Articles scientifiques

A Similarity-Based Approach to Prediction

I. GILBOA, O. Lieberman, D. Schmeidler

Journal of Econometrics

mai 2011, vol. 162, n°1, pp.124-131

Départements : Economie et Sciences de la décision, GREGHEC (CNRS)

Assume we are asked to predict a real-valued variable yt based on certain characteristics xt = (x1t , . . . , xdt), and on a database consisting of (x1i, . . . , xdi , yi) for i = 1, . . . , n. Analogical reasoning suggests to combine past observations of x and y with the current values of x to generate an assessment of y by similarity-weighted averaging. Specifically, the predicted value of y, yst , is the weighted average of all previously observed values yi, where the weight of yi, for every i = 1, . . . , n, is the similarity between the vector x1t, . . . , xdt, associated with yt , and the previously observed vector, x1i , . . . , xdi. The ''empirical similarity'' approach suggests estimation of the similarity function from past data. We discuss this approach as a statistical method of prediction, study its relationship to the statistical literature, and extend it to the estimation of probabilities and of density functions.Keywords:Density estimationEmpirical similarityKernelSpatial models

Aggregation of multiple prior opinions


Journal of Economic Theory

novembre 2011, vol. 146, n°6, pp.2563-2582

Départements : Economie et Sciences de la décision, GREGHEC (CNRS)

Mots clés : Aggregation of opinions, Ambiguity, Multiple priors

Experts are asked to provide their advice in a situation of uncertainty. They adopt the decision maker's utility function, but each has a potentially different set of prior probabilities, and so does the decision maker. The decision maker and the experts maximize the minimal expected utility with respect to their sets of priors. We show that a natural Pareto condition is equivalent to the existence of a set ¿ of probability vectors over the experts, interpreted as possible allocations of weights to the experts, such that (i) the decision maker's set of priors is precisely all the weighted-averages of priors, where an expert's prior is taken from her set and the weight vector is taken from ¿; (ii) the decision maker's valuation of an act is the minimal weighted valuation, over all weight vectors in ¿, of the experts' valuations

Aligning Ambition and Incentives


Journal of Law, Economics and Organization

octobre 2011, vol. 27, n°3, pp.655-688

Départements : Economie et Sciences de la décision

Mots clés : Reputation, Asymmetric learning, Relative performance contracts, Transparency

Labor turnover creates longer term career concerns incentives that motivate employees in addition to the short-term monetary incentives provided by the current employer. We analyze how these incentives interact and derive implications for the design of incentive contracts and organizational choice. The main insights stem from a trade-off between “good monetary incentives” and “good reputational incentives.” We show that the principal optimally designs contracts to create ambiguity about agents’ abilities. This may make it optimal to contract on relative performance measures, even though the extant rationales for such schemes are absent. Linking the structure of contracts to organizational design, we show that it can be optimal for the principal to adopt an opaque organization where performance is not verifiable, despite the constraints that this imposes on contracts

Belief-free equilibria in games with incomplete information: characterization and existence

J. Hörner, S. LOVO, T. TOMALA

Journal of Economic Theory

septembre 2011, vol. 146, n°5, pp.1770-1795

Départements : Finance, GREGHEC (CNRS), Economie et Sciences de la décision

Mots clés : Repeated game with incomplete information, Harsanyi doctrine, Belief-free equilibria

We generalize the results of Hörner and Lovo (2009) [15] to N-player games with arbitrary information structure. First, we characterize the set of belief-free equilibrium payoffs under low discounting as the set of feasible payoffs that are individually rational, jointly rational, and incentive compatible. Second, we provide necessary and sufficient conditions on the information structure for this set to be non-empty

Entrepreneurs: Jacks of all Trades or Hobos?

T. B. ASTEBRO, P. Thompson

Research Policy

juin 2011, vol. 40, n°5, pp.637-649

Départements : Economie et Sciences de la décision, GREGHEC (CNRS)

Mots clés : Entrepreneurship, Employment choice, Skill, Jack-of-all-trades, Taste for variety

Suggests that entrepreneurs should be generalists, while those who work for others should be specialists. Many prospective entrepreneurs will develop varied skills by engaging in a variety of employment activities prior to becoming an entrepreneur, and incomes are higher for those that do so. An alternative view predicts that those with greater taste for variety are more likely to become entrepreneurs. Varied employment prior to becoming an entrepreneur is simply an expression of this taste, and is associated with lower earnings. Data from a survey of 830 independent inventors and 300 individuals from the general population are used to discriminate between these two theories. The results show that inventor-entrepreneurs typically have a more varied labor market experience, and that varied work experience is associated with lower household income.