the joint economic lot sizing problem review and extensions with the growing focus on supply chain management firms realize that inventories across the entire supply chain can be more efficiently managed through greater cooperation and better coordination this paper presents a comprehensive and up to date review of the joint economic lot sizing problem jelp and also provides some extensions of this important problem in particular a detailed mathematical description of and a unified framework for the main jelp models are given additionally a comparative empirical study of the main policies proposed for jelp is conducted the focus of this study is on assessing the deviation of these policies from the optimal solution studying the performance of different models provides additional insights that will help in justifying their use in more complex supply chain models that involve more stages or other practical considerations of interest

efficient mechanisms for bilateral trading we consider bargaining problems between one buyer and one seller for a single object the seller s valuation and the buyer s valuation for the object are assumed to be independent random variables and each individual s valuation is unknown to the other we characterize the set of allocation mechanisms that are bayesian incentive compatible and individually rational and show the general impossibility of ex post efficient mechanisms without outside subsidies for a wide class of problems we show how to compute mechanisms that maximize expected total gains from trade and mechanisms that can maximize a broker s expected profit journal of economic literature classification number 026

one man one bid abstract we compare two mechanisms to implement a simple binary choice e g adopt one of two proposals we show that when neither alternative is ex ante preferred simple majority voting cannot implement the first best outcome we introduce a simple bidding mechanism where votes can be bought at a quadratic cost and voters receive rebates equal to the average of others payments this mechanism is budget balanced individually rational and fully efficient in the limit moreover the mechanism redistributes from those that gain from the outcome to those that lose and everyone is better off under bidding compared to voting we test the two mechanisms in the lab using an environment with moderate and extremist voters the observed efficiency losses under voting are close to theoretical predictions and significantly larger than under bidding because of redistribution the efficiency gain from bidding benefits mostly the moderate voters

fair share siting noxious facilities as a risk distribution game under nontransferable utility abstract the search for equitable solutions to the siting of noxious facilities has long been an unresolved problem theoretically and politically common prescriptions often involve compensating host communities in this article we address the case when compensation is not an option or when we are unable to translate risk into a common measure of utility we propose a new analytic for finding equity based fair share distributions of risk which translates directly to mixed siting strategies in order to do this we employ a new general solution concept for n person bargaining games under nontransferable utility we discuss conditions under which the existence of such solutions can be proven last we illustrate the solution concept with application to the lancer project a controversial municipal incinerator originally proposed for east los angeles comparing results obtained with the ntu shapley value with the actual proposal finally we point out that solutions will involve risk elimination not just redistribution per se but we need both and to talk of one without the other is at times unjust at times ineffectual and often both

efficient bilateral taxation of externalities in the context of the example of a factory whose smoke emissions affect a near by laundry coase j law econ 3 1 44 1960 argued for taxing the laundry as well as the factory while baumol am econ rev 62 307 322 1972 argued for taxing only the factory consistent application of marginal cost pricing shows that the efficient tax on laundries is positive when the number of laundries is finite and that the tax approaches zero in the limit as the number of laundries approaches infinity the efficient tax on factories is bounded away from zero regardless of the number of factories our framework is an application of the vickrey clarke groves family of truth telling mechanisms that require each agent to bear the full social cost of changing the outcome that would have prevailed had she not participated in the decision until now the literature has not fully resolved the discrepancies between coase s and baumol s arguments and even contemporary textbooks on environmental economics and public economics do not offer correct and complete analyses

how not to sell nuclear weapons we consider situations where a sale affects the ensuing interaction between potential buyers these situations are modeled by assuming that an agent who does not acquire the object for sale incurs an identity dependent externality we construct a revenue maximizing auction for the seller we observe that 1 outside options and participation constraints are endogenous 2 the seller extracts surplus also from agents who do not obtain the auctioned object 3 the seller is better off by not selling at all while obtaining some payments if externalities are much larger than valuations

pollution claim settlements under private information abstract the classical problem of resolving a nuisance dispute between a pollution generating firm and nearby residents is modelled here as a mechanism design problem we assume that the designer of the mechanism is the firm that it is uncertain about the actual losses suffered by residents and that the initial assignment of property rights is one where each resident is entitled to prevail we derive a profitmaximizing scheme under the individual rationality and incentive compatibility constraints and examine its properties it is shown that the outcomes it yields are sometimes inefficient moreover when many residents are affected by pollution and the degree of uncertainty with respect to the losses they suffer is large these inefficiencies become rampant

auctioning incentive contracts this paper draws a remarkably simple bridge between auction theory and incentive theory it considers the auctioning of an indivisible project among several fi rms the firms have private information about their future cost at th e bidding stage and the selected firm ex post invests in cost reduct ion the authors show that 1 the optimal auction can be implemented by a dominant strategy auction that uses information about both the first bid and the second bid 2 the winner faces a linear incenti ve contract 3 the fixed transfer to the winner decreases with his announced expected cost and increases with the second lowest announce d expected cost and 4 the share of cost overruns borne by the winn er decreases with the winner s announced expected cost copyright 1987 by university of chicago press

