Econometrica最新文献

{"title":"Intertemporal Hedging and Trade in Repeated Games With Recursive Utility","authors":"Asen Kochov,&nbsp;Yangwei Song","doi":"10.3982/ECTA17756","DOIUrl":"10.3982/ECTA17756","url":null,"abstract":"<p>Two key features distinguish the general class of recursive preferences from the standard model of dynamic choice: (i) agents may care about the intertemporal distribution of risk, and (ii) their rates of time preference, rather than being fixed, may vary with the level of consumption. We investigate what these features imply in the context of a repeated strategic interaction. First, we show that opportunities for intertemporal trade may expand the set of feasible payoffs relative to that in a static interaction. Two distinct sources for such trade are identified: <i>endogenous heterogeneity</i> in the players' rates of time preference and a <i>hedging motive</i> pertaining to the intertemporal distribution of risk. The set of equilibrium payoffs may on the other hand shrink drastically as many efficient outcomes become unsustainable no matter the level of patience. This “antifolk” result occurs when the players prefer stage outcomes to be positively correlated rather than independent across time. Intuitively, such preferences make it inefficient to offset short-term losses with future gains, while this is needed to ensure that security levels are met on path. We also establish a folk theorem: if security levels <i>are</i> met on path, such play can be sustained in a subgame perfect equilibrium provided that the players are sufficiently patient.</p>","PeriodicalId":50556,"journal":{"name":"Econometrica","volume":null,"pages":null},"PeriodicalIF":6.1,"publicationDate":"2023-12-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138546173","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Mixed Strategies in the Indefinitely Repeated Prisoner's Dilemma","authors":"Julian Romero,&nbsp;Yaroslav Rosokha","doi":"10.3982/ECTA17482","DOIUrl":"10.3982/ECTA17482","url":null,"abstract":"<div>\u0000 <p>Identifying the strategies that are played is critical to understanding behavior in repeated games. This process is difficult because only choices (not strategies) are observable. Recently, a debate has emerged regarding whether subjects play mixed strategies in the indefinitely repeated prisoner's dilemma. We use an experimental approach to elicit mixed strategies from human subjects, thereby providing direct empirical evidence. We find that a majority of subjects use mixed strategies. However, the data also suggest subjects' strategies are becoming less mixed over time, and move toward three focal pure strategies: Tit For Tat, Grim Trigger, and Always Defect. We use the elicited strategies to provide an empirically-relevant foundation for analyzing commonly used mixture model estimation procedures.</p>\u0000 </div>","PeriodicalId":50556,"journal":{"name":"Econometrica","volume":null,"pages":null},"PeriodicalIF":6.1,"publicationDate":"2023-12-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.3982/ECTA17482","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138546365","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Reply to: Comments on “Presidential Address: Demand-Side Constraints in Development. The Role of Market Size, Trade, and (In)Equality”","authors":"Pinelopi Koujianou Goldberg,&nbsp;Tristan Reed","doi":"10.3982/ECTA22251","DOIUrl":"https://doi.org/10.3982/ECTA22251","url":null,"abstract":"","PeriodicalId":50556,"journal":{"name":"Econometrica","volume":null,"pages":null},"PeriodicalIF":6.1,"publicationDate":"2023-12-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138550469","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"A Comment on: “Presidential Address: Demand-Side Constraints in Development: The Role of Market Size, Trade, and (In)Equality” by Pinelopi Koujianou Goldberg and Tristan Reed","authors":"Paula Bustos","doi":"10.3982/ECTA22318","DOIUrl":"https://doi.org/10.3982/ECTA22318","url":null,"abstract":"<p><span>Let me start this comment</span> by confessing that as I was reading the paper, I found myself staring at the tables documenting poverty reduction and market size changes across countries with a level of curiosity and interest that I had not experienced in a long time. Is it true that small market size is a constraint for economic development? Can it be overcome through international or domestic market size? At a time when globalization is being questioned, these are important and difficult questions that Goldberg and Reed wisely address.