Theoretical Economics Papers

ALT We study whether randomization is needed to generate a prescribed distribution of posterior means for a one-dimensional state. Drawing on backward Monge martingale transport, we show that every mean-preserving contraction of an atomless prior with finite first moment admits a deterministic implementation. Consequently, restricting attention to deterministic signals leaves the designer's value unchanged whenever objectives and constraints depend only on the posterior-mean distribution. We decompose implementation into independent problems on non-separating intervals and describe a constructive procedure based on barcode transport. We also characterize when lower or upper contour sets can take a nested-interval form, and provide applications to monopolistic pricing with buyer-optimal learning and robust persuasion with ambiguous receiver preferences.

ALT We propose a simple model of training an agent with an endogenous bias. A principal chooses in which states to train the agent and what actions to prescribe in these states. In response, the agent updates their bias and then acts optimally given their new bias in untrained states, while following their training in trained states. The agent chooses their new bias to minimize a weighted average of their loss under their initial and final biases. Training can thus generalize to untrained states via the agent's bias updating. We characterize optimal training, which involves over-correction in trained states and generalization-aware (non-greedy) selection of training states. If only a small share of states can be trained, greedy state selection is approximately optimal, but over-correction remains essential. If any bias function is possible, or if the principal evaluates training robustly over bias functions that admit the possibility of full alignment, the value of training generalization

ALT Strategy-proofness is the traditional standard for predictable behavior, yet participants often fail to play dominant strategies. Most existing simplicity concepts attribute these failures to the cost of contingent reasoning, which they lower by comparing the worst case of the dominant strategy with the best case of an alternative. I argue that there is another approach, one that makes more use of the structure of the strategy set, which I formalize as a neighbor relation. Comparing neighboring strategies can reduce the need for contingent reasoning, and, even with a single contingency, it can simplify the search through the strategy set. I introduce a new simplicity criterion: a mechanism is local improvement solvable under a neighbor relation if repeatedly moving to an improving neighbor always reaches a dominant strategy. Strategy-proofness is the criterion under the coarsest relation, and many classical mechanisms satisfy it under finer ones. In extensive-form mechanisms without du

ALT We study a multiplayer communication coordination game in which privately informed agents communicate through a social network and choose their optimal actions while balancing them against their own bliss points and those of their neighbours. We show that equilibrium actions are convex combinations of the expected bliss points of all players, with weights determined by a degree-discounted Bonacich centrality measure. We also characterize when players report truthfully, over-report, or under-report their private information, and show that the incentive to misreport depends critically on the receiver's position in the network. A striking implication is that even under identical preferences, fully revealing communication may not be realized, and information transmission may remain coarse in a star network while becoming almost fully informative in a complete network. Finally, when biases are endogenously chosen, strategic responses to neighbours' biases are governed by their centralities,

ALT In a duopoly with captive and contested consumers, I characterize every pair of consumer and producer surplus that can arise under some market composition and some public segmentation, and construct a market that produces each pair. The set is lens-shaped. At any level of industry profit, consumers do worst when captive and contested consumers are perfectly separated and best in an unsegmented market in which the two firms have equally many captives. A market with unequal captive bases and some contested consumers cannot reach this upper frontier under any segmentation. Between Bertrand competition and monopoly, the frontier itself lies strictly below what consumers would get if everyone paid a single deterministic price yielding the same profit. Firms must randomize, and with downward-sloping demand the resulting price dispersion lowers consumer surplus.

ALT In this note, we consider social welfare functions on infinite utility streams and answer an open question posed in Asheim et al. (2021, Remark 1). There exists a real-valued representation of social welfare preferences that satisfies monotonicity, stationarity, restricted dominance, and strong anonymity, hence also finite anonymity. Our social welfare function satisfies a stronger finite-rank sensitivity condition, Liminf-Restricted Dominance, in the sense of Asheim et al. (2022) and Asheim et al. (2025). Our construction shows that limited discontinuity is not redundant in Asheim et al. (2021, Proposition 2): once that diagonal continuity condition is dropped, even arbitrary-permutation invariance can coexist with stationarity and non-trivial sensitivity.

ALT Organizations choose team structures to intensify competition, yet their members may prefer to reorganize. We ask whether an architecture that maximizes aggregate effort can remain stable when contestants may form a replacement team from incumbent rosters. When a coalition draws from identical teams and reproduces their type, its members and the designer rank the reorganization in opposite directions: the coalition gains precisely when total effort falls. A strict effort optimum can therefore supply its own blocking certificate, while a stable optimum can survive only on a plateau where every reachable reorganization of this kind leaves effort unchanged. In a linear benchmark, we characterize stability against every feasible one-team reorganization and global effort maximization over every feasible partition. Except under pair capacity, the two regions do not overlap; with pair capacity, they meet only at one boundary. The ordering persists in a matched quadratic benchmark with strictl

ALT We revisit the influential distribution-independent optimal disclosure result of Bergemann, Heumann, Morris, Sorokin, and Winter (2022), whose optimal disclosure policy reveals low bidder values and pools high values at a critical quantile depending only on the number of bidders, and show that this policy is no longer generally revenue-maximizing even for the familiar uniform and binary valuation distributions, once bidders can endogenously acquire private information through costly verification. The underlying reason reflects a fundamental principle of incentive-based mechanism design, rooted in Hurwicz's analysis of structural invariance and echoed in the Lucas critique: economic agents respond strategically to changes in the information and incentives they face. This is the essence of trust, but verify. A change in disclosure policy may leave the underlying economic primitives unchanged while altering bidders' verification decisions and the resulting equilibrium information structur

ALT I axiomatize Berk-Nash equilibrium in decision problems with possibly misspecified models. I specify how a rule–which selects a set of action-belief pairs in a problem–ought to compare a correct forecast with an incorrect one, react to the removal of models, and accommodate additional observations that do not distinguish among the models. Together with axioms concerning attitudes toward randomization and payoffs, and a pair of regularity conditions, these axioms characterize Berk-Nash equilibrium.

ALT I show that the two-level nested logit demand model arises exactly from a sequential choice process in which group, subgroup, and product taste shocks are revealed stage by stage. The result extends to any number of levels and holds for any nesting parameters below one, without the bounds and ordering that random utility maximization requires. Estimates that applied work discards for violating these bounds are therefore consistent with sequential choice. The standard linear inversion and welfare formula remain valid. Adding a product to a nest can raise another product's share in that nest, even with single-unit demand.