Generalisations of Quasi-Hyperbolic Discounting

<p>This paper proposes several time preference specifications that generalise quasi-hyperbolic discounting, while retaining its analytical tractability. We define their discount functions and provide a recursive formulation of the implied lifetime payoffs. A calibration exercise demonstrates that these specifications deliver better approximations to true hyperbolic discounting. We characterise the Markov-perfect equilibrium of a general intra-personal game of agents with various time preferences. When applied to specific economic examples, our proposals yield policies that are close to those of true hyperbolic discounters. Furthermore, these approximations can be used in settings where an exact solution for hyperbolic agents is not available. Finally, we suggest further generalisations which would provide an even better fit.</p>

Generalisations of Quasi-Hyperbolic Discounting

<p>This paper proposes several time preference specifications that generalise quasi-hyperbolic discounting, while retaining its analytical tractability. We define their discount functions and provide a recursive formulation of the implied lifetime payoffs. A calibration exercise demonstrates that these specifications deliver better approximations to true hyperbolic discounting. We characterise the Markov-perfect equilibrium of a general intra-personal game of agents with various time preferences. When applied to specific economic examples, our proposals yield policies that are close to those of true hyperbolic discounters. Furthermore, these approximations can be used in settings where an exact solution for hyperbolic agents is not available. Finally, we suggest further generalisations which would provide an even better fit.</p>

Tax Competition between Symmetric Countries for Large Asymmetric Investors

In a dynamic two-period game between two symmetric countries, we show that a unique subgame-perfect equilibrium arises during the initial stage of the game. A mixed taxation regime arises in the equilibrium where one country adopts a non-preferential taxation regime while its competitor adopts a preferential taxation regime. The country with a non-preferential taxation regime earns a higher tax revenue compared to the country with a preferential taxation regime. A tax holiday does not arise during the initial stage of the game when the size of the mobile capital base that enters during the later stage is considerably larger than the size of the mobile capital base that enters the economy during the initial stage. We provide the complete characterization and proof of the uniqueness of the mixed strategy Nash equilibrium.JEL classification: F21, H21, H25, H87

Dynamic Tax Competition, Home Bias and the gain from Non-preferential Taxation Regimes: A case for unilateral commitment

A country has an incentive to unilaterally commit to a non-preferential taxation regime even though the competitor adopts a preferential taxation regime. We show that a mixed taxation regime arises in a dynamic two-period model of tax competition between two symmetric countries where an investor has home-bias for the country where he/she invests in the initial period. A scenario where competing countries jointly adopt non-preferential taxation regimes is also a subgame-perfect equilibrium. The tax revenue of the country which adopts a preferential taxation regime in a mixed taxation regime is equal to the tax revenue a country receives when competing countries jointly adopt a non-preferential taxation regime.JEL classification: F21; H21; H25; H87

Voting behavior under outside pressure: promoting true majorities with sequential voting?

When including outside pressure on voters as individual costs, sequential voting (as in roll call votes) is theoretically preferable to simultaneous voting (as in recorded ballots). Under complete information, sequential voting has a unique subgame perfect equilibrium with a simple equilibrium strategy guaranteeing true majority results. Simultaneous voting suffers from a plethora of equilibria, often contradicting true majorities. Experimental results, however, show severe deviations from the equilibrium strategy in sequential voting with not significantly more true majority results than in simultaneous voting. Social considerations under sequential voting—based on emotional reactions toward the behaviors of the previous players—seem to distort subgame perfect equilibria.

Conditional loyalty and its implications for pricing

Bertrand–Edgeworth competition has recently been analyzed under imperfect buyer mobility, as a game in which, once prices are chosen, a static buyer subgame (BS) is played where the buyers choose which seller to visit (see, e.g., Burdett et al. in J Political Econ 109:1060–1085, 2001). Our paper considers a symmetric duopoly where two buyers play a two-stage BS of imperfect information after price setting. An “assessment equilibrium” of the BS is shown to exist in which, with prices at the two firms sufficiently close to each other, the buyers keep loyal if previously served. Conditional loyalty is proved to increase the duopolists’ market power: at the corresponding subgame perfect equilibrium of the entire game, the uniform price is higher than that corresponding to the equilibrium of the BS in which the buyers are persistently randomizing.

On a special case of non-symmetric resource extraction games with unbounded payoffs

The game of resource extraction/capital accumulation is a stochastic infinite-horizon game, which models a joint utilization of a productive asset over time. The paper complements the available results on pure Markov perfect equilibrium existence in the non-symmetric game setting with an arbitrary number of agents. Moreover, we allow that the players have unbounded utilities and relax the assumption that the stochastic kernels of the transition probability must depend only on the amount of resource before consumption. This class of the game has not been examined beforehand. However, we could prove the Markov perfect equilibrium existence only in the specific case of interest. Namely, when the players have constant relative risk aversion (CRRA) power utilities and the transition law follows a geometric random walk in relation to the joint investment. The setup with the chosen characteristics is motivated by economic considerations, which makes it relevant to a certain range of real-word problems.

The equal collective gains value in cooperative games

The property of equal collective gains means that each player should obtain the same benefit from the cooperation of the other players in the game. We show that this property jointly with efficiency characterize a new solution, called the equal collective gains value (ECG-value). We introduce a new class of games, the average productivity games, for which the ECG-value is an imputation. For a better understanding of the new value, we also provide four alternative characterizations of it, and a negotiation model that supports it in subgame perfect equilibrium.

Introduction to The Origin of Electromagnetic Mass (Electromagnetic Inertia)

Newton described in his second law of motion the classical definition of mass (inertia). However, it is impossible to calculate with Newton’s second law of motion the (electromagnetic) mass of a beam of light (Ref. [1], [2],[3]). Because the speed of light is a universal constant which follows from Albert Einstein’s Theory of Special Relativity, it is impossible to accelerate or to slow down a beam of light and for that reason it is impossible to determine the electromagnetic mass of a beam of light (free electromagnetic radiation) by Newton’s second law. To calculate the electromagnetic mass of free or confined electromagnetic radiation, the fundamental concept of the New Theory has been used that the Universe is in a perfect Equilibrium and that any electromagnetic field configuration is in a perfect equilibrium with itself and its surrounding. From this fundamental concept follows a different definition of (confined) electromagnetic mass. Electromagnetic mass (or inertia) has been determined by the relativistic Lorentz transformation of the radiation pressures in all different directions and the disturbance of a uniform motion (or position at rest) of confined electromagnetic radiation results in a relativistic effect which we measure (experience) as electromagnetic mass (inertia). The mass in [kg] of an object will be generally measured by acceleration (or deceleration) of the object according Newton’s second law of motion. In the theory of special relativity, the speed of light is a fundamental constant and the intensity of the light is not a universal constant. The calculate the relativistic mass of Confined Electromagnetic Radiation, we start with a thought experiment in which a beam of light is propagating between two 100 % reflecting mirrors, indicated as Mirror A and Mirror B. Both mirrors are part of a rigid construction and the relative velocity between both mirrors always equals zero. The results of this calculation will be generalized for any kind of electromagnetic radiation which has been confined by its own electromagnetic and gravitational field. When the speed of the observer has the same speed as the speed of the light source, then the observer and the light source are relative at rest. And the same light intensity will be measured at the location of the emitter and at the location of the observer.

The Origin of Electromagnetic Mass (Electromagnetic Inertia)

Newton described in his second law of motion the classical definition of mass (inertia). However, it is impossible to calculate with Newton’s second law of motion the (electromagnetic) mass of a beam of light. Because the speed of light is a universal constant which follows from Albert Einstein’s Theory of Special Relativity, it is impossible to accelerate or to slow down a beam of light and for that reason it is impossible to determine the electromagnetic mass of a beam of light (free electromagnetic radiation) by Newton’s second law. To calculate the electromagnetic mass of free or confined electromagnetic radiation, the fundamental concept of the New Theory has been used that the Universe is in a perfect Equilibrium and that any electromagnetic field configuration is in a perfect equilibrium with itself and its surrounding. From this fundamental concept follows a different definition of (confined) electromagnetic mass. Electromagnetic mass (or inertia) has been determined by the relativistic Lorentz transformation of the radiation pressures in all different directions and the disturbance of a uniform motion (or position at rest) of confined electromagnetic radiation results in a relativistic effect which we measure (experience) as electromagnetic mass (inertia). The mass in [kg] of an object will be generally measured by acceleration (or deceleration) of the object according Newton’s second law of motion. In the theory of special relativity, the speed of light is a fundamental constant and the intensity of the light is not a universal constant. The calculate the relativistic mass of Confined Electromagnetic Radiation, we start with a thought experiment in which a beam of light is propagating between two 100 % reflecting mirrors, indicated as Mirror A and Mirror B. Both mirrors are part of a rigid construction and the relative velocity between both mirrors always equals zero. The results of this calculation will be be generalized for any kind of electromagnetic radiation which has been confined by its own electromagnetic and gravitational field. When the speed of the observer has the same speed as the speed of the light source, then the observer and the light source are relative at rest. And the same light intensity will be measured at the location of the emitter and at the location of the observer.