Theoretical Economics Papers

Automated

@January

New Theoretical Economics papers from arxiv.org: contract theory, decision theory, game theory. Thank you to arXiv for use of its open access interoperability.

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Theoretical Economics Papers @January 2d

Designing Public Information for Strategic Advice

Vasudha Jain, Jaideep Roy
arxiv.org/abs/2611.07744 [𝚎𝚌𝚘𝚗.𝚃𝙷]

A principal chooses an action using advice from an expert who privately knows local conditions. Before receiving advice, she can commission a public study of an independent state, such as future demand, that changes the expected conflict between their preferred actions. We show that the communication protocol determines the optimal study. Under optimal mediation, the value of advice is convex in conflict, making full revelation optimal. Under commitment to an action rule, the principal may prefer no information, while informative optimal studies include a report certifying high conflict. Under unmediated cheap talk, changes in the number of equilibrium messages create upward kinks in the value of advice. Optimal studies avoid interior communication thresholds and can induce two distant communication regimes while skipping every regime in between, strictly outperforming both full revelation and no information. When the principal retains the raw data, selective public disclosure can impr

Theoretical Economics Papers @January 2d

Robust prizes in all-pay contests with loss aversion

Dmitry Ryvkin, Qin Wu
arxiv.org/abs/2611.07419 [𝚎𝚌𝚘𝚗.𝚃𝙷]

We study robust prize design in all-pay contests with loss-averse agents when the principal does not know the agents' convex cost of effort, subject to an aggregate productivity constraint. The robustly optimal prize structure awards equal prizes to all contestants except the one ranked last. The optimal bottom prize is zero under moderate loss aversion, but becomes positive and increases with loss aversion when loss aversion is sufficiently strong. Under strong loss aversion, the robust solution involves partial participation in the contest.

Theoretical Economics Papers @January 2d

Brave New Data: Pricing Expertise and Discovery

Dihan Zou
arxiv.org/abs/2611.07278 [𝚎𝚌𝚘𝚗.𝚃𝙷]

We study the procurement of verifiable evidence from an expert who privately assesses a binary state and chooses the direction and intensity of evidence acquisition. The buyer balances the ease of inducing discovery against its value for decisions beyond the expert's initial assessment. An optimal contract pays only for disclosed evidence, independently of the initial report. When acquisition is cheap, equal rewards for evidence of either state induce intensive search whose failure is informative. As costs rise, rewarding evidence of only one state becomes optimal despite the symmetry of the environment, reducing expected payments at the expense of decision accuracy.

Theoretical Economics Papers @January 2d

Complex Menus in Discriminatory Pricing

Patrick Lahr, Axel Niemeyer, Marek Pycia
arxiv.org/abs/2611.07128 [𝚎𝚌𝚘𝚗.𝚃𝙷]

Advances in technology decrease the costs of offering and choosing from large menus of varieties. As these complexity costs fall, how large are the menus offered by monopolists likely to become? For the multi-product or multi-attribute case, ubiquitous in practice, we show that optimal menus are generically infinite in the absence of complexity costs. Complexity costs can decrease the menu size, but it grows without bound as these costs decrease. These results have no analogue in the single-dimensional model and do not rely on non-linearities in production costs or preferences; the extensive product differentiation is caused by screening considerations alone.

Theoretical Economics Papers @January 3d

Universal Nonexistence of Monotone Equilibrium in Multiunit Auctions with Risk Aversion

Wei He, Yeneng Sun, Hanping Xu
arxiv.org/abs/2611.06644 [𝚎𝚌𝚘𝚗.𝚃𝙷]