Counterfactuals with Latent Information

We describe a methodology for making counterfactual predictions in settings where the information held by strategic agents and the distribution of payoff-relevant states of the world are unknown. The analyst observes behavior assumed to be rationalized by a Bayesian model, in which agents maximize expected utility, given partial and differential information about the state. A counterfactual prediction is desired about behavior in another strategic setting, under the hypothesis that the distribution of the state and agents’ information about the state are held fixed. When the data and the desired counterfactual prediction pertain to environments with finitely many states, players, and actions, the counterfactual prediction is described by finitely many linear inequalities, even though the latent parameter, the information structure, is infinite dimensional. (JEL D44, D82, D83)

How to guarantee food supply during pandemics? Rethinking local food systems from peri-urban strategic agents’ behaviour: The case study of the Barcelona Metropolitan Region

The Covid-19 pandemic has acted as a warning for the world’s current food system, especially in urban contexts with global food dependence. This article aims to analyse the food system behaviour of the Barcelona Metropolitan Region (in the northeast of Spain) during the first stage of the pandemic by deepening the behaviour of different peri-urban agricultural areas in which local food supply is promoted. Semi-structured interviews to 11 entities and institutions located in the peri-urban area of the BMR based on its productive and management profile have been carried out from March to May 2020. The results obtained highlight the socio-economic, environmental, and health perspective of food supply during the pandemic. Main results show 1) shortcomings in the operation and logistics of the metropolitan food system; 2) the complicity between the local producer and the urban consumer through new sales and distribution initiatives, 3) the role of peri-urban agricultural areas for ensuring food supply and land preservation, and 4) the need to initiate cooperation and mutual aid activities between the different agents involved in the food system. Furthermore, agents underlined the need for rethinking the agroeconomic model to strengthening the producer-consumer nexus and promoting local food policy based on food sustainability, sovereignty, and governance.

Mechanism Design for Facility Location Problems: A Survey

The study of approximate mechanism design for facility location has been in the center of research at the intersection of artificial intelligence and economics for the last decade, largely due to its practical importance in various domains, such as social planning and clustering. At a high level, the goal is to select a number of locations on which to build a set of facilities, aiming to optimize some social objective based on the preferences of strategic agents, who might have incentives to misreport their private information. This paper presents a comprehensive survey of the significant progress that has been made since the introduction of the problem, highlighting all the different variants and methodologies, as well as the most interesting directions for future research.

Facilitating the Search for Partners on Matching Platforms

Two-sided matching platforms can control and optimize over many aspects of the search for partners. To understand how matching platforms should be designed, we introduce a dynamic two-sided search model with strategic agents who must bear a cost to discover their value for each potential partner and can do so nonsimultaneously. We characterize evolutionarily stable stationary equilibria and find that, in many settings, the platform can mitigate wasted search effort by imposing suitable restrictions on agents. In unbalanced markets, the platform should force the short side of the market to initiate contact with potential partners, by disallowing the long side from doing so. This allows the agents on the long side to exercise more choice in equilibrium. When agents are vertically differentiated, the platform can significantly improve welfare even in the limit of vanishing screening costs by forcing the shorter side of the market to propose and by hiding information about the quality of potential partners. Furthermore, a Pareto improvement in welfare is possible in this limit. This paper was accepted by Baris Ata, stochastic models and simulation.

Nash Social Welfare Approximation for Strategic Agents

We study the problem of allocating divisible resources to agents with different preferences. We analyze a market game known as Trading Post, first considered by Shapley and Shubik, where each agent gets a budget of virtual currency to bid on goods: after bids are placed, goods are allocated to players in proportion to their bids. In this setting, the agents choose their bids strategically, aiming to maximize their utility, and this gives rise to a game. We study the equilibrium allocations of this game, measuring the quality of an allocation via the Nash social welfare, the geometric mean of utilities (a measure of aggregate welfare that respects individual needs). We show that any Nash equilibrium of Trading Post approximates the optimal Nash welfare within a factor of two for all concave valuations, and the mechanism is essentially optimal for Leontief valuations.