partisan bias in economic news evidence on the agenda setting behavior of u s newspapers abstract we study the agenda setting political behavior of a large sample of u s newspapers during the 1996 2005 period our purpose is to examine the intensity of coverage of economic issues as a function of the underlying economic conditions and the political affiliation of the incumbent president focusing on unemployment inflation the federal budget and the trade deficit we investigate whether there is any significant correlation between the endorsement policy of newspapers and the differential coverage of bad good economic news as a function of the president s political affiliation we find evidence that newspapers with pro democratic endorsement pattern systematically give more coverage to high unemployment when the incumbent president is a republican than when the president is democratic compared to newspapers with pro republican endorsement pattern this result is robust to controlling for the partisanship of readers we find similar but less robust results for the trade deficit we also find some evidence that newspapers cater to the partisan tastes of readers in the coverage of the budget deficit we find no evidence of a partisan bias or at least of a bias that is correlated with the endorsement or reader partisanship for stories on inflation

not only what but also when a theory of dynamic voluntary disclosure we examine a dynamic model of voluntary disclosure of multiple pieces of private information in our model a manager of a firm who may learn multiple signals over time interacts with a competitive capital market and maximizes payoffs that increase in both period prices we show perhaps surprisingly that in equilibrium later disclosures are interpreted more favorably even though the time the manager obtains the signals is independent of the value of the firm we also provide sufficient conditions for the equilibrium to be in threshold strategies

recommender systems as mechanisms for social learning this article studies how a recommender system may incentivize users to learn about a product collaboratively to improve the incentives for early exploration the optimal design trades off fully transparent disclosure by selectively overrecommending the product or spamming to a fraction of users under the optimal scheme the designer spams very little on a product immediately after its release but gradually increases its frequency she stops it altogether when she becomes sufficiently pessimistic about the product the recommender s product research and intrinsic naive users seed incentives for user exploration and determine the speed and trajectory of social learning potential applications for various internet recommendation platforms and implications for review ratings inflation are discussed

endogenous information flows and the clustering of announcements we consider the strategic timing of information releases in a dynamic disclosure model because investors don t know whether or when the firm is informed the firm will not necessarily disclose immediately we show that bad market news can trigger the immediate release of information by firms conversely good market news slows the release of information by firms thus our model generates clustering of negative announcements surprisingly this result holds only when firms can preemptively disclose their own information prior to the arrival of external information these results have implications for conditional variance and skewness of stock returns jel d21 d83 g12 g14 l11

partial exposure in large games abstract in this work we introduce the notion of partial exposure in which the players of a simultaneous move bayesian game are exposed to the realized types and chosen actions of a subset of the other players we show that in any large simultaneous move game each player has very little regret even after being partially exposed to other players if players are given the opportunity to be exposed to others at the expense of a small decrease in utility players will decline this opportunity and the original nash equilibria of the game will survive

resolving differences in willingness to pay and willingness to accept reply gwendolyn c morrison 1997 raises a logical point regarding our experimental test of the divergence between willingness to pay wtp and willingness to accept wta measures of economic value shogren et al 1994 she argues that our design does not provide a true test of the existence of a fundamental endowment effect since we did not control for the potential of a pivoting indifference map daniel kahneman et al 1990 she concludes that even though our ev idence shows that the mean wtp and wta bids for market goods with close substitutes e g candy bars and coffee mugs converge after market experience the endowment effect might still be alive and well albeit at statisti cally insignificant levels

joint confidence intervals for income shares and lorenz curves in a recent paper beach and davidson 1983 extended the principles of statistical inference to lorenz curves and income shares by establishing the asymptotic distribution and covariance structure of a vector of lorenz curve ordinates corresponding to a set of quantile abscissae one can thus use the lorenz curve and income shares no longer just as descriptive devices for summarizing distribution information but now also as analytical tools for comparing alternative distributions and carrying out conventional statistical inference on them it would clearly be desirable however to extend and complement this work by providing a method for computing a set of joint confidence intervals about these income shares and for illustrating graphically a joint confidence band about a set of estimated lorenz curve ordinates the present paper provides a new and simple technique for doing this when analyzing differences between sets of income shares or lorenz curves one typically wants to elicit more detailed information than is provided by a standard joint chi square test on the overall set of shares that is when the hypothesis of two sets of shares being the same is rejected we generally want to know further which particular differences in shares are different from zero and of these nonzero differences which are positive and which negative savin 1980 a natural way of providing such information is through multiple comparison procedures developed in this paper in a recent work richmond 1982 has developed a general method of finding multiple comparison intervals that is particularly suited to the present problem and in this situation appears to dominate other conventional alternatives in contrast for example to scheff s s projection method richmond s approach focuses on a set of primary points of interest income shares among a more general set of points including the lorenz curve ordinates and optimizes the joint confidence interval lengths on this primary set of points since estimated lorenz curve ordinates are built up from underlying income shares these shares perhaps further supplemented are natural choices for the primary set the method however also provides a joint confidence band that geometrically bounds the set of lorenz curve ordinates and interpolated segments between them the present

