18-01. Yuhta Ishii, Aniko Ory and Adrien Vigier, Competing for Talent.
Abstract: In many labor markets, e.g., for lawyers, consultants, MBA students, and professional sport players, workers get oered and sign long-term contracts even though waiting could reveal signicant information about their capabilities. This phenomenon is called unraveling. We examine the link between wage bargaining and unraveling. Two rms, an incumbent and an entrant, compete to hire a worker of unknown talent. Informational frictions prevent the incumbent from always observing the entrant's arrival, inducing unraveling in all equilibria. We analyze the extent of unraveling, surplus shares, the average talent of employed workers, and the distribution of wages within and across rms.
18-02. Bertan Turhan, Welfare and Incentives in Partitioned School Choice.
Abstract: Divided enrollment systems cause school assignments to be unfair and wasteful. Iterative version of the student-optimal stable mechanism (I-SOSM), proposed by Manjunathand Turhan (2016), achieves individually rational and fair assignments in such partitioned school choice markets for any number of iteration. It also reaches a nonwasteful matching when iterated sufficiently many times. This paper examines the effects of partition structure of schools on students’ welfare and incentives they face under I-SOSM. I find that when school partition gets coarser students’ welfare weakly increases under I-SOSM for any number of iteration. I also show that under coarser school partitions I-SOSM becomes weakly less manipulable for students according to a criteria defined by Pathak and Sönmez (2013). These results suggest that when full integration is not possible keeping school partition as coarse as possible benefits students with respect to their welfare and incentives they face if stability is a concern for policymakers.
18-03. Mustafa O˘guz Afacany, Inácio Bóz and Bertan Turhan, Assignment Maximization.
Abstract: We evaluate the goal of maximizing the number of individually rational assignments. We show that it implies incentive, fairness, and implementation impossibilities. Despite that, we present two classes of mechanisms that maximize assignments. The first are Pareto efficient, and undominated – in terms of number of assignments – in equilibrium. The second are fair for unassigned students and assign weakly more students than stable mechanisms in equilibrium. We provide comparisons with well-known mechanisms through computer simulations. Those show that the difference in number of matched agents between the proposed mechanisms and others in the literature is large and significant.
18.04 Igor L. Kheifets, Multivariate Specification Tests Based on a Dynamic Rosenblatt Transform.
Abstract: This paper considers parametric model adequacy tests for nonlinear multivariate dynamic models. It is shown that commonly used Kolmogorov-type tests do not take into account cross-sectional nor time-dependence structure, and a test, based on multi-parameter empirical processes, is proposed that overcomes these problems. The tests are applied to a nonlinear LSTAR-type model of joint movements of UK output growth and interest rate spreads. A simulation experiment illustrates the properties of the tests in finite samples. Asymptotic properties of the test statistics under the null of correct specification and under the local alternative, and justification of a parametric bootstrap to obtain critical values, are provided.
18-05 Felipe Meza, Mexico from the 1960s to the 21st Century: From Fiscal Dominance to Debt Crisis to Low Inflation.
Abstract: The objective of this paper is to analyze the monetary and fiscal history of Mexico using as framework the model of Sargent and Wallace (1981). I study the period 1960-2016. I evaluate the ability of the model to explain the crises of 1982 and 1994. The model can explain the 1982 Debt Crisis, but cannot explain the 1994 Crisis. A constitutional change in the relation between the Federal Government and Banco de México, and policy choices made in the aftermath of the 1994 Crisis, are consistent with a transition from fiscal dominance to an independent central bank. Inflation fell persistently after 1995, reaching values of 3 percent per year in mid-2016. That number is the target of the central bank. After a long transition after the 1982 Crisis Mexico succeeded controlling inflation. I discuss the forces that reduced inflation over time: A long sequence of primary surpluses, negotiations between the government, workers and businessmen, the constitutional change that gave independence and a goal to the central bank, and the current inflation targeting regime. On the fiscal side I observe a change in the downward trend of the total debt to GDP ratio, as it fell from the 1980s to 2009, year in which it started growing persistently.
18-06 Timothy N. Cason, Tridib Sharma and Radovan Vadovic, Correlated beliefs: Predicting outcomes in 2X2 games.
Abstract: Studies of strategic sophistication in experimental normal form games commonly assume that subjects' beliefs are consistent with independent choice. This paper examines whether beliefs are consistent with correlated choice. Players play a sequence of simple 2X2 normal form games with distinct opponents and no feedback. Another set of players, called predictors, report a likelihood ranking over possible outcomes. A substantial proportion of the reported rankings are consistent with the predictors believing that the choice of actions in the 2X2 game are correlated. The extent of correlation over action profiles varies systematically between the type of games (i.e., prisoner's dilemma, stag hunt, coordination, and strictly competitive) as well as the kind of payments within each type of game (i.e., high vs. low deviation payoffs and symmetric vs. asymmetric payoffs).
18-07 Parimal K. Bagy and Tridib Sharma, Sequential Expert Advice: Superiority of Closed-Door Meetings.
Abstract: Sequential advice to a decision maker by experts with career concerns has previously been studied under transparency. In a two-expert model and a Bayesian decision maker(D), our nding is that secrecy (weakly) dominates transparency, yielding superior decisions for D. The subtle insight is that secrecy empowers experts moving late to be pivotal more often. We show two other results: (i) only secrecy enables the second expert to partially communicate her information and its high precision level to D and swing the decision away from the rst expert's recommendation; (ii) if the experts on average have high precision, then the second expert is eective only under secrecy. We also show that the efficacy of secrecy is further enhanced if either (1) the experts are allowed to revise their advice following each other's initial recommendation (i.e., deliberate), or (2) the experts are allowed to make detailed recommendations (i.e., give advice and also report its quality). Expanding the message space under deliberation or under detailed recommendation, both generate the possibility of fully revealing equilibria, leading to informationally efficient choice by D.