choosing and sharing implementing a project like a nationwide nuclear waste disposal which benefits all involved agents but brings major costs only to the host is often problematic in practice revelation issues and redistributional concerns are significant obstacles to achieving stable agreements we address these issues by proposing the first mechanism to implement the efficient site the host with the lowest cost and share the exact cost while retaining total control over realized transfers our mechanism is simple and in the vein of the well known divide and choose procedure the unique nash equilibrium outcome of our mechanism coincides with truthtelling is budget balanced individually rational and immune to coalitional deviations more generally our mechanism can also handle the symmetric case of positive local externalities e g olympic games and even more complex situations where the usefulness of the project regardless of its location is not unanimous

noxious facilities environmental damages and efficient randomized siting this paper considers the efficient siting of a noxious facility that causes environmental damages for example increased pollution in the host community the analysis shows that there can be multiple efficient locations without transfers and that an efficient location need not have the smallest wta or wtp in general there exist randomized outcomes that are ex ante efficient and that pareto dominate efficient outcomes the analysis also shows that a community s most preferred lottery never provides full insurance under some conditions lotteries with no host compensation are pareto superior to those with compensation

siting noxious facilities are markets efficient abstract this paper explores the economics and politics of the siting of noxious facilities in the base case facilities are sited by markets subject to majority agreement in the host jurisdiction by contrast with the existing market siting literature which assumes that all the disamenities of a facility will be contained in the host jurisdiction and fully reflected in the jurisdiction s willingness to accept here facilities impose disamenities on individuals as a function of distance and the process of majority agreement is explicitly modeled the principal finding is that when voters are uniformly distributed within a jurisdiction an individual who is median distance from a facility suffers less than average mean disamenity therefore a majority would be willing to serve as facility host for a price host fee that is strictly less than the aggregate disamenity that the facility imposes on the jurisdiction further by threatening the equilibrium host with a site just across its border a firm can induce majority acceptance of a nontrivial facility at zero host fee even when this threat site strategy is infeasible though market determined host fees will not signal efficient sites thus markets will produce an excessive number of noxious facilities and place them in the wrong sites these results are robust to alternative specifications of bargaining power and market structure if however host majority agreement is subject to the veto of a higher jurisdiction e g in response to cries of nimby then efficiency may be either improved or reduced

incarceration and incapacitation evidence from the 2006 italian collective pardon abstract in august 2006 the italian government released one third of the nation s prison inmates via a national collective pardon we test for a discontinuous break in national crime rates corresponding to the mass release we also test for the effect of the return of the incarceration rate to its predicted steady state level on national crime rates finally we exploit regional variation in prison releases based on the province of residence of pardoned inmates all three sources of variation yield substantial incapacitation effect estimates and suggest that the crime preventing effects of incarceration diminish with increases in the incarceration rate jel k42

competitive and cooperative policies for the vendor buyer system abstract this paper considers a model for decentralized dynamic production distribution control we examine the situation where a vendor produces a product in a batch production environment and supplies it to a buyer under deterministic conditions some conditional games for the vendor and the buyer are defined the games are indexed by numbers of shipments acceptable to both players before the strategies competition begins a construction of nash equilibrium strategies is given in the proof of the existence theorem goyal s numerical example is used to compare our equilibrium solutions with relatively optimal policies in the cooperative case

a sealed bid auction mechanism for siting noxious facilities this paper proposes a sealed bid mechanism for facilitating the siting process of noxious facilities such as prisons trash disposal plants and incinerators for hazardous waste these facilities have created such opposition by communities that the acronyms nimby not in my backyard or lulu local undesirable land use are now in common usage to describe the public s reaction to them the noxious facility siting problem arises because there are economies of scale associated with having only one plant to serve the needs of a wide region the community that hosts the plant absorbs all of the environmental costs while the rest of the region enjoys the benefits of the facility one reason that these facilities have been so strongly opposed by communities is that they generate relatively little new employment and provide limited additional taxes in relation to their perceived negative impact d morell and c magorian 1982 some compensation arrangement is thus needed to share the gains from the winners to the potential loser this paper discusses a sealed bid auction mechanism for selecting a location for the facility so that all communities feel they are better off than under the status quo

bidding for the surplus a non cooperative approach to the shapley value abstract we propose a simple mechanism to determine how the surplus generated by cooperation is to be shared in zero monotonic environments with transferable utility the mechanism consists of a bidding stage followed by a proposal stage we show that the subgame perfect equilibrium outcomes of this mechanism coincide with the vector of the shapley value payoffs we extend our results to implement the weighted shapley values finally we generalize our mechanism to handle arbitrary transferable utility environments the modified mechanism generates an efficient coalition structure and implements the shapley values of the super additive cover of the environment journal of economic literature classification numbers c71 c72

