Rodrigo Harrison

Social connections and access charges in networks

In this paper we present a model where two interconnected network operators compete in linear prices in a market characterized by the existence of social connections among consumers, which are represented by a random regular graph. Assuming horizontal differentiation among operators, the customers select their network provider based on their preferences and the prices offered by the competing firms. In equilibrium the number of calls made to other agents depends on where they are located in the social network.

Network Structure in a Link-formation Game: An Experimental Study

Network formation is frequently modeled using link-formation games and typically present a multiplicity of Nash equilibria. Cooperative refinements - such as strong or coalitional proof Nash equilibria - have been the standard tool used for equilibrium selection in these games. Non-cooperative refinements derived from the theory of global games have shown also that, for a class of payoff functions, multiplicity of equilibria disappears when the game is perturbed by introducing small amounts of incomplete information. We conducted a laboratory study evaluating the predictive power of each of these refinements in an illustrative link-formation game. Compared with cooperative game solutions, the global game approach did significantly better at predicting the strategies played by individuals in the experiment.

DYNAMIC MECHANISM DESIGN FOR A GLOBAL COMMONS: DESIGN FOR A GLOBAL COMMONS

We model dynamic mechanisms for a global commons. Countries value both consumption and conservation of an open access resource. A countrys relative value of consumption to conservation is privately observed and evolves stochastically. An optimal quota maximizes world welfare subject to being implementable by Perfect Bayesian equilibria. With complete information, the optimal quota is first best; it allocates more of the resource each period to countries with high consumption value. Under incomplete information, the optimal quota is fully compressed: Identical countries receive the same quota even as environmental costs and resource needs differ. This is true even when private information is negligible.