market behavior in bid offer and double auctions abstract this study examines the robustness of the previously observed smith 1964 differences in market behavior between double auctions both buyers and sellers may enter price quotes bid auctions only buyers may enter price quotes and offer auctions only sellers may enter price quotes based on the results of twenty one market experiments we find little support for the a priori hypothesis that bid auction prices tend to be greater than double auction prices which tend to be greater than offer auction prices

equilibrium behavior in crisis bargaining games this paper analyzes a general model of two player bargaining in the shadow of war where one player possesses private information concerning the expected benefits of war i derive conclusions about equilibrium behavior by examining incentive compatibility constraints where these constraints hold regardless of the game form hence the qualitative results are game free i show that the higher the informed player s payoff from war the higher is his or her equilibrium payoff from settling the dispute short of war and the higher is the equilibrium probability of war the latter result rationalizes the monotonicity assumption prevalent in numerous expected utility models of war i then provide a general result concerning the equilibrium relationship between settlement payoffs and the probability of war

communication competition and social gift exchange in an auction for public good provision abstract reverse auctions are an established policy instrument for allocating conservation contracts while the auction mechanism has been the subject of a number of studies less attention has been paid to the post bidding contract phase as contracts involving natural resource management are usually incomplete trust becomes crucial for the effectiveness of the programme we test the effect of communication between auctioneer and bidders on bidding behaviour and contract fulfilment using experimental economics we combine a repeated reverse auction with an effort level game and use a bilateral chatting tool as treatment variable without communication auctioneers tended to select the lowest priced bidders who invested substantially less than the socially optimal level of effort when fulfilling their contract to provide the public good relational contracting proved important with effort levels and profits tending to be higher when auctioneers and bidders entered into consecutive contract relationships in the communication treatment there was no evidence of price competition as auctioneers were more likely to accept high priced bids however an overall higher price level did not lead to efficiency losses since contractors realised higher effort levels in return establishing a social gift exchange our results demonstrate the importance of trust based relationships between the auctioneering institution and landholders

an economic lot size model with non linear holding cost hinging on time and quantity abstract this paper develops an economic lot size inventory model where the demand rate depends on the stock level and the cumulative holding cost is non linear on both the quantity and the time they are stored more concretely it is supposed that the demand rate is a concave potential function of the inventory level and the holding cost is potential on both time and quantity moreover shortages are not allowed a general procedure to determine the optimal lot size and the maximum inventory profit is developed also some results about the profitability of the inventory system are presented this work extends several inventory models previously considered in the literature finally numerical examples which help us to understand the theoretical results are also given

the effects of rent asymmetries in posted offer markets abstract we report the results of six posted offer market experiments designed to analyze the effects of asymmetric supply and demand configurations on the price convergence path to competitive equilibrium the posted offer experiments are compared with twelve double auction experiments reported by smith and williams 1982 results differ markedly across trading institutions unlike trading under double auction rules we cannot reject the proposition that contract price convergence paths are unaffected by the distribution of consumer and producer surplus posted offer contract prices tend to converge to the competitive equilibrium from above regardless of the distribution of the exchange surplus

bargaining on behalf of a constituency abstract we study bargaining situations in which one side consists of a group of people who elect a representative to bargain with another party on their behalf a two phase bargaining model is developed in which a principal agent problem between the constituency and its representative is embedded with a natural refinement of sequential equilibrium we characterize the set of equilibria and examine its efficiency properties we show that agency problems in the delegation relationship rather than asymmetric information between the two bargainers can cause severe bargaining inefficiency i e delay in reaching agreements extensions of the model and applications to union firm bargaining are then discussed briefly journal of economic literature classification numbers c78 d82 j52

a simple model of voice we think of voice as a means of information aggregation within groups operating in a variety of settings we explore how the characteristics of groups and their leaders influence voice in relatively homogeneous groups members farthest away from the leader have the best incentives to provide information and their voice tends to moderate policy decisions in large heterogeneous groups where leaders cannot identify individual members the possibilities for informational exchange are severely limited and any communication that exists pushes policies farther to the extreme

