Articles

More haste less speed? Signaling through investment timing

C. BOBTCHEFF, R. LEVY

American Economic Journal: Microeconomics

aout 2017, vol. 9, n°3, pp.148-186

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

Mots clés : JEL D21, D82, D83, D92, G31, G32)

https://www.aeaweb.org/articles?id=10.1257/mic.20160200


We consider a cash-constrained firm learning on the value of an irreversible project at a privately-known speed. Under perfect information, the optimal date of investment may be non-monotonic in the learning speed: better learning increases the value of experimenting further, but also the speed of updating. Under asymmetric information, the firm uses its investment timing to signal confidence in the project and raise cheaper capital from uninformed investors, which may generate timing distortions: investment is hurried when learning is sufficiently fast, and delayed otherwise. The severity of the cash constraint affects the magnitude of the distortion, but not its direction

Optimal Dynamic Information Provision

J. RENAULT, E. SOLAN, N. VIEILLE

Games and Economic Behavior

juillet 2017, vol. 104, pp.329-349

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

Mots clés : Dynamic information provision, Optimal strategy, Greedy algorithm, Commitment

https://www.sciencedirect.com/science/article/pii/S089982561730074X


We study a dynamic model of information provision. A state of nature evolves according to a Markov chain. An advisor with commitment power decides how much information to provide to an uninformed decision maker, so as to influence his short-term decisions. We deal with a stylized class of situations, in which the decision maker has a risky action and a safe action, and the payoff to the advisor only depends on the action chosen by the decision maker. The greedy disclosure policy is the policy which, at each stage, minimizes the amount of information being disclosed in that stage, under the constraint that it maximizes the current payoff of the advisor. We prove that the greedy policy is optimal in many cases – but not always

Psychophysical foundations of the Cobb–Douglas utility function

R. ARGENZIANO, I. GILBOA

Economics Letters

aout 2017, vol. 157, pp.21-23

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

Mots clés : Cobb–Douglas, Weber’s law, Semi-order

https://ac.els-cdn.com/S016517651730191X/1-s2.0-S016517651730191X-main.pdf?_tid=29bb1524-1229-4c49-a053-fd662da2013b&acdnat=1522058549_4148725b1ba21aac09775cf8591b1eea


Relying on a literal interpretation of Weber’s law in psychophysics, we show that a simple condition of independence across good categories implies the Cobb–Douglas preferences

Regularized Generalized Canonical Correlation Analysis: A Framework for Sequential Multiblock Component Methods

M. TENENHAUS, A. TENENHAUS, P. J. F. GROENEN

Psychometrika

septembre 2017, vol. 82, n°3, pp.737-777

Départements : Economie et Sciences de la décision

Mots clés : consensus PCA, hierarchical PCA, MAXBET, MAXDIFF, MAXVAR, multiblock component methods, PLS path modeling, GCCA, RGCCA, SSQCOR, SUMCOR

https://link.springer.com/article/10.1007/s11336-017-9573-x


A new framework for sequential multiblock component methods is presented. This framework relies on a new version of regularized generalized canonical correlation analysis (RGCCA) where various scheme functions and shrinkage constants are considered. Two types of between block connections are considered: blocks are either fully connected or connected to the superblock (concatenation of all blocks). The proposed iterative algorithm is monotone convergent and guarantees obtaining at convergence a stationary point of RGCCA. In some cases, the solution of RGCCA is the first eigenvalue / eigenvector of a certain matrix. For the scheme functions x, |x|, x2 or x4 and shrinkage constants 0 or 1, many multiblock component methods are recovered

Repeated games with public deterministic monitoring

T. TOMALA, Marie LACLAU

Journal of Economic Theory

mai 2017, vol. 169, pp.400-424

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

Mots clés : Repeated games, Public monitoring, Pure strategies, Approachability

https://www.sciencedirect.com/science/article/pii/S0022053117300285


We consider repeated games with compact actions sets and pure strategies in which players commonly observe a public signal which reveals imperfectly the action profile. We characterize the set of payoffs profiles that can be sustained by a perfect equilibrium, as players become increasingly patient. There are two conditions: admissibility and joint rationality. An admissibly feasible payoff can be achieved by an action profile that offers no unilateral deviation which is both undetectable and profitable. It is jointly rational if for all weights on players, the weighted average payoff is greater than or equal to the minmax level of the weighted average payoff function. This characterization is alternative to the one provided by the “score method” of Fudenberg and Levine (1994). We provide a simple construction of equilibrium strategies based on cooperation, punishments and rewards. Punishments rely on Blackwell's approachability algorithm