choosing wisely a multibidding approach reaching decisions about the location of noxious facilities such as dump sites environmentally hazardous plants nuclear power generators and the like is a highly contentious issue for instance in february 2000 the u s senate decided that nationwide nuclear waste would be shipped to the yucca mountain site in nevada conditional to it being approved as a high level nuclear waste repository despite the attractive compensation package the state of nevada voiced vehement opposition president clinton vetoed the bill and in may 2000 the senate failed to overturn it as such the major problem facing the u s nuclear industry on where to site a high level radioactive waste repository remains virtually unresolved neither are decisions about the location of desirable events easily solvable every two years the international olympic committee selects hosts for the summer and winter games a procedure that is constantly under review and revision in order to bring about the best possible outcome until about a year ago the decision was made by a vote based on bids and plans submitted by candidate cities however the recent controversy surrounding the choice of salt lake city to host the 2002 winter games culminated in the design of a new procedure for choosing the host of the 2006 winter games this procedure called for the selection of two finalist cities in this case turin and sion immediately after which the host was selected by secret ballot in this case turin another similar issue is currently the subject of heated debate in spain the spanish government both on the national and local level has recently been discussing various possible projects for transferring water from rivers in the north of spain to the arid southern regions the parties involved have conflicting interests with regard to several aspects of the projects proposed particularly the water rich regions are hesitant to give up parts of their water resources the parties involved have still not agreed upon the choice of a transport mode or the size of the transfer payments that would compensate the localities that are relinquishing part of the water supply these and several other cases belong to a class of problems in which a group of agents has to choose one out of several projects a project is efficient if it maximizes the aggregate welfare of the group members reaching an efficient outcome is trivial when the designer has all the relevant information however it is often the case that the parties concerned possess much more information than the designer hence the designer faces a nontrivial problem if she wishes to optimally choose one of the projects moreover from a normative point of view even if the designer has all the information it is easier to justify the use of a fixed procedure to reach a decision than to modify the procedure for various cases in light of information disclosed or already available to the designer several well known methods are available for the problem of choosing one out of a set of alternatives one class of methods consists of various voting schemes such as majority voting or the borda rule the outcomes generated by these methods need not be efficient due to strategic behavior on the part of the agents another class of methods consists of vickreyclarke groves mechanisms for this class truthtelling is a dominant strategy that always results in the choice of an efficient alternative however these mechanisms are not budgetbalanced and the payments collected from the perez castrillo department of economics code universitat autonoma de barcelona 08193 bellatera barcelona spain wettstein department of economics bengurion university of the negev monaster center for economic research beer sheva 84105 israel we thank herve moulin for his helpful suggestions suresh mutuswami who encouraged us to check for strong nash equilibria and francis bloch mark gradstein moshe justman jordi masso and two anonymous referees for their useful comments perez castrillo gratefully acknowledges financial support from bec2000 0172 and 2000sgr 00054

asymmetries in the valuation of risk and the siting of hazardous waste disposal facilities recently several economists richard thaler 1980 jack knetsch and j a sinden 1984 following suggestions of psychologists daniel kahneman and amos tversky 1979 have argued that current economic models of consumer behavior fail to explain observed asymmetries in how individuals respond to gain vs losses in perceived entitlements attention to their arguments is increasing because they relate to many current policy issues especially those associated with undesirable land uses most of the papers suggesting this limitation with the conventional economic framework have been motivated by the large differences between the estimates of willingness to pay vs willingness to accept as measures of the change in individual well being that would result from a change in the conditions of access to or the quality of a commodity in this paper we report the first evidence of a sizable property rights effect using only willingness to pay measures this change is potentially important because both the recent appraisal of contingent valuation surveys see ronald cummings et al 1986 an important source of the available empirical evidence and laboratory experiments suggest that individuals may have difficulty in dealing with the concept of compensation this is especially true when there is no opportunity for individuals to learn about transactions that involve compensation through experience based on a contingent valuation survey of households in suburban boston we found that respondents bid significantly more to reduce risk than they indicated they were willing to pay to avoid an equivalent risk increase while our findings support suggestions that changes in the implied entitlements to safety can lead to large differences in welfare measures for risk changes several of these earlier arguments would have implied that individuals were willing to pay more to avoid a risk increase the opposite to our results thus these differences imply that the determinants of individuals valuations for risk changes are more complex than past studies have acknowledged

