EconStor Community: University of California Davis, Department of Economics
https://hdl.handle.net/10419/289
University of California Davis, Department of Economics2024-03-29T04:54:08ZEstimating Present Bias and Sophistication over Effort and Money
https://hdl.handle.net/10419/283203
Title: Estimating Present Bias and Sophistication over Effort and Money
Authors: Cerrone, Claudia; Chakraborty, Anujit; Kim, Hyok Jung; Lades, Leonhard K.
Abstract: We design and implement the first real-effort experiment that can jointly estimate present bias (Ø) and sophistication (bØ), with separate preference parameters for money (Øm, bØm) and effort (Øe, bØe). In our study, participants chose to (and predicted to) complete 14% (and 10%) fewer tasks on the same day than on a future day, leading to an estimated Øe between 0.70 and .79 (and bØe between 0.80 and .88). Participants chose to (and predicted to) complete 2% (and 2%) fewer tasks when the payment happened on the same day than on a future date, implying insignificant present bias or sophistication over money. At the individual-level, estimates of Øe and bØe are highly correlated but that of Øm and bØm are uncorrelated. We explain and illustrate how assuming identical preferences for money and effort, biases the estimates of key preference parameters.2023-01-01T00:00:00ZLow Risk Sharing with Many Assets
https://hdl.handle.net/10419/283204
Title: Low Risk Sharing with Many Assets
Authors: Marin, Emile A.; Singh, Sanjay R.
Abstract: Classical contributions in international macroeconomics rely on goods-market mechanisms to reconcile the cyclicality of real exchange rates when financial markets are incomplete. However, cross-border trade in one domestic and one foreign-currency-denominated risk-free asset prohibits these mechanisms from breaking the pattern consistent with complete markets. In this paper, we characterize how goods markets drive exchange rate cyclicality, taking into account trade in risk-free and/or risky assets. We show that goods-market mechanisms come back into play, even when there is cross-border trade in two risk-free assets, as long as we allow for empirically plausible heterogeneity in the stochastic discount factors of domestic marginal investors.2023-01-01T00:00:00ZA Kripke-Lewis semantics for belief update and belief revision
https://hdl.handle.net/10419/283201
Title: A Kripke-Lewis semantics for belief update and belief revision
Authors: Bonanno, Giacomo
Abstract: We provide a new characterization of both belief update and belief revision in terms of a Kripke-Lewis semantics. We consider frames consisting of a set of states, a Kripke belief relation and a Lewis selection function. Adding a valuation to a frame yields a model. Given a model and a state, we identify the initial belief set K with the set of formulas that are believed at that state and we identify either the updated belief set or the revised belief set, prompted by the input represented by formula A, as the set of formulas that are the consequent of conditionals that (1) are believed at that state and (2) have A as antecedent. We show that this class of models characterizes both the Katsuno-Mendelzon (KM) belief update functions and the AGM belief revision functions, in the following sense: (1) each model gives rise to a partial belief function that can be completed into a full KM/AGM update/revision function, and (2) for every KM/AGM update/revision function there is a model whose associated belief function coincides with it. The difference between update and revision can be reduced to two semantic properties that appear in a stronger form in revision relative to update, thus confirming the finding by Peppas et al. (1996) that, "for a fixed theory K, revising K is much the same as updating K".2023-01-01T00:00:00ZImplicit Knowledge in Unawareness Structures
https://hdl.handle.net/10419/283202
Title: Implicit Knowledge in Unawareness Structures
Authors: Belardinelli, Gaia; Schipper, Burkhard C.
Abstract: Awareness structures by Fagin and Halpern (1988) (FH) feature a syntactic awareness correspondence and accessibility relations modeling implicit knowledge. They are a flexible model of unawareness, and best interpreted from a outside modeler's perspective. Unawareness structures by Heifetz, Meier, and Schipper (2006, 2008) (HMS) model awareness by a lattice of state spaces and explicit knowledge via possibility correspondences. Sublattices thereof can be interpreted as subjective views of agents. Open questions include (1) how implicit knowledge can be defined in HMS structures, and (2) in which way FH structures can be extended to model the agents' subjective views. In this paper, we address (1) by defining implicit knowledge such that it is consistent with explicit knowledge in HMS models. We also introduce a variant of HMS models that instead of explicit knowledge, takes implicit knowledge and awareness as primitives. Further, we address (2) by introducing a category of FH models that are modally equivalent relative to sublanguages and can be interpreted as agents' subjective views depending on their awareness. These constructions allow us to show an equivalence between HMS and FH models. As a corollary, we obtain soundness and completeness of HMS models with respect to the Logic of Propositional Awareness, based on a language featuring both implicit and explicit knowledge.2023-01-01T00:00:00Z