shirking and sorting in a political market with finite lived politicians this paper analyzes principal agent slack in the context of a political market composed of voters challengers and incumbents the introduction of a last period via finite livedness in combination with voters imperfect information about politicians preferences causes time varying shirking behavior on the part of politicians political markets eventually sort out those politicians with significantly deviant policy preferences potentially providing a solution to the last period problem and enabling politicians to make credible commitments in the extreme sorting can insure that it is not worthwhile for potential shirkers to run for office a systematic relationship between political shirking and number of terms in office may exist and depends on how quickly sorting takes place we show that evidence of little if any shirking is quite consistent with politicians having diverse and strongly held policy preferences in addition if sorting is a significant feature of political markets cross sectional studies will tend to oversample little and non shirking politicians compared to longitudinal studies reinterpretations of existing empirical work are also discussed

forced information disclosure and the fallacy of transparency in markets a theory advanced in regulatory hearings holds that market performance will be improved if one side of the market is forced to publicly reveal preferences for example wholesale electricity producers claim that retail electricity consumers would pay lower prices if wholesale public utility demand is disclosed to producers experimental markets studied here featured decentralized privately negotiated contracts typical of the wholesale electricity markets two conclusions emerge i such markets generally converge to the competitive equilibrium and ii forced disclosure works to the disadvantage of the disclosing side information disclosure would result in higher wholesale and thus higher retail electricity prices

extremism campaigning and ambiguity this paper studies a model of how political parties use resources for campaigning to inform voters each party has a predetermined ideology drawn from some distribution parties choose a platform and campaign to inform voters about the platform we find that the farther away parties are from each other on average the less resources are spent on campaigning on average thus if parties are extreme less information is supplied than if parties are moderate we also show that if a public subsidy is introduced we have policy convergence given some mild technical restrictions on the public subsidy

the role of party reputation in the formation of policy abstract this paper shows that a party can credibly establish a platform more moderate than the ideology of its members and thereby raise the probability that the party s nominee wins the election a lame duck incumbent optimally implements his party s platform in order to maintain his party s reputation for having a moderate platform this increases the likelihood that his party retains power when candidates credibly locate themselves in policy space via this mechanism we show that if candidates are sufficiently impatient then their policies are bounded away from one another the policy convergence result is not robust

an eoq model for deteriorating items with a linear trend in demand and shortages in all cycles abstract we consider here the inventory replenishment problem over a finite time horizon for a deteriorating item with a linear trend in demand equal replenishment cycles and shortage in every cycle the reorder number the interval between two successive reorders and the shortage intervals are all determined in an optimal manner so as to minimize the average system cost the advantage of allowing shortage in all cycles is illustrated with a numerical example

convergence to nonstationary competitive equilibria an experimental analysis abstract this paper reports the results of 26 posted offer and double auction markets examining the effect of systematic supply and or demand nonstationarities on market performance and dynamic adjustment paths to the competitive equilibria both the trading institution and the source of the nonstationarity are found to affect the ability of markets to track the competitive equilibrium although some posted offer markets track the competitive equilibrium price as well as comparable double auctions posted offer markets consistently exhibit lower efficiency the inability of the posted offer trading institution to track demand based market shocks is particularly striking

political reputations and campaign promises we analyze conditions under which candidates reputations may affect voters beliefs over what policy will be implemented by the winning candidate of an election we develop a model of repeated elections with complete information in which candidates are purely ideological we analyze an equilibrium in which voters strategies involve a credible threat to punish candidates who renege on their campaign promises and in which all campaign promises are believed by voters and honored by candidates we characterize the maximal credible campaign promises and find that the degree to which promises are credible in equilibrium is an increasing function of the value of a candidate s reputation jel d8

a simple rule for determining replenishment intervals of an inventory item with linear decreasing demand rate abstract considerable amount of research efforts have not so far been devoted to inventory replenishment problems where the rate of demand decreases with time in comparison to increasing pattern of demand rate this article presents a simple rule for determining the replenishment intervals of an inventory item having a linear decreasing demand rate over a finite planning horizon in heuristic approach the proposed method is applied to the well known silver s heuristic continuous time part period heuristic and continuous least unit cost method and its performance is examined with a numerical example