choosing a common project experimental evidence on the multibidding mechanism abstract perez castrillo d wettstein d 2002 choosing wisely a multibidding approach american economic review 5 1577 1587 and veszteg r f 2004 multibidding game under uncertainty working paper 14 04 universidad de navarra propose the use of a multibidding mechanism for situations where agents have to choose a common project examples are decisions involving public goods or public bads we report experimental results that test the practical tractability and effectiveness of multibidding mechanisms in environments where agents hold private information concerning their valuation of the projects the mechanism performed quite well in the laboratory providing the ex post efficient outcome in roughly three quarters of the cases across the treatments moreover the largest part of the subject pool formed their bids according to theoretical bidding behavior

entry and exit patterns of toxic firms we pair an establishment level dataset from texas with public information available in the toxics release inventory tri to evaluate the standing of dirty industries in texas census tracts with a focus on environmental justice concerns the share of nonwhite residents in a tract is positively correlated with the number of tri reporting firms and an inverse u shaped relationship characterizes the number of tri reporting firms and a tract s median income even after controlling for factor prices and other covariates which might drive firm location decisions entrants that report to the tri are more likely to locate in areas with a higher share of nonwhite residents firms that report to the tri are also more likely to enter areas with a low share college graduates in contrast the number of entrants from industries which do not have tri reporters is negatively related to the percent of nonwhite residents in a tract firms in these non reporting industries are also more likely to enter areas with a high share of college graduates polluters appear to agglomerate raising concerns about both chemical releases being concentrated in certain tracts and also affecting nonwhite dense areas disproportionately the strength of these effects often depend on an urban rural classification with rural areas experiencing the most pronounced concerns moreover tri reporting firms are less likely to exit the market relative to their peers which operate in the same industry but do not need to file tri reports suggesting releases may affect a region in the long run

the single vendor single buyer integrated production inventory model with a generalised policy abstract this note considers a more general type of policy for the single vendor single buyer integrated production inventory model than has hitherto been presented based on successive shipments to the buyer within a single production batch increasing by a fixed factor

a heuristic solution technique to attain the minimal total cost bounds of transporting a homogeneous product with varying demands and supplies abstract transportation of a product from multi source to multi destination with minimal total transportation cost plays an important role in logistics and supply chain management researchers have given considerable attention in minimizing this cost with fixed supply and demand quantities however these quantities may vary within a certain range in a period due to the variation of the global economy so the concerned parties might be more interested in finding the lower and the upper bounds of the minimal total costs with varying supplies and demands within their respective ranges for proper decision making this type of transportation problem has received attention of only one researcher who formulated the problem and solved it by lingo we demonstrate that this method fails to obtain the correct upper bound solution always then we extend this model to include the inventory costs during transportation and at destinations as they are interrelated factors the number of choices of supplies and demands within their respective ranges increases enormously as the number of suppliers and buyers increases in such a situation although the lower bound solution can be obtained methodologically determination of the upper bound solution becomes an np hard problem here we carry out theoretical analyses on developing the lower and the upper bound heuristic solution techniques to the extended model a comparative study on solutions of small size numerical problems shows promising performance of the current upper bound technique another comparative study on results of numerical problems demonstrates the effect of inclusion of the inventory costs

on improving the single vendor single buyer integrated production inventory model with a generalized policy abstract in this note a simple procedure is suggested for modifying shipment size as obtained on applying the procedure given by hill european journal of operational research 97 1997 493 499

a dynamic model for the single vendor multi buyer problem abstract we consider a problem of a dynamic production distribution situation for a single product we examine the situation where a vendor produces a product in a batch production environment and supplies it to multiple buyers under deterministic conditions stationarity of buyers demands does not imply stationarity of the demand at the vendor which follows a periodic sequence we consider buyers and the vendor demands as periodic sequences in this case some turnpike policies relative to the class of periodic dynamic parameter problems are recommended some remarks on the existence of planning and forecast horizons are also given

a solution to the problem of externalities when agents are well informed the author describes a class of simple two stage mechanisms that implement efficient allocations as subgame perfect equilibria for economic environments involving externalities these mechanisms known as compensation mechanisms solve a wide variety of externalities problems including implementation of lindahl allocations regulation of monopoly and efficient solutions to the prisoner s dilemma copyright 1994 by american economic association

efficient allocation of a prize king solomon s dilemma abstract a planner is interested in allocating an indivisible good a prize to one of many agents in the economy his objective is to give the prize to the agent who values it most without any payments being made by the recipient the planner however does not know the identity of this agent while the agents themselves do this paper shows how the planner can construct simple multistage mechanisms with a unique subgame perfect equilibrium outcome at this outcome the agent who values the prize most gets it without any transfer of money being made by any of the agents or the planner

