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Volume 15 - November 21, 2009 Previous Next

1. Paola Conconi, Nicolas Sahuguet and Maurizio Zanardi Democratic Peace and Electoral Accountability

This paper sheds very interesting new light on the so-called ``democratic peace,'' which refers to the fact that it is extremely rare for two democracies go to war with each other. The authors show that this is largely correlated with whether or not a democratic leader faces reelection, and that in fact democratic leaders facing term limits act like autocrats. Thus, incentives for reelection play a large part in explaining the democratic peace.
original link cached copy reviewed by Matthew O. Jackson on 11/21/09

2. Jose Apesteguia and Miguel Ballester Choice by Sequential Procedures

Consider a decision maker who employs a sequence of incomplete, acyclic preference relations to eliminate alternatives from the choice set, until she reaches a unique element, which is the one she ends up choosing. The paper axiomatizes this procedure and relates it to other methods of rationalizing choice behavior. It also extends a result due to Mariotti and Manzini (2007) showing that a sequentially rationalizable choice function violates IIA only if the preference relation revealed by choices from pairs contains cycles.
original link cached copy reviewed by Ran Spiegler on 12/08/09

3. Yusufcan Masatlioglu, Daisuke Nakajima and Erkut Ozbay Revealed Attention

How can we infer preferences from choices, when the decision maker may be unaware of some of the feasible alternatives? This paper enriches the standard model of rational choice by assuming that the decision maker is characterized by two unobservables: her preferences, and an "attention filter" which reduces every choice set to a "consideration set", to which preferences are applied. The paper addresses the problem of identifying these two components from observed choices.
original link cached copy reviewed by Ran Spiegler on 12/01/09

4. Marc Fleurbaey and John Roemer Judicial Precedent as a Dynamic Rationale for Axiomatic Bargaining Theory

Suppose that an arbitrator must allocate payoffs at every date from a freshly drawn two-person bargaining problem. She pays a penalty if her allocation at some date violates one of the Nash axioms relative to her past behavior. (Penalties are lower for inconsistencies with the more distant past.) Conditions are given for penalty-minimizing behavior to converge to the Nash bargaining solution over time. This working paper opens (by example) a new line that might apply more generally to axiomatic solution concepts. If successful, it would connect judicial precedent to axiomatic reasoning.
original link cached copy reviewed by Debraj Ray on 02/01/10

5. Nick Netzer and Florian Scheuer Competitive Markets without Commitment

This paper shows that a problem that seems very awkward for a benevolent planner is at least ameliorated by means of an unsophisticated invisible hand. Consider a contract between a principal and a risk-averse agent who also subject to moral hazard, so there is a tension between incentives and risk-sharing. In a competitive market counterpart, with no commitment on either side, the outcome generated Pareto dominates the single principal outcome.
original link cached copy reviewed by Arthur Robson on 03/22/10