Risk-Based Capital Requirements for Banks and International Trade

B. DEMIR-PAKEL, T. K. MICHALSKI, E. ORS

Review of Financial Studies

novembre 2017, vol. 30, n°11, pp.3970-4002

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

https://academic.oup.com/rfs/article/30/11/3970/3954037


We test the trade finance channel of exports by controlling for the bank credit channel. Using Turkey’s July 2012 adoption of Basel II as a quasi-natural experiment, we examine whether shocks to trade financing costs affect exports. With data for 16,662 Turkish exporters shipping 2,888 different products to 158 countries, we find that the share of letters-of-credit-based exports decreases (increases) when the associated risk weights for counterparty exposure increase (decrease) after the adoption of Basel II. However, growth of firm-product-country-level exports remains unaffected. Trade financing might have a lesser role in exports than previously suggested by the previous literature. © The Author 2017. Published by Oxford University Press on behalf of The Society for Financial Studies

The private financial gains to entrepreneurship: Is it a good use of public money to encourage individuals to become entrepreneurs?

T. ASTEBRO

Small Business Economics

février 2017, vol. 48, n°2, pp.323-329

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

Mots clés : Entrepreneurship, Income underreporting, Public policy, Financial incentives

https://link.springer.com/article/10.1007/s11187-016-9777-y


Recent evidence comparing earnings from entrepreneurship versus wage earning shows that, after allowing for obvious observable differences,most entrepreneurs in most developed countries earn less than similar wage-earning employees. Does this mean that the decision to become an entrepreneur should be discouraged? The answer depends in part on whether we believe that entrepreneurs report their income truthfully or not. Adjusting for what is considered to be underreporting by entrepreneurs lifts entrepreneurial earnings by between 10 and 40 %, reversing the fortunes of the entrepreneur such that they appear to be earning much more than theircounterparts in a wage-earning job. If this adjustment should prove to be appropriate, then there is no obvious reason to increase the incentive for individuals to become entrepreneurs (such as with tax breaks or direct start-up subsidies) in developed countries, and there is reason, instead, to discuss decreasing these subsidies

Warm-Glow Giving and Freedom to be Selfish

O. EVREN, S. MINARDI

Economic Journal

août 2017, vol. 127, n°603, pp.1381–1409

Départements : Economie et Sciences de la décision

http://onlinelibrary.wiley.com/doi/10.1111/ecoj.12351/abstract


Warm-glow refers to prosocial behaviour that causes the actor to experience positive feelings, apart from its social implications. We study an individual who enjoys taking a prosocial action that incurs a private cost because such actions improve his social image. A private cost obtains only in the presence of a more selfish option, implying a preference for freedom to behave selfishly. We provide behavioural foundations for this model by building upon the experimental findings on motivation crowding out. Our theory distinguishes between warm-glow and other motivations for giving, and subsumes Andreoni’s (1989, 1990) model of public good provision

A theorem on aggregating classifications

F. MANIQUET, P. MONGIN

Mathematical Social Sciences

janvier 2016, vol. 79, pp.6-10

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

Mots clés : Aggregation of classifications, Group identification problem, Task assignment problem, Nonbinary evaluations

http://ssrn.com/abstract=2686037


Suppose that a group of individuals must classify objects into three or more categories, and does so by aggregating the individual classifications. We show that if the classifications, both individual and collective, are required to put at least one object in each category, then no aggregation rule can satisfy a unanimity and an independence condition without being dictatorial. This impossibility theorem extends a result that Kasher and Rubinstein (1997) proved for two categories and complements another that Dokow and Holzman (2010) obtained for three or more categories under the condition that classifications put at most one object in each category. The paper discusses an interpretation of its result both in terms of Kasher and Rubinstein’s group identification problem and in terms of Dokow and Holzman’s task assignment problem.

Choice-based cardinal utility: a tribute to Patrick Suppes

J. BACCELLI, P. MONGIN

Journal of Economic Methodology

2016, vol. 23, n°3, pp.268-288

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

Mots clés : ordinal utility, cardinal utility, preference differences, representation theorems, Suppes, ordinalism, cardinalism

http://www.tandfonline.com/doi/full/10.1080/1350178X.2016.1189112


We reexamine some of the classic problems connected with the use of cardinal utility functions in decision theory, and discuss Patrick Suppes’ contributions to this field in light of a reinterpretation we propose for these problems. We analytically decompose the doctrine of ordinalism, which only accepts ordinal utility functions, and distinguish between several doctrines of cardinalism, depending on what components of ordinalism they specifically reject. We identify Suppes’ doctrine with the major deviation from ordinalism that conceives of utility functions as representing preference differences, while being nonetheless empirically related to choices. We highlight the originality, promises and limits of this choice-based cardinalism.


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