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Economic applications of games with private information

Posted on:2006-07-02Degree:Ph.DType:Dissertation
University:Columbia UniversityCandidate:Vergote, Wouter R. RFull Text:PDF
GTID:1459390008457979Subject:Economics
Abstract/Summary:
The first chapter investigates the retaliatory use of anti-dumping tariffs, petitioned by firms, in the current world trade system. By modeling the trade relationship between countries as a repeated game of hidden information, we show that retaliation can be cooperation enhancing with respect to a rigid rule on the use of AD. We stress the fact that underlying this result is the unavailability of transfers or export subsidies in the current world trading system.; The second chapter explores how well bidders can collude their bidding in an infinitely repeated version of a standard auction with a continuum of types. We present a dynamic mechanism that recovers one third of the gap between static bid rotation and efficiency and then extend our mechanism for the case of finitely many bidders. We show that it outperforms static bid rotation for any number of bidders.; The third chapter investigates the contractual relationship between an expert and an agent where the former is a standard expected utility maximizer while the latter is ambiguity averse. Our model predicts that experts are reluctant to share information which is an empirically relevant finding. It presents a standard insurance model in which the insured cannot assess her risk probabilistically while the insurer has the ability to do so. We model this by letting the insured be a Choquet Expected Utility (CEU) maximizer and the insurer a Subjective Expected Utility (SEU) maximizer. We argue that a contractual offer can potentially transfer this 'informational advantage' to the insured. This leads us to model their relationship as a signaling game. We show that both pooling and separating equilibria exist but only one---the most profitable full insurance pooling contract---is a Perfect Sequential Equilibrium.; The fourth chapter is reserved for mathematical derivations.
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