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Previous articleNext article No AccessThe Past, Present, and Future of Economics: A Celebration of the 125-Year Anniversary of the JPE and of Chicago EconomicsChicago and the Origins of Modern General EquilibriumHugo F. SonnenscheinHugo F. SonnenscheinUniversity of Chicago Search for more articles by this author PDFPDF PLUSFull Text Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinkedInRedditEmail SectionsMoreDetailsFiguresReferencesCited by Journal of Political Economy Volume 125, Number 6December 2017 Article DOIhttps://doi.org/10.1086/694638 Views: 2675Total views on this site Citations: 3Citations are reported from Crossref © 2017 by The University of Chicago. All rights reserved.PDF download Crossref reports the following articles citing this article:Edward Nik-Khah Information at Chicago, (Jan 2023): 123–148.https://doi.org/10.1007/978-3-031-01775-9_6Jose Luis Retolaza, Leire San-Jose Stakeholder Accounting for Sustainability Applied to Nonfinancial Information in Banking, (Nov 2020): 1–22.https://doi.org/10.1007/978-3-030-00001-1_37-1Jose Luis Retolaza, Leire San-Jose Stakeholder Accounting for Sustainability Applied to Nonfinancial Information in Banking, (Feb 2021): 593–613.https://doi.org/10.1007/978-3-030-29371-0_37

Negotiation involves determining not only an agreement's price, but also its content, which typically has many aspects. We model such negotiations and provide conditions under which negotiation leads to efficient outcomes, even in the face of substantial asymmetric information regarding the value of each aspect. With sufficient information about the overall potential surplus, if the set of offers that agents can make when negotiating is sufficiently rich, then negotiation leads the agents to efficient agreements in all equilibria. Furthermore, no "planner" or "mechanism designer" who knows the statistical structure of information is required: the same negotiation game works regardless of the setting. The theory and examples explore the anatomy of negotiation and may shed light on why many situations with significant asymmetric information exhibit little inefficiency.

We begin by framing some of Salvador's important research contributions.The theory of social choice is at the very center of economic analysis.

We demonstrate that Rybczynski's classic comparative statics can be reversed in a Heckscher–Ohlin world when preferences in each country favor the exported commodity. This taste bias has empirical support. An increase in the endowment of a factor of production can lead to an absolute curtailment in the production of the commodity using that factor intensively, and an absolute expansion of the commodity using relatively little of the same factor. This outcome – which we call “Reverse Rybczynski” – implies immiserizing factor growth. We present a simple analytical example that delivers this result with unique pre- and post-growth equilibria. In this example, production occurs within the cone of diversification, such that factor price equalization holds. We also provide general conditions that determine the sign of Rybczynski's comparative statics.

“Sequential Bargaining as a Non-Cooperative Foundation for Walrasian Equilibrium” was the result of a collaboration that began several years after my thesis research, and which reflected Hugo’s continued interest in and concern for his students. Getting my thesis into decent shape was an agonizing process that took far too long, so I was quite relieved and delighted to get the defense over with, but, in a way that I sensed only dimly at the time, I am pretty sure that he thought of it as an intermediate step in a longer process. Over the years I benefitted repeatedly from the watchful eye he kept on my progress, and in our collaboration I became aware of aspects of his guidance that, due to his gentle and subtle approach, were not so apparent when I was a graduate student.

Consider an arbitrary Bayesian decision problem in which the preferences of each agent are private information. We prove that the utility costs associated with incentive constraints typically decrease when the decision problem is linked with independent copies of itself. This is established by flrst deflning a mechanism in which agents must budget their representations of preferences so that the frequency of preferences across problems mirrors the underlying distribution of preferences, and then arguing that agents will satisfy their budget by being as truthful as possible. Examples illustrate the disappearance of incentive costs when problems are linked in a rich variety of problems, including public goods allocation, voting, and bargaining.

Fifty years ago T. M. Rybczynski [3] published a frequently referenced note in which he inaugurated a systematic investigation of the comparative statics associated with a change in the endowment of a factor. The questions that he posed are broad and fundamental: How do the prices and consumptions of final goods depend on factor endowments? How do factor prices and consumer wealth vary with changes in factors endowments? What are the welfare implications of these changes? Rybczynski considered a closed economy with two factors of production A and B and two consumption goods X and Y , each produced according to constant returns to scale and perfect competition. He argued that if X is A intensive and Y is B intensive, then an increase in A leads to an increase in the equilibrium output of X and a decrease in the equilibrium output of Y , provided that the marginal rate of transformation in production betweenX and Y (MRT (X,Y )) does not change when one moves from the original to the new equilibrium. In other words, under Rybczynski’s assumptions, the expanded production possibilities associated with a factor increase, which allows for an increased production of both outputs, leads in equilibrium to an increase in just one of the two outputs (the one that is intensive in the factor that has increased) and a decrease in the other. This unambiguous comparative statics result has been applied to the case of international trade in which an economy is small (more properly infinitesimal), so that the MRT at every interior equilibrium is determined by international prices and does not change.

Consider an arbitrary Bayesian decision problem in which the preferences of each agent are private information. We prove that the utility costs associated with incentive constraints typically decrease when the decision problem is linked with independent copies of itself. This is established by first defining a mechanism in which agents must budget their representations of preferences so that the frequency of preferences across problems mirrors the underlying distribution of preferences, and then arguing that agents will satisfy their budget by being as truthful as possible. Examples illustrate the disappearance of incentive costs when problems are linked in a rich variety of problems, including public goods allocation, voting, and bargaining. Chicago where Jackson was visiting when this research began. We thank Zachary Cohn and Phil Reny for calling our attention to the treatment of participation constraints, Bill Zame for questions about coalitional considerations, Mahmut Erdem for written suggestions an earlier draft, Robert Veszteg as a discussant of the paper, and the participants of various seminars for helpful questions and comments. † This supercedes an earlier version of this paper entitled " The Linking of Collective Decisions and Effi

For groups that must make several decisions of similar form, we define a simple and general mechanism that is designed to promote social efficiency. The mechanism links the various decisions by forcing agents to budget their representations of preferences so that the frequency of preferences across problems conforms to the underlying distribution of preferences. We show that as the mechanism operates over a growing number decisions, the welfare costs of incentive constraints completely disappear. In addition, as the number of decisions being linked grows, a truthful strategy is increasingly successful and secures the efficient utility level for an agent.

Experiments designed to test the predictions of noncooperative game theory about the way that surplus will be divided in alternating offer games with discounting have produced conflicting results. Neither the Stahl/Rubinstein division nor the alternative equal division are generally supported. The experiments reported here suggest a regularity in the data that is consistent with all the previous experiments: First players who have a great advantage in the sense that the Stahl/Rubinstein division would give them a large share of the initial pie demand more than half of the pie, but do not fully exploit their advantage. First players who are at a disadvantage demand equal divisions. Journal of Economic Literature Classification Numbers: C72, C91.

Problems of social choice frequently take the following form. There are n voters and a set K = {1,2,...,k} of objects. The voters must choose a subset of K. We define a class of voting schemes called voting by committees. The main result of the paper is a characterization of voting by committees, which is the class of all voting schemes that satisfy voter sovereignty and nonmanipulability on the domain of separable preferences. This result is analogous to the literature on the Groves and Clarke scheme in that it characterizes all of the nonmanipulable voting schemes on an important domain.