtain representation theorems for the core of a nonatomic game of the form v =ˆ f o m where m is a finite dimensional vector of measures and f is a concave function. We also apply our results to some nonatomic games which occur in economic applications. (Full text.)

• The asymptotic nucleolus of large monopolistic market games (con E. Einy y B. Shitovitz), Journal of Economic Theory (1999), 89: 186-206.
Abstract: We study the asymptotic nucleolus of differentiable monopolistic market games in continuum economies with a finite number of traders' types, and show that, under appropriate assumptions, it is the center of symmetry of the subset of the core in which all the monopolists receive the same payoff. Thus, the nucleolus discriminates the traders in the atomless sector, whereas the competitive equilibrium does not. Moreover, if there is a single syndicated atom and a finite number of atomless sectors, the syndicate is treated more favorably under the asymptotic nucleolus than under the Shapley value associated with the pure monopolisticmarket. (Full text.)

General Equilibrium Theory
•    Rational expectations equilibria and the ex-post core of an economy with asymmetric information (con E. Einy y B. Shitovitz), Journal of Mathematical Economics (2000), 34: 527-535.
Abstract: We study the relationship between the set of rational expectations equilibrium allocations and the ex-post core of exchange economies with asymmetric information. (Full text.)

• On the core of an economy with differential information (con E. Einy y B. Shitovitz), Journal of Economic Theory (2000) 94: 262-270.
Abstract: We show that the fine core of an atomless exchange economy with differential information is a subset of the ex-post core of the economy. (This inclusion may be proper, and it does not hold for economies with a finite number of traders.) Consequently, every fine core allocation is a selection from the equilibrium correspondence of the associated family of full information economies. Moreover, when each trader knows his or her own utility function and his of her own endowment,every fine core allocation is a rational expectations equilibrium allocation.  (Full text.)

• Competitive and core allocations in large economies with differential information (con E. Einy y B. Shitovitz), Economic Theory (2001) 18: 321-332.
Abstract: We study the core and competitive allocations in exchange economies with a continuum of traders and differential information. We show that if the economy is “irreducible”, then a competitive equilibrium, in the sense of Radner (1968, 1982), exists. Moreover, the set of competitive equilibrium allocations coincides with the “private core” (Yannelis, 1991). We also show that the “weak fine core” of an economy coincides with the set of competitive allocations of an associated symmetric information economy in which the traders information isthe joint information of all the traders in the original economy.  (Full text.)

• The bargaining set of a large exchange economy with differential information (con E. Einy y B. Shitovitz), Economic Theory (2001) 18: 473-484.
Abstract:  We study the Mas-Colell bargaining set of an exchange economy with differential information and a continuum of traders. We established the equivalence of the private bargaining set and the set of Radner competitive equilibrium allocations. As for the weak fine bargaining set, we show that it contains the set of competitive equilibrium allocations of an associated symmetric information economy in which each trader has the “joint information” of all the traders in the original economy, but unlike the weak fine core and the set of fine value allocations, it may also contain allocations which are not competitive in the associated economy. (Full text.)

• On the continuity of equilibrium and core correspondences in economies with differential information (con E. Einy, O. Haimanko, y B. Shitovitz), Economic Theory (2005) 26: 793 - 812.
Abstract:  We study upper semi-continuity of the private and coarse core and the Walrasian expectations equilibrium correspondences for economies with differential information, with Boylan (1971) topology on agents information fields. (Full text.)

Industrial Organization
• Information advantage in Cournot oligopoly (con E. Einy y B. Shitovitz), Journal of Economic Theory (2002) 106: 151-160.
Abstract: Consider an oligopolistic industry where firms have access to the same technology but are asymmetrically informed about the environment. Even though it is commonplace to think that in this context superior information leads to higher profits, we find that under Cournot competition this is not generally the case: It holds when firms’ technology exhibits constant returns to scale, but it does notnecessarily hold otherwise.  (Full text.)

• The value of public information in Cournot Oligopoly (con E. Einy y B. Shitovitz). Games and Economic Behavior (2003) 44: 272-285.
Abstract: We derive alternative sufficient conditions for the value of public information to be either positive or negative in a Cournot duopoly where firms technology exhibits constant returns to scale. (Full text..)

