Philippe Jehiel
Biographic Data
| ID | 5734702 |
|---|---|
| NAME | Philippe Jehiel |
| GIVEN NAMES | Philippe |
| FAMILY NAME | Jehiel |
| SIGNATURE | JEHIEL P |
| AFFILIATIONS | Paris School of Economics |
| ORCID | 0000-0003-2327-3186 |
| VERIFIED | Yes |
| TOTAL WORKS | 32 |
| TOTAL CITATIONS | 14 |
| AUTHOR COUNT | 32 |
| EDITOR COUNT | 0 |
| FIRST PUBLICATION YEAR | 2005 |
| LATEST PUBLICATION YEAR | 2025 |
| H-INDEX | 2 |
Endogenous Clustering and Analogy-Based Expectation Equilibrium
Normal-form two-player games are categorized by players into K analogy classes so as to minimize the prediction error about the behaviour of the opponent. This results in Clustered Analogy-Based Expectation Equilibria in which strategies are analogy-based expectation equilibria given the analogy partitions and analogy partitions minimize the prediction errors given the strategies. We distinguish between environments with self-repelling analogy pa…
Auction design with data‐driven misspecifications: Inefficiency in private value auctions with correlation
We study the existence of efficient auctions in private value settings in which some bidders form their expectations about the distribution of their competitor's bids based on the accessible data from past similar auctions consisting of bids and ex post values. We consider steady states in such environments with a mix of rational and data‐driven bidders, and we allow for correlation across bidders in the signal distributions about the ex post val…
Decentralized Affirmative Action Policies: Some Remarks on Their Transparency and Persistence
The analogical foundations of cooperation
We offer an approach to cooperation in repeated games of private monitoring in which players construct models of their opponents' behavior by observing the frequencies of play in a record of past plays of the game in which actions but not signals are recorded. Players construct models of their opponent's behavior by grouping the histories in the record into a relatively small number of analogy classes for which they estimate probabilities of coop…
Information redundancy neglect versus overconfidence: A social learning experiment
We study social learning in a continuous action space experiment. Subjects, acting in sequence, state their belief about the value of a good, after observing their predecessors' statements and a private signal. We compare the behavior in the laboratory with the Perfect Bayesian Equilibrium prediction and the predictions of bounded rationality models of decision making: the redundancy of information neglect model and the overconfidence model. The …
On Why Affirmative Action May Never End and Why it Should
Online Appendix to 'On the Permanent Nature of Affirmative Action Policies'
Communication with forgetful liars
I consider multiround cheap talk communication environments in which, after a lie, the informed party has no memory of the content of the lie. I characterize the equilibria with forgetful liars in such settings assuming that a liar's expectation about his past lie coincides with the equilibrium distribution of lies aggregated over all possible realizations of the states. The approach is used to shed light on when the full truth is almost surely e…
Multi-state choices with aggregate feedback on unfamiliar alternatives
This paper studies a multi-state binary choice experiment in which in each state, one alternative has well understood consequences whereas the other alternative has unknown consequences. Subjects repeatedly receive feedback from past choices about the consequences of unfamiliar alternatives but this feedback is aggregated over states. Varying the payoffs attached to the various alternatives in various states allows us to test whether unfamiliar a…
Non-Bayesian updating in a social learning experiment
Non-Bayesian updating in a social learning experiment
In our laboratory experiment, subjects, in sequence, have to predict the value of a good. The second subject in the sequence makes his prediction twice: first ("first belief"), after he observes his predecessor's prediction; second ("posterior belief"), after he observes his private signal. We find that the second subjects weigh their signal as a Bayesian agent would do when the signal confirms their first belief; they overweight the signal when …
Bundlers' dilemmas in financial markets with sampling investors
We study banks' incentive to pool assets of heterogeneous quality when investors evaluate pools by extrapolating from limited sampling. Pooling assets of heterogeneous quality induces dispersion in investors' valuations without affecting their average. Prices are determined by market clearing assuming that investors can neither borrow nor short‐sell. A monopolistic bank has the incentive to create heterogeneous bundles only when investors have en…
Bundlers' Dilemmas in Financial Markets with Sampling Investors
On the Benefits of Set-Asides
Set-aside programs that consist in forbidding access to specific participants are commonly used in procurement auctions. We show that when the set of potential participants is composed of an incumbent (whose entry costs are already sunk) and of entrants who show up endogenously (in such a way that their expected rents are fixed by outside options), then it is always beneficial for revenues to exclude the incumbent in the Vickrey auction. This exc…
Investment Strategy and Selection Bias: An Equilibrium Perspective on Overoptimism
Investors implement projects based on idiosyncratic signal observations, without knowing how signals and returns are jointly distributed. The following heuristic is studied: investors collect information on previously implemented projects with the same signal realization, and invest if the associated mean return exceeds the cost. The corresponding steady states result in suboptimal investments, due to selection bias and the heterogeneity of signa…
Selective Sampling with Information-Storage Constraints
A memoryless agent can acquire arbitrarily many signals. After each signal observation, she either terminates and chooses an action, or she discards her observation and draws a new signal. By conditioning the probability of termination on the information collected, she controls the correlation between the payoff state and her terminal action. We provide an optimality condition for the emerging stochastic choice. The condition highlights the benef…
Updating ambiguous beliefs in a social learning experiment
We present a novel experimental design to study social learning in the laboratory. Subjects have to predict the value of a good in a sequential order. We elicit each subject's belief twice: first ("prior belief"), after he observes his predecessors' action; second ("posterior belief"), after he observes a private signal on the value of the good. We are therefore able to disentangle social learning from learning from a private signal. Our main res…
A Mechanism Design Approach to the Tiebout Hypothesis
We revisit the Tiebout hypothesis in a world in which agents may possess private information as to how they value the various public goods in the various locations, and jurisdictions are free to choose whatever mechanism to attract citizens possibly after making some investments. It is shown that efficiency can be achieved as a competitive equilibrium when jurisdictions seek to maximize local revenues but not necessarily when they seek to maximiz…
Financial reporting and market efficiency with extrapolative investors
On Discrimination in Auctions with Endogenous Entry
When entry is exogenous, strong buyers should be discriminated against weak buyers to maximize revenues (Myerson 1981). When entry is endogenous so that entrants' expected payoffs do not depend on the proposed mechanism, optimal discrimination takes a completely different form. The revenue-maximizing equilibrium requires that there should be no discrimination with respect to entrants irrespective of their ex ante characteristics. Besides, those b…
On Absolute Auctions and Secret Reserve Prices
From a theory viewpoint, the use of auctions with zero public reserve prices, also called absolute auctions, or of auctions with secret reserve prices, is somewhat puzzling despite being common. By allowing that buyers differ in their processing of past data regarding how the participation rate varies with the auction format and how reserve prices are distributed when secret, we show in a competitive environment that these auction formats may end…
On Transparency in Organizations
Locally robust implementation and its limits
Reputation with Analogical Reasoning
We consider a repeated interaction between a long-run player and a sequence of short-run players, in which the long-run player may either be rational or may be a mechanical type who plays the same (possibly mixed) action in every stage game. We depart from the classical model in assuming that the short-run players make inferences by analogical reasoning, meaning that they correctly identify the average strategy of each type of long-run player, bu…
Manipulative auction design: Manipulative auction design
This paper considers an auction design framework in which bidders get partial feedback about the distribution of bids submitted in earlier auctions: either bidders are asymmetric but past bids are disclosed in an anonymous way or several auction formats are being used and the distribution of bids, but not the associated formats, is disclosed. I employ the analogy-based expectation equilibrium (Jehiel 2005) to model such situations. First-price au…
Dynamic Processes of Social and Economic Interactions: On the Persistence of Inefficiencies
An economy with a finite number of agents and a finite number of states is considered. An exogenous institutional rule prescribes which moves from one state to another are feasible to each coalition. At each time, an agent is called to act with some exogenous probability, and he chooses a coalition, a feasible new state to move the economy to, and side payments between the agents in the coalition. The setup can be applied to various dynamic proce…
Bargaining and Majority Rules: A Collective Search Perspective