how much crime reduction does the marginal prisoner buy abstractwe estimate the effect of changes in incarceration rates on changes in crime rates using state level panel data we develop an instrument for future changes in incarceration rates based on the theoretically predicted dynamic adjustment path of the aggregate incarceration rate in response to a shock to prison entrance or exit transition probabilities given that incarceration rates adjust to permanent changes in behavior with a dynamic lag one can identify variation in incarceration rates that is not contaminated by contemporary changes in criminal behavior for the period 1978 2004 we find crime prison elasticities that are considerably larger than those implied by ordinary least squares estimates we also present results for two subperiods 1978 90 and 1991 2004 our instrumental variables estimates for the earlier period suggest relatively large crime prison effects for the later time period however the effects of changes in incarceration rates on crime rates are much smaller

is there a prison size dilemma an empirical analysis of output specific economies of scale abstract we advocate a nonparametric multi output framework to estimate output specific economies of scale and we apply this model to male prisons in england and wales over the sample period 2009 2012 to estimate output specific returns to scale in prisons we consider not only the cost per place but also qualitative outputs such as purposeful out of cell activity and successful reintegration furthermore we introduce environmental heterogeneity using the characteristics of the prison ers england and wales offers a unique example to study economies of scale in prisons as the uk has started to build new super size prisons in order to replace the most outdated prisons

integrated vendor buyer cooperative models with stochastic demand in controllable lead time abstract this article presents the single vendor single buyer integrated production inventory models we relax the assumption that lead time demand x is deterministic and assume that it is stochastic also we assume that shortage during the lead time is permitted and lead time can be reduced at an added cost two models are considered here in the first model the demand of lead time follows a normal distribution and in the second model it is distribution free for both cases we develop effective iterative procedures for finding the optimal policy and numerical examples are used to illustrate the benefits of integration

realizing fair outcomes in minimum cost spanning tree problems through non cooperative mechanisms abstract in the context of minimum cost spanning tree problems we present a bargaining mechanism for connecting all agents to the source and dividing the cost among them the basic idea is very simple we ask each agent the part of the cost he is willing to pay for an arc to be constructed we prove that there exists a unique payoff allocation associated with the subgame perfect nash equilibria of this bargaining mechanism moreover this payoff allocation coincides with the rule defined in bergantinos and vidal puga bergantinos g vidal puga j j 2007a a fair rule in minimum cost spanning tree problems journal of economic theory 137 326 352

the effect of prison population size on crime rates evidence from prison overcrowding litigation simultaneity between prisoner populations and crime rates makes it difficult to isolate the causal effect of changes in prison populations on crime to break that simultaneity this paper uses prison overcrowding litigation in a state as an instrument for changes in the prison population the resulting elasticities are two to three times greater than those of previous studies a one prisoner reduction is associated with an increase of fifteen index i crimes per year while calculations of the costs of crime are inherently uncertain it appears that the social benefits associated with crime reduction equal or exceed the social costs of incarceration for the marginal prisoner

the siting of hazardous waste facilities in federal systems the political economy of nimby this paper offers a new political economy explanation for thepervasive problem of siting hazardous waste treatment facilitiesin federal system we first show that a decentralized systemyields the first best waste treatment capacity level and that acentralized structure gives rise to free riding behavior amonglocal jurisdictions in our model each community seeks toinfluence the central government through political contributions this leads to suboptimal levels of treatment capacity thecapacity is increasing in the compensation level if the marginalbenefit of treatment capacity is sufficiently large and in thegovernment s weight on aggregate social welfare relative tolobbying activities the centralized system can replicate thedecentralized system with a sufficiently high compensation level since compensation has proved difficult a centralized systemfaces greater obstacles than a decentralized system

voluntary auctions for noxious facilities incentives to participate and the efficiency of siting decisions abstract this paper explores the efficiency properties of a voluntary auction under which the city submitting the low bid hosts the region s noxious facility and receives the high bid as compensation in the nash equilibrium of the auction game the auction mechanism is individually rational participation is rational for all values of the local environmental costs of the facility incentive compatible the facility is located in the low cost city and revenue neutral if the compensation of the host city distorts location choices participation in the auction is rational for all values of local environmental costs if the scale economies associated with the noxious facility are large relative to the average local environmental cost and the distortionary cost per dollar of compensation

crime in europe and the united states dissecting the reversal of misfortunes contrary to common perceptions today both property and violent crimes with the exception of homicides are more widespread in europe than in the united states while the opposite was true thirty years ago we label this fact as the reversal of misfortunes we investigate what accounts for the reversal by studying the causal impact of demographic changes incarceration abortion unemployment and immigration on crime for this we use time series data 1970 2008 from seven european countries and the united states we find that the demographic structure of the population and the incarceration rate are important determinants of crime our results suggest that a tougher incarceration policy may be an effective way to contrast crime in europe our analysis does not provide information on how incarceration policy should be made tougher nor does it provide an answer to the question whether such a policy would also be efficient from a cost benefit point of view we leave this to future research paolo buonanno francesco drago roberto galbiati and giulio zanella