efficiency and information aggregation in large uniform price auctions abstract we prove that the equilibria of a large interdependent value uniform price auction model where bidders have arbitrary preferences for multiple units can be approximated by a nonatomic exchange economy we show that the uniform price auction is approximately efficient with a large number of participants and asymptotically aggregates idiosyncratic bidder information into the market price more generally our analysis framework provides conditions justifying the use of nonatomic limit model approximations to analyze the large market behavior of game theoretic models we demonstrate continuity requirements on the economic primitives sufficient for the equilibrium strategies of the two models to converge as the number of participants in the finite game approaches infinity

media competition and electoral politics we build a framework linking competition in the media market to political participation media outlets report on the ability of candidates running for office and compete for audience through their choice of slant citizens consume news only if the expected utility of being informed about candidates ability is sufficiently large for their group collectively our results can reconcile seemingly contradictory empirical evidence showing that entry in the media market can either increase or decrease turnout while information pushes up independent turnout partisans adjust their turnout to the ability of their preferred candidate and on average they vote less when informed

input demand under yield and revenue insurance previous studies disagree on the effects of insurance on fertilizer application rates the effect of increased fertilizer on the probability of low yields primarily determines whether fertilizer and insurance are substitutes or complements we estimate conditional distributions of corn yields to determine if the technical relationship between yields and fertilizer supports the hypothesis that insurance increases optimal application rates our results indicate no support for this hypothesis at all nitrogen fertilizer rates and reasonable levels of risk aversion nitrogen fertilizer and insurance are substitutes suggesting that those who purchase insurance are likely to decrease nitrogen fertilizer applications

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

an economic model of representative democracy this paper develops an approach to the study of democratic policy making where politicians are selected by the people from those citizens who present themselves as candidates for public office the approach has a number of attractive features first it is a conceptualization of a pure form of representative democracy in which government is by as well as of the people second the model is analytically tractable being able to handle multidimensional issue and policy spaces very naturally third it provides a vehicle for answering normative questions about the performance of representative democracy

the principal agent relationship with an informed principal ii common values in many circumstances a principal may have relevant private information when she proposes a contract to an agent we analyze such a principal agent relationship as a noncooperative game the principal proposes a contract which is accepted or rejected by the agent who for most of our analysis has no private information the contract is executed if accepted otherwise the reservation allocation takes effect this allocation may be determined by a pre existing contract which the principal by her proposal is attempting to renegotiate or it may simply be the no trade point in this paper we assume that the principal s information directly affects the agent s payoff before solving the game we discuss pareto efficiency with asymmetric information we define an incentive compatible allocation to be weakly interim efficient wie if there exists no alternative incentive compatible allocation that both parties prefer for all possible beliefs that the agent might have about the principal s private information type we show that any wie allocation is interim efficient ie for some beliefs the rothschild stiglitz wilson rsw allocation relative to the reservation allocation l is the allocation that maximizes the payoff of each type of principal within the class of incentive compatible allocations that guarantee the agent at least the utility he gets from a irrespective of his beliefs about the principal s type the equilibrium set of the contract proposal game consists of the allocations that weakly pareto dominate the rsw allocation thus there is a unique equilibrium outcome if and only if the latter is ie and the equilibrium outcome is the rsw allocation itself after characterizing the equilibrium allocations we study those that are renegotiation proof when either the principal or the agent leads the renegotiation we then compare our contract proposal game which is a signaling model with its screening counterpart we conclude by extending our results to the case in which the agent as well as the principal has private information under the assumption of quasi linear preferences

implementation in differential information economies abstract we consider the problem of implementation of social choice correspondences in differential information economies we provide necessary conditions for implementation and slightly stronger conditions which are sufficient to guarantee implementation

public goods with congestion abstract i consider the problem of the efficient provision of a congested limited capacity public good in a setting with asymmetric information i show in particular that when the capacity of the good is limited in a wide class of economies it is possible to construct an incentive compatible mechanism that always produces the good at the efficient level balances the budget and satisfies voluntary participation constraints this result is in contrast with the corresponding impossibility result for pure public goods due to mailath and postlewaite rev econ stud 57 1990 351 359 and rob j econ theory 47 1989 307 333

generational accounting and intergenerational welfare we investigate the intergenerational welfare implications of generational accounting when it is used as the basis for intertemporal fiscal policy decisions in particular we consider an economy with a paygo social security system out of steady state due to a permanent fall in fertility in a highly stylized cge overlapping generations model we illustrate that policy recommendations based on a standard application of generational accounting may not be compatible with intertemporal welfare maximization our model provides an example where such policies are either time inconsistent or welfare decreasing

