Portail HAL Paris School of Economics (PSE)
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Ballot Richness and Information Aggregation
No full textWhen voters have different information quality, voting rules with richer ballot spaces can help voters better aggregate information by endogenously allocating more decision power to better-informed members. Using laboratory experiments, we compare two polar examples of voting rules in terms of ballot richness: majority voting (MV) and continuous voting (CV). Our results show that CV outperforms MV on average, although the difference is smaller than predicted, and that CV has more support than MV in treatments where it is expected to perform better. We also find that voters with intermediate information overestimate the importance of their votes under CV
Inequality decomposition analysis, the Lorenz curve and the Gini coefficient
No full textInternational audienceWe compare two alternative procedures for decomposing the Lorenz curve and the Gini coefficient into within-groups and between-groups contributions: the standard additive decomposition (Bhattacharya and Mahalanobis in J Am Stat Assoc 62(317):143–161, 1967) and another inspired by the path-independent decomposition (Foster and Shneyerov in J Econ Theory 91(2):199–222, 2000). We show that the former approach offers a clean measure of the between-group inequality, which is insensitive to changes in the distribution that do not alter the relative difference between the groups’ averages. On the other hand, the latter approach offers an unbiased measure of the within-group inequality, which is independent of the between-group component. Hence, we propose and interpret a new decomposition of the Gini index that is based on the path-independent approach. Finally, we explore the implications of Lorenz between-group dominance combined with Lorenz within-group dominance. We show the difficulty of defining sufficient conditions for two Lorenz curves not to intersect and suggest an alternative partial order based on concentration curves which does not account for the overlap between groups
Profit Versus Win Maximization in a League: A Paradox
No full textInternational audienceThe paper studies a very simple game‐theoretical model of sports competition such as the European football leagues. In this oligopoly‐type context, the Cournot‐Nash equilibrium reveals a paradoxical differentiation between clubs: those that include not only profit but also sporting performance in their objectives end up generating more profit than others who purely maximize profit
Endogenous clustering and analogy-based expectation equilibrium
No full textInternational audienceNormal-form two-player games are categorized by players into K analogy classes so as to minimize the prediction error about the behavior of the opponent. This results in Clustered Analogy-Based Expectation Equilibria in which strategies are analogy-based expectation equilibria given the analogy partitions and analogy partitions minimize the prediction errors given the strategies. We distinguish between environments with self-repelling analogy partitions in which some mixing over partitions is required and environments with self-attractive partitions in which several analogy partitions can arise, thereby suggesting new channels of belief heterogeneity and equilibrium multiplicity. Various economic applications are discussed
Equivalence Scales Revisited: Evidence from Subjective Data
No full textEquivalence scales (ES) are widely used to compare income levels across different households.Yet the commonly used OECD and square-root scales rely on assumptions about household economies of scale that lack robust empirical support. Using responses to the Minimum Income Question (MIQ) from the European Union Statistics on Income and Living Conditions (EU-SILC) survey, we construct subjective ES based on panel data, rather than relying on pooled OLS as in most previous studies, allowing us to track how income needs evolve within households over time instead of comparing different households. The economies of scale in this subjective scale are notably different from those in traditional ES, and these differences have a substantial effect on the levels and distribution of equivalised income. Based on our empirical findings, we propose a simple alternative to conventional ES and illustrate its implications for poverty and inequality, both within and across countries. Our results show that the choice of equivalence scale significantly influences not only the estimated levels of these variables but also country rankings in comparative analyses.</p
Dynamic assignment without money: Optimality of spot mechanisms
No full textInternational audienceWe study a large market model of dynamic matching with no monetary transfers and a continuum of agents who have to be assigned items at each date. When the social planner can only elicit ordinal agents' preferences, we prove that under a mild regularity assumption, incentive compatible and ordinally efficient allocation rules coincide with spot mechanisms. The latter specify “virtual prices” for items at each date and, for each agent, randomly select a budget of virtual money at the beginning of time. When the social planner can elicit cardinal preferences, we prove that under a similar regularity assumption, incentive compatible and Pareto efficient mechanisms coincide with spot menu of random budgets mechanisms. These are similar to spot mechanisms except that, at the beginning of time, each agent chooses within a menu, a distribution over budget of virtual money
The Decline of a Great Financial Intermediary: Notaries in France, 1851–1934
No full textInternational audienceVia peer-to-peer lending, notaries mobilized immense amounts of capital in France up into the 1930s. They did so despite a thriving stock market, widespread banking with branches, and the existence of an effective lender of last resort. Using detailed evidence on their careers and their businesses, we analyze their training, their successes and failures, how they were regulated, and how they dealt with political and economic crises. What we uncover teaches broader lessons about the misconceptions surrounding modernization, financial development, and the reputational models that economists rely upon to explain informal dealings
Beyond Present Bias: Exploring Temporal Smoothing Biases
No full textThe importance of the literature on present bias may have overlooked some other forms of temporal inconsistencies anchored in the smoothing properties of consumption. The article first clarifies how a list of axioms enable the obtention of time-dependent recursive utility functions. The properties of the latters are analysed in light of the well-known present bias but also through a temporal smoothing bias that emerges when two successives selves do no share the same aversion to fluctuations. It is shown that this new concept relates to a time-varying Morishima intertemporal elasticity of substitution. The second part of the article brings an axiomatic construction providing a parametric representation that is aimed at a careful account of future and present bias, how they relate to each other or to substitution mechanisms and is finally concerned with the testable implications of the current framework. The theory is finally applied by considering intertemporal choices with Markovian strategies and temporally consistent solutions. For some parameters configurations, there exists a multiplicity of Nash equilibria, and then an indeterminacy in the agent behaviour
The heterogeneous impact of the EU-Canada agreement with causal machine learning
No full textThis paper introduces a causal machine learning approach to investigate the impact of the EU-Canada Comprehensive Economic Trade Agreement (CETA). We propose a matrix completion algorithm on French customs data to obtain multidimensional counterfactuals at the firm, product and destination levels. We find a small but significant positive impact on average at the product-level intensive margin. On the other hand, the extensive margin shows product churning due to the treaty beyond regular entry-exit dynamics: one product in eight that was not previously exported substitutes almost as many that are no longer exported. When we delve into the heterogeneity, we find that the effects of the treaty are higher for products at a comparative advantage. Focusing on multiproduct firms, we find that they adjust their portfolio in Canada by reallocating towards their first and most exported product due to increasing local market competition after trade liberalization. Finally, multidimensional counterfactuals allow us to evaluate the general equilibrium effect of the CETA. Specifically, we observe trade diversion, as exports to other destinations are re-directed to Canada