We argue that the lack of academic proficiency in K-12 education is due to information asymmetry between the policy-maker, households and schools. The policy-maker is thus unable to write down contracts that ensure proficiency, and must incur agency costs which, in turn, generate other distortions. We develop a theoretical equilibrium model where schools and households choose their efforts in r...

Reinforcement learning turned out a technique that allowed robots to ride a bicycle, computers to play backgammon on the level of human world masters and solve such complicated tasks of high dimensionality as elevator dispatching. Can it come to rescue in the next generation of challenging problems like playing football or bidding on virtual markets? Reinforcement learning that provides a way o...

We consider a variant of the well-studied multiarmed bandit problem in which the reward from each action evolves monotonically in the number of times the decision maker chooses to take that action. We are motivated by settings in which we must give a series of homogeneous tasks to a finite set of arms (workers) whose performance may improve (due to learning) or decay (due to loss of interest) w...

Bundling has been extensively studied in the literature and its benefits have been manifested through three perspectives of achieving better price discrimination, helping to save costs, and preserving the power for deterring a potential entrant. In this study, we examine two aspects of bundling which have not been studied before. We examine the impact of product heterogeneity on bundling decisi...

This paper extends a probabilistic voting model with a multidimensional policy space, allowing candidates to have different prior probability distributions of the distribution of voters’ ideal policies. In this model, we show that a platform pair is a Nash equilibrium if and only if both candidates choose a common generalized median of expected ideal policies. Thus, the existence of a Nash equi...

w was created in the tradition of typesetting printed pages for bound volumes. For hundreds of years, printers considered the page as a block of type surrounded by margins. As adequate margins were required for binding, practical considerations became aesthetic needs applied by strict formulas. Earlier concepts of pages, such as certain Egyptian hieroglyphs, Roman scrolls. and medieval illumina...

This article uses the notion of a “Local Nash Equilibrium” (LNE) to model a vote maximizing political game that incorporates valence (the electorally perceived quality of the political leaders). Formal stochastic voting models without valence typically conclude that all political agents (parties or candidates) will converge towards the electoral mean (the origin of the policy space). The main t...

Cai and Wang (2005) conducted a laboratory simulation of the Crawford-Sobel “strategic information transmission” game. The researchers were most interested in observing the amount of information that senders in the game transmitted to receivers. Consequently, they did not examine what I call the no-policy-bias implication of the game. This implication is that—as the Nash equilibria to the game ...

In this work we formulate the problem of restless multi-armed bandits with cumulative feedback and partially observable states. We call these bandits as lazy restless bandits (LRB) as they are slow in action and allow multiple system state transitions during every decision interval. Rewards for each action are state dependent. The states of arms are hidden from the decision maker. The goal of t...

We consider a novel, yet practical setting of prediction markets called distributed prediction markets, where the aggregated price of a security of an event in one prediction market is affected dynamically by the prices of securities of similar events in other, simultaneously running prediction markets. We focus on the problem of decision making facing a market maker to determine the price of a...