the effects of differential income replacement and mortality on u s social security redistribution we study redistribution via the u s social security retirement system for cohorts of men born during the second half of the 20th century our focus is on redistribution across race and education groups the cohorts we study are younger than cohorts studied in previous similar research and thus more exposed to recent increases in earnings inequality all else equal this should increase the degree of progressivity of social security redistribution due to the structure of the benefit formula however we find that redistribution is only modestly progressive for individuals born as late as 1980 differential mortality rates across race and education groups are the primary explanation while black white mortality gaps have narrowed some in recent years they remain large and dull progressivity mortality gaps by education level are also large and unlike the gaps by race they are widening which puts additional regressive pressure on social security redistribution

testing for the monotone likelihood ratio assumption although monotonicity of the likelihood ratio for conditioned densities is a common technical assumption in economic models empirical tests for its plausibility do not appear to have been conducted this article develops such a test based on the theory of order restricted inference that is robust with respect to the correlation structure of the distributions being compared the test is applied to study the technology revealed by agricultural production experiments for the data under scrutiny the results support the monotone likelihood ratio assumption in a second application we find some support for the assumption of affiliation among bids cast in a multiple round vickrey auction for a consumption good

persistent media bias abstract the news media plays an essential role in society but surveys indicate that the public views the media as biased this paper presents a theory of media bias that originates with private information obtained by journalists through their investigations and persists despite profit maximizing news organizations and rivalry from other news organizations bias has two effects on the demand for news first rational individuals are more skeptical of potentially biased news and thus rely less on it in their decision making this skepticism reduces demand and leads the news organization to set a lower price for its publication the greater is the bias it tolerates lower quality news thus commands a lower price second bias makes certain stories more likely than others given their private information journalists may bias their stories if their career prospects can be advanced by being published on the front page news organizations can control bias by restricting the discretion allowed to journalists but granting discretion and tolerating bias can increase profits if it allows journalists to be hired at a lower wage bias is not driven from the market by a rival news organization nor by a news organization with an opposing bias and the profits of a high bias news organization can be higher than the profits of a low bias one moreover bias can be greater with competition than with a monopoly news organization if individuals collectively choose regulation in place of their individual decision making bias increases the expected stringency of regulation

price information and bidding behavior in repeated second price auctions examining panel data on bidding behavior in over forty second price auction markets with repeated trials we observe that i posted prices influence the behavior of the median naive bidder ii posted prices do not affect the behavior of the median experienced bidder or the bidder for familiar goods and iii anticipated strategic behavior wanes after two trials the results suggest that while affiliation might exist in auctions for new goods the repeated trial design with nonprice information removes the correlation of values and provides the experience that bidders need to understand the market mechanism

the efficiency of competitive mechanisms under private information we consider the efficiency properties of exchange economies where privately informed traders behave strategically specifically a competitive mechanism is any mapping of traders reports about their types to an equilibrium price vector and allocation of the reported economy in our model some traders may have non vanishing impact on prices and allocations regardless of the size of the economy although truthful reporting by all traders cannot be achieved we show that given any desired level of approximation there is n such that any bayesian nash equilibrium of any competitive mechanism of any private information economy with n or more traders leads with high probability to prices and allocations that are close to a competitive equilibrium of the true economy in particular allocations are approximately efficient a key assumption is that there is small probability that traders behave non strategically

stability in large bayesian games with heterogeneous players bayesian nash equilibria that fail to be hindsight or alternatively ex post stable do not provide reliable predictions of outcomes of games in many applications we characterize a family of large bayesian games with many players in which all equilibria are asymptotically hindsight stable and discuss the consequences of this robustness property in contrast to earlier literature we establish hindsight stability in a class of games in which players are not anonymous and type spaces and action spaces can be infinite

strategic information revelation we analyze the problem in which agents have non public information and are to play an asymmetric information game the agents may reveal some or all of their information to other agents prior to playing this game revelation is via exogenously specified certifiable statements the equilibria resulting from various revelation strategies are used to determine equilibrium revelation of information sufficient conditions are provided for complete revelation of all private information a number of examples are provided illustrating when revelation will or will not occur in commonly analyzed games many economic problems are characterized by the presence of both strategic behaviour on the part of individuals and by asymmetric information models encompassing both of these characteristics have been used successfully to examine questions in many fields usually using the concept of bayesian nash equilibrium as the solution concept typically the agents information is given exogenously and is fixed throughout the analysis modelling the information structure as static is appropriate for some problems but not for all in particular situations that are inherently dynamic most economic encounters allow for some interchange between the agents before the outcome is settled irrevocably in such circumstances it is possible that at least one or more of the agents possessing non public information may be able to reveal part or all of his information to one or all of the other agents in the economy during the course of their contact to the extent that such a communication is believed by the other agents the priors of the other agents will change and we will have what is in essence a new asymmetric information game new in

time scarcity and the market for news abstract we develop a theory of news coverage in environments of information abundance time constrained consumers browse through news items across competing outlets they choose which outlets to access and which stories to read or skip thus indirectly deciding how much time to spend on a given outlet firms decide on rankings of news items that maximize their profits we show that even when readers or television viewers and firms are rational and unbiased they spend more time on the news than they would like and not necessarily on the topics they prefer in particular relevant news items may be crowded out we then study how reader efficient standards can be restored and derive implications on diverse aspects of new and traditional media these include tabloidization and polarization of the news and other aspects relevant for the political economy of the media including political knowledge gaps and voter turnout