non cooperative strategies for production and shipment lot sizing in one vendor multi buyer system abstract this paper considers a decentralized dynamic production distribution control a discrete deterministic model in which a vendor produces a product and supplies it to the buyer is considered several papers on vendor buyer integrated production inventory management assume that policies are set by a central decision maker to optimize total system performance although vendor and buyer may agree to minimize the total cost at least one of them has a private incentive to deviate from the agreement in the competitive situation the objective is to determine schedules which minimize the individual average total cost of production shipment and stockholding we assume that the division of shipment costs is centrally coordinated or negotiated initially it leads to a class of non cooperative constrained games indexed by two parameters connected with partitions of shipment costs non cooperative strategies are considered as feasible strategies in a restricted non cooperative game some properties of equilibrium strategies are investigated as acceptable equilibrium strategies of subgames in the game

an assessment of four popular auction mechanisms in the siting of nimby facilities some experimental evidence the issue of locating locally unfriendly but socially beneficial facilities such as landfills and power stations is an important public policy concern in many countries local residents in the area where such facilities are to be located tend to exhibit strong opposition no doubt due to the asymmetric distribution of the costs and benefits of such not in my backyard nimby facilities a potentially useful mechanism for the siting of such facilities is by compensation auctions which attempt to incorporate the market mechanism into the decision making process in such auctions communities name the compensation they require to host such facilities and the community demanding the least amount of compensation gets to host the facility this research attempts to evaluate the performance of such compensation auctions using laboratory exepriments four popular auction formats are evaluated first and second price and all pay first and second price sealed bid auctions the latter two formats correspond to th

rational bargaining in games with coalitional externalities this paper provides a flexible strategic framework to analyze bargaining and values in environments with coalitional externalities within this framework we propose a new value that extends the shapley value to partition function form games the so called rational belief shapley rbs value we investigate the strategic foundation of the rbs value by constructing an implementation mechanism this mechanism extends existing models of multilateral bargaining by allowing players a higher degree of freedom to form coalitions the same framework of bidding and renegotiation allows for natural variations of the rbs mechanism in this way alternative shapley like values are obtained and a unified platform to analyze and compare these solutions is provided

a one vendor multi buyer integrated inventory model abstract we consider a one vendor multi buyer integrated inventory model the vendor seeks to minimize his total annual cost subject to the maximum costs which buyers are prepared to incur in order to implement this model the vendor only needs to know buyer s annual demand and previous order frequency which can be inferred from buyer s past ordering behavior we find the optimal solution for the one vendor one buyer case and present a heuristic approach for the one vendor multi buyer case

customer ownership and quality provision in public services under asymmetric information the implementation of projects producing external effects is often a source of disagreement and conflict between hosting and nonhosting communities the article focuses on the impact of participatory ownership on conflict resolution and social welfare in the presence of asymmetric information and imperfect quality monitoring we show that in such situations the participatory solution may help solve deadlocks that money transfers to a for profit operator cannot solve the analysis highlights three main factors behind this fact first a customer owned cooperative internalizes at least partially the external effects generated by the project second the alignment of cooperative members preferences with those of the social planner reduces in some cases eliminates the distortions caused by information asymmetries third cooperatives require less costly monitoring than their for profit counterparts we also show that cooperatives productive inefficiency with respect to for profits may emerge endogenously as a consequence of a lower pressure to compete on costs for the market

tragic choices and collective decision making an empirical study of voter preferences for alternative collective decision making mechanisms central to this paper has been the idea that there might be a demand on the part of the citizens for having specific decision mechanisms in specific types of situations this demand cannot be deduced on purely theoretical grounds but rather should be registered case by case theory might help in categorising classes of situations where decisions can be tackled with the same approach in any case the choice of a decision mechanism should not be left completely at the discretion of the policy maker if the citizens s welfare is to be promoted in a suitable way

proposal power and majority rule in multilateral bargaining with costly recognition this paper studies a sequential bargaining model in which agents expend efforts to be the proposer in equilibrium agents effort choices are influenced by the prize and cost effects the endogenous prize is 9

an experimental study of voting with costly delay a conclave is a voting mechanism in which a committee selects an alternative by voting until a sufficient supermajority is reached we study experimentally welfare properties of simple three voter conclaves with privately known preferences over two outcomes and waiting costs the resulting game is a form of multiplayer war of attrition our key finding is that consistent with theoretical predictions when voters are ex ante heterogeneous in terms of the intensity of their preferences the conclave leads to efficiency gains relative to simple majority voting we also compare welfare properties of a static versus a dynamic version of a conclave when social cost of waiting is taken into account the dynamic conclave is superior in terms of welfare than its static version

