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| Publications of Philipp Sadowski :chronological combined listing:%% Journal Articles @article{fds285778, Author = {Dillenberger, D and Lleras, JS and Sadowski, P and Takeoka, N}, Title = {A theory of subjective learning}, Journal = {Journal of Economic Theory}, Volume = {153}, Number = {1}, Pages = {287-312}, Publisher = {Elsevier BV}, Year = {2014}, Month = {January}, ISSN = {0022-0531}, url = {http://dx.doi.org/10.1016/j.jet.2014.07.003}, Abstract = {We study an individual who faces a dynamic decision problem in which the process of information arrival is unobserved by the analyst. We elicit subjective information directly from choice behavior by deriving two utility representations of preferences over menus of acts. One representation uniquely identifies information as a probability measure over posteriors and the other identifies information as a partition of the state space. We compare individuals who expect to learn differently in terms of their preference for flexibility. On the extended domain of dated-menus, we show how to accommodate gradual learning over time by means of a subjective filtration. © 2014 Elsevier Inc.}, Doi = {10.1016/j.jet.2014.07.003}, Key = {fds285778} } @article{fds285781, Author = {Sadowski, P and Dillenberger, D}, Title = {Ashamed to Be Selfish}, Journal = {Economic Research Initiatives at Duke Working Paper}, Volume = {7}, Number = {84}, Year = {2010}, Month = {September}, Abstract = {We study a decision maker (DM) who has preferences over choice problems, which are sets of payoff-allocations between herself and a passive recipient. An example of such a set is the collection of possible allocations in the classic dictator game. The choice of an allocation from the set is observed by the recipient, whereas the choice of the set itself is not. Behaving selfishly under observation, in the sense of not choosing the normatively best allocation, inflicts shame on DM. We derive a representation that identifies DM's private ranking of allocations, her subjective norm, and shame. The normatively best allocation can be further characterized as the Nash solution of a bargaining game induced by the second-stage choice problem.}, Key = {fds285781} } @article{fds285780, Author = {Sadowski, P}, Title = {Contingent preference for flexibility: Eliciting beliefs from behavior}, Journal = {Theoretical Economics}, Volume = {8}, Number = {2}, Pages = {503-534}, Publisher = {The Econometric Society}, Year = {2013}, Month = {May}, ISSN = {1933-6837}, url = {http://dx.doi.org/10.3982/TE884}, Abstract = {Following Kreps (1979), I consider a decision maker who is uncertain about her future taste. This uncertainty leaves the decision maker with a preference for flexibility: When choosing among menus that contain alternatives for future choice, she weakly prefers menus with additional alternatives. Standard representations that accommodate this choice pattern cannot distinguish tastes (indexed by a subjective state space) and beliefs (a probability measure over the subjective states) as different concepts. I allow choice between menus to depend on objective states. My axioms provide a representation that uniquely identifies beliefs, provided objective states are sufficiently relevant for choice. I suggest that this result can provide choice theoretic substance to the assumption, commonly made in the (incomplete) contracting literature, that contracting parties who know each others' ranking of contracts also share beliefs about each others' future tastes in the face of unforeseen contingencies. © 2013 Philipp Sadowski.}, Doi = {10.3982/TE884}, Key = {fds285780} } @article{fds285779, Author = {Sadowski, P and Krishna, R}, Title = {Dynamic Preference for Flexibility}, Journal = {Econometrica}, Volume = {82}, Number = {2}, Pages = {655-703}, Publisher = {The Econometric Society}, Year = {2014}, ISSN = {0012-9682}, url = {http://dx.doi.org/10.3982/ECTA10072}, Doi = {10.3982/ECTA10072}, Key = {fds285779} } @article{fds285775, Author = {Dillenberger, D and Sadowski, P}, Title = {Generalized Partition and Subjective Filtration}, Journal = {Economic Research Initiatives at Duke (ERID)}, Number = {132}, Pages = {30 pages}, Year = {2012}, Month = {September}, Abstract = {We study an individual who faces a dynamic decision problem in which the process of information arrival is unobserved by the analyst, and hence should be identified from observed choice data. An information structure is objectively describable if signals correspond to events of the objective state space. We derive a representation of preferences over menus of acts that captures the behavior of a Bayesian decision maker who expects to receive such signals. The class of information structures that can support such a representation generalizes the notion of a partition of the state space. The representation allows us to compare individuals in terms of the preciseness of their information structures without requiring that they share the same prior beliefs. We apply the model to study an individual who anticipates gradual resolution of uncertainty over time. Both the filtration (the timing of information arrival with the sequence of partitions it induces) and prior beliefs are uniquely identified.