social security and intergenerational redistribution a generational accounting perspective this paper is concerned with the analysis of intergenerational redistribution in a pay as you go financed social security scheme instead of annual fiscal indicators we apply generational accounts to calculate the intertemporal effects arising from a projected aging process as a case study the institutional settings and the parameterization of our model refer to the conditions found in germany in 1989 additionally the intergenerational impacts of the german 1992 pension reform act are taken into account our findings suggest that the major reform measures affect the distribution of the demographic burden between future and presently living generations however the burden is shifted in favor of the generations currently alive thereby contradicting the explicit political intentions and aggravating the situation for future generations

the scope of anonymous voluntary bargaining under asymmetric information we present a model of anonymous collective bargaining where individuals preferences and information may be significantly interdependent we show that the bargaining outcome becomes independent of individuals preferences and information as the bargaining group increases in size as a corollary we show that anonymous voluntary bargaining completely fails in large groups either the difference between the bargaining outcome and the status quo vanishes as the size of the group becomes larger or the bargaining becomes coercive and results in a violation of at least some individuals rights the result provides a rationale for the inherent difficulty of reform in the presence of asymmetric information

parametric pension reform with higher retirement ages a computational investigation of alternatives for a pay as you go based pension system abstract this paper discusses parametric reform options to control losses generated by a publicly managed pay as you go payg pension system under alternative deficit reduction reform strategies involving changes in contribution and replacement rates and statutory retirement ages two different problems corresponding to different pension reform strategies are considered using computational techniques the techniques are illustrated through exercises employing data for the financially troubled pension system in turkey

welfare effects of unfunded pension systems when labor supply is endogenous abstract a mandatory unfunded pension system can lead to welfare losses if the contributions are levied in such a way that the labor supply decision of the individuals is distorted this is shown in an overlapping generations model for a closed economy furthermore it is shown that under certain conditions a gradual abolition of unfuded pensions using lump sum contributions in the transition phase can lead to an intergenerational pareto improvement thus the paper extends a result recently derived by homburg for a small open economy to the closed economy case

news management and the value of firms the literature on asymmetric information has been concerned mainly with the problem of the informed party lying to the uninformed parties however in many cases the informed party will stop short of lying but will seek to gain from private information by managing the disclosure of news this article examines the pricing of a firm when there is such manipulation of news i model this situation as a variant of the persuasion game of milgrom and roberts 1986 in which i can parameterize the notion of the degree of credence placed by the market on the disclosures of the informed party an empirical hypothesis thrown up by the theory is that for otherwise identical firms a low price earnings ratio will be associated with a greater degree of positive skewness of the disclosure strategy

a spatial theory of news consumption and electoral competition we characterize the optimal editorial positions of the media in a model in which the media influence both voting behaviour and party policies political parties are less likely to choose partisan policies when more voters consume informative news when there are two media outlets each should be slightly biased relative to its audience in order to attract voters with relatively extreme views voter welfare is typically higher under a duopoly than under a monopoly two media outlets under joint ownership may provide more diverse viewpoints than two independent ones but voter welfare is not always higher copyright 2008 wiley blackwell

extremist platforms political consequences of profit seeking media we analyze how information about candidate quality affects the choice of electoral platforms made by an office motivated political challenger the incumbent is of known quality and located at the ideal policy of the voter the voter cares for both policy and the candidates quality and can learn about the challenger s quality by buying information a high quality challenger then has an incentive to signal her quality by choosing a policy that induces the voter to buy information we first study the benchmark case in which the information is supplied exogenously and its quality is independent of the challenger s platform this yields multiple equilibria and indeterminacy of equilibrium platforms by contrast when the information is supplied by a profit maximizing media outlet its quality depends on the challenger s platform and we obtain a unique equilibrium platform in particular when the incumbent s quality is relatively low the media coverage rises and the challenger s platform diverges further from the voter s ideal policy as the voter s preference for quality increases

a spatial theory of media slant and voter choice we develop a theory of media slant as a systematic filtering of political news that reduces multidimensional politics to the one dimensional space perceived by voters economic and political choices are interdependent in our theory expected electoral results influence economic choices and economic choices in turn influence voting behaviour in a two candidate election we show that media favouring the front runner will focus on issues unlikely to deliver a surprise while media favouring the underdog will gamble for resurrection we characterize the socially optimal slant and show that it coincides with the one favoured by the underdog under a variety of circumstances balanced media giving each issue equal coverage may be worse for voters than partisan media

