{"title":"Spatial search","authors":"Xiaoming Cai , Pieter Gautier , Ronald Wolthoff","doi":"10.1016/j.jet.2025.105976","DOIUrl":"10.1016/j.jet.2025.105976","url":null,"abstract":"<div><div>This paper considers a random search model where some locations provide sellers with better chances of meeting many buyers than other locations (for example popular shopping streets or the first page of a search engine). When sellers are heterogeneous in terms of the quality of their product and/or the probability that a given buyer likes their product, it is desirable that sellers of high-quality niche products sort into the best locations (positive assortative matching, PAM). We show that this does not always happen in a decentralized market. Finally, we endogenize the location distribution and show that PAM between sellers and locations always arises in equilibrium. However, the equilibrium distribution of locations is too favorable for the sellers of high-quality, niche products.</div></div>","PeriodicalId":48393,"journal":{"name":"Journal of Economic Theory","volume":"224 ","pages":"Article 105976"},"PeriodicalIF":1.4,"publicationDate":"2025-02-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143348240","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Klaus Ritzberger , Jörgen W. Weibull , Peter Wikman
{"title":"Solid outcomes in finite games","authors":"Klaus Ritzberger , Jörgen W. Weibull , Peter Wikman","doi":"10.1016/j.jet.2025.105977","DOIUrl":"10.1016/j.jet.2025.105977","url":null,"abstract":"<div><div>A new solution concept for finite games is presented and analyzed. It is defined in terms of outcomes—probability distributions over the plays of the game. Solid outcomes are robust to the representation of the game, whether in normal or extensive form, and are consistent with backward induction. They are also unaffected by the removal or addition of dominated strategies. Solid outcome sets exist in all finite extensive-form games with perfect recall. They have support in minimal “game blocks,” a class of product sets of pure-strategy profiles that are robust set-valued candidates for conventions and social norms in recurrent population play of the game. Algorithms for identifying all solid outcomes are presented, and simulations illustrate the solution concept's significant cutting power and computational efficiency.</div></div>","PeriodicalId":48393,"journal":{"name":"Journal of Economic Theory","volume":"224 ","pages":"Article 105977"},"PeriodicalIF":1.4,"publicationDate":"2025-02-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143341053","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Revealed reciprocity","authors":"Paul H.Y. Cheung","doi":"10.1016/j.jet.2025.105974","DOIUrl":"10.1016/j.jet.2025.105974","url":null,"abstract":"<div><div>We propose and characterize the General Reciprocity Model in a framework of context-dependent choice. In the model, the second mover can establish their own rules regarding when or why to reciprocate. The model disentangles the baseline social preference from reciprocity: reciprocity occurs when people deviate from their baseline preference due to the context in which the first mover's choice is made. Our model provides a condition to reveal reciprocity, which aligns with the standard model-free criterion commonly used to identify reciprocity in experimental settings. Thus, it enables us to examine the behavioral foundation of this criterion through the lens of our model. Moreover, in some situations where the standard criterion cannot be applied due to imperfect data, our model offers an additional condition to reveal reciprocity by imposing assumptions about the second mover's psychological processes. Finally, we apply the model to several past experiments, demonstrating how it identifies reciprocity.</div></div>","PeriodicalId":48393,"journal":{"name":"Journal of Economic Theory","volume":"224 ","pages":"Article 105974"},"PeriodicalIF":1.4,"publicationDate":"2025-01-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143341300","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"General theory of equilibrium in models with complementarities","authors":"Tarun Sabarwal","doi":"10.1016/j.jet.2025.105975","DOIUrl":"10.1016/j.jet.2025.105975","url":null,"abstract":"<div><div>We provide a new and general theory of order nearest comparative statics for subsets of equilibria in models with complementarities used widely in economics and other disciplines. Order nearest equilibria are motivated naturally in the theory of monotone comparative statics of equilibrium, but their existence does not follow from results based on weak set order or strong set order, in general. We provide such results and develop the general theory using weak monotonicity of selections from best response correspondences and two new set comparison relations: Star complete relation and star lattice relation. We do not require any continuity properties. Our results hold for standard models with complementarities prevalent in the literature and allow for new cases.</div></div>","PeriodicalId":48393,"journal":{"name":"Journal of Economic Theory","volume":"224 ","pages":"Article 105975"},"PeriodicalIF":1.4,"publicationDate":"2025-01-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143341055","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Widening access in university admissions","authors":"Battal Doğan , Aytek Erdil","doi":"10.1016/j.jet.2025.105973","DOIUrl":"10.1016/j.jet.2025.105973","url":null,"abstract":"<div><div>Widening access to higher education remains a significant policy goal. Universities often frame and pursue these goals via access targets (target number of students from disadvantaged backgrounds) as part of their intake targets (target total number of students). However, universities' desire to exercise <em>flexibility</em> in their access and intake targets constitutes a novel challenge in designing a centralised admissions system. We introduce the <em>Flexible Access and Intake Targets</em> mechanism that is strategy-proof for the students and enables the universities to pursue their flexible access and intake targets with the most qualified applicants possible. The mechanism is based on an iterative market clearing procedure whose key element is its systematic adjustment of targets in each step in response to fluctuations in applicant numbers. We formulate a <em>fairness</em> concept for matchings that strikes a balance between widening access and merit-based allocation. Our mechanism finds the unique student-optimal fair matching.