</p><p>The paper builds on the classic idea that the transition from agriculture to manufacturing requires the adoption of advanced technologies which are subject to increasing returns to scale and thus are only profitable when operated on a large market. The theoretical literature has proposed two mechanisms through which this market size can be attained: first, through expansion in international markets (<span>Helpman and Krugman</span> (<span>1985</span>)), a road taken by East Asian countries; second, through growth in domestic markets (<span>Murphy, Shleifer, and Vishny</span> (<span>1989</span>)), which the authors note was the road recently taken by other developing countries like India. Is there systematic evidence that these mechanisms were important for poverty reduction in the past four decades?</p><p>A first challenge in addressing this question is that there are several theoretical mechanisms through which market size can affect development. Some of these mechanisms involve firm-level economies of scale, while others require industry- or economy-level increasing returns. A second difficulty is that developing countries around the world had very different strategies to integrate in the world economy, encompassing regional free trade agreements and unilateral trade liberalizations. A final issue is that it is difficult to track the effects of firm-level productivity gains in the household-level outcomes of poor informal workers (<span>Goldberg and Pavcnik</span> (<span>2004</span>), <span>Topalova</span> (<span>2010</span>)).</p><p>The empirical literature has made progress by testing for different theoretical mechanisms using (i) detailed product and firm-level data that permit direct observation of the outcomes of interest at different levels of aggregation; (ii) exogenous changes in market size generated by trade liberalization episodes or other trade shocks. ¹ The consensus view is that expansion into international markets induces firms to upgrade technology, quality, and skills, leading to productivity gains. A natural question at this point is to what extent these mechanisms carefully documented at the firm level had important aggregate effects on the level of poverty in developing countries.</p><p>This paper addresses this question by observing the aggregate cross-country data through the lens of a “new growth theory” model where the industrial sector is characterized by incr","PeriodicalId":50556,"journal":{"name":"Econometrica","volume":null,"pages":null},"PeriodicalIF":6.1,"publicationDate":"2023-12-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.3982/ECTA22318","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138550497","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Mitigating Disaster Risks in the Age of Climate Change","authors":"Harrison Hong,&nbsp;Neng Wang,&nbsp;Jinqiang Yang","doi":"10.3982/ECTA20442","DOIUrl":"https://doi.org/10.3982/ECTA20442","url":null,"abstract":"<p>Emissions abatement alone cannot address the consequences of global warming for weather disasters. We model how society adapts to manage disaster risks to capital stock. Optimal adaptation—a mix of firm-level efforts and public spending—varies as society learns about the adverse consequences of global warming for disaster arrivals. Taxes on capital are needed alongside those on carbon to achieve the first best. We apply our model to country-level control of flooding from tropical cyclones. Learning rationalizes empirical findings, including the responses of Tobin's <i>q</i>, equity risk premium, and risk-free rate to disaster arrivals. Adaptation is more valuable under learning than a counterfactual no-learning environment. Learning alters social-cost-of-carbon projections due to the interaction of uncertainty resolution and endogenous adaptive response.</p>","PeriodicalId":50556,"journal":{"name":"Econometrica","volume":null,"pages":null},"PeriodicalIF":6.1,"publicationDate":"2023-10-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"50119608","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Infinite Debt Rollover in Stochastic Economies","authors":"Narayana R. Kocherlakota","doi":"10.3982/ECTA21090","DOIUrl":"https://doi.org/10.3982/ECTA21090","url":null,"abstract":"<p>This paper shows that there is <i>more</i> scope for a borrower to engage in a <i>sustainable infinite debt rollover</i> (a “Ponzi scheme”) when interest/growth rates are stochastic. In this context, I prove that the relevant “r vs. g” comparison uses the yield <i>r</i>_long to an infinite-maturity zero-coupon bond. I show that <i>r</i>_long is lower than the risk-neutral expectation of the short-term yield when it is variable, and that <i>r</i>_long is close to the minimal realization of the short-term yield when it is highly persistent. The paper applies these results to illustrative heterogeneous agent dynamic stochastic general equilibrium models to obtain similarly weakened sufficient conditions for the existence of public debt bubbles.</p>","PeriodicalId":50556,"journal":{"name":"Econometrica","volume":null,"pages":null},"PeriodicalIF":6.1,"publicationDate":"2023-10-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"50119609","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Platform Design When Sellers Use Pricing Algorithms","authors":"Justin P. Johnson,&nbsp;Andrew Rhodes,&nbsp;Matthijs Wildenbeest","doi":"10.3982/ECTA19978","DOIUrl":"https://doi.org/10.3982/ECTA19978","url":null,"abstract":"<p>We investigate the ability of a platform to design its marketplace to promote competition, improve consumer surplus, and increase its own payoff. We consider demand-steering rules that reward firms that cut prices with additional exposure to consumers. We examine the impact of these rules both in theory and by using simulations with artificial intelligence pricing algorithms (specifically Q-learning algorithms, which are commonly used in computer science). Our theoretical results indicate that these policies (which require little information to implement) can have strongly beneficial effects, even when sellers are infinitely patient and seek to collude. Similarly, our simulations suggest that platform design can benefit consumers and the platform, but that achieving these gains may require policies that condition on past behavior and treat sellers in a nonneutral fashion. These more sophisticated policies disrupt the ability of algorithms to rotate demand and split industry profits, leading to low prices.</p>","PeriodicalId":50556,"journal":{"name":"Econometrica","volume":null,"pages":null},"PeriodicalIF":6.1,"publicationDate":"2023-10-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"50119614","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"The Macro Impact of Short-Termism","authors":"Stephen J. Terry","doi":"10.3982/ECTA15420","DOIUrl":"https://doi.org/10.3982/ECTA15420","url":null,"abstract":"<p>R&amp;D investment reduces current profits, so short-term pressure to hit profit targets may distort R&amp;D. In the data, firms just meeting Wall Street forecasts have lower R&amp;D growth and subsequent innovation, while managers just missing receive lower pay. But short-termist distortions might not quantitatively matter if aggregation or equilibrium dampen their impact. So I build and estimate a quantitative endogenous growth model in which short-termism arises naturally as discipline on conflicted managers and boosts firm value by about 1%. But short-termism reduces R&amp;D, and the social return to R&amp;D is higher than the private return due to standard channels including knowledge spillovers and imperfect competition. So at the macro level, short-termist distortions slow growth by 5 basis points yearly and lower social welfare by about 1%.</p>","PeriodicalId":50556,"journal":{"name":"Econometrica","volume":null,"pages":null},"PeriodicalIF":6.1,"publicationDate":"2023-10-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"50119615","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Monitoring versus Discounting in Repeated Games","authors":"Takuo Sugaya,&nbsp;Alexander Wolitzky","doi":"10.3982/ECTA20206","DOIUrl":"https://doi.org/10.3982/ECTA20206","url":null,"abstract":"<p>We study how discounting and monitoring jointly determine whether cooperation is possible in repeated games with imperfect (public or private) monitoring. Our main result provides a simple bound on the strength of players' incentives as a function of discounting, monitoring precision, and on-path payoff variance. We show that the bound is tight in the low-discounting/low-monitoring double limit, by establishing a public-monitoring folk theorem where the discount factor and the monitoring structure can vary simultaneously.</p>","PeriodicalId":50556,"journal":{"name":"Econometrica","volume":null,"pages":null},"PeriodicalIF":6.1,"publicationDate":"2023-10-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"50119607","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Frontmatter of Econometrica Vol. 91 Iss. 5","authors":"","doi":"10.3982/ECTA915FM","DOIUrl":"https://doi.org/10.3982/ECTA915FM","url":null,"abstract":"","PeriodicalId":50556,"journal":{"name":"Econometrica","volume":null,"pages":null},"PeriodicalIF":6.1,"publicationDate":"2023-10-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"50119623","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}