timing decisions in organizations communication and authority in a dynamic environment this paper develops a theory of how organizations make timing decisions we consider a problem where an uninformed principal decides when to exercise an option and interacts with an informed but biased agent this problem is common examples include headquarters deciding when to close a plant drill an oil well or launch a product because time is irreversible the direction of the agent s bias is crucial for communication and allocation of authority when the agent favors late exercise centralized decision making where the principal retains authority and communicates with the agent often features full information revelation but ine cient delay delegation is never optimal in this case in contrast when the agent favors early exercise communication under centralized decision making is partial while option exercise is unbiased or delayed delegation is optimal if the bias is small or delegation can be timed thus delegating decisions such as plant closures is never optimal while delegating decisions such as product launches may be optimal

a reputational model of authority abstract the paper provides a model where authority relaionships are founded on reputation the viability of authority is the result of subordinates free riding on each other s challenges reducing the frequency of challenges and making reputation worth defending the party with authority secures subordinates compliance through the payment of rents to influence the extent of their failure to act collectively and exacerbate the free rider problem they face the model provides a framework to explain how the magnitude and form of these rents depend on the primitives of the environment and on the authority s design of its reputation applications to employment relationships dictatorships and the notion of legitimacy are considered

rational expectations information acquisition and competitive bidding most rational expectations market equilibrium models are not models of price formation and naive mechanisms leading to such equilibria can be severely manipulable in this paper a bidding model is developed which has the market like features that bidders act as price takers and that prices convey information higher equilibrium prices convey more favorable information about the quality of the objects being sold than do lower prices bidders can benefit from trading only if they have a transactions motive or if they have access to inside information apart from exceptional cases prices are not fully revealing a two stage model is developed in which bidders may acquire information at a cost before bidding and for which the equilibrium price is fully revealing resolving a well known paradox

political polarization and the electoral effects of media bias abstract we develop a model in which profits of media firms depend on their audience ratings and maximizing profits may involve catering to a partisan audience by suppressing information that the partisan audience does not like hearing while voters are rational understand the nature of the news suppression bias and update appropriately important information is lost through bias and can lead to electoral mistakes we characterize those conditions that give rise to electoral mistakes showing that heightened political polarization and asymmetric distributions of voter ideologies make electoral mistakes more likely even if the median ideology is a centrist and centrist voters gain access to unbiased news media bias can generate excessive cross over voting which in turn can lead to the election of the wrong candidate

manipulated news model electoral competition and mass media abstract this paper investigates the relationship between media manipulation the strategic suppression of relevant information by mass media and self mediatization the strategic exploitation of media coverage by candidates in elections in the model a voter cannot directly observe the policies proposed by two office motivated candidates the voter learns this information through media reports before voting takes place while the media outlet suppresses some of this information because the voter s decision making could be incorrect direct distortion the candidates have an incentive to win the election by influencing the media coverage through policy settings indirect distortion as a result policy convergence to the voter s ideal policy occurs if and only if the media bias is sufficiently small we then characterize the set of equilibria in terms of the degree of distortion the results suggest that if either strategic media manipulation or competition among the candidates is omitted then the distortion is nonnegligibly misspecified

pivotal players and the characterization of influence a player s influence relative to a mechanism and opponents strategies is the maximum difference his action can make in the expected value of a collective outcome a player is pivotal if his influence exceeds a threshold we provide tight bounds on the number of pivotal players and on average influence these bounds are uniform over all mechanisms and action profiles and are achieved at mechanisms that take the form of a majority rule we illustrate our analysis with an example of provision of a public good where each individual compares the private cost of his contribution with its influence on the collective outcome journal of economic literature classification numbers d62 d89 h41

government control of the media abstract we present a formal model of government control of the media to illuminate variation in media freedom across countries and over time media bias is greater and state ownership of the media more likely when the government has a particular interest in mobilizing citizens to take actions that further some political objective but are not necessarily in citizens individual best interest however the distinction between state and private media is smaller large advertising markets reduce media bias in both state and private media but increase the incentive for the government to nationalize private media media bias in state and private media markets diverge as governments become more democratic whereas media bias in democracies and autocracies converge as positive externalities from mobilization increase

rational debate and one dimensional conflict this paper studies repeated communication regarding a multidimensional collective decision in a large population when preferences coincide but beliefs about the consequences of the various decisions diverge it is shown under some specific assumptions that public communication causes the disagreement between beliefs either to vanish or to become one dimensional at the limit multidimensional disagreement indeed allows for many directions of communication including some that are orthogonal to the conflict along which agents can communicate credibly the possible convergence toward a one dimensional conflict where no further communication takes place may be related to the empirically observed geometry ofthe political conflict in many countries

voter participation and strategic uncertainty the paradox of not voting is examined in a model where voters have uncertainty about the preferences and costs of other voters in game theoretic models of voter participation under complete information equilibrium outcomes can have substantial turnout even when voting costs are relatively high in contrast when uncertainty about preferences and costs is present only voters with negligible or negative net voting costs participate when the electorate is large

