Local ownership as private information: Evidence on the monitoring-liquidity trade-off

2007 ◽  
Vol 83 (3) ◽  
pp. 751-792 ◽  
Author(s):  
Jose-Miguel Gaspar ◽  
Massimo Massa
2016 ◽  
Vol 2016 (4) ◽  
pp. 202-218 ◽  
Author(s):  
Ryan Henry

Abstract Private information retrieval (PIR) is a way for clients to query a remote database without the database holder learning the clients’ query terms or the responses they generate. Compelling applications for PIR are abound in the cryptographic and privacy research literature, yet existing PIR techniques are notoriously inefficient. Consequently, no such PIRbased application to date has seen real-world at-scale deployment. This paper proposes new “batch coding” techniques to help address PIR’s efficiency problem. The new techniques exploit the connection between ramp secret sharing schemes and efficient information-theoretically secure PIR (IT-PIR) protocols. This connection was previously observed by Henry, Huang, and Goldberg (NDSS 2013), who used ramp schemes to construct efficient “batch queries” with which clients can fetch several database records for the same cost as fetching a single record using a standard, non-batch query. The new techniques in this paper generalize and extend those of Henry et al. to construct “batch codes” with which clients can fetch several records for only a fraction the cost of fetching a single record using a standard non-batch query over an unencoded database. The batch codes are highly tuneable, providing a means to trade off (i) lower server-side computation cost, (ii) lower server-side storage cost, and/or (iii) lower uni- or bi-directional communication cost, in exchange for a comparatively modest decrease in resilience to Byzantine database servers.


2015 ◽  
Vol 131 (1) ◽  
pp. 461-518 ◽  
Author(s):  
Felix J. Bierbrauer ◽  
Pierre C. Boyer

Abstract We study political competition in an environment in which voters have private information about their preferences. Our framework covers models of income taxation, public-goods provision, or publicly provided private goods. Politicians are vote-share maximizers. They can propose any policy that is resource-feasible and incentive-compatible. They can also offer special favors to subsets of the electorate. We prove two main results. First, the unique symmetric equilibrium is such that policies are surplus-maximizing and hence first-best Pareto-efficient. Second, there is a surplus-maximizing policy that wins a majority against any welfare-maximizing policy. Thus, in our model, policies that trade off equity and efficiency considerations are politically infeasible.


Author(s):  
Franz Wirl

Abstract Environmental incentives are characterized by two distinct features: (1) a benefit-cost trade-off; and (2) private information about the trade-off. This suggests a degree of freedom of where to attach the private information, either to the benefit or the costs, as long as these choices imply the same behavior absent incentives (‘observation equivalent’). However, we show that different observation equivalent specifications can lead to different incentives. This is demonstrated for two cases: rainforest protection and contributions to a public good. Therefore, the choice of a private information parameter must be justified against observation equivalent alternatives.


2015 ◽  
Vol 105 (7) ◽  
pp. 2141-2182 ◽  
Author(s):  
Vianney Dequiedt ◽  
David Martimort

We consider vertical contracting arrangements between a manufacturer and a retailing network when retailers have private information and the organization is run through bilateral contracts. We highlight a new form of informational opportunism arising when the manufacturer manipulates information learned separately in each relationship. We characterize the set of allocations robust to such opportunism by means of simple ex post incentive compatibility constraints. Those constraints limit the manufacturer's ability to use yardstick competition among retailers. They simplify contracts and restore a rent/efficiency trade-off even with correlated information. We show that sell-out contracts are optimal under a wide range of circumstances. (JEL D21, D86, L14, L60, L81)


2020 ◽  
Vol 130 (631) ◽  
pp. 2175-2206
Author(s):  
Sergio Currarini ◽  
Giovanni Ursino ◽  
A K S Chand

Abstract We consider a situation in which a decision-maker gathers information from imperfectly informed experts, receiving coarse signals about a uniform state of the world. Private information is (conditionally) correlated across players, and communication is cheap talk. We show that with two experts correlation unambiguously tightens the conditions on preferences for a truth-telling equilibrium. However, with multiple experts the effect of correlation on the incentives to report information truthfully can be non-monotonic: while little and large levels of correlation hinder truth-telling, intermediate levels may discipline experts’ equilibrium behaviour and foster truthful communication. We discuss the implications of our results for the political discussion in the presence of ‘selective exposure' to media, where similarity in preferences comes with higher correlation, and a trade-off between truth-telling incentives and informational content arises.


Author(s):  
Farzad Saidi ◽  
Alminas Žaldokas

Firms face a trade-off between patenting, thereby disclosing innovation, and secrecy. We show that this trade-off interacts with firms’ financing choices. As a shock to innovation disclosure, we study the American Inventor’s Protection Act that made firms’ patent applications public 18 months after filing, rather than when granted. We find that such increased innovation disclosure helps firms switch lenders, resulting in lower cost of debt, and facilitates their access to syndicated-loan and public capital markets. Our evidence lends support to the idea that public-information provision through patents and private information in financial relationships are substitutes, and that innovation disclosure makes credit markets more contestable. This paper was accepted by Gustavo Manso, finance.


2009 ◽  
Vol 17 (1) ◽  
pp. 25-44 ◽  
Author(s):  
Sean Gailmard

In this paper I investigate the trade-off a legislature faces in the choice of instruments to ensure accountability by bureaucrats with private information. The legislature can either design a state-contingent incentive scheme or “menu law” to elicit the bureau's information or it can simply limit the set of choices open to the bureaucrat and let it choose as it wishes (an action restriction). I show that the optimal action restriction is simply a connected interval of the policy space. However, this class of instruments is not optimal without some sort of limitation on the set of levers of control available to the legislature. I then analyze one such limitation salient in politics, the legislative principal's inability to commit to honor a schedule of (state contingent) policy choices and transfer payments for a menu law. In this case the optimal action restriction outperforms (in terms of the legislature's welfare) the best available menu law.


2017 ◽  
Vol 107 (4) ◽  
pp. 1005-1029 ◽  
Author(s):  
Tri Vi Dang ◽  
Gary Gorton ◽  
Bengt Holmström ◽  
Guillermo Ordoñez

Banks produce short-term debt for transactions and storing value. The value of this debt must not vary over time so agents can easily trade it at par like money. To produce money-like safe liquidity, banks keep detailed information about their loans secret, reducing liquidity if needed to prevent agents from producing costly private information about the banks' loans. Capital markets involve information revelation, so they produce risky liquidity. The trade-off between less safe liquidity and more risky liquidity determines which firms choose to fund projects through banks and which ones through capital markets. (JEL D92, E51, G21, G31, G32)


Econometrica ◽  
2021 ◽  
Vol 89 (4) ◽  
pp. 1665-1698 ◽  
Author(s):  
Piotr Dworczak ◽  
Scott Duke Kominers ◽  
Mohammad Akbarpour

Policymakers frequently use price regulations as a response to inequality in the markets they control. In this paper, we examine the optimal structure of such policies from the perspective of mechanism design. We study a buyer‐seller market in which agents have private information about both their valuations for an indivisible object and their marginal utilities for money. The planner seeks a mechanism that maximizes agents' total utilities, subject to incentive and market‐clearing constraints. We uncover the constrained Pareto frontier by identifying the optimal trade‐off between allocative efficiency and redistribution. We find that competitive‐equilibrium allocation is not always optimal. Instead, when there is inequality across sides of the market, the optimal design uses a tax‐like mechanism, introducing a wedge between the buyer and seller prices, and redistributing the resulting surplus to the poorer side of the market via lump‐sum payments. When there is significant same‐side inequality that can be uncovered by market behavior, it may be optimal to impose price controls even though doing so induces rationing.


2013 ◽  
Vol 88 (5) ◽  
pp. 1683-1714 ◽  
Author(s):  
Christian Hofmann ◽  
Naomi R. Rothenberg

ABSTRACT: This study investigates whether having an upstream or downstream agent privately observe an interim performance measure and disseminating this measure to the other agent is valuable to the principal. The signal is informative about the upstream agent's action and positively correlated with output. If the upstream agent privately observes the signal, then there can be a higher cost of the downstream agent if the signal is sufficiently forward-looking. If the downstream agent privately observes the signal, then the trade-off involves rents to the downstream agent versus a reduced cost for the upstream agent. Private observation of an interim signal is valuable to the principal if it is not too forward-looking. The choice between upstream and downstream agent depends nontrivially on the signal's backward-looking quality. The results suggest that the value of observation and dissemination of an interim signal depends on the informativeness of output and the signal about upstream and downstream production. JEL Classifications: D82, D83, L20, M40.


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