Ambrus A, Greiner B, Greiner B.
Group vs individual decision-making: Is there a shift?. 2009.
AbstractWe revisit the phenomenon that group decisions differ systematically from decisions of individuals. Our experiment solicits individual and group decisions from the same subjects in two settings, gift-exchange games and lottery choices. With no deliberation and voting, the group decision is determined by the median individual decision, without a shift. With deliberation but no imposed decision rule, the individual one position towards the selfish direction also becomes influential. In lottery choices we find no group shift relative to the median. We demonstrate that the standard practice of comparing means of group and individual decisions would incorrectly identify a level shift.
groups09revised.pdf Ambrus A, Egorov G.
Delegation and Nonmonetary Incentives. 2009.
AbstractThis paper investigates the problem of delegating decision-making when there are limitations on using monetary transfers to provide incentives, but the principal can prescribe costly activities such as bureaucratic paperwork on the agent for choosing certain actions. For simplicity, we assume that these activities are purely wasteful, and refer to them as money burning. Through the agent’s ex-ante participation constraint, the use of money burning is costly for the principal. Despite this, the optimal delegation contract can involve money burning, both when contingent monetary transfers are not possible, and when payments from the principal to the agent are bounded from below. We show that under certain regularity conditions the optimal contract in case of a positively biased agent imposes zero money burning in low states, money burning is increasing in the state, and the implemented action is always between the ideal points of the participants. If both transfers and monetary transfers are allowed, whether the optimal contract involves money burning depends on how important the action choice for the principal relative to the agent in monetary terms, and on the outside option of the agent relative to the minimal transfer. If the outside option of the agent is high enough, the optimal contract is efficient, and there is no money burning. If the outside option is low enough, there is money burning in almost all states. For an intermediate region of parameters, monetary transfers (positive incentives) are used in low states, while money burning (negative incentives) are used in high states. The results point out a distortionary effect of minimum wages not discussed in the literature: increasing the minimum wage makes it more likely that employers switch to socially inefficient nonmonetary incentives from financial ones.
delegation-75revised.pdf Ambrus A, Argenziano R.
Asymmetric networks in two-sided markets. American Economic Journal: Microeconomics. 2009;1 (1) :17-52.
AbstractThis paper investigates firms’ pricing decisions and consumers’ network choices in two-sided markets with network externalities. Consumers are heterogeneous in how much they value the externality. We show that imposing some restrictions on the extent of coordination failure among consumers leads to clear qualitative conclusions about equilibrium market configurations. Multiple asymmetric networks can coexist in equilibrium, both in the case of a monopolist network provider and in the case of competing providers. These equilibria have the property that can be observed in many different two-sided markets: one network is cheaper and larger on one side, while the other network is cheaper and larger on the other side. Product differentiation is endogenized by consumers’ network choices.
amb_ar_08_final.pdf Ambrus A.
Theories of coalitional rationality. Journal of Economic Theory. 2009;144 (2) :676-695.
AbstractThis paper generalizes the concept of best response to coalitions of players and offers epistemic definitions of coalitional rationalizability in normal form games. The (best) response of a coalition is defined to be an operator from sets of conjectures to sets of strategies. A strategy is epistemic coalitionally rationalizable if it is consistent with rationality and common certainty that every coalition is rational. A characterization of this solution set is provided for operators satisfying four basic properties. Special attention is devoted to an operator that leads to a solution concept that is generically equivalent to the iteratively defined concept of coalitional rationalizability.
revision02posted.pdf