media as watchdogs the role of news media in electoral competition abstract we develop an equilibrium model to analyze the role of the media in electoral competition when policy payoffs are state dependent party policies do not converge to the median voter s ideal policy if the media report only party policies news analysis about the state though possibly biased can discipline off equilibrium deviations and make the parties adopt more centrist policies since voters are rational the party favored by the media need not win with a higher probability instead media bias may reduce the effectiveness of electoral competition and lead to more polarized policies

are biased media bad for democracy this paper assesses the normative and positive claims regarding the consequences of biased media using a political agency framework with a strategic voter polarized politicians and news providers my model predicts that voters are always better informed with unbiased than biased outlets even when the latter have opposite ideological preferences however biased media may improve voter welfare contrary to several scholars fear partisan news providers are not always bad for democracy my theoretical findings also have important implications for empirical analyses of the electoral consequences of changes in the media environment left wing and right wing biased outlets have heterogeneous effects on electoral outcomes which need to be properly accounted for existing empirical studies are unlikely to measure the consequences of biased media as researchers never observe and can rarely approximate the adequate counterfactual elections with unbiased news outlets

provision of a public good with bounded cost abstract we provide a sufficient condition for the expected aggregate contribution to a public good to be bounded independently of the size of the population

the relevance of private information in mechanism design abstract recent results in mechanism design show that as long as agents have correlated private information and are sufficiently risk neutral it is possible to design mechanisms that leave agents with arbitrarily small information rents we show that these full rent extraction results hinge on the implicit assumption that the agents beliefs uniquely determine their preferences we present an example of the voluntary provision of a public good in which this assumption is relaxed and consequently even in highly correlated environments if agents beliefs do not uniquely determine their preferences then the extraction of the agents entire information rents is impossible

when can a news organization lead public opinion ideology versus market forces in decisions to make news do news organizations purposefullylead the public to support a particularideological agenda when debating thisquestion many analysts draw conclusionsfrom weak empirical evidence we introducea model that clarifies how a newsorganization s internal structure combineswith market forces to affect when it canlead public opinion we identify conditionsunder which liberal reporters orpolitically driven media magnates canachieve ideological goals we alsoilluminate important barriers that preventmany would be public opinion leaders fromever satisfying these conditions we showthat internal structure and market forcesare critical determinants of any newsorganization s power over public opinion

the market for news we investigate the market for news under two assumptions that readers hold beliefs which they like to see confirmed and that newspapers can slant stories toward these beliefs we show that on the topics where readers share common beliefs one should not expect accuracy even from competitive media competition results in lower prices but common slanting toward reader biases on topics where reader beliefs diverge such as politically divisive issues however newspapers segment the market and slant toward extreme positions yet in the aggregate a reader with access to all news sources could get an unbiased perspective generally speaking reader heterogeneity is more important for accuracy in media than competition per se

the political economy of dynamic elections accountability commitment and responsiveness we survey the literature on dynamic elections in the traditional settings of spatial preferences and rent seeking under perfect and imperfect monitoring of politicians we define stationary electoral equilibrium which encompasses notions used by barro 1973 ferejohn 1986 banks and sundaram 1998 and others we show that repeated elections mitigate the commitment problems of politicians and voters and that a responsive democracy result holds under general conditions term limits however attenuate the responsiveness finding we also touch on related applied work and we point to areas for fruitful future research including the connection between dynamic models of politics and economics

optimal information disclosure a sender randomly draws a prospect characterized by its profitability to the sender and its relevance to a receiver the receiver observes only a signal provided by the sender and accepts the prospect if his bayesian inference about the prospect s relevance exceeds his opportunity cost the sender s profits are typically maximized by partial information disclosure whereby the receiver is induced to accept less relevant but more profitable prospects switches by pooling them with more relevant but less profitable ones baits extensions include maximizing a weighted sum of sender profits and receiver surplus and allowing the sender to use monetary incentives

demand for slant how abstention shapes voters choice of news media political commentators warn that the fragmentation of the modern media landscape induces voters to withdraw into information cocoons and segregate along ideological lines we show that the option to abstain breaks ideological segregation and generates cross over in news consumption voters with considerable leanings towards a candidate demand information that is less biased towards that candidate than voters who are more centrist this non monotonicity in the demand for slant makes voters ideologies non recoverable from their choice of news media and generates disproportionate demand for media outlets that are centrist or only moderately biased it also implies that polarisation of the electorate may lead to an ideological moderation in news consumption

aging population problems and policy options in the us and germany aging population axel borsch supan the expected change in the age structure of the industrialized countries will lead to a dramatically higher proportion of older people in germany for example 100 employed persons now support about 40 elderly by 2030 this ratio will rise to 85 elderly people per 100 employed persons this process will deeply affect labour financial and housing markets it will strain the social security systems change the accumulation of aggregate wealth and skew its intergenerational distribution while imposing a growing burden on family support by the young generation when the elderly are becoming frail and unable to live independently this paper investigates the mechanisms at work in labour financial and housing markets drawing systematically on comparisons between german and us institutions to determine the role of taxes subsidies and regulations the evidence demonstrates that economic policies have powerful effects some of them are also currently distortionary and interact with existing market imperfections so that a serious consideration of policy options which may moderate the implications of population aging is called for

demand for risky financial assets a portfolio analysis abstract demand for risky financial assets takes place in portfolio settings the common stochastic orders applied in economics fail to rank demand for assets in such situations even for risk averse investors therefore the evaluation of the relative desirability of risky financial assets requires the establishment of new orders we prove that if returns on risky assets are ordered by the monotone likelihood ratio order then dominating assets will be more desired by all investors with nondecreasing utility functions

financial contracting under risk neutrality limited liability and ex ante asymmetric information this paper derives equilibrium financial contract forms in a risk neutral capital market with asymmetrically informed borrowers entrepeneurs and investors in doing so the analysis generalizes the work of demeza and webb 1987 by allowing for arbitrary profit distributions arbitrary contract forms and variable investment choices the main result of this inquiry is as follows when higher quality entrepreneurs have better ex post profit distributions in the sense of the monotone likelihood ratio property equilibrium contracts take a standard debt form so long as admissible investor payoff functions are monotone non decreasing in firm profit without the monotonicity constraint contracts often take a different live or die form

fault tolerance in large games abstract a nash equilibrium is an optimal strategy for each player under the assumption that others play according to their respective nash strategies but it provides no guarantees in the presence of irrational players or coalitions of colluding players in fact no such guarantees exist in general however in this paper we show that large games are innately fault tolerant we quantify the ways in which two subclasses of large games continuous games and anonymous games are resilient against byzantine faults i e irrational behavior coalitions and asynchronous play we also show that general large games have some non trivial resilience against faults

asymmetric information bargaining problems with many agents a yes or no decision must be made about some issue all agents must agree the coase theorem asserts that the efficient outcome will always result suppose the value positive or negative that an individual attaches to an affirmative decision is privately known to that individual it is proved under very mild conditions that with independent types as the number of agents increases the probability of an affirmative efficient decision goes to zero an example in which it is common knowledge that an affirmative decision is efficient and yet the probability of such a decision goes to zero is given

efficient mechanisms for public goods with use exclusions constrained efficient provision of an excludable public good is studied in a model where preferences are private information the provision level is asymptotically deterministic making it possible to approximate the optimal mechanism with a mechanism that provides a fixed quantity of the good and charges fixed user fees for access in general the fixed fees involve third degree price discrimination but if names are uninformative about preferences the analysis provides a justification for average cost pricing copyright 2004 wiley blackwell

generational accounting a new approach for understanding the effects of fiscal policy on saving working pa er 9107 generational accounting a new approach for understanding the effects of fiscal policy on saving by alan j auerbach jagadeesh gokhale and laurence j kotlikoff alan j auerbach is a professor of economics at the university of pennsylvania and an associate of the national bureau of economic research jagadeesh gokhale is an economist at the federal reserve bank of cleveland and laurence j kotlikoff is a professor of economics at boston university and an asso ciate of the national bureau of economic research working papers of the federal reserve bank of cleveland are preliminary materials circu lated to stimulate discussion and critical comment the views stated herein are those of the authors and not necessarily those of the federal reserve bank of cleveland or of the board of governors of the federal reserve sys tem may 1991

disclosures and asset returns public information in financial markets often arrives through the disclosures of interested parties who have a material interest in the reactions of the market to the new information when the strategic interaction between the sender and the receiver is formalized as a disclosure game with verifiable reports equilibrium prices can be given a simple characterization in terms of the concatenation of binomial pricing trees there are a number of empirical implications the theory predicts that the return variance following a poor disclosed outcome is higher than it would have been if the disclosed outcome were good also when investors are risk averse this leads to negative serial correlation of asset returns other points of contact with the empirical literature are discussed

when to drop a bombshell sender who is either good or bad wishes to look good at an exogenous deadline sender privately observes if and when she can release a public flow of information about her private type releasing information earlier exposes to greater scrutiny but signals credibility in equilibrium bad sender releases information later than good sender we find empirical support for the dynamic predictions of our model using data on the timing of u s presidential scandals and u s initial public offerings in the context of elections our results suggest that october surprises are driven by the strategic behaviour of bad sender

monotone comparative statics under uncertainty this paper analyzes monotone comparative statics predictions in several classes of stochastic optimization problems the main results characterize necessary and sufficient conditions for comparative statics predictions to hold based on properties of primitive functions that is utility functions and probability distributions the results apply when the primitives satisfy one of the following two properties i a single crossing property which arises in applications such as portfolio investment problems and auctions or ii log supermodularity which arises in the analysis of demand functions affiliated random variables stochastic orders and orders over risk aversion

insurability and moral hazard in agricultural insurance markets pareto optimal and constrained pareto optimal all risk insurance contracts are studied conditions required for emergence of competitive insurance markets are isolated and discussed full insurance contracts are shown to be dominated by contracts involving coinsurance and deductibles if insurers are pseudo risk averse the effect of moral hazard on all risk agricultural insurance indemnity schedules is examined results for indemnity schedules under moral hazard and constant absolute risk aversion show that providing farmers with the incentives to take appropriate actions may imply lower deductibles in the presence of moral hazard than in the absence of moral hazard

informational size and incentive compatibility we examine a general equilibrium model with asymmetrically informed agents the presence of asymmetric information generally presents a conflict between incentive com patibility and pareto efficiency we present a notion of informational size and show that the conflict between incentive compatibility and efficiency can be made arbitrarily small if agents are of sufficiently small informational size the incompatibility of pareto efficiency and incentive compatibility is a central theme in economics and game theory the issues associated with this incompatibility are particularly important in the design of resource allocation mechanisms in the presence of asymmetrically informed agents where the need to acquire information from agents in order to compute efficient outcomes and the incentives agents have to misrepresent that information for personal gain come into conflict despite a large literature that focuses on these issues there has been little work aimed at understanding those situations in which informational asymmetries are quantitatively important virtually every transaction is characterized by some asymmetry of information any investor who buys or sells a share of stock generally knows something rel evant to the value of the share that is not known to the person on the other side of the transaction in order to focus on more salient aspects of the problem many models rightly ignore the incentive problems associated with informa tional asymmetries in the belief that for the problem at hand agents are infor mationally small however few researchers have investigated the circumstances under which an analysis that ignores these incentive problems will yield results similar to those obtained when these problems are fully accounted for in this paper we study a class of mechanism design problems our goal is to formalize informational size in a way that when agents are informationally small 1 early versions of this paper circulated under the titles informational smallness and pareto effi ciency and informational smallness and incentive compatibility we thank jacques cremer dean foster andreu mas colell stephen morris david schmeidler and particularly faruk gul for help ful conversations and rajiv vohra for a very careful reading we also thank the numerous partici pants in seminars at which this paper was presented for helpful comments we also thank an editor and the referees for very helpful comments and thank ichiro obara for pointing out an error in an earlier version postlewaite gratefully acknowledges support from the national science foundation

mass media competition political competition and public policy if better informed voters receive favourable policies then mass media will affect policy because mass media provide most of the information people use in voting this paper models the incentives of the media to deliver news to different groups the increasing returns to scale technology and advertising financing of media firms induce them to provide more news to large groups such as taxpayers and dispersed consumer interests and groups that are valuable to advertisers this news bias alters the tradeoff in political competition and therefore introduces a bias in public policy the paper also discusses the effects of broadcast media replacing newspapers as the main information source about politics the model predicts that this change should raise spending on government programmes used by poor and rural voters

social connectivity media bias and correlation neglect we propose a model of political persuasion in which a biased newspaper aims to convince voters to vote for the government each voter receives the newspaper s report as well as an independent private signal voters then exchange this information on social media and form posterior beliefs neglecting correlation among signals an increase in connectivity increases the newspaper s bias if voters are ex ante predisposed to vote against the government and reduces the bias if they are predisposed in favour of the government while more precise independent signals reduce the newspaper s optimal bias the bias remains positive even when connectivity becomes large thus even with a large number of social connections the election produces an inefficient outcome with positive probability implying a failure of the condorcet jury theorem

a model of political competition with citizen candidates the authors develop a model of electoral competition in which citizens choose whether or not to run as candidates a winner implements her favorite policy the equilibrium number of candidates depends negatively on the cost of running and positively on the benefits of winning for some parameter values all equilibria under plurality rule have exactly two candidates whose positions are distinct two candidate elections are more likely under plurality rule than under a runoff system the candidates positions are less differentiated under a runoff system there exist equilibria under both systems in which some candidates have no chance of winning

downs meets d aspremont and company convergence versus differentiation in politics and the media abstract media firms have incentives to differentiate their news products to soften price competition when consumers value cognitive consistency between the news they read and the policies they support politicians are induced to propose more polarized policies to conform to a polarized media landscape a stronger commercial motive or a weaker preference for editorial neutrality in the media exacerbates this effect and causes party policies to become more extreme we find that prices for news products are higher when consumers have a demand for cognitive consistency despite the fact that maximal product differentiation does not hold for media firms

public good provision with many participants for a nonexcludable public good with benefit and cost functions independent of the number of participants this paper studies second best allocations under bayesian interim incentive compatibility and interim individual rationality as the number of participants becomes large second best provision levels converge in distribution to first best levels if the latter are bounded second best provision levels become large in absolute terms but small relative to first best levels if benefit and cost functions are isoelastic in contrast for an excludable public good the ratio of second best to first best levels is bounded away from zero

efficiency of large double auctions we consider large double auctions with private values values need be neither symmetric nor independent multiple units may be owned or desired participation may be stochastic we introduce a very mild notion of a little independence we prove that all nontrivial equilibria of auctions that satisfy this notion are asymptotically efficient for any alpha 0 inefficiency disappears at rate 1 n 2 alpha