Andrew Postlewaite

Social Norms, Savings Behavior, and Growth

We argue that many goods and decisions are not allocated or made through markets. We interpret an agents status as a ranking device that determines how well he or she fares in the nonmarket sector. The existence of a nonmarket sector can endogenously generate a concern for relative position in, for example, the income distribution so that higher income implies higher status. Moreover, it can naturally yield multiple equilibria. It is thus possible to explain differences in growth rates across countries without recourse to differences in underlying preferences, technologies, or endowments. Different social organizations lead to different reduced-form preferences, which lead to different growth rates.

The effect of adolescent experience on labor market outcomes: The case of height

Taller workers receive a wage premium. Net of differences in family background, the disparity is similar in magnitude to the race and gender gaps. We exploit variation in an individual’s height over time to explore how height affects wages. Controlling for teen height essentially eliminates the effect of adult height on wages for white men. The teen height premium is not explained by differences in resources or endowments. The teen height premium is partially mediated through participation in high school sports and clubs. We estimate the monetary benefits of a medical treatment for children that increases height.

Strategic Information Revelation

We analyze the problem in which agents have non-public information and are to play an asymmetric information game. The agents may reveal some or all of their information to other agents prior to playing this game. Revelation is via exogenously specified certifiable statements. The equilibria resulting from various revelation strategies are used to determine equilibrium revelation of information. Sufficient conditions are provided for complete revelation of all private information. A number of examples are provided illustrating when revelation will or will not occur in commonly analyzed games.

Weak versus strong domination in a market with indivisible goods

Abstract The core of a market in indivisible goods can be defined in terms of strong domination or weak domination. The core defined by strong domination is always non-empty, but may contain points which are unstable in a dynamic sense. However, it is shown that there are always stable points in the core, and a characterization is obtained. The core defined by weak domination is always non-empty when there is no indifference, and has no instability problems. In this case, the core coincides with the unique competitive allocation.

Implementation in differential information economies

Abstract We consider the problem of implementation of social choice correspondences in differential information economies. We provide necessary conditions for implementation and slightly stronger conditions which are sufficient to guarantee implementation

Quality Testing and Disclosure

Sellers are often more able than consumers to test product quality. We show that whether such firms will voluntarily test quality and disclose what they learn depends in a paradoxical way upon the presence of mandatory disclosure rules: only if disclosure is mandatory will a seller not test and disclose. We than ask whether it is even desirable for consumers to be informed about the quality at the time they purchase. We show that if information about product quality can be obtained only after production decisions have been made, and if income effects are negligible, then consumers and firms will agree that a regime in which consumers are uninformed (informed) is preferable to a regime in which they are informed (uninformed) if income and quality are complements (substitutes) in utility. Consumers and firms can disagree -- in either way -- about which regime is better if income effects are not negligible. We conclude by discussing the desirability of mandatory testing laws.

Confidence-Enhanced Performance

There is ample evidence that emotions affect performance. Positive emotions can improve performance, while negative ones may diminish it. For example, the fears induced by the possibility of failure or of negative evaluations have physiological consequences (shaking, loss of concentration) that may impair performance in sports, on stage or at school. There is also ample evidence that individuals have distorted recollection of past events, and distorted attributions of the causes of successes of failures. Recollection of good events or successes is typically easier than recollection of bad ones or failures. Successes tend to be attributed to intrinsic aptitudes or own effort, while failures are attributed to bad luck. In addition, these attributions are often reversed when judging the performance of others. The objective of this paper is to incorporate the first phenomenon above into an otherwise standard decision theoretic model, and show that in a world where performance depends on emotions, biases in information processing enhance welfare.

Informational Size and Incentive Compatibility

We examine a general equilibrium model with asymmetrically informed agents. The presence of asymmetric information generally presents a conflict between incentive compatibility and Pareto efficiency. We present a notion of informational size and show that the conflict between incentive compatibility and efficiency can be made arbitrarily small if agents are of sufficiently small informational size. Copyright The Econometric Society 2002.

Pre-play Communication in Two- Person Sealed-Bid Double Auctions*

Allowing unmediated communication in a two-person double auction dramatically enlarges the set of equilibrium outcomes. It then consists of all allocation rules that are equilibrium outcomes of games in which all traders have the power at the end to veto proposed trades. All the allocation rules so characterized are equilibrium outcomes of a single game in which the traders exchange messages once before bidding in a double auction. These outcomes are all obtained by equilibria in which the traders truthfully tell each other their values. Adding a mediator achieves no further outcomes.

The Effect of Adolescent Experience on Labor Market Outcomes: The Case of Height

Aluminum or aluminum foil is placed in communication with the interior of a cold cathode gas discharge display chamber to prevent undesirable quantities of mercury from entering the display chamber and to absorb undesirable O2 and H2O which may evolve during the life of the display device.