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Publications of Philipp Sadowski    :chronological  alphabetical  by type listing:

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@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{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{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{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{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{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{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}
}

@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{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{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{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{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}
}


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