Abstract We consider two private-value auctions where the prize in one is higher than the prize in the other. We show that a separating equilibrium exists in which bidders with a high valuation attend the auction with the higher prize while bidders with a low valuation attend the auction with the lower prize. In addition, we prove that a weak separating equilibrium exists where the strong bidders attend the high prize auction while the weak bidders randomize and may attend either auction, although with a higher probability of attending the low prize auction. In the set of auctions with separating equilibrium, we find the optimal minimum bids that maximize a seller's expected revenue.
AbstractDeveloping effective inspection processes at border crossings in order to identify violators within large groups of mostly innocent people is an important and difficult task. Passenger profiling is a tool used to deal with this task, but it raises many public concerns and ongoing debates about its usefulness. In this article, we study whether profiling is helpful, how it should be used to maximize its effectiveness, and how social utility is affected by its use. We consider two game models that take place at a crowded border crossing, where passengers are divided into different groups based on their risk profile. The models involve three players: the defender, the attacker, and the passenger recruited to engage in a violation. The defender decides on an inspection policy for every group of passengers. The attacker decides from which group to recruit a single passenger as a violator. The recruited passenger has private knowledge about the likelihood that she/he will engage in the violation or not. We solve the game models and compare their solutions with those of a no‐profiling inspection policy. We then study a model with four players, including a social planner who is concerned about social utility, and chooses the defender's inspection resources and policy. We show that the announced profiling policy provides the highest payoffs to the defender. Regarding social utility, profiling is always better than no profiling. However, there are cases where the unannounced profiling policy provides the most social utility.
The paper suggests a theoretical game framework to explain collective action dynamics by learning processes. When a certain fact becomes common knowledge due to a certain event, people accumulate knowledge about the state of the world and act accordingly. We concentrate on a conceptual example of the bandwagon dynamic showing the insights which this approach adds to existing studies. We analyze two other conceptual examples showing that the accumulation of information does not always bring people to know the truth about the state of the world. On the other hand, it may make them aware of their ignorance. Several practical implications follow.
The paper suggests a theoretical game framework to explain collective action dynamics by learning processes. When a certain fact becomes common knowledge due to a certain event, people accumulate knowledge about the state of the world & act accordingly. We concentrate on a conceptual example of the bandwagon dynamic showing the insights that this approach adds to existing studies. We analyze two other conceptual examples showing that the accumulation of information does not always bring people to know the truth about the state of the world. On the other hand, it may make them aware of their ignorance. Several practical implications follow. 4 Tables, 47 References. Adapted from the source document.
We examine how group membership influences individual decisions with respect to joining a mass political struggle, under the assumption that group members have a strong group identity, expressed by a strong commitment to group decisions. We suggest a two-level theoretical game model in which, in the first stage, an individual calculates the costs and benefits of participation at the group level and then he/she calculates the costs and benefits of the group's participation in mass collective action. The model shows that when the costs of action are low and the expected benefits are high, there are two equilibria - one with high and the other with low probability of collective action. It also shows that the chances of achieving political change through mass mobilization are lower when individuals are members of two subgroups that act separately, than when they are members of one group only. The model is applied to the socio-political processes in Poland between 1976 and 1981.
