Related papers: Luck Out or Outpay? Competing with a Public Option

A competitive market is modeled as a game of incomplete information. One player observes some payoff-relevant state and can sell (possibly noisy) messages thereof to the other, whose willingness to pay is contingent on their own beliefs. We…

We analyse two models of liquidity provision to determine the retail traders' preference for marketable order routing. Order internalization is captured by a model of market makers competing for the retail order flow in a Bertrand fashion.…

Most modern systems strive to learn from interactions with users, and many engage in exploration: making potentially suboptimal choices for the sake of acquiring new information. We initiate a study of the interplay between exploration and…

Individuals often navigate several options with incomplete knowledge of their own preferences. Information provisioning tools such as public rankings and personalized recommendations have become central to helping individuals make choices,…

In this paper, the optimal pricing strategy in Avellande-Stoikov's for a monopolistic dealer is extended to a general situation where multiple dealers are present in a competitive market. The dealers' trading intensities, their optimal bid…

Besides the structure of interactions within networks, also the interactions between networks are of the outmost importance. We therefore study the outcome of the public goods game on two interdependent networks that are connected by means…

In a static environment, optional participation and a local agglomeration of cooperators are found to be beneficial for the occurrence and maintenance of cooperation. In the optional public goods game, the rock-scissors-paper cycles of…

Optimistic rollups are a popular and promising method of increasing the throughput capacity of their underlying chain. These methods rely on economic incentives to guarantee their security. We present a model of optimistic rollups that…

This survey reviews recent developments in revealed preference theory. It discusses the testable implications of theories of choice that are germane to specific economic environments. The focus is on expected utility in risky environments;…

We address the problem of improving bidders' strategies in prior-dependent revenue-maximizing auctions and introduce a simple and generic method to design novel bidding strategies if the seller uses past bids to optimize her mechanism. We…

Most decision theories, including expected utility theory, rank dependent utility theory and cumulative prospect theory, assume that investors are only interested in the distribution of returns and not in the states of the economy in which…

The hegemony of control over our search platforms by a few large corporations raises justifiable concerns, particularly in light of emerging geopolitical tensions and growing instances of ideological imposition by authoritarian actors to…

Altruistic punishment, where individuals incur personal costs to punish others who have harmed third parties, presents an evolutionary conundrum as it undermines individual fitness. Resolving this puzzle is crucial for understanding the…

Facing a heavy task, any single person can only make a limited contribution and team cooperation is needed. As one enjoys the benefit of the public goods, the potential benefits of the project are not always maximized and may be partly…

I examine how upstream mergers affect negotiated prices when suppliers bargain with a monopoly intermediary selling products to final consumers. Conventional wisdom holds that such transactions lower negotiated prices when the products are…

Consumers only discover at the first seller which product best fits their needs, then check its price online, then decide on buying. Switching sellers is costly. Equilibrium prices fall in the switching cost, eventually to the monopoly…

There has been much recent work on the revenue-raising properties of truthful mechanisms for selling goods to selfish bidders. Typically the revenue of a mechanism is compared against a benchmark (such as, the maximum revenue obtainable by…

In search engines, online marketplaces and other human-computer interfaces large collectives of individuals sequentially interact with numerous alternatives of varying quality. In these contexts, trial and error (exploration) is crucial for…

In frequently repeated matching scenarios, individuals may require diversification in their choices. Therefore, when faced with a set of potential outcomes, each individual may have an ideal lottery over outcomes that represents their…

In lowest unique bid auctions, $N$ players bid for an item. The winner is whoever places the \emph{lowest} bid, provided that it is also unique. We use a grand canonical approach to derive an analytical expression for the equilibrium…