The aim of this paper is to explain how financial constraints and family background characteristics affect the signalling educational investments of individuals born in low-income families. We show ...that talented students who are poor are unable to signal their talent, as the maximum level of education they can attain may also be achieved by less talented students who are rich. Under this approach, a de-crease in inequalities across generations cannot be expected. The paper also shows that an increase in educational standards would help poor individuals with high-ability if it is combined with other non-monetary measures.
This paper provides an explanation for the existence of gender discrimination in the labour market focusing on the intergenerational transmission of preferences related to the attitude of women ...towards jobs and family. Changes in women's preferences over generations depend on the socialization efforts of their parents which in turn are influenced by both the firm's expected recruitment policy and the expected utility from household care. We obtain two types of steady state equilibria: the discriminatory equilibrium, in which women are segregated to low-paid jobs, and the non-discriminatory equilibrium, in which women are hired in highly-paid jobs. The conditions of convergence to each equilibrium are analysed. Copyright 2004, Oxford University Press.
This paper analyses the effects of partially revocable endogenous commitments of a seller in a negotiation with a deadline. In particular, we examine when commitment is a source of strength, a source ...of inefficiency and when it does not affect the bargaining outcome at all. We show that when commitment possesses a minimum amount of irrevocability this crucially determines the bargaining outcome. In the bilateral bargaining case, commitment becomes a source of inefficiency since it causes a deadline effect. In the choice of partner framework, however, the deadline effect disappears and there is an immediate agreement and, moreover, commitment becomes a source of strength since it increases the seller's equilibrium payoff by triggering off competition between the buyers.
Game theory lacks an explanation of how players' beliefs are formed and why they are in equilibrium. This is the reason why it has failed to make significant advances with the problem of equilibrium ...selection even for quite simple games, as 2 x 2 games with two strict Nash equilibrium. Our paper models the introspection process by which the selected equilibrium is achieved in this class of games. Players begin their analysis with imprecise priors, obtained under weak restrictions formulated as Axioms. For a large class of reasoning dynamics we obtain as the solution the risk dominant Nash equilibrium.
We present a finitely repeated bargaining game with complete information. The stage game is asimultaneous demand game with a fall-back position for both parties, in which we allow one party(say, the ...union) to estabilish a credible commitment to strike if it is not offered a determinedwage. We try to refine the equilibrium set of the repeated game using a formulation of ForwardInduction. In particular, we say that a path of Nash Equilibria in the repeated game is Consistentwith Forward Induction (CFI) if for all period t the cost of deviation (if it is strictly positive) is greateror equal than the maximal net gain in CFI paths with t-1 horizon. We present several cases in which the average payoff for the union in any CFI path, when thehorizon tends to infinity, is his preferred wage. These results are similar to those obtained with thereputation effects approach and reveal some connection between the FI notion and the approachconsisting of perturbing the game with some incomplete information.
This paper analyses a finitely repeated wage bargaining game, where the union's strike decision is endogenous, but there is incomplete information about his striking strategy space. We characterize ...the equilibrium path and the equilibrium payoff of all Sequential Equilibria, following the techniques of Schmidt (1993). We obtain a finite bound, independent of the horizon of the repeated game, in the number of periods in which the firm tests the union and in which there are strikes. We also show that for a sufficiently long horizon, the union can credibly threaten to strike and obtain a high wage for most of the periods.
We present a new refinement for signalling games: the Introspective Equilibrium. It is based on both a procedure for beliefs formation -called Incentive Dominance- and a global consistence ...requirement, closely related to that of the Undefeated equilibrium of mailath, Okuno-Fujiwara and Postlewaite. The incentive Dominance criterion captures the principie of forward induction through explicitly modelling the players thought process when forming preliminary beliefs. The main idea is that they should exploit the information contained in the best reply structure about the incentives of the different types of a a rational Bayesian sender. Our criterion subsumes very intuitive ones as equilibrium dorninance and divinity. The Introspective Equilibrium asks for an unambigous explanation of any deviation from a given equilibrium. This means that the explanation should be unique, part of a sequential equilibrium and achievable from the preliminary beliefs defined by the Incentive Dominance Cnterion.
Game theory lacks an explanation of how players' beliefs are formed and why they are in equilibrium. This is the reason why it has failed to make significant advances with the problem of equilibrium ...selection even for quite siniple games, as 2x2 games with two strict Nash equilibria. Our paper models the introspection process by which the selected equilibrium is achieved in this class of games. Players begin their analysis with imprecise priors, obtained under weak restrictions formulated as Axioms. For a large class of reasoning dynamics we obtain as the solution the risk dominant Nash equilibrium.
This paper analyzes the problems in designing a tax sharing system when there are two governments levels with rights over the same taxes. Using a principal-agent model, the optimality of the ...different tax sharing systems is discussed. The presence of efficiency problems derived from the lack of cooperation between governments is proved, using Bernheim & Winstons (1986) common agency theorems. It is finally shown how a cooperative result can be institutionally induced by creating, for example, a Common Tax Agency in which all implicated governments participate. El trabajo analiza los problemas de diseño de un sistema de participación en la gestión tributaria cuando existen dos niveles de gobierno con derechos sobre los mismos tributos. Con la ayuda de un esquema principal-agente, se discute la optimalidad de los resultados de los distintos sistemas de participación tributaria. Haciendo uso de los teoremas sobre agencia común de Bernheim y Winston (1986) se prueba la existencia de problemas de eficiencia derivados de la falta de cooperación entre los gobiernos. Finalmente se muestra cómo el resultado cooperativo podría ser inducido mediante algún remedio institucional, como la creación de una Agencia Tributaria Común, participada por todos los gobiernos implicados.
