Market design with endogenous preferences

• 成果类型: Article
• 署名作者: Heifetz, Aviad; Segev, Ella; Talley, Eric
• 署名单位: Open University Israel; Technion Israel Institute of Technology; University of Southern California; RAND Corporation
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2005.12.001
• 发表日期: 2007
• 页码: 121-153
• 关键词: Market design; endogenous preferences

摘要

This paper explores the interdependence between market structure and an important class of cognitive biases. Starting with a familiar bilateral monopoly framework, we characterize the endogenous emergence of preference distortions during bargaining which cause negotiators to perceive their private valuations differently than they would outside the adversarial negotiation context. Using this model, we then demonstrate how a number of external interventions in the structure and/or organization of market interactions (occurring before trade, after trade, or during negotiations themselves) can profoundly alter the nature of these dispositions. Our results demonstrate that many such interventions frequently (though not always) share qualitatively similar characteristics to market interventions that are often proposed for overcoming more conventional forms of market failure. Nevertheless, our analysis underscores the importance of understanding the precise link between cognitive failures and market structure prior to the implementation of any particular proposed reform. (c) 2005 Elsevier Inc. All rights reserved.