minimum effort coordination games stochastic potential and logit equilibrium abstract this paper revisits the minimum effort coordination game with a continuum of pareto ranked nash equilibria noise is introduced via a logit probabilistic choice function the resulting logit equilibrium distribution of decisions is unique and maximizes a stochastic potential function in the limit as the noise vanishes the distribution converges to an outcome that is analogous to the risk dominant outcome for 2 2 games in accordance with experimental evidence logit equilibrium efforts decrease with increases in effort costs and the number of players even though these parameters do not affect the nash equilibria journal of economic literature classification numbers c72 c92

ten little treasures of game theory and ten intuitive contradictions this paper reports laboratory data for games that are played only once these games span the standard categories static and dynamic games with complete and incomplete information for each game the treasure is a treatment in which behavior conforms nicely to predictions of the nash equilibrium or relevant refinement in each case however a change in the payoff structure produces a large inconsistency between theoretical predictions and observed behavior these contradictions are generally consistent with simple intuition based on the interaction of payoff asymmetries and noisy introspection about others decisions

international inequality in the basic needs indicators abstract using data for nearly 100 countries cross country inequality indexes for five major basic needs indicators are computed and compared with income inequality indexes except for physician supply inter country inequality in meeting basic needs appears much smaller than income inequality while inter country income disparity increased inequality in basic needs indicators declined during 1960 1978

the role of real income level and income distribution in fulfillment of basic needs abstract using internationally comparable estimates of real gdp per capita along with world bank data on seven basic needs indicators and one income equality measure relative importance of real income level and income equality for improvement in the provision of basic needs is assessed on the basis of a multiple regression model income level seems important in almost all cases but the importance of income equality is observed only on a limited scale although income is probably more important in low income ldcs the relationships studied appear broadly similar in the low income and the middle income ldc contexts

production externalities and long run equilibria bargaining and pigovian taxation this paper analyzes bargaining and pigovian taxation solutions to inefficiencies from production externalities with free entry the coase theorem fails in a decentralized context but remains valid if the property rights holder can act like a command economy planner a less powerful price taking rights holder s objective function is nonconcave causing an inefficient bargaining outcome bargaining complicates pigovian taxes with a nonlinear tax scheme required to sustain the optimum polluting firms pay a franchise tax whose revenue is given lump sum to consumers and face a marginal charge only on excess output which thus raises no revenue in equilibrium

changes in the world distribution of income between 1950 and 1977 trends in the world distribution of income are much discussed and philosophised about the issue of increasing economic inequality among nonsocialist countries in the post war period is central to the debate about the international economic order in i969 the pearson commission report was already pointing to the widening gap between the developed and developing countries as a central issue of our time and was proposing the reduction of that gap as the main objective of international co operation according to that report gnp per capita had increased between i960 and i967 at annual rates of 2 5 and 3 6 in developing and developed countries respectively morawetz i978 found that the gap between the two sets of countries rose from i 2 6 fold in i950 to i3 2 fold in i975 other authors see a more complicated picture atkinson i975 for instance has argued that although the share of poor countries in world income probably declined between i950 and i970 that of the countries at the middle of the world distribution probably increased 2 what may be a mere assessment of relative growth performances among nonsocialist countries becomes a basic theoretical element in the radical stream of economic literature for authors like amin i974 emmanuel i972 and frank i978 the capitalist mode of development necessarily leads to the rich countries of the centre becoming richer and poor countries of the periphery becoming poorer in a degree depending on their involvement in international trade for them a widening gap between developed and developing countries is simply the statistical confirmation of an unavoidable consequence of the national and international capitalist system in the latter perspective the issue at stake is of such importance that the contrast between the abundance of theoretical literature and the lack of empirical work is striking the few existing studies of changes in world distribution provide an inadequate picture intra country income distributions are not taken into account observation periods do not exceed i5 years 8 for andic and peacock i96i and for beckerman and bacon i970 i5 for kirman and tomasini i969 socialist as well as some non socialist countries are excluded and national incomes are converted to u s dollars at official exchange rates 3 finally none of these studies covers the i970s although several shocks which might have affected world distribution occurred during that decade for the non socialist countries to which they refer the andic peacock and beckerman bacon studies found the gini coefficient almost constant over

public goods self selection and optimal income taxation using the self selection approach to tax analysis this paper derives a modified samuelson rule for the provision of public goods when the government deploys an optimal nonlinear income tax this approach gives a straightforward interpretation of the central result in this area generalises it and provides a simple characterisation of optimal policy in a wide range of circumstances the analysis also emphasises and clarifies the significance of the choice of numeraire for the optimality of decentralising public spending decisions it is well known that the famous samuelson rule for the provision of public goods may not be applicable when the tax revenues used to finance the public goods come from distorting taxes the principle was recognized as long ago as pigou 1947 long before the samuelson rule was devised pigou saw that in addition to the resource cost involved in transferring funds from the private to the public sector there was a deadweight loss involved from this insight he suggested that the criterion for providing public goods should be more stringent than the samuelson rule would later suggest in particular one might expect that the inclusion of the deadweight loss of taxes as part of the cost of providing a public good would lead to a reduction in its optimal provision relative to a situation in which lump sum taxes were available the problem was investigated more systematically by atkinson and stern 1974 who considered the case in which a public good is financed by a set of optimal commodity taxes all individuals were assumed to be identical so efficiency alone dictated the objective they found that no prima facie case could be made for the pigou position that the use of distortionary taxes called for a reduction in the supply of the public good their analysis clearly showed that there were two influences at work when the financing of a public good was by distorting taxes on the one hand

the bayesian foundations of solution concepts of games abstract we transform a noncooperative game into a bayesian decision problem for each player where the uncertainty faced by a player is the strategy choices of the other players the priors of other players on the choice of other players the priors over priors and so on we provide a complete characterization between the extent of knowledge about the rationality of players and their ability to successively eliminate strategies which are not best responses this paper therefore provides the informational foundations of iteratively undominated strategies and rationalizable strategic behavior b d bernheim econometrica 52 1984 1007 1028 d pearce econometrica 52 1984 1029 1050 sufficient conditions are also found for nash equilibrium behavior and a result akin to r j aumann econometrica 55 1987 1 18 on correlated equilibria is derived with different hypotheses

privatization and the distribution of income in the commons abstract the explicit treatment of heterogeneity among the users of the commons leads to results that differ from those that are now generally accepted in the literature the owner of the fixed factor is not able to expropriate the rents of privatization rather the resulting distribution of income to the free factor after privatization depends on the technology and the institutional arrangements this result extends to more than two goods if the decline in the price of the good produced in the commons is sufficient to offset the decline in the marginal product of labor in the rest of the economy

private information coasian bargaining and the second welfare theorem abstract most of the debate about coasian bargaining in the presence of externalities relates to the first welfare theorem is the outcome under bargaining efficient this debate has involved the definition and importance of transaction costs the significance of private information and the effect of entry there has been little analysis of how coasian bargaining relates to the second welfare theorem even if the bargaining outcome is efficient does the process limit the set of pareto optimal allocations which can be achieved we consider a model in which individuals utilize a common resource and may affect each other s output the individuals differ in their productivities or tastes and this information is private to each of them the government can manage the common resource and use nonlinear taxes to correct for the externality or it can turn the common resource over to a private owner who can charge individuals to utilize it with a nonlinear fee schedule the government and the owner have the same information about tastes and productivities of the individuals except for the private information there are no bargaining or administrative costs for collecting the taxes or fees whether there is public or private ownership the government desires to redistribute but it faces self selection constraints we show that the outcome of coasian bargaining is constrained pareto efficient that is given the information constraints no pareto improvement is possible however private ownership may limit what pareto optimal allocations the government can achieve the private owner in seeking to maximize profits always proposes contracts which counteract the government s attempts to redistribute across individuals with different characteristics under public management any pareto optimum can be sustained in this context private ownership while not inefficient does limit the government s ability to redistribute

strategic risk and coordination failure in blame games within a class of games that we call blame games we discuss how strategic risk may discourage play of a unique and efficient strictly dominance solvable equilibrium

anomalous behavior in a traveler s dilemma the notion of a nash equilibrium has joined supply and demand as one of the two or three techniques that economists instinctively try to use first in the analysis of economic interactions moreover the nash equilibrium and closely related game theoretic concepts are being widely applied in other social sciences and even in biology where evolutionary stability often selects a subset of the nash equilibria many people are uneasy about the stark predictions of the nash equilibrium in some contexts where the extreme rationality assumptions seem implausible kaushik basu s 1994 traveler s dilemma is a particularly convincing example of a case where the unrelenting logic of game theory is at odds with intuitive notions about human behavior the story associated with the dilemma is that two travelers purchase identical antiques while on a tropical vacation their luggage is lost on the return trip and the airline asks them to make independent claims for compensation in anticipation of excessive claims the airline representative announces

economic and social convergence in colombia royuela v and garcia g a economic and social convergence in colombia regional studies gross domestic product gdp has usually been used as a proxy for human well being nevertheless other social aspects should also be considered such as life expectancy infant mortality educational enrolment and crime issues this paper investigates economic and social convergence between regions in colombia in the period 1975 2005 the main results confirm that there is convergence in colombia in key social variables although not in the classic economic variable gdp per capita it is also found that spatial autocorrelation reinforces convergence processes through deepening market and social factors while isolation condemns regions to non convergence

second best pollution taxes and the structure of preferences we characterize optimal taxes on polluting and nonpolluting goods in ramsey and mirrlees second best environments the polluting good tax differs from the pigouvian tax by ramsey terms in the first and by stiglitz mirrlees plus another adjustment term in the second these terms can be positive negative or zero if preferences are weakly separable in public and private goods with the private good subutility weakly separable in labor and produced goods nonpolluting goods are taxed uniformly and the concept of a tax differential between polluting and nonpolluting goods is well defined the differential is then less than the pigouvian tax in the ramsey framework but it can be greater equal to or smaller than the pigouvian tax in the mirrlees second best in mirrlees second best if preferences are separable in labor supply and other goods the second best tax differential is identical to the pigouvian tax

information and the coase theorem abstract some economists think the coase theorem implies a lot about the proper scope of government intervention in the economy and about the welfare consequences of laissez faire others see it as a mere tautology that if people negotiate efficiently then every outcome will be efficient the coase theorem is important only if we believe that efficient negotiation is likely of course we can attribute inefficiencies to bargaining imperfection but it may not be useful to do so such attitudes sometimes seem to depend more on ideology than on reason this article gives one economist s reasoned view it discusses the coase theorem as a decentralization result and why decentralization results are interesting it considers mechanism design for revealing private information and describes the problems of centralization should the coase theorem should be viewed as a second best result property rights are more efficient than some reasonable alternative does the coase theorem recommend an institution or make

international income mobility abstract we perform a novel analysis of the international mobility of per capita gnp we find general but not unambiguous support for the notion that world income mobility increased between 1972 and 1992 counterpointing the increased inequality over this period

does voluntary participation undermine the coase theorem abstract the coase theorem states that costless enforcement of voluntary agreements yields efficient outcomes we argue that previous treatments fail to recognize the full meaning of voluntary it requires a two stage game a non cooperative participation decision followed by coaseian bargaining only among those who choose to participate we illustrate this in a simple public goods model and find outcomes ranging from extremely inefficient to fully efficient however the efficient equilibrium is not robust to even very small transaction costs thus we cast doubt on coaseian claims of universal efficiency finally we outline a kind of coercion that restores efficiency

intercountry inequalities in income and basic needs indicators a recent perspective abstract large crosscountry samples are used to compute intercountry inequalities in income and three indicators of basic needs fulfillment first the familiar picture of high intercountry inequality in income coexisting with low inequality in basic needs indicators is reaffirmed for the 1980s second income inequality seems to have continued its increasing trend third however while the pace of increase in inequality in conventional gdp per capita has accelerated accentuation of inequality in real gdp per capita has slowed fourth inequality in basic needs indicators continues to decline last caution is urged in interpreting the very low values observed for some indices of inequality in basic needs fulfillment during the 1980s

self selection and pareto efficient taxation abstract this paper analyses the set of pareto efficient tax structures the formulation of the problem as one of self selection not only shows more clearly the similarity between this problem and a number of other problems such as the optimal pricing of a monopolist which have recently been the subject of extensive research but also allows the derivation of a number of new results we establish i under fairly weak conditions randomization of tax structures is desirable ii if different individuals are not perfect substitutes for one another in production then the general equilibrium effects until now largely ignored in the literature of changes in the tax structure may be dominant in determining the optimal tax structure in particular if the relative wage of high ability and low ability individuals depends on the relative supplies of labor the optimal tax structure entails a negative marginal tax rate on the high ability individuals and a positive marginal tax rate on the low ability individuals the marnitude of which depends on the elasticity of substitution iii if individuals differ in their preferences pareto efficient taxation may entail negative marginal tax rates for high incomes while iv if wage income is stochastic the marginal tax rate at the upper end may be 100 our analysis thus makes clear that the main qualitative properties of the optimal tax structure to which earlier studies called attention are not robust to these attempts to make the theory more realistic