10:30 – 11:20 Jianpei Li (University of International Business and Economics):
3:20 – 4:10 Xiaoyong Chao and Jiong Gong (University of International Business and Economics)
Papers and Abstracts
1. Hanming Fang, “How does life settlement affect the primary life insurance market?”
Abstract: We study the effect of the life settlement market on the structure of long term contracts offered by the primary market for life insurance, as well as the effect on consumer welfare, using a dynamic model of life insurance with one sided commitment and bequest-driven lapsation. We show that the presence of life settlement affects the extent as well as the form of dynamic reclassification risk insurance in the equilibrium of the primary insurance market, and that the settlement market generally leads to lower consumer welfare. We also examine the primary insurers' response to the settlement market when they can offer enriched contracts by specifying optimally chosen cash surrender values (CSVs).
2. Uwe Dulleck, with Berthold U. Wigger, “Politicians as Experts, Electoral Control, and Fiscal Restraints”
Abstract: We propose an argument for fiscal restraints that is based on the premise that the services of politicians are credence goods. Politicians are experts who specialize in observing the true state of the economy. Budget maximizing politicians are better informed than the electorate about the level of public spending necessary to manage public affairs. Voters, who are able to observe the size of the budget but not the necessary level of spending, affect the government’s spending behavior via electoral control. A fiscal restraint limits the maximum spending a government can choose. We identify conditions under which such a fiscal restraint improves voter welfare and discuss the role of the political opposition as a second expert in situations in which the state of the economy requires a level of spending which exceeds the fiscal restraint.
3. Jianpei Li, with Paul Schweinzer, “A simple scapegoat mechanism implementing efficient team production”
Abstract: We study a simple but robust scapegoat mechanism to implement efficiency in team production. We show that a team sharing contract combined with a tournament off the equilibrium path implements efficiency quite generally. We derive sufficient conditions for efficiency to obtain when production is deterministic and stochastic.
4. Changying Li, TBA
5. Norio Takeoka, “A theory of subjective learning”
Abstract: We study an individual who faces a dynamic decision problem in which the process of information arrival is unobserved by the analyst, and instead should be elicited from choice behavior. We derive two utility representations of preferences over menus of acts that capture the individual's uncertainty about his future beliefs. The most general representation identifies a unique probability distribution over the set of posteriors that the decision maker might face at the time of choosing from the menu. We use this representation to characterize a notion of more preference for flexibility via a subjective analogue of Blackwell's (1951,1953) comparisons of experiments. A more specialized representation uniquely identifies information as a partition of the state space. This result allows us to compare individuals who expect to learn differently, even if they do not agree on their prior beliefs. We conclude by introducing the domain of dated-menus, which allows us to extend our model to study an individual who expects to learn gradually over time by means of a subjective filtration.
6. Jimmy Chan, with Wing Suen, “Does Majority Rule Produce Hasty Decisions?”
Abstract: We study a model of collective decision-making and learning where agents differ in their preferences toward which alternative to adopt and how quickly to act. Impatient agents are attractive allies if some agents want to stop learning to adopt their favored alternative. Competition for impatient agents’ votes can produce hasty decisions through strategic complementarity. Majority rule is not robust in that one very impatient agent can cause the whole group to rush to a decision. Super-majority rule may avoid this problem, but may allow a minority with extreme preferences to hold out and impose their favored alternative on the majority.
7. Xiaoyong Chao, with Jiong Gong, “The Tradeoff of the Commons in Stochastic Usage”
Abstract: We develop a model of scarce, renewable resources to study the commons problem. Our model formulation differs from the exant literature in that usage of the commons is assumed to be stochastic in nature. One example is the microwave spectrum for mobile and wireless communications. We investigate three resource allocation mechanisms: free usage, exclusive franchise and a regulated monopoly model. We show that the welfare tradeoff among them depends on the relationships among commons characteristics and usage patterns. In particular, property rights are not always the best solution.
8. Ye Bing, “Information Provision and Employment Relationship”
Abstract: We examine the choice of employment relationship for a two-period production process wherein initially both parties do not know the ability of the agent for the task and where the principal has the option to costlessly provide precise information on the agent's ability to the agent. We find that the principal prefers to have a flexible employment relationship with information provision if the project is large; a flexible relationship but no information provision if the project is of medium size; while an exclusive relationship with information provision if the project is small. The comparative statics of principal's employment choice with respect to morale problem and sorting problem are also explored.