}, Key = {fds285775} } @article{fds320617, Author = {Dillenberger, D and Sadowski, P}, Title = {Inertial Behavior and Generalized Partition}, Journal = {Economic Research Initiatives at Duke (ERID)}, Number = {216}, Pages = {26 pages}, Year = {2016}, Month = {May}, Abstract = {We call behavior inertial if it does not react to the apparent arrival of relevant information. In a context where the precise information content of signals is subjective, we formulate an axiom that captures inertial behavior, and provide a representation that explains such behavior as that of a rational decision maker who perceives a particular type of information structure, which we call a generalized partition. We characterize the learning processes that can be described by a generalized partition. We proceed to assume that there is a true underlying information structure that may not be a generalized partition, and investigate different channels that may lead the decision maker to nonetheless perceive a generalized partition (and thus to display inertial behavior): A cognitive bias referred to as cognitive inertia and a bound on rationality which we term shortsightedness.}, Key = {fds320617} } @article{fds326599, Author = {Daley, B and Sadowski, P}, Title = {Magical thinking: A representation result}, Journal = {Theoretical Economics}, Volume = {12}, Number = {2}, Pages = {909-956}, Publisher = {The Econometric Society}, Year = {2017}, Month = {May}, url = {http://dx.doi.org/10.3982/TE2099}, Abstract = {This paper suggests a novel way to import the approach of axiomatic theories of individual choice into strategic settings and demonstrates the benefits of this approach. We propose both a tractable behavioral model as well as axioms applied to the behavior of the collection of players, focusing first on prisoners' dilemma games. A representation theorem establishes these axioms as the precise behavioral content of the model, and that the model's parameters are (essentially) uniquely identified from behavior. The behavioral model features magical thinking: players behave as if their expectations about their opponents' behavior vary with their own choices. The model provides a unified view of documented behavior in a range of often studied games, such as the prisoners' dilemma, the battle of the sexes, hawk–dove, and the stag hunt, and also generates novel predictions across games.}, Doi = {10.3982/TE2099}, Key = {fds326599} } @article{fds318182, Author = {Sadowski, P}, Title = {Overeagerness}, Journal = {Journal of Economic Behavior and Organization}, Volume = {131}, Pages = {114-125}, Publisher = {Elsevier BV}, Year = {2016}, Month = {November}, url = {http://dx.doi.org/10.1016/j.jebo.2016.08.014}, Abstract = {We capture the impression that high types may send lower signals than low types in order not to appear too desperate. We require a noisy one-dimensional signal, where a very low signal being transmitted forces types to execute their outside option. The central assumption is that low types are not only less productive when employed, but that they also face a worse outside option. High types then exploit low types’ eagerness not to end up with their bad outside option by running a larger risk of transmitting a very low signal.}, Doi = {10.1016/j.jebo.2016.08.014}, Key = {fds318182} } @article{fds320616, Author = {Sadowski, P}, Title = {Preferences with Taste Shock Representations: Price Volatility and the Liquidity Premium}, Journal = {Economic Research Initiatives at Duke (ERID)}, Volume = {101}, Number = {219}, Pages = {13 pages}, Year = {2016}, Month = {June}, url = {http://dx.doi.org/10.1016/j.mathsocsci.2019.06.004}, Abstract = {If price volatility is caused in some part by taste shocks, then it should be positively correlated with the liquidity premium. Our argument is based on Krishna and Sadowski (2014), who provide foundations for a representation of dynamic choice with taste shocks, and show that volatility in tastes corresponds to a desire to maintain flexibility. To formally connect volatile tastes to price volatility and preference for flexibility to the liquidity premium, we analyze a modified simple Lucas tree economy, where the representative agent is uncertain about his degree of future risk aversion, and where the productive asset cannot be traded in every period, while rights to output can. We show that a representative agent with a higher degree of uncertainty about his future risk aversion implies a higher liquidity premium (i.e., a lower price for the illiquid asset) and more price volatility.}, Doi = {10.1016/j.mathsocsci.2019.06.004}, Key = {fds320616} } @article{fds320615, Author = {Krishna, R and Sadowski, P}, Title = {Randomly Evolving Tastes and Delayed Commitment}, Journal = {Economic Research Initiatives at Duke (ERID)}, Volume = {92}, Number = {218}, Pages = {39 pages}, Year = {2016}, Month = {June}, url = {http://dx.doi.org/10.1016/j.jmateco.2020.09.007}, Abstract = {We consider a decision maker with randomly evolving tastes who faces dynamic decision situations that involve intertemporal tradeoffs, such as those in consumption savings problems. We axiomatize a recursive representation of choice that features uncertain consumption utilities, which evolve according to a subjective Markov process. The parameters of the representation, which are the subjective Markov process governing the evolution of utilities, and the discount factor, are uniquely identified from behavior. We relate the correlation of tastes over time and the desire to delay commitment to future consumption.}, Doi = {10.1016/j.jmateco.2020.09.007}, Key = {fds320615} } @article{fds340875, Author = {Dillenberger, D and Sadowski, P}, Title = {Stable behavior and generalized partition}, Journal = {Economic Theory}, Volume = {68}, Number = {2}, Pages = {285-302}, Year = {2019}, Month = {September}, url = {http://dx.doi.org/10.1007/s00199-018-1122-z}, Abstract = {Behavior is stable if the ex ante ranking of two acts that differ only on some event I coincides with their ex post ranking upon learning I. We identify the largest class of information structures for which the behavior of a Bayesian expected utility maximizer is stable. We call them generalized partitions and characterize the learning processes they can accommodate. Often, the information structure is not explicitly part of the primitives in the model, and so becomes a subjective parameter. We propose a way to identify how the individual plans to choose contingent on learning an event, and establish that for a Bayesian expected utility maximizer, stable behavior—formulated in terms of this indirectly observed contingent ranking—is a tight characterization of subjective learning via a generalized partition.