Working Papers by Federico Echenique
# | Title | Authors | Date | Length | Paper | Abstract | |
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1441 | Approximate Expected Utility Rationalization | Echenique, Federico Imai, Taisuke Saito, Kota | 06/22/2018 | 52 | sswp1441.pdf | We propose a new measure of deviations from expected utility, given data on economic choices under risk and uncertainty. In a revealed preference setup, and given a positive number e, we provide a characterization of the datasets whose deviation (in beliefs, utility, or perceived prices) is within e of expected utility theory. The number e can then be used as a distance to the theory. We apply our methodology to three recent large-scale experiments. Many subjects in those experiments are consistent with utility aximization, but not expected utility maximization. The correlation of our measure with demographics is also interesting, and provides new and intuitive findings on expected utility. | |
1440 | A Characterization of "Phelpsian" Statistical Discrimination | Chambers, Christopher P. Echenique, Federico | 06/13/2018 | 14 | sswp1440.pdf | We establish that statistical discrimination is possible if and only if it is impossible to uniquely identify the signal structure observed by an employer from a realized empirical distribution of skills. The impossibility of statistical discrimination is shown to be equivalent to the existence of a fair, skill-dependent remuneration for every set of tasks every signal-dependent optimal assignment of workers to tasks. Finally, we connect this literature to Bayesian persuasion, establishing that if the possibility of discrimination is absent, then the optimal signalling problem results in a linear payoff function (as well as a kind of converse). | |
1439 | Statistical Discrimination and Affirmative Action in the Lab | Dianat, Ahrash Echenique, Federico Yariv, Leeat | 04/30/2018 | 44 | sswp1439.pdf | We present results from laboratory experiments studying the impacts of affirmative-action policies. We induce statistical discrimination in simple labor-market interactions between rms and workers. We then introduce affirmative-action policies that vary in the size and duration of a subsidy firms receive for hiring discriminated-against workers. These different affirmative-action policies have nearly the same effect and practically eliminate discriminatory hiring practices. However, once lifted, few positive effects remain and discrimination reverts to its initial levels. One exception is lengthy affirmative-action policies, which exhibit somewhat longer-lived effects. Stickiness of beliefs, which we elicit, helps explain the evolution of these outcomes. | |
1434 | Fairness and efficiency for probabilistic allocations with endowments | Echenique, Federico Zhang, Jun Miralles, Antonio | 12/19/2017 | 38 | sswp1434_-_revised.pdf | We propose to use endowments as a policy instrument in market design. Endowments give agents the right to enjoy certain resources. For example in school choice, one can ensure that low-income families have a shot at high-quality schools by endowing them with a chance of admission. We introduce two new criteria in resource allocation problems with endowments. The first adapts the notion of justified envy to a model with endowments, while the second is based on market equilibrium. Using either criteria, we show that fairness (understood as the absence of justified envy, or as a market outcome) can be obtained together with efficiency and individual rationality. Revised January 2018 | |
1428 | Preference Identification | Chambers, Christopher P. Echenique, Federico Lambert, Nicolas S | 04/11/2017 | 37 | sswp1428.pdf | An experimenter seeks to learn a subject's preference relation. The experimenter produces pairs of alternatives. For each pair, the subject is asked to choose. We argue that, in general, large but finite data do not give close approximations of the subject's preference, even when countably infinite many data points are enough to infer the preference perfectly. We then provide sufficient conditions on the set of alternatives, perferences, and sequences of pairs so that the observation of finitely many choices allows the experimentor to learn the subject's preference with arbitrary precision. The sufficient conditions are strong, but encompass many situations of interest. And while preferneces are approximated, we show that it is harder to identify utility functions. We illustrate our results with several examples, including expected utility, and preferences in the Anscombe-Aumann model. | |
1420 | A Characterization of Combinatorial Demand | Chambers, Christopher P. Echenique, Federico | 05/31/2016 | 9 | sswp1420.pdf | We prove that combinatorial demand functions are characterized by two properties: continuity and the law of demand. | |
1418 | On Multiple Discount Rates | Chambers, Christopher P. Echenique, Federico | 05/09/2016 | 33 | sswp1418.pdf | We propose a theory of intertemporal choice that is robust to specic assumptions on the discount rate. One class of models requires that one utility stream be chosen over another if and only if its discounted value is higher for all discount factors in a set. Another model focuses on an average discount factor. Yet another model is pessimistic, and evaluates a flow by the lowest available discounted value. | |