We study collective search processes in which members of a committee decide whether to accept the current proposal or continue searching. The acceptance decision is made according to majority rule. We study which members have more impact on the decision, as well as the degree of randomness of the decision. When proposals vary along a single dimension, the acceptance set is small, and at most two members determine the outcome whatever the majority…
Selective Sampling with Information-Storage Constraints
A memoryless agent can acquire arbitrarily many signals. After each signal observation, she either terminates and chooses an action, or she discards her observation and draws a new signal. By conditioning the probability of termination on the information collected, she controls the correlation between the payoff state and her terminal action. We provide an optimality condition for the emerging stochastic choice. The condition highlights the benef…
Dynamic Processes of Social and Economic Interactions: On the Persistence of Inefficiencies
An economy with a finite number of agents and a finite number of states is considered. An exogenous institutional rule prescribes which moves from one state to another are feasible to each coalition. At each time, an agent is called to act with some exogenous probability, and he chooses a coalition, a feasible new state to move the economy to, and side payments between the agents in the coalition. The setup can be applied to various dynamic proce…
On Quitting Rights in Mechanism Design
Quitting rights play a major role in many economic interactions, whether in the precontractual phase or after contracts have been signed. Clearly, no party can be forced to sign a contract if she is unwilling to, thus implying that quitting rights can be exerted at the ex ante stage when no contract has been signed. But, quitting rights can also be exerted after explicit contracts have been signed in a number of instances. For example, most labor…
Revisiting games of incomplete information with analogy-based expectations
Smoking Today and Stopping Tomorrow: A Limited Foresight Perspective
This article considers an intertemporal decision problem in which the agent has limited foresight. It offers an interpretation of why people may smoke when they are young—as a result of having a short horizon of foresight—and refrain from smoking when they get older—as a result of having better foresight. (JEL codes: D03, D83, D91, I10)
Feedback spillover and analogy-based expectations: A multi-game experiment
The Coalitional Nash Bargaining Solution
The coalitional Nash bargaining solution is defined to be the core allocation for which the product of players' payoffs is maximal. We consider a non-cooperative model with discounting in which one team may form and every player is randomly selected to make a proposal in every period. The grand team, consisting of all players, generates the largest surplus. But a smaller team may form. We show that as players get more patient if an efficient and …
Bargaining and Majority Rules: A Collective Search Perspective
We study collective search processes in which members of a committee decide whether to accept the current proposal or continue searching. The acceptance decision is made according to majority rule. We study which members have more impact on the decision, as well as the degree of randomness of the decision. When proposals vary along a single dimension, the acceptance set is small, and at most two members determine the outcome whatever the majority…
Manipulative auction design: Manipulative auction design
This paper considers an auction design framework in which bidders get partial feedback about the distribution of bids submitted in earlier auctions: either bidders are asymmetric but past bids are disclosed in an anonymous way or several auction formats are being used and the distribution of bids, but not the associated formats, is disclosed. I employ the analogy-based expectation equilibrium (Jehiel 2005) to model such situations. First-price au…
Locally robust implementation and its limits
Reputation with Analogical Reasoning
We consider a repeated interaction between a long-run player and a sequence of short-run players, in which the long-run player may either be rational or may be a mechanical type who plays the same (possibly mixed) action in every stage game. We depart from the classical model in assuming that the short-run players make inferences by analogical reasoning, meaning that they correctly identify the average strategy of each type of long-run player, bu…
On Transparency in Organizations
Financial reporting and market efficiency with extrapolative investors
On Discrimination in Auctions with Endogenous Entry
When entry is exogenous, strong buyers should be discriminated against weak buyers to maximize revenues (Myerson 1981). When entry is endogenous so that entrants' expected payoffs do not depend on the proposed mechanism, optimal discrimination takes a completely different form. The revenue-maximizing equilibrium requires that there should be no discrimination with respect to entrants irrespective of their ex ante characteristics. Besides, those b…