}, Doi = {10.1007/s00199-018-1122-z}, Key = {fds340875} } @article{fds320618, Author = {Dillenberger, D and Krishna, R and Sadowski, P}, Title = {Subjective Dynamic Information Constraints}, Journal = {Economic Research Initiatives at Duke (ERID)}, Number = {214}, Pages = {58 pages}, Year = {2016}, Month = {April}, Abstract = {We axiomatize a new class of recursive dynamic models that capture subjective constraints on the amount of information a decision maker can obtain, pay attention to, or absorb, via a Markov Decision Process for Information Choice (MIC). An MIC is a subjective decision process that specifies what type of information about the payoff-relevant state is feasible in the current period, and how the choice of what to learn now affects what can be learned in the future. The constraint imposed by the MIC is identified from choice behavior up to a recursive extension of Blackwell dominance. All the other parameters of the model, namely the anticipated evolution of the payoff-relevant state, state dependent consumption utilities, and the discount factor are also uniquely identified.}, Key = {fds320618} } @article{fds371111, Author = {Dillenberger, D and Krishna, RV and Sadowski, P}, Title = {Subjective information choice processes}, Journal = {Theoretical Economics}, Volume = {18}, Number = {2}, Pages = {529-559}, Year = {2023}, Month = {May}, url = {http://dx.doi.org/10.3982/TE4531}, Abstract = {We propose a class of dynamic models that capture subjective (and, hence, unobservable) constraints on the amount of information a decision maker can acquire, pay attention to, or absorb via an information choice process (ICP). An ICP specifies the information that can be acquired about the payoff-relevant state in the current period and how this choice affects what can be learned in the future. In spite of their generality, wherein ICPs can accommodate any dependence of the information constraint on the history of information choices and state realizations, we show that the constraints imposed by them are identified up to a dynamic extension of Blackwell dominance. All the other parameters of the model are also uniquely identified.}, Doi = {10.3982/TE4531}, Key = {fds371111} } @article{fds320619, Author = {Dillenberger, D and Krishna, R and Sadowski, P}, Title = {Supplement to 'Subjective Dynamic Information Constraints'}, Journal = {Economic Research Initiatives at Duke (ERID)}, Number = {215}, Pages = {34 pages}, Year = {2016}, Month = {April}, Abstract = {Supplement to "Subjective Dynamic Information Constraints" (http://ssrn.com/abstract=2774300). All references to definitions and results in this Supplement refer to Dillenberger, Krishna, and Sadowski (2016, henceforth DKS) unless otherwise specified. This supplement is organized as follows. Section 1 establishes the Abstract Static Representation that is the starting point for our derivations in Appendix C of DKS. Section 2 reviews relevant notions from convex analysis. Section 3 provides a preference independent notion of minimality on the space of rics, which is referred to in Section 6 of DKS. Section 4 provides a metric on the space of partitions as referred to in Appendix A.3 of DKS. Section 5 extends the existence of the RAA representation, which is established in Krishna and Sadowski (2014) for finite prize spaces, to our domain with a compact set of prizes, as discussed in Appendix A.7 of DKS. Finally, Section 6 provides a detailed proof of the partitional representation introduced in Appendix C.1 of DKS.}, Key = {fds320619} } @article{fds320620, Author = {Conrad, RF and Hool, B and Nekipelov, D}, Title = {The Role of Royalties in Resource Extraction Contracts}, Journal = {Economic Research Initiatives at Duke (ERID) Working Paper}, Volume = {94}, Number = {195}, Pages = {340-353}, Publisher = {University of Wisconsin Press}, Year = {2015}, Month = {September}, url = {http://dx.doi.org/10.3368/le.94.3.340}, Abstract = {The manner in which governments charge mineral resource producers has been the subject of considerable debate. In particular, there is a continuing debate about whether royalties should be reduced or eliminated, the preferred alternative then being some variant of an income-based charge such as a resource rent tax, a policy adopted in Norway, the United Kingdom and Australia. The argument for avoiding royalties is based on analyses demonstrating that royalties and other quantity-based charges distort production decisions and lead to outcomes such as high-grading and premature mine closure. We argue that it is inappropriate to infer that royalties are inefficient from the perspective of the resource owner (typically a government on behalf of society). Rather, the royalty serves a key pricing purpose and should be interpreted as the capital loss on the resource owner's balance sheet from extracting marginal reserves. We demonstrate this result under various conditions of uncertainty and informational asymmetry, using an incentive-based framework which enables us to highlight the separation of asset ownership from asset use. The principal-agent framework is consistent with the contracting problem encountered by governments who as resource owners contract with private sector firms for extraction rights.}, Doi = {10.3368/le.94.3.340}, Key = {fds320620} } | |
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