I consider transactions involving asymmetric prisoners’ dilemmas between pairs of players randomly selected from two large populations. Games are played repeatedly, but information about cheating is not adequate to sustain cooperation, and there is no official legal system of contract enforcement. I examine how profit–maximizing private intermediation can supply the information and enforcement. I obtain conditions under which private governance can improve upon no governance, and examine why it fails to achieve social optimality.
We propose a functional estimation procedure for homogeneous stochastic differential equations based on a discrete sample of observations and with minimal requirements on the data generating process. We show how to identify the drift and diffusion function in situations where one or the other function is considered a nuisance parameter. The asymptotic behavior of the estimators is examined as the observation frequency increases and as the time span lengthens. We prove almost sure consistency and weak convergence to mixtures of normal laws, where the mixing variates depend on the chronological local time of the underlying diffusion process, that is the random time spent by the process in the vicinity of a generic spatial point. The estimation method and asymptotic results apply to both stationary and nonstationary recurrent processes.
In this paper we focus on strategic voting behavior when both an election and a signaling motivation affect voters' behavior. We analyze a model of elections with two candidates competing on a one-dimensional policy space. Voters are privately and imperfectly informed about a common shock affecting the electorate's preferences. Candidates are assumed to choose policy in response to information gleaned from election results and according to exogenous factors that may lead to polarization in candidates' policy choices. We analyze a subset of symmetric equilibria in which strategies are symmetric to candidates' names and private signals (CSS equilibria). We show that signaling and election motivations pull voters to vote in different directions. We provide conditions that show the relation between the amount of information aggregated in the election and the motivation that influences voting behavior the most. Finally, we show that when candidates are responsive and polarized, all CSS equilibria are inefficient in the limit. Copyright The Econometric Society 2003.
We develop a model of monetary exchange where, as in the random matching literature, agents trade bilaterally and not through centralized markets. Rather than assuming they match exogenously and at random, however, we determine who meets whom as part of the equilibrium. We show how to formalize this process of directed matching in dynamic models with double coincidence problems, and present several examples and applications that illustrate how the approach can be used in monetary theory. Some of our results are similar to those in the random matching literature; others differ significantly. Copyright Econometric Society, 2002.
This paper analyzes the specification and identification of causal multivariate duration models. We focus on the case in which one duration concerns the point in time a treatment is initiated and we are interested in the effect of this treatment on some outcome duration. We define “no anticipation of treatment” and relate it to a common assumption in biostatistics. We show that (i) no anticipation and (ii) randomized treatment assignment can be imposed without restricting the observational data. We impose (i) but not (ii) and prove identification of models that impose some structure. We allow for dependent unobserved heterogeneity and we do not exploit exclusion restrictions on covariates. We provide results for both single-spell and multiple-spell data. The timing of events conveys useful information on the treatment effect.
We study the results of elections of Fellows of the Econometric Society. We aremotivated largely by the question of whether these elections are “fair,” where our defini-tion of fairness is that votes are based solely on the quality of the candidates. If so, thenconditional on quality other characteristics of the candidates (such as geographic locationor subspecialty) should not influence the probability of election. We find that, conditionalon a number of measures of the quality of the candidates, other characteristics do sig-nificantly predict election. For example, an Australian econometrician is less likely to beelected than a North America-based economic theorist. This is true whether or not wecontrol for quality measures.One might object that even fully informed individuals may differ in their assessment ofquality, and that neither the voters nor the authors of this study are fully informed aboutcandidates’ quality. This is true in any study of the impact of ascriptive characteristics onoutcomes. We discuss various interpretations of our findings in the conclusion, but readersmust draw their own conclusions about what the results imply about the roles of qualityand fairness in this electoral process.1 the electoral institutionMost members of the economics profession consider election as a Fellow as an honor.It recognizes prior professional achievements (within what are the more technical areasof economics). There are roughly 500 living Fellows. Names are placed on the ballot inone of two ways: (i) by the Nominating Committee of the Society, or (ii) by petition ofat least three members (who need not be but usually are current Fellows). The ballotcontains the candidate’s name and current affiliation; a list of at most six publications; ashort statement of the candidate’s contribution to economics; and an indication of whetherthe nomination was by Committee or by endorsers and, if the latter (from 1990 through2000), the names of all the endorsers. The ballot deadline is April 30.The electorate, dues-paying current Fellows, receive the ballot in early autumn alongwith the nomination form for each candidate, mark their ballots, and return them tothe Society’s office. Results are announced in December. Names on the ballot are inalphabetical order, with a different starting point in each annual election. Voters checkthe names of individuals whom they wish to be elected. A candidate is elected who isapproved on at least 30 percent of the ballots returned. (Typically about half the eligibleFellows cast votes.) Losing candidates can be nominated in later years by either of thetwo methods, but the process must be undertaken de novo.
In sequential bargaining models without outside options, each player's bargaining power is ultimately determined by which player will make an offer and when. This paper analyzes a sequential bargaining model in which players may hold different beliefs about which player will make an offer and when. Excessive optimism about making offers in the future can cause delays in agreement. The main result states that, despite this, if players will remain sufficiently optimistic for a sufficiently long future, then in equilibrium they will agree immediately. This result is also extended to other canonical models of optimism.
We present a general method for computing the set of supergame equilibria in infinitely repeated games with perfect monitoring and public randomization. We present a three-stage algorithm that constructs a convex set containing the set of equilibrium values, constructs another convex set contained in the set of equilibrium values, and produces strategies that support them. We explore the properties of this algorithm by applying it to familiar games.
In econometrics there are many occasions where knowledge of the structural relationship among dependent variables is required to answer questions of interest. This paper gives identification and estimation results for nonparametric conditional moment restrictions. We characterize identification of structural functions as completeness of certain conditional distributions, and give sufficient identification conditions for exponential families and discrete variables. We also give a consistent, nonparametric estimator of the structural function. The estimator is nonparametric two-stage least squares based on series approximation, which overcomes an ill-posed inverse problem by placing bounds on integrals of higher-order derivatives.