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  <item rdf:about="http://hdl.handle.net/10419/59690">
    <title>Affiliation and dependence in economic models</title>
    <link>http://hdl.handle.net/10419/59690</link>
    <description>Title: Affiliation and dependence in economic models
&lt;br/&gt;
&lt;br/&gt;Authors: de Castro, Luciano I.
&lt;br/&gt;
&lt;br/&gt;Abstract: Affiliation has been a prominent assumption in the study of economic models with statistical dependence. Despite its large number of applications, especially in auction theory, affiliation has limitations that are important to be aware of. This paper shows that affiliation is a restrictive condition and the intuition usually given for its adoption may be misleading. Also, other usual justifications for affiliation are not compelling. Moreover, some implications of affiliation do not generalize to other definitions of positive dependence. These results show the need to consider alternatives to affiliation. The results of this paper suggest new directions for the study of dependence in economics. The main result classifies economic models of information and proves the existence of a minimally informative random variable that makes types conditionally independent. If this variable is known, then all results that are valid under independence are also valid for these models with statistically dependent types. Complementing this result, we describe a method to study general forms of dependence using grid distributions, which are distributions whose densities are constant in squares. This method allows a comprehensive investigation on the revenue ranking of auctions under general dependence.</description>
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  <item rdf:about="http://hdl.handle.net/10419/59691">
    <title>Ambiguity aversion solves the conflict between efficiency and incentive compatibility</title>
    <link>http://hdl.handle.net/10419/59691</link>
    <description>Title: Ambiguity aversion solves the conflict between efficiency and incentive compatibility
&lt;br/&gt;
&lt;br/&gt;Authors: De Castro, Luciano I.; Yannelis, Nicholas C.
&lt;br/&gt;
&lt;br/&gt;Abstract: The conflict between Pareto optimality and incentive compatibility, that is, the fact that some Pareto optimal (efficient) allocations are not incentive compatible is a fundamental fact in information economics, mechanism design and general equilibrium with asymmetric information. This important result was obtained assuming that the individuals are expected utility maximizers. Although this assumption is central to Harsanyi's approach to games with incomplete information, it is not the only one reasonable. In fact, a huge literature criticizes EU's shortcomings and propose alternative preferences. Thus, a natural question arises: does the mentioned conflict extend to other preferences? We show that when individuals have (a special form of) maximin expected utility (MEU) preferences, then any efficient allocation is incentive compatible. Conversely, only MEU preferences have this property. We also provide applications of our results to mechanism design and show that Myerson-Satterthwaite's negative result ceases to hold in our MEU framework.</description>
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    <title>Calibration: Respice, adspice, prospice</title>
    <link>http://hdl.handle.net/10419/59689</link>
    <description>Title: Calibration: Respice, adspice, prospice
&lt;br/&gt;
&lt;br/&gt;Authors: Foster, Dean P.; Vohra, Rakesh V.</description>
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    <title>Quotient spaces of boundedly rational types</title>
    <link>http://hdl.handle.net/10419/59688</link>
    <description>Title: Quotient spaces of boundedly rational types
&lt;br/&gt;
&lt;br/&gt;Authors: Cianciaruso, Davide; Germano, Fabrizio
&lt;br/&gt;
&lt;br/&gt;Abstract: By identifying types whose low-order beliefs - up to level li - about the state of nature coincide, we obtain quotient type spaces that are typically smaller than the original ones, preserve basic topological properties, and allow standard equilibrium analysis even under bounded reasoning. Our Bayesian Nash (li, l-i)-equilibria capture players' inability to distinguish types belonging to the same equivalence class. The case with uncertainty about the vector of levels (li, l-i) is also analyzed. Two examples illustrate the constructions.</description>
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