• Coalition-proof supply function equilibria in oligopoly (con J. Delgado), Journal of Economic Theory (2004) 114: 231-254.
Abstract:In an industry where firms compete via supply functions, the set of equilibrium outcomes is large. If decreasing supply functions are ruled out, this set is reduced significantly, but remains large. Specifically, the set of prices that can be sustained by supply function equilibria is the interval between the competitive price and the Cournot price. In sharp contrast, when the number of firms is above a threshold we identify (e.g., three if demand is linear), only theCournot outcome can be sustained by a coalition-proof supply function equilibrium.  (Full text..)

• Capacity precommitment and price competition yield Cournot outcomes (con L. Ubeda), Games and Economic Behavior (2006) 56: 323-332.
Abstract: We introduce a simple model of oligopolistic competition where firms first build capacity, and then, after observing the capacity decisions, choose a reservation price at which they are willing to supply their capacities.
This model describes many markets more realistically than the model of Kreps and Scheinkman [Kreps, D., Scheinkman, J., 1983. Quantity precommitment and Bertrand competition yield Cournot outcomes.
Bell J. Econ. 14, 326–337]. We show that in this new model every pure strategy equilibrium yields the Cournot outcome, and that the Cournot outcome can be sustained by a pure strategy subgame perfect
equilibrium. (Full text.)

Competitive Decentralized Markets
• Prices, delay and the dynamics of trade (con J. Wooders), Journal of Economic Theory (2002) 104: 304-339.
Abstract:  We characterize trading patterns and their dynamics in a market in which trade is bilateral, finding a trading partner is costly, prices are determined by bargaining, and preferences are private information. We also determine how the trading pattern depends on the market composition. Our analysis reveals that market equilibria may be inefficient and may exhibit delay. As the market becomes frictionless the welfare loss due to inefficiency vanishes; delay persists, however, and in this respect frictionless markets are not competitive. (Full text.)

• Decentralized trade mitigates the lemons problem (con J. Wooders), International Economic Review, forthcoming.
Abstract:  In markets with adverse selection, only low-quality units trade in the competitive equilibrium when the average quality of the good held by sellers is low. We show that under decentralized trade, however, both high and low-quality units trade, although with delay. Moreover, when frictions are small the surplus realized is greater than the (static) competitive surplus. Thus, decentralized trade mitigates the lemons problem. Remarkably, payoffs are competitive as frictions vanish, even though both high and low-quality units continue to trade and there is trade at several prices. (Full text. The companion working paper: UC3M-wp2007-12.)

Social Choice
• Nonmanipulable voting schemes when participants' interests are partially decomposable (con M. Walker), Social Choice and Welfare (1991) 8: 221-233.
Abstract: Recent papers by Barbera and Peleg and by Zhou have established that the Gibbard-Satterthwaite Theorem remains valid when individuals are restricted to reporting only "reasonable" preferences. We present a theorem that covers situations in which, as in Barbera & Peleg and Zhou, preferences may be restricted to reasonable ones, but in which, additionally, it may be known in advance that some dimensions of the social decision do not affect all the participants -- i.e., in which the social decisions are partially decomposable into decisions that affect only subsets of the participants. As in the previous theorems, the conclusion of this new theorem is that nonmanipulable voting schemes must be dictatorial. (Full text..)

• Nonmanipulable decision mechanisms for economic environments, Social Choice and Welfare (1994) 11: 225-240.
Abstract: In the social choice literature studying the problem of designing institutions for collective decision making, it is customary to (implicitly) assume that each dimension of the social outcome is of public interest (i.e., that each individual's welfare depends on every dimension of the outcome). Thus, the scope of the conclusions obtained is very limited. Here social decision problems with and without that public character are considered and it is shown that the same negative results arise in most cases; namely, that only dictatorial mechanisms are immune to the participants' manipulations. These results are obtained without requiring that the mechanisms produce Pareto optimal outcomes (they must simply be minimally responsive to the participants' preferences), which deepens their pessimistic character.  (Full text.)

• Strategy-proof allocation mechanisms for pure public goods economies when preferences are monotonic, Economic Theory (1999) 13: 183-197.
Abstract:  A fundamental problem in public finance is that of allocating a␣given budget to financing the provision of public goods (education, transportation, police, etc.). In this paper it is established that when␣admissible preferences are those representable by continuous and increasing utility functions, then strategy-proof allocation mechanisms whose (undominated) range contains three or more outcomes are dictatorial on the set of profiles of strictly increasing utility functions, a dense subset of the domain in the topologies commonly used in this context. If admissible utility functions are further restricted to be strictly increasing, or if mechanisms are required to be non-wasteful, then strategy-profness leads to (full) dictatorship.  (Full text.)