</div></div>","PeriodicalId":48393,"journal":{"name":"Journal of Economic Theory","volume":"224 ","pages":"Article 105973"},"PeriodicalIF":1.4,"publicationDate":"2025-01-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143341054","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"The spatial evolution of economic activities and the emergence of cities","authors":"Davide Fiaschi, Cristiano Ricci","doi":"10.1016/j.jet.2025.105971","DOIUrl":"10.1016/j.jet.2025.105971","url":null,"abstract":"<div><div>This paper examines the spatial agglomeration of workers and income in a continuous space-time framework. Local markets feature spatial spillovers and both exogenous and endogenous amenities. Workers relocate to maximise their instantaneous utility, constrained by mobility costs. In the limit of infinite workers, short-run equilibria are described by a partial differential equation (PDE). The PDE reveals spatial dynamics influenced by initial conditions, path dependence, and metastability (persistence), where prolonged stability is disrupted by sharp transitions to new distributions. We characterise conditions for spatial agglomeration in stationary equilibria and demonstrate that social utility consistently increases over time, suggesting efficient spatial allocations. Numerical results replicate key patterns, such as city formation, dependence on historical spatial patterns, and nonlinear out-of-equilibrium dynamics.</div></div>","PeriodicalId":48393,"journal":{"name":"Journal of Economic Theory","volume":"224 ","pages":"Article 105971"},"PeriodicalIF":1.4,"publicationDate":"2025-01-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143341056","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Selling signals","authors":"Zhuoran Lu","doi":"10.1016/j.jet.2025.105966","DOIUrl":"10.1016/j.jet.2025.105966","url":null,"abstract":"<div><div>This paper studies a signaling model in which a strategic player can manipulate the cost of signaling. A seller chooses a price scheme for a good, and a buyer with a hidden type chooses how much to purchase as a signal to receivers. When receivers observe the price scheme, the seller charges monopoly prices, and the buyer purchases less than the first best. In contrast, when receivers do not observe the price scheme, the demand for signals is more elastic. In equilibrium, the seller charges lower prices, and the buyer purchases more than when receivers observe the price scheme; the highest types purchase more than the first best. The model suggests that price transparency benefits the seller but harms the buyer. The model can be applied to schools choosing tuition, retailers selling luxury goods and media companies selling advertisements.</div></div>","PeriodicalId":48393,"journal":{"name":"Journal of Economic Theory","volume":"224 ","pages":"Article 105966"},"PeriodicalIF":1.4,"publicationDate":"2025-01-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143341058","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Optimal discriminatory disclosure","authors":"Yingni Guo , Li Hao , Xianwen Shi","doi":"10.1016/j.jet.2025.105972","DOIUrl":"10.1016/j.jet.2025.105972","url":null,"abstract":"<div><div>A seller of an indivisible good designs a selling mechanism for a buyer whose private information (his type) is the distribution of his value for the good. A selling mechanism includes both a menu of sequential pricing, and a menu of information disclosure about the realized value that the buyer is allowed to learn privately. In a model of two types with an increasing likelihood ratio, we show that under some regularity conditions the disclosure policy in an optimal mechanism has a nested interval structure: the high type is allowed to learn whether his value is greater than the seller's cost, while the low type is allowed to learn whether his value is in an interval above the cost. The interval of the low type may exclude values at the top of the distribution to reduce the information rent of the high type. Information discrimination is in general necessary in an optimal mechanism.</div></div>","PeriodicalId":48393,"journal":{"name":"Journal of Economic Theory","volume":"224 ","pages":"Article 105972"},"PeriodicalIF":1.4,"publicationDate":"2025-01-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143341057","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Modeling machine learning: A cognitive economic approach","authors":"Andrew Caplin , Daniel Martin , Philip Marx","doi":"10.1016/j.jet.2025.105970","DOIUrl":"10.1016/j.jet.2025.105970","url":null,"abstract":"<div><div>We investigate whether the predictions of modern machine learning algorithms are consistent with economic models of human cognition. To test these models we run an experiment in which we vary the loss function used in training a leading deep learning convolutional neural network to predict pneumonia from chest X-rays. The first cognitive economic model we test, capacity-constrained learning, corresponds with an intuitive notion of machine learning: that an algorithm chooses among a feasible set of learning strategies in order to minimize the loss function used in training. Our experiment shows systematic deviations from the testable implications of this model. Instead, we find that changes in the loss function impact learning just as they might if the algorithm was a human being who found learning costly.</div></div>","PeriodicalId":48393,"journal":{"name":"Journal of Economic Theory","volume":"224 ","pages":"Article 105970"},"PeriodicalIF":1.4,"publicationDate":"2025-01-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143340521","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Network-based peer monitoring design","authors":"Zhuoran Lu , Yangbo Song","doi":"10.1016/j.jet.2025.105969","DOIUrl":"10.1016/j.jet.2025.105969","url":null,"abstract":"<div><div>We study a team incentive design problem where multiple agents are located on a network and work on a joint project. The principal seeks the least costly mechanism to incentivize full effort, by choosing the work assignment sequence and the rewards to the agents upon success. Whereas the agents' actions are hidden to the principal, they may be observed among the agents given the internal information that is determined by the network and the sequence. Under effort complementarity, the transparency of the agents' actions can reduce their incentive costs, but exhibits diminishing marginal effectiveness. This gives rise to the desire to balance internal transparency when it is infeasible to uniformly enhance transparency. For several typical network topologies, we derive explicit properties of an optimal assignment sequence, and propose two new measures, total cost and stability, for the principal to rank these networks.</div></div>","PeriodicalId":48393,"journal":{"name":"Journal of Economic Theory","volume":"224 ","pages":"Article 105969"},"PeriodicalIF":1.4,"publicationDate":"2025-01-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143340522","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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