papers in experimental economics competitive market institutions double auctions vs sealed bid offer auctions consider a market with the following characteristics 1 privacy that is each agent knows only his own valuation or cost conditions 2 exchange follows the rules of the oral double auction that is buyers freely announce bids or accept offers and sellers freely announce offers or accept bids 3 aggregate market supply and demand per trading period is stationary for at least two to three periods and 4 there are at least four buyers and as many sellers the literature reporting the results of a large number of experimental markets with these characteristics documents what appears to be a remarkably rapid convergence to a competitive equilibrium ce however any claim of double auction da convergence to the ce can only have meaning in one of three senses i the ce is attained immediately ii after t periods of trading some measure of the market s state such as mean price is nearer relative to experimental sampling variability to a ce than to some distinct alternative equilibrium such as a monopoly or nash equilibrium iii after t periods of trading this measure is nearer to a ce in da experimental markets than in markets organized under a different institution of contract for example a sealed bid auction since everything from electrons and the stars to rats and people yield state measures subject to error or random variation the deterministic criterion i can have no serious scientific standing by such criteria any hypothesis can be rejected and there could be no science of physics biology or economics 2 with the exception of certain very simple markets such as single object auctions or certain idealized markets such as the cournot quantity adjuster model economics has only two concepts of equilibrium monopoly and competitive the only formal model of da trading that has been proposed see david easley and john ledyard p 6 predicts stochastic convergence in finite time with probability one to a ce hence the only test alternative to the ce research hypothesis in da markets is a monopoly or monopsony equilibrium experimentalists have not reported statistical tests of the ce professor department of economics university of arizona assistant professor department of economics indiana university instructor department of economics university of arizona and sandia national laboratories albuquerque nm respectively we are indebted to the national science foundation for research support and to art denzau and mort kamien for helpful comments there is an early and recently growing body of experimental evidence for convergence to a competitive equilibrium under double auction rules the earliest evidence contained in experiments initiated in january 1956 is reported in smith 1962 1964 1965 1976 however these early experiments used between twenty and fifty or so participant buyers and sellers because in keeping with prevailing professional beliefs it was thought that a ce was unlikely to be approached unless numbers were quite large using large numbers was not unreasonable since it is a good beginning procedure to give a theory whatever is believed to be its best shot more recent evidence using six buyers six sellers and two traders in speculative da markets with cyclical demand is reported by r m miller charles plott and smith and williams 1979 for evidence from a comparison of oral and computerized da experiments with four buyers and four sellers see williams 1980 for further evidence in the context of the study of price controls see m isaac and plott 1981b and smith and williams 1981b in the context of a conspiracy study see isaac and plott 1981a in the context of comparisons between da and posted offer pricing see jon ketcham smith and williams in the context of a study of four variations on da rules see smith and williams 1980 all of these more recent papers report double auction experiments using no more than four buyers and four sellers 2as frederick mosteller once noted if you wanted to reject the inverse square law of attraction try tossing a sheet of paper out the window

endogenizing market institutions an experimental approach abstract we study experimental two sided markets in which the information structure is endogenous when submitting an offer a trader decides which other traders will be informed about the offer this setup allows both a decentralized bargaining market chamberlin j polit econ 56 1948 95 and a double auction market smith j polit econ 70 1962 111 as special cases the results show that offers are typically directed to all traders of the other side of the market but to none of the traders of the same side of the market even though traders receive much less information the resulting market institution leads to the same outcomes in terms of prices and efficiency as a double auction market in two additional treatments we examine the robustness of these results first it is found that the market institution adapts predictably but not necessarily efficiently to the imposition of transaction costs second we find that the preference of sellers to conceal offers from competitors is strict at the same time sellers benefit collectively when they reveal offers to each other

celebrating a century of the economic order quantity model in honor of ford whitman harris abstract this writing presents a brief introduction to the papers included in the special issue celebrating a century of the economic order quantity model in honor of ford whitman harris published by the international journal of production economics forty one papers covering an extensive scope of inventory management have been incorporated in this volume from contributing authors from 20 countries located in america asia europe and africa this special issue also provides a basis for new directions in inventory management research

knowledge is power a theory of information income and welfare spending no voters cast their votes based on perfect information but better educated and richer voters are on average better informed than others we develop a model where the voting mistakes resulting from low political knowledge reduce the weight of poor voters and cause parties to choose political platforms that are better aligned with the preferences of rich voters in us election survey data we find that income is more important in affecting voting behavior for more informed voters than for less informed voters as predicted by the model further in a panel of us states we fi nd that when there is a strong correlation between income and political information congress representatives vote more conservatively which is also in line with our theory

elections with limited information a fulfilled expectations model using contemporaneous poll and endorsement data as information sources a one dimensional model of two candidate elections under asymmetric information is theoretically developed and experimentally tested candidates do not know voter utility functions and most voters are uninformed about candidate policy positions a fulfilled expectations equilibrium is defined using poll and endorsement data as information sources it is proved that with any positive fraction of informed voters any equilibrium extracts all available information all participants voters and candidates alike act as if they were fully informed for fixed candidate strategies a dynamic is given for convergence to voter equilibrium and this process is shown to imply a bandwagon effect

the hidden cost of raising voters expectations reference dependence and politicians credibility abstract two politicians compete to get elected each politician is characterized by a valence which is unobservable to the electorate and can take one of two values high or low the representative voter prefers politicians with high valence but random shocks may lead him to appoint a low valence politician politicians make statements concerning their valence if the voter is a standard expected utility maximizer politicians statements lack any credibility and no information transmission takes place by introducing reference dependence and loss aversion we show that truthful communication is possible in equilibrium and we characterize the conditions under which it can arise intuitively these behavioral biases introduce a cost of overstating one s valence as overstatements may shift the electorate s preferences toward better skilled opponents

a comparison of prospective and retrospective voting with heterogeneous politicians a long standing empirical literature has been concerned with determining whether voters vote prospectively or retrospectively despite this interest little is known about the consequences of one voting regime versus another this study addresses this deficiency we find that voter welfare can be greatly affected by the candidate selection technique employed by voters among other findings we show that electing the best candidate does not always maximize voter welfare furthermore myopic voting is sometimes superior to farsighted voting these findings have implications for interpretations of empirical studies of voter behavior

cheap talk with two audiences these problems have in common a simple structure an informed sender says something to two interested but uninformed receivers who then take actions based on their beliefs these actions affect the sender as well as the receivers in this paper we study how costless nonverifiable claims cheap talk can affect these beliefs and hence the actions and how the incentives for truthful revelation to one receiver are affected by the presence of the other we then ask how welfare is affected by whether claims are made in public or in private as some of the above examples suggest public messages may be more credible than private messages addressed to either audience one possibility is that the presence of one audience can discipline the sender s relationship with the other we call this one sided

a comparison of posted offer and double auction pricing institutions this paper presents an experimental study of a computerized posted offer pricing mechanism that captures many of the basic institutional features of retail exchange in the u s posted offer market performance is evaluated relative to double auction market performance using two supply and demand designs subject experience with the trading mechanism is explicitly considered as an experimental treatment variable the market data suggest that prices tend to be higher and efficiency lower under posted offer pricing relative to double auction however the institutional effect appears to interact with other design conditions when feasible the predictive power of competitive nash and limit price theoretic equilibria are empirically evaluated

inventory model for an inventory system with time varying demand rate abstract the standard inventory problems of the multi period have been modeled under different situations specifically we have considered the demand subjects of a continuous distribution and a discrete distribution and whether the demand of each period is unchanged or not a method to get an economic order quantity in inventory systems with discrete and unchanged demand was presented in a previous paper and this method has been generalized to an inventory model with varying continuous demand however it was not achieved due to there being many classified cases in the general situations in this article the above method is discussed in the case discrete demand to determine whether it increases or decreases from period to period a theoretical method is presented by using previous results and some examples are given which suggest how the concept can handle on inventory system in order to make the decision an algorithm is also presented under some conditions and examples are shown by using the computer software program mathematica which helps to explain the findings in general cases we view the optimal policy in the inventory problems in only a few periods

joint pricing and inventory control for non instantaneous deteriorating items with partial backlogging and time and price dependent demand abstract in this paper a joint pricing and inventory control for non instantaneous deteriorating items is developed we adopt a price and time dependent demand function shortages is allowed and partially backlogged the major objective is to determine the optimal selling price the optimal replenishment schedule and the optimal order quantity simultaneously such that the total profit is maximized we first show that for any given selling price optimal replenishment schedule exists and unique then we show that the total profit is a concave function of price next we present a simple algorithm to find the optimal solution finally we solve a numerical example to illustrate the solution procedure and the algorithm

optimal policy for an inventory system with power demand backlogged shortages and production rate proportional to demand rate abstract this article analyzes an inventory system for items with time varying demand the way by which demand occurs during the inventory cycle follows a power demand pattern the production of items allows to add stock in the inventory during a replenishment period the production rate is proportional to demand rate shortages are allowed and completely backlogged holding cost shortage cost and order cost are the costs considered in the inventory model the aim consists of the minimization of the total cost per inventory cycle an efficient approach is developed to obtain the optimal scheduling period and the optimal reorder point in addition the economic lot size and the minimum cost of the inventory management is determined some numerical examples are presented for illustrating the proposed inventory model

elections with privately informed parties and voters this paper studies a situation in which parties are betterinformed than voters about the optimal policies for voters weshow that voters are able to infer the parties information byobserving their electoral positions even if parties have policypreferences which differ substantially from the median voter s unlike previous work that reach opposite conclusions we assumethat voters have some private information of their own if theinformation available to voters is biased parties attempts toinfluence voters beliefs will result in less than fullconvergence even if parties know with certainty the optimalpolicy for the median voter

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

how many parts to make at once reprinted from factory the magazine of management volume 10 number 2 february 1913 pp 135 136 152 interest on capital tied up in wages material and overhead sets a maximum limit to the quantity of parts which can be profitably manufactured at one time set up costs on the job fix the minimum experience has shown one manager a way to determine the economical size of lots

a political theory of populism when voters fear that politicians may have a right wing bias or that they may be in uenced or corrupted by the rich elite signals of true left wing conviction are valuable as a consequence even a moderate politician seeking reelection chooses populist policies i e policies to the left of the median voter as a way of signaling that he is not from the right truly right wing politicians respond by choosing more moderate or even left of center policies this populist bias of policy is greater when the value of remaining in o ce is higher for the politician when there is greater polarization between the policy preferences of the median voter and right wing politicians when politicians are indeed more likely to have a hidden right wing agenda when there is an intermediate amount of noise in the information that voters receive when politicians are more forward looking and when there is greater uncertainty about the type of the incumbent we show that similar results apply when some politicians can be corrupted or in uenced through other non electoral means by the rich elite we also show that soft term limits may exacerbate rather than reduce the populist bias of policies

a model of electoral competition with incomplete information a model of two candidate electoral competition is developed in which voters are uncertain about the policy either candidate would implement if elected candidates simultaneously announce policy positions from which voters attempt to infer the true positions the candidates would adopt announcing a position different from the true position is costly to the winning candidate with these costs increasing as the difference between the true policy and the announced policy increases a refinement of the sequential equilibrium concept is used to describe the behavior of candidates and voters

communicating on electoral platforms this paper proposes an analysis of strategic communication on platforms by candidates during an electoral campaign a candidate s platform in a possibly multidimensional policy space is fixed but is imperfectly known by voters a candidate strategically decides the emphasis he puts on the various issues and thus the precision of the information he conveys to voters on his position on each issue we show that if voters are fully rational then all the relevant information is revealed at equilibrium whatever the candidate s true position we then study a model of boundedly rational voters who take at face value the messages sent by the politicians without being able to decipher their strategies if voters are boundedly rational in this sense a politician will not transmit all the relevant information his communication strategy will depend on both the prior in the electorate and his true positions unknown to the electorate in particular we show that candidates address all issues with positive probability but tend to talk more often on issues on which they are a priori congruent with the representative voter thereby providing a nuanced version of petrocik s issue ownership theory

flip flopping ideological adjustment costs in the united states senate models of electoral competition in which candidates can change position at no cost predict the convergence of platforms in a two candidate election such convergence is at odds with empirical observation in this paper i undertake a study of candidate positioning in the united states senate and determine the extent to which electoral costs associated with changing position explain the ideological positions taken by senators using over 50 years of roll call voting data i use a simulated method of moments approach to estimate a dynamic model of candidate positioning for u s senators the ndings support a model in which senators face convex costs to changing position with the best tting model being one with linear costs of adjustment the model thus predicts severe punishments for ip opping senators those who make large changes in position as a result of the signi cant costs associated with adjusting position the empirical validity of the median voter theorem which depends upon candidates being able to change position at no cost is called into question

bequests as signals an explanation for the equal division puzzle in the united states more than two thirds of decedents with multichild families divide their estates exactly equally among their children in contrast gifts given before death are usually unequal these findings challenge the validity of existing theories regarding the determination of intergenerational transfers in this paper we develop a theory that accounts for this puzzle based on the notion that the division of bequests provides a signal about a parent s altruistic preferences the theory can also explain the norm of unigeniture which prevails in other societies

candidate entry and political polarization an antimedian voter theorem we study a citizen candidate entry model with private information about ideal points we fully characterize the unique symmetric equilibrium of the entry game and show that only relatively extreme citizen types enter the electoral competition as candidates whereas more moderate types never enter it generally leads to substantial political polarization even when the electorate is not polarized and citizens understand that they vote for more extreme candidates we show that polarization increases in the costs of entry and decreases in the benefits from holding office moreover when the number of citizens goes to infinity only the very most extreme citizens with ideal points at the boundary of the policy space become candidates finally our polarization result is robust to changes in the implementation of a default policy if no citizen runs for office and to introducing directional information about candidates types that is revealed via parties

signaling character in electoral competition we study a one dimensional hotelling downs model of electoral competition with the following innovation a fraction of candidates have character and are exogenously committed to a campaign platform this is unobservable to voters character is desirable and a voter s utility is a convex combination of standard policy preferences and her assessment of a candidate s character this structure induces a signaling game between strategic candidates and voters since a policy platform affects voters utilities not only directly but also indirectly through inferences about a candidate s character the model generates a number of predictions starting with a failure of the median voter theorem jel d72 d82

polarization and inefficient policies of the economy in this case the costs of producing a public good the parties each propose a policy an election is held and the policy of the winning party is implemented voters and parties care about the level of the public good and costs two kinds of sequential equilibria exist revealing where voters learn the true costs and the implemented policy adjusts to costs and non revealing if parties preferences are polarized only non revealing equilibria fulfill a refinement criterion like the intuitive criterion if they are alike only revealing equilibria fulfill this criterion thus less political polarization improves information revelation in electoral democracies policy motivated parties are likely to be better informed about the functioning of the economy than are voters this paper presents a model where two parties but not voters are informed about the cost of producing a public good we study whether an electoral democracy leads to efficient production of the public good given this asymmetry of information in particular under which circumstances will the implemented policy the level of the public good reflect actual costs the main result is that the policy will reflect costs if and only if at least one of the parties has preferences which are sufficiently similar to the median voter s in this sense polarization leads to inefficiency the public good can be for instance infrastructure medicare or military services both a continuum of voters and the parties have preferences over the amount of the good that is provided by the government the preferences of the two parties are situated on each side of those of the median voter the costs of providing the good are not precisely known to the voters who only know the distribution of costs and that they will pay for these costs as taxpayers on the other hand the parties know the costs

spatial models of political competition under plurality rule a survey of some explanations of the number of candidates and the positions they take this paper surveys work that uses spatial models of political competition to explain the number of candidates and the positions that they take in plurality rule elections

selection vs accountability an experimental investigation of campaign promises in a moral hazard environment abstract we examine retrospective and prospective voting considerations in an experiment implementing a simple voting model in each period the official chooses how much rent to appropriate from a social endowment announcement of this choice is followed by an election between the official and a randomly selected challenger with the winner becoming the official in the next period we vary two features of the setting a the discount factor and b whether candidates can make costless non binding campaign promises about their behaviour if elected consistent with the model s predictions both raising the discount factor and introducing campaign promises lead to lower rent appropriation by officials and worse electoral outcomes other things equal for incumbents campaign promises despite being cheap talk have real effects promising less appropriation is rewarded by voters but breaking such promises is punished finally we find a weak positive association between campaign promises and officials subsequent behaviour

partisanship as information intuitively we associate different political parties with different types of policy in contrast this paper shows that in the absence of differential costs of membership among parties that is if party membership ischeap talk party labels cannot perfectly signal the ideologies of candidates however under certain conditions parties can signal candidate types imperfectly the paper therefore also provides an example of how costless communication can be effective in games of partial conflict