1410 | Response Time and Utility | Echenique, Federico Saito, Kota | 11/17/2015 | 22 | SSWP1410r.pdf | Response time is the time an agent needs to make a decision. One fundamental finding in psychology and neuroscience is that, in a binary choice, the response time is shorter as the difference between the utilities of the two options becomes larger. We consider situations in which utilities are not observed, but rather inferred from revealed preferences: meaning they are inferred from subjects' choices. Given data on subjects' choices, and the time to make those choices, we give conditions on the data that characterize the property that response time is decreasing in utility differences. | |
1409 | Average Choice | Ahn, David Echenique, Federico Saito, Kota | 10/12/2015 | 34 | sswp1409.pdf | This is an investigation of stochastic choice when only the average of the choices is observable. For example when one observes aggregate sales numbers from a store, but not the frequency with which each item was purchased. The focus of our work is on the Luce model, also known as the Logit model. We show that a simple path independence property of average choice uniquely characterizes the Luce model. We also characterize the linear Luce mode, using similar tools. A linear version of the Luce model is used most frequently in empirical work by applied economists. Our characterization is based on the property of path independence, which runs counter to early impossibility results on path independent choice. From an empirical perspective, our results provide a small-sample advantage over the tests of Luce's model that rely on estimating choice frequences. | |
1407 | General Luce Model | Echenique, Federico Saito, Kota | 10/01/2015 | 30 | sswp1407R.pdf | We extend the Luce model of discrete choice theory to satisfactorily handle zero-probability choices. The Luce model (or the Logit model) is the most widely applied and used model in stochastic choice, but it struggles to explain choices that are never made. The Luce model requires that if an alternative y is never chosen when x is available, then there is no set of alternatives from which y is chosen with positive probablity: y cannot be chose, if from sets of alternatives that exclude x. We relax this assumption. In our model, if an alternative y is never chosen when x is available, then we infer that y is dominated by x. While dominted by x, y may still be chosen with positive probability - even with high probability - when grouped with a comparable set of alternatives. | |
1401 | Testable Implications of Translation Invariance and Homotheticity: Variational, Maxmin, Cara and CRRA Preferences | Chambers, Christopher P. Echenique, Federico Saito, Kota | 01/22/2015 | 21 | sswp1401-3.pdf | We provide revealed preference axioms that characterize models of translation invariant preferences. In particular, we characterize the models of variational, maxmin, CARA and CRRA utilities. In each case, we present a revealed preference axiom that is satisfied by a dataset if and only if the data set is consistent from the corresponding utility representation. Our results complement traditional exercies in decision theory that take preferences as primitive. | |
1388 | Testable Implications of Quasi-Hyperbolic and Exponential Time Discounting | Echenique, Federico Saito, Kota Imai, Taisuke | 05/20/2014 | 57 | sswp-1388.pdf | We present the first revealed-preference characterizations of the models of exponential time discounting, quasi-hyperbolic time discounting, and other time-separable models of consumers' intertemporal decisions. The characterizations provide non-parametric revealed-preference tests, which we take to data using the results of a recent experiment conducted by Andreoni and Sprenger (2012). For such data, we find that less than half of the subjects are consistent with exponential discounting, and only a few more are consistent with quasi-hyperbolic discounting. | |
1381 | Testable implications of exponential discounting | Echenique, Federico Saito, Kota | 11/13/2013 | 22 | sswp1381.pdf | ||
1380 | Savage in the Market | Echenique, Federico Saito, Kota | 10/22/2013 | 24 | sswp1380-2.pdf | ||
1379 | The perception-adjusted Luce model | Echenique, Federico Saito, Kota Tserenjigmid, Gerelt | 10/02/2013 | 31 | sswp1379.pdf | ||
1373 | Strategic uncertainty and unraveling in matching markets | Echenique, Federico Pereyra, Juan Sebastian | 04/15/2013 | 38 | sswp1373.pdf | ||
1372 | Ordinal and cardinal solution concepts for two-sided matching | Echenique, Federico Galichon, Alfred | 03/20/2013 | 23 | sswp1372.pdf | ||
1366 | How to control controlled school choice | Echenique, Federico Yenmez, Mehmet Bumin | 12/14/2012 | 40 pages | sswp1366.pdf | ||
1354 | Finding a Walrasian Equilibrium is easy for a fixed number of agents | Echenique, Federico Wierman, Adam | 10/26/2011 | 19 | sswp1354.pdf | ||
1348 | Testable Implications of Bargaining Theories | Chambers, Christopher P. Echenique, Federico | 06/07/2011 | sswp1348.pdf | |||
1337 | Existence and testable implications of extreme stable matchings | Echenique, Federico Lee, SangMok Yenmez, Mehmet Bumin | 11/10/2010 | sswp1337.pdf | |||
1333 | A revealed preference approach to computational complexity in economics | Echenique, Federico Golovin, Daniel Wierman, Adