Advances in Economic Design

454 Pages·2003·21.395 MB·English

by  Semih Koray, M. R. Sertel (auth.), Professor Dr. Murat R. Sertel, Professor Dr. Semih Koray (eds.)

STUDIES IN ECONOMIC DESIGN
Series Editor Murat R. Sertel
Turkish Academy of Sciences
Springer-Verlag Berlin Heidelberg GmbH
Titles in the Series
V. 1. Danilov and A. 1. Sotskov
Social Choice Mechanisms
VI, 191 pages. 2002. ISBN 3-540-43105-5
T. Ichiishi and T. Marschak (Eds.)
Markets, Games and Organization
VI, 314 pages. 2003. ISBN 3-540-43897-1
B. Dutta and M. O. Jackson (Eds.)
Networks and Groups
VIII, 496 pages. 2003. ISBN 3-540-43113-6
Murat R. Sertel
Semih Koray
Editors
Advances
in Economic
Design
With 53 Figures
and 28 Tables
Springer
Professor Dr. Murat R. Sertel
Ko<; University
Rumeli Feneri Yolu, Sariyer
34450 Istanbul, Turkey
e-Mail [email protected]
Professor Dr. Semih Koray
Bilkent University
Department of Economics
06533 Bilkent, Ankara, Turkey
e-Mail [email protected]
ISBN 978-3-642-05541-6 ISBN 978-3-662-05611-0 (eBook)
DOI 10.1007/978-3-662-05611-0
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© Springer-Verlag Berlin Heidelberg 2003
Originally published by Springer-Verlag Berlin Heidelberg New York in 2003.
Softcover reprint of the hardcover 1s t edition 2003
The use of general descriptive names, registered names, trademarks, etc. in this publication
does not imply, even in the absence of a specific statement, that such names are exempt from
the relevant protective laws and regulations and therefore free for general use.
Cover design: Erich Kirchner, Heidelberg
SPIN 10905005 43/3130 - 5 4 3 2 1 0 - Printed on acid free paper
We dedicate this book, Advances in Economic Design,
to the memory ofA hmet Sertel, who designed many things
aesthetic and usefulfor uso We lost him on 25.06.2000,
during SED 2000, in istanbul.
Preface
This book, Advances in Economic Design, celebrates the birth of SED, the Society
for Economic Design. It grew out of SED 2000, the first International Conference
of the Society for Economic Design, which took place in istanbul during 23-27
lune, 2000. While it is not a proceedings or even a selected proceedings volume, it
nevertheless contains many chapters which derive from papers presented at SED
2000, although they have typically been substantially reworked, extended and
deepened. Of course, all the papers published in this book were anonymously refe
reed.
As a collection of selected essays, the book displays the state of the art across a
broad spectrum of theoretical questions and topics and areas of application which
economic designers are investigating. This characteristic of the book is reflected in
its organization into seven parts: (A) Social Choice and Electoral Systems, (B)
Buyers and SeIlers, (C) Bargaining, (D) Coalitional Stability and Efficiency, (E)
Regulating and Organizing Markets, (F) Designing Rights, (G) Information.
Most of the chapters of this book were edited for their English. Ms. ludith
Tucker edited Chapters A2, A3, BI, B3, Cl, C4, DI, D2, D3, E2, E3, F2, F3 and
F4, while Dr. Noah Hardy linguistically edited Chapters B2, B4 and C3. We thank
Ms. Tucker and Dr. Hardy for their diligent support in this regard.
We thank Dr. AY9a E. Giritligil Kara for her continued editorial assistance in
keeping our communication with our many authors, our linguistic editors and our
publishers, Springer Verlag, in order. She was indispensable throughout the selec
tion of the papers and the formation of the book.
Last but not least, we thank Dr. Werner Müller and Dr. Martina Bihn of Springer
for their warm reception of this book.
We expect that the book will serve as a useful reference for researchers in eco
nomic design.
The Editors
Table of Contents
Preface ................................................................................................................ VII
Introduction ........................................................................................................... 1
S. Koray and MR. Serlel
PART A: SOCIAL CHOICE AND ELECTORAL SYSTEMS
Selecting a Social Choice Rule - An Exploratory Panel Study ....................... 19
MR. Serlel and A.E. G. Kara
Weighted Scoring Rules That Maximize Condorcet Efficiency ...................... 53
W V. Gehrlein
Incentive Contracts and Elections for Politicians and the
Down-Up Problem .............................................................................................. 65
H. Gersbach
PART B: BUYERS AND SELLERS
On Determination of Optimal Reserve Price in Auctions with
Common Knowledge about Ranking ofValuations ......................................... 79
A.A. Elbittar and M U Ünver
On Auctions with Interest Linkages among Bidders ....................................... 95
0. Chillemi
Substitutes, Complements, and Equilibrium in Two-Sided
Market Models .................................................................................................. 105
v.I.
Danilov, G.A. Koshevoy, and C. Lang
Core Convergence in Two-Sided Matching Markets ..................................... 125
A. Feldin
X Table of Contents
PART C: BARGAINING
Can and Should the Nash Program Be Looked at as a
Part of Mechanism Theory? ............................................................................ 153
W Trockel
Impossibility of aWalrasian Bargaining Solution .......................................... 175
MR. Sertel and M YzldlZ
Characterization of Competitive AHocations and the
N ash Bargaining Problem ................................................................................ 183
A.I. Sotskov
Kalai-Smorodinsky and Maschler-Perles Solutions under Pre-donation .... 205
B.Z. Orbay
PART D: COALITIONAL STABILITY AND EFFICIENCY
Stable Cartel Structures in a Dismantling Game ........................................... 219
S. Thoron
A Sequential Approach to the Characteristic Function and the Core in
Games with Externalities ................................................................................. 233
S. Currarini and M Marini
Coalition Structural Games and the Voluntary Provision of
Public Goods ...................................................................................................... 251
G. A~an and MR. Sanver
PART E: REGULA TING AND ORGANIZING MARKETS
Regulation and Markets for Catastrophe Insurance ..................................... 263
P.R. Kleindorfer and R. W Klein
Table of Contents XI
Ineentive Compatible Regulation ofQuality Provision by Natural
Monopolies - The Role of Teebnieal Progress ................................................ 281
T Kuhn and K. Pittel
On tbe Importanee of Sequendng of Markets in Monetary Eeonomies ...... 297
E. Ba§c;i and I. Saglam
PART F: DESIGNING RIGHTS
Tbe Stability and Effideney of Eeonomie and Sodal Networks ................... 319
MO. Jac1cson
Designing Severanee Payments and Dedsion Rigbts for Effident Plant
Closure under Profit-Sbaring .......................................................................... 363
M Moretto and G. Rossini
Moral Hazard and Linear Contraets: Eeonomies witb Idiosyneratie
Risks ................................................................................................................... 387
A. Citanna
Equal Awards vs. Equal Losses: Duality in Bankruptey ............................... 413
C. Herrero
PARTG: INFORMATION
Mechanism Design without Games ................................................................. 429
L. Hurwicz
Hierareby Size and Environmental Uneertainty ............................................ 439
K. Meagher, H Orbay, and T Van Zandt