A Model of the IPO Process where Underpricing Can Be the Equilibrium Outcome

2007 ◽  
Author(s):  
Peter J. Phillips
Keyword(s):  
Equilibrium Outcome

scholarly journals Duopoly price competition with limited capacity

2021 ◽  
Author(s):  
A. Bërdëllima
Keyword(s):  
Price Competition ◽  
Small Firms ◽  
Common Knowledge ◽  
Limited Capacity ◽  
Equilibrium Outcome ◽  
Second Stage ◽  
Duopoly Model ◽  
Full Capacity ◽  
Stage Game ◽  
The Given

AbstractWe study a variation of the duopoly model by Kreps and Scheinkman (1983). Firms limited by their capacity of production engage in a two stage game. In the first stage they commit to levels of production not exceeding their capacities which are then made common knowledge. In the second stage after production has taken place firms simultane- ously compete in prices. Solution of this sequential game shows that the unique Cournot equilibrium outcome as in Kreps and Scheinkman is not always guaranteed. However the Cournot outcome is still robust in the sense that given sufficiently large capacities this equilibrium holds. If capacities are sufficiently small, firms decide to produce at their full capacity and set a price which clears the market at the given level of output.

scholarly journals Those who can't sort, steal: caste, occupational mobility, and rent-seeking in rural India

2021 ◽  
Vol 87 (1) ◽  
pp. 107-140
Author(s):  
Nicholas Lawson ◽  
Dean Spears
Keyword(s):  
Labor Markets ◽  
Social Inequality ◽  
Occupational Mobility ◽  
Rent Seeking ◽  
Static Equilibrium ◽  
Rural India ◽  
Equilibrium Outcome ◽  
Stylized Facts ◽  
Survey Question

AbstractThree important features of Indian labor markets enduringly coexist: rent-seeking, occupational immobility, and caste. These facts are puzzling, given theories that predict static, equilibrium social inequality without conflict. Our model explains these facts as an equilibrium outcome. Some people switch caste-associated occupations for an easier source of rents, rather than for productivity. This undermines trust between castes and shuts down occupational mobility, which further encourages rent-seeking due to an inability of workers to sort into occupations. We motivate our contribution with novel stylized facts exploiting a unique survey question on casteism in India, which we show is associated with rent-seeking.

scholarly journals Would depositors pay to show that they do not withdraw? Theory and experiment

2020 ◽  
Vol 23 (3) ◽  
pp. 873-894
Author(s):  
Markus Kinateder ◽  
Hubert János Kiss ◽  
Ágnes Pintér
Keyword(s):  
Multiple Equilibria ◽  
Financial Intermediation ◽  
Type Model ◽  
Unique Equilibrium ◽  
Equilibrium Outcome ◽  
Bank Run ◽  
Public Announcements ◽  
Information Sets ◽  
Theoretical Results ◽  
Theory And Experiment

Abstract In a Diamond–Dybvig type model of financial intermediation, we allow depositors to announce at a positive cost to subsequent depositors that they keep their funds deposited in the bank. Theoretically, the mere availability of public announcements (and not its use) ensures that no bank run is the unique equilibrium outcome. Multiple equilibria—including bank run—exist without such public announcements. We test the theoretical results in the lab and find a widespread use of announcements, which we interpret as an attempt to coordinate on the no bank run outcome. Withdrawal rates in general are lower in information sets that contain announcements.

scholarly journals Determinacy of equilibrium outcome distributions for zero sum and common utility games

2012 ◽  
Vol 115 (2) ◽  
pp. 152-154 ◽  
Author(s):  
Cristian M. Litan ◽  
Francisco Marhuenda
Keyword(s):  
Equilibrium Outcome ◽  
Zero Sum

Eco-Labels as a Signal of Quality

2011 ◽  
Vol 6 (2) ◽  
pp. 179-192 ◽  
Author(s):  
Lester M.K. Kwong
Keyword(s):  
Jel Classification ◽  
Canonical Model ◽  
Equilibrium Outcome ◽  
General Properties ◽  
Quality Dimension ◽  
The Cost

AbstractUsing a canonical model of signaling, we show that if the cost of organic viticulture is strictly increasing in the quality dimension, then the use of eco-labels as a signal for quality cannot possibly occur as an equilibrium outcome. Conditions for the existence of such a signalling equilibrium as well as some general properties regarding its configuration are herein characterized. (JEL Classification: L15, L66, M3)

UNIQUENESS IN RANDOM-PROPOSER MULTILATERAL BARGAINING

2009 ◽  
Vol 11 (04) ◽  
pp. 407-417 ◽  
Author(s):  
HUIBIN YAN
Keyword(s):  
Subgame Perfect Equilibrium ◽  
Characteristic Functions ◽  
Bargaining Model ◽  
Equilibrium Outcome ◽  
Multilateral Bargaining ◽  
Legislative Bargaining ◽  
Uniqueness Results ◽  
Subgame Perfect Equilibria ◽  
Perfect Equilibria ◽  
Special Case

Solution uniqueness is an important property for a bargaining model. Rubinstein's (1982) seminal 2-person alternating-offer bargaining game has a unique Subgame Perfect Equilibrium outcome. Is it possible to obtain uniqueness results in the much enlarged setting of multilateral bargaining with a characteristic function? This paper investigates a random-proposer model first studied in Okada (1993) in which each period players have equal probabilities of being selected to make a proposal and bargaining ends after one coalition forms. Focusing on transferable utility environments and Stationary Subgame Perfect Equilibria (SSPE), we find ex ante SSPE payoff uniqueness for symmetric and convex characteristic functions, considerably expanding the conditions under which this model is known to exhibit SSPE payoff uniqueness. Our model includes as a special case a variant of the legislative bargaining model in Baron and Ferejohn (1989), and our results imply (unrestricted) SSPE payoff uniqueness in this case.

The Game of Voting

2011 ◽  
Author(s):  
Michel Balinski ◽  
Rida Laraki
Keyword(s):  
Condorcet Winner ◽  
Election Outcome ◽  
Equilibrium Outcome ◽  
Grade Distribution ◽  
Best Response ◽  
Strong Equilibria ◽  
Majority Judgment ◽  
Best Response Correspondence

This chapter compares majority judgment mechanism to other methods, including first-past-the-post and Borda’s method, among others, in the context of the game of voting. The concept of utilities, which depends on grade distribution of the electorate, is extended to election output. When the identity of the election winner is dependent on the utilities of voters, Condorcet-winner is elected by a large number of strong-equilibria strategy-profiles. The chapter explores best-response correspondence, according to which, if the number of possible equilibria is very small and sometimes unique, the Condorcet-winner emerges as the unique, possible equilibrium outcome and honest votes determine the election outcome.

Analysis of Bundling Homogeneous Content Product in Different Formats

2018 ◽  
Vol 11 (4) ◽  
pp. 63-83
Author(s):  
Li Chen
Keyword(s):  
Competitive Advantage ◽  
Book Industry ◽  
Equilibrium Outcome ◽  
Total Surplus ◽  
Digital Format ◽  
Print Book ◽  
Online Book ◽  
Period Model

Content digitalization brings products with homogeneous content but in different formats (digital format and physical format) together. Recently retailers in the online book industry started bundling programs such as Amazon Matchbook, giving print book buyers a free or deeply discounted e-book version. While this bundling strategy is attractive to consumers, it potentially allows consumers to resell the print book in the bundle, which might cannibalize retailers' sales. Consequently, it will influence all participants in the industry including the publisher, the retailers, and the consumers. Using a two-period model, the authors investigate the impacts of this strategy under both monopoly and competition. The authors compute the equilibrium outcome for both scenarios. The findings show that (1) under monopoly, both the publisher and the retailer sell at a higher rate; consumers also see higher total surplus; (2) under competition, the retailer who provides bundling will gain a competitive advantage. This study indicates that the bundling model yields a win-win strategy.

The Shadow Economy as an Equilibrium Outcome

2011 ◽  
Author(s):  
Christopher J. Waller ◽  
Adrian Peralta-Alva ◽  
Pere Gomis-Porqueras
Keyword(s):  
Shadow Economy ◽  
Equilibrium Outcome

Flexibility mechanisms and credit discounting

2003 ◽  
Vol 8 (2) ◽  
pp. 247-260 ◽  
Author(s):  
Sungwhee Shin ◽  
Sang-Chul Suh
Keyword(s):  
Climate Change ◽  
Game Theory ◽  
Nash Equilibrium ◽  
Kyoto Protocol ◽  
Cooperative Game ◽  
Cooperative Game Theory ◽  
International Treaties ◽  
Equilibrium Outcome

We consider the international treaties on climate change as self-enforcing agreements. Applying non-cooperative game theory, we interpret the UN framework Convention on Climate Change as a Nash equilibrium outcome of an international abatement game where only domestic abatement is allowed. The Kyoto Protocol is a Nash equilibrium outcome of the game where flexibility mechanisms are introduced. We also show that credit discounting on foreign abatement can Pareto improve the welfare of all countries.

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