political rents and voter information in search equilibrium abstract political parties committed to grab rents may run for election and even win if citizens are uninformed but how is the political equilibrium affected if citizens can mitigate this information problem through costly information search we propose a political equilibrium theory with endogenous information search and turnout we show that i the political equilibrium generates political uncertainty characterized by a distribution of rent policies i i the expectation of this rent distribution is inversely u shaped in the information search cost i i i turnout is lower and rents are higher the more proportional is the electoral system

third parties in equilibrium under standard assumptions equilibria with three parties normally do not exist in spatial models of electoral competition in this paper i show that such equilibria are possible if it is assumed that voters are uncertain about the exact policies parties will adopt once elected substantive predictions can be derived from the model explaining some features of three party competition first the least risk party will always take the most moderate position second this position is also winning third the two riskier parties are always on opposite sides of the median voter and also of the moderate party

papers in experimental economics on nonbinding price controls in a competitive market interest in the effect of nonbinding price controls on double auction markets stems from two primary considerations the double auction institution converges to a competitive allocation more rapidly and with fewer participating agents than any other institution with which it has been compared see smith et al one way to improve our understanding of this important property is to determine what conditions if any can interfere with or retard this convergence process nonbinding price controls represent a condition that may affect this convergence process hence if such effects can be documented they will provide a body of data that any future proposed model of the double auction process should be able to explain a second reason for studying the effect of nonbinding controls on the double auction is practical the organized commodity exchanges often set limits on price fluctuations during any single day when prices at any point during a day rise above qr fall below the closing prices of the preceding day by more than the amount of the limit no further trading for that day is permitted walter labys p 162 consequently commodity trading frequently occurs at prices near the level of nonbinding price floors or ceilings mark issac and charles plott report the results of twelve exploratory experiments in which various price control constraints are imposed on double auction markets their two principal conclusions can be summarized as follows 1 the hypothesis is rejected that nonbinding price controls that is price ceilings above or price floors below the competitive equilibrium ce will serve as a focal point or signalling price on which sellers and buyers will key their contracts 2 inconclusive evidence is presented in support of the hypothesis that nonbinding controls near the ce will bias prices below ce when there is a price ceiling and above ce when there is a price floor support for this second hypothesis is not conclusive because some experimental markets show a tendency to converge from below and others from above depending upon the relative bargaining strength of buyers as against sellers thus sampling variation among subjects can yield a group in which buyers sellers are able to make contracts at an average price below above ce for several periods of trading consequently in an experiment in which there is a price ceiling floor five cents above below ce and in which contract prices are observed to occur below above ce one cannot determine conclusively whether the observed effect was due to the nonbinding price control or to the bargaining characteristics of the market participants we report below an experimental design developed for the purpose of separating these confounding factors and allowing the effect of nonbinding controls to be isolated the results of sixteen experiments strongly support the hypothesis that markets with a nonbinding price ceiling floor near ce will converge from below above relative to any otherwise identifiable tendency to converge from below above an analysis of the effect of a nonbinding price ceiling floor on the distributions of bids and offers reveals the cause of this bias ceilings limit the bargaining strategies of sellers especially but also that of buyers while floors have the opposite effect thus in the absence of price controls double auction trading is characterized by a process in which sellers typically make concessions from offer prices well above ce while buyers most often concede from bid prices well below ce a price ceiling truncates seller offer prices at the ceiling requir university of arizona and indiana university respectively research support by the national science foundation is gratefully acknowledged

electoral competition with informed and uninformed voters i present a model of electoral competition in which candidates raise campaign contributions by choosing policies that benefit interest groups and then expend those contributions to influence voters who are uninformed about the policies informed voters however vote based on those policies so candidates face a trade off between choosing a policy to generate funds to attract the uninformed vote and choosing a policy to attract the informed vote electoral equilibria are characterized for two categories of policies particularistic and collective in the case of particularistic policies the equilibrium policies of the candidates are separated if the proportion of uninformed voters is sufficiently high and the degree of separation is an increasing function of that proportion the model is extended to include the public financing of elections and incumbency advantages for the case of collective policies the candidates locate at the median of the ideal points of the informed voters and contributions are zero