misaligned incentives and the scale of incarceration in the united states abstract the incarceration rate has increased substantially in the united states between the 1980s and the 2000s in this paper i explore an institutional explanation for this growth the fact that costs of incarceration are not fully internalized typically prison is paid for at the state level but county employees such as judges prosecutors or probation officers determine time spent in custody i exploit a natural experiment that shifted the cost burden of juvenile incarceration from state to counties keeping overall costs and responsibilities unchanged this resulted in a stark drop in incarceration and no increase in arrests suggesting an over use of prison when costs are not internalized the large magnitude of the change suggests that misaligned incentives in criminal justice may be a significant contributor to the current levels of incarceration in the united states

abreu matsushima mechanisms experimental evidence abstract abreu matsushima mechanisms can be applied to a broad class of games to induce any desired outcome as the unique rationalizable outcome we conduct experiments investigating the performance of such mechanisms in two simple coordination games in these games one pure strategy equilibrium is focal we assess the efficacy of abreu matsushima mechanisms for implementing the other pure strategy equilibrium outcome abreu matsushima mechanisms induce some choices consistent with the desired outcome but more choices reflect the focal outcome moreover strengthening the mechanism has a perverse effect when the desired outcome is a pareto dominated risk dominated equilibrium journal of economic literature classification number c7

first day criminal recidivism abstract we report that on any given day the number of inmates released from incarceration significantly affects the number of offenses committed this day and we name this as first day recidivism our estimates of this novel approach to study early recidivism are robust to a variety of alternative model specifications we then show that first day recidivism can be eliminated by an increase in the gratuity provided to prisoners at the time of their release a simple cost benefit analysis shows that increasing the gratuity at release is a very efficient policy

on a political solution to the nimby conflict scale economy in the construction and operation of public facilities such as landfills calls for cooperation among communities to build a common facility arthur o sullivan 1993 such a facility is a mixture of a public good and a private bad and hence leads to strong opposition by communities to locate it in their vicinity bruno s frey et al 1996 this is one of the most serious environmental concerns of recent years and is known as nimby not in my backyard in this paper we study the hypothesis that a democratic political process creates an adequate mechanism for the resolution of the nimby conflict the intuitive explanation is simple a nimby conflict is likely to induce lobbying and symmetric pressures by all threatened communities in the relevant region as is well known gene m grossman and elhanan helpman 1994 when subject to symmetric pressures politicians stick firmly to principles and function most efficiently the existing literature on the siting of noxious facilities focuses mainly on normative issues such as welfare maximizing siting via decentralized community based mechanisms e g howard kunreuther and paul r kleindorfer 1986 robert c mitchell and richard t carson 1986 and deborah minehart and zvika neeman 2002 evidently however such mechanisms have seldom been practiced e g stephen k swallow et al 1992 the current study adopts a positive approach integrating a political economic framework with a model of a competitive real estate market in the theoretical section a government of a linear two city economy determines the location of a noxious facility which affects the equilibrium in the real estate market and induces the spatial distributions of price and population the government is subject to political pressures by city level lobbies of landowners both landlords and home owners in general the political equilibrium and the socially optimal siting differ however the more equitable the distribution of landownership in the region the smaller the difference at the limit when property distribution is perfectly equitable and all cities participate in the political arena the government locates the facility at the socially optimal site the analysis proceeds by identifying additional conditions under which the political equilibrium siting coincides with the socially optimal location and with an empirical analysis in the empirical section the theoretical framework is extended to account for a multiple city region and is calibrated to assess the prospects of the political system for resolving the nimby conflict in the context of landfill siting in israel it is shown that if all cities in the region form political lobbies and the politicians are not extremely corrupt the political siting is close geographically to the socially optimal location and the difference entails a less than 0 1 percent reduction in social welfare moreover even if the formation of lobbying in the region is incomplete as long as the weight the politicians assign to social welfare is larger than 0 7 the proximity of the politically and socially optimal locations is preserved we interpret the above results as supportive of the hypothesis of an effective political solution to the nimby conflict

implementation in undominated strategies a look at bounded mechanisms this paper examines the impact of placing natural restrictions on the mechanisms considered for implementation problems it is shown that if all mechanisms are considered and preferences satisfy a basic condition then any social choice correspondence can be implemented in undominated strategies an example points out that the strength of this result derives from the use of mechanisms with questionable features in part of the message space the agent who announces the highest integer is rewarded this sort of tail chasing construction common in the constructive proofs of the literature is used to assure that undesired strategy combinations do not form an equilibrium if such mechanisms are ruled out then the social choice correspondences which can be implemented in undominated strategies satisfy an incentive compatibility type condition called strategy resistence for social choice functions this is equivalent to strategy proofness this contrast suggests that this issue should be examined as it applies to other solution concepts used in implementation theory the last portion of the paper begins to explore the issue as it relates to nash implementation and undominated nash implementation

