On Rationalizable Outcomes in Private-Value First-Price Discrete Auctions

In this paper, we extend the result of Dekel and Wollinsky ("Rationalizable Outcomes of Large Private-Value First-Price Discrete Auctions" Games and Economic Behavior, 2003) on rationalizable outcomes in first-price auctions. Dekel and Wollinsky show that under certain conditions, each player chooses a unique bid conditional on her valuation. Their result however depends on the assumption that the number of players is sufficiently large (relative to the number of available bids). We first provide a different set of sufficient conditions for the uniqueness result. We then show that for the independent (possibly asymmetric) private value case, (i) the result holds if the distributions are such that the inverse hazard rate is sufficiently high for each valuation, implying that auctions need not necessarily be large, and (ii) if the distributions satisfy the conditions of Dekel and Wollinsky, they always satisfy oursFirst-Price Auctions, Rationalizability, Dominance

Subjective probabilities: psychological evidence and economic applications

Real-life decision makers are often forced to estimate the likelihood of uncertain future events. Usually, economists assume that agents behave as though they are fully rational, employing statistical rules to assess probabilities, and that they maximize expected utility. Psychological studies, however, have shown that people tend not to adhere to these rationality postulates. We review three rules of thumb taken from the psychology literature that people have been shown to rely on when assessing the likelihood of uncertain events. We construct a simple model of belief formation that incorporates these rules and present one formal and two illustrative applications in which these psychological phenomena cause deviations from anticipated economic outcomes.Economic conditions ; Prediction (Psychology)

Subjective probabilities: psychological theories and economic applications

Abbigail J. Chiodo, Massimo Guidolin, Michael T. Owyang, and Makoto Shimoji> Real-life decisionmakers are often forced to estimate the likelihood of uncertain future events. Usually, economists assume that these agents behave in a fully rational manner, employing statistical rules to assess probabilities, and that they maximize expected utility. Psychological studies, however, have shown that people do not tend to behave as rational models would predict. The authors review three rules of thumb taken from the psychology literature that people rely on when assessing the likelihood of uncertain events. The authors construct a simple model of belief formation that incorporates these rules and then present one formal and three illustrative applications showing how these psychological phenomena cause deviations from anticipated economic outcomes.Economic conditions ; Prediction (Psychology)

Global network structure of dominance hierarchy of ant workers

Dominance hierarchy among animals is widespread in various species and believed to serve to regulate resource allocation within an animal group. Unlike small groups, however, detection and quantification of linear hierarchy in large groups of animals are a difficult task. Here, we analyse aggression-based dominance hierarchies formed by worker ants in Diacamma sp. as large directed networks. We show that the observed dominance networks are perfect or approximate directed acyclic graphs, which are consistent with perfect linear hierarchy. The observed networks are also sparse and random but significantly different from networks generated through thinning of the perfect linear tournament (i.e., all individuals are linearly ranked and dominance relationship exists between every pair of individuals). These results pertain to global structure of the networks, which contrasts with the previous studies inspecting frequencies of different types of triads. In addition, the distribution of the out-degree (i.e., number of workers that the focal worker attacks), not in-degree (i.e., number of workers that attack the focal worker), of each observed network is right-skewed. Those having excessively large out-degrees are located near the top, but not the top, of the hierarchy. We also discuss evolutionary implications of the discovered properties of dominance networks.Comment: 5 figures, 2 tables, 4 supplementary figures, 2 supplementary table