On Absolute Auctions and Secret Reserve Prices
From a theory viewpoint, the use of auctions with zero public reserve prices, also called absolute auctions, or of auctions with secret reserve prices, is somewhat puzzling despite being common. By allowing that buyers differ in their processing of past data regarding how the participation rate varies with the auction format and how reserve prices are distributed when secret, we show in a competitive environment that these auction formats may end…
Updating ambiguous beliefs in a social learning experiment
We present a novel experimental design to study social learning in the laboratory. Subjects have to predict the value of a good in a sequential order. We elicit each subject's belief twice: first ("prior belief"), after he observes his predecessors' action; second ("posterior belief"), after he observes a private signal on the value of the good. We are therefore able to disentangle social learning from learning from a private signal. Our main res…
A Mechanism Design Approach to the Tiebout Hypothesis
We revisit the Tiebout hypothesis in a world in which agents may possess private information as to how they value the various public goods in the various locations, and jurisdictions are free to choose whatever mechanism to attract citizens possibly after making some investments. It is shown that efficiency can be achieved as a competitive equilibrium when jurisdictions seek to maximize local revenues but not necessarily when they seek to maximiz…
Investment Strategy and Selection Bias: An Equilibrium Perspective on Overoptimism
Investors implement projects based on idiosyncratic signal observations, without knowing how signals and returns are jointly distributed. The following heuristic is studied: investors collect information on previously implemented projects with the same signal realization, and invest if the associated mean return exceeds the cost. The corresponding steady states result in suboptimal investments, due to selection bias and the heterogeneity of signa…
Selective Sampling with Information-Storage Constraints
A memoryless agent can acquire arbitrarily many signals. After each signal observation, she either terminates and chooses an action, or she discards her observation and draws a new signal. By conditioning the probability of termination on the information collected, she controls the correlation between the payoff state and her terminal action. We provide an optimality condition for the emerging stochastic choice. The condition highlights the benef…
Bundlers' Dilemmas in Financial Markets with Sampling Investors
On the Benefits of Set-Asides
Set-aside programs that consist in forbidding access to specific participants are commonly used in procurement auctions. We show that when the set of potential participants is composed of an incumbent (whose entry costs are already sunk) and of entrants who show up endogenously (in such a way that their expected rents are fixed by outside options), then it is always beneficial for revenues to exclude the incumbent in the Vickrey auction. This exc…
Non-Bayesian updating in a social learning experiment
In our laboratory experiment, subjects, in sequence, have to predict the value of a good. The second subject in the sequence makes his prediction twice: first ("first belief"), after he observes his predecessor's prediction; second ("posterior belief"), after he observes his private signal. We find that the second subjects weigh their signal as a Bayesian agent would do when the signal confirms their first belief; they overweight the signal when …
Bundlers' dilemmas in financial markets with sampling investors
We study banks' incentive to pool assets of heterogeneous quality when investors evaluate pools by extrapolating from limited sampling. Pooling assets of heterogeneous quality induces dispersion in investors' valuations without affecting their average. Prices are determined by market clearing assuming that investors can neither borrow nor short‐sell. A monopolistic bank has the incentive to create heterogeneous bundles only when investors have en…
On Why Affirmative Action May Never End and Why it Should
Online Appendix to 'On the Permanent Nature of Affirmative Action Policies'
Communication with forgetful liars
I consider multiround cheap talk communication environments in which, after a lie, the informed party has no memory of the content of the lie. I characterize the equilibria with forgetful liars in such settings assuming that a liar's expectation about his past lie coincides with the equilibrium distribution of lies aggregated over all possible realizations of the states. The approach is used to shed light on when the full truth is almost surely e…
Economics (27 works) · Computer Science (23 works) · Auction Theory and Applications (16 works) · Microeconomics (16 works) · Experimental Behavioral Economics Studies (13 works) · Game Theory and Applications (11 works) · Mathematical economics (10 works) · Business (8 works) · Mathematics (8 works) · Psychology (8 works)