the effect of police response time on crime clearance rates police agencies devote vast resources to minimizing the time that it takes them to attend the scene of a crime despite this the long standing consensus is that police response time has no meaningful effect on the likelihood of catching offenders we revisit this question using a uniquely rich dataset from the greater manchester police to identify causal effects we use a novel strategy that exploits discontinuities in distance to the response station across locations next to each other but on different sides of division boundaries contrary to previous evidence we find large and strongly significant effects in our preferred estimate a 10 increase in response time leads to a 4 7 percentage points decrease in the likelihood of clearing the crime we find stronger effects for thefts than for violent offences although the effects are large for every type of crime we find suggestive evidence in support of two mechanisms the likelihood of an immediate arrest and the likelihood that a suspect will be named by a victim or witness both increase as response time becomes faster we argue that under conservative assumptions hiring an additional response officer would generate a benefit in terms of future crime prevented equivalent to 170 of her payroll cost

the conditional auction mechanism for sharing a surplus a first bid auction to allocate the leadership role is used to choose a public decision and a balanced set of transfers the mechanism is shown to implement an equal sharing of the surplus above the average utility level at the equilibrium an agent s message reveals the other agent s utility when only two players are involved and the exact value of the joint surplus a variety of other contexts allow for the construction of similar auction like mechanisms displaying the same mirror image effect

politics and social costs estimating the impact of collective action on hazardous waste facilities firms that generate negative externalities may consider the effects of their location on the surrounding environment because of the right of their prospective neighbors to demand compensation for pollution and raise the transaction costs of location since communities vary both in the value individuals place on the environment and in the ability of residents to organize politically locations that generate the least political opposition may not be the locations that result in the lowest externalities this article tests whether the degree to which firms internalize their externalities depends on the ability of affected communities to engage in collective action the results indicate that firms processing hazardous waste when deciding where to expand capacity do take into account variations in the potential for collective action to raise their costs

an experiment on nash implementation we perform an experimental test of a modification of the controversial canonical mechanism for nash implementation using three subjects in non repeated groups as well as three outcomes states of nature and integer choices we find that this mechanism successfully implements the desired outcome a large majority of the time providing empirical evidence for the feasibility of such implementation in addition the performance is further improved by imposing a fine on a dissident so that the mechanism implements strict nash equilibria while our environment is stylized our results offer hope that experiments can identify reasonable features for practical implementation mechanisms

amicable divorce dissolving a partnership with simple mechanisms abstract this paper considers mechanisms for allocating the assets of a dissolving partnership that can be specified without information on the distribution of valuations of the asset or the level of risk aversion of the participants for the case of a single asset and risk averse agents three simple mechanisms are considered these mechanisms can be ranked in terms of ex post efficiency and partially ranked in terms of interim expected utility the efficiency of the alternating selection mechanism is considered for environments when there are many items to be allocated agents are risk neutral and transfers are prohibited conditions are given when a myopic strategy of picking the most preferred abailable item forms an equilibrium and these conditions are satisfied under independence under the further assumption of identical distributions of valuations it is shown that the total expected efficiency loss is at most 1 2 of the maximal value of a single item regardless of how many items are to be allocated

the optimal use of fines and imprisonment abstract this paper examines the use of fines and imprisonment to deter individuals from engaging in harmful activities these sanctions are analyzed separately as well as together first for identical risk neutral individuals and then for two groups of risk neutral individuals who differ by wealth when fines are used alone and individuals are identical the optimal fine and probability of apprehension are such that there is some underdeterrence if individuals differ by wealth then the optimal fine for the high wealth group exceeds the fine for the low wealth group when imprisonment is used alone and individuals are identical the optimal imprisonment term and probability may be such that there is either underdeterrence or overdeterrence if individuals differ by wealth the optimal imprisonment term for the high wealth group may be longer or shorter than the term for the low wealth group when fines and imprisonment are used together it is desirable to use the fine to its maximum feasible extent before possibly supplementing it with an imprisonment term the effects of risk aversion of these results are also discussed

efficient bidding with externalities we implement a family of efficient proposals to share benefits generated in environments with externalities these proposals extend the shapley value to games with externalities and are parametrized through the method by which the externalities are averaged we construct two slightly different mechanisms one for environments with negative externalities and the other for positive externalities we show that the subgame perfect equilibrium outcomes of these mechanisms coincide with the sharing proposals

nash equilibrium and welfare optimality if is a set of social alternatives a social choice rule scr assigns a subset of a to each potential profile of individuals preferences over a where the subset is interpreted as the set of welfare optima a game form or mechanism implements the social choice rule if for any potential profile of preferences 1 any welfare optimum can arise as a nash equilibrium of the game form implying in particular that a nash equilibrium exists and 2 all nash equilibria are welfare optimal the main result of this paper establishes that any scr that satisfies two properties monotonicity and no veto power can be implemented by a game form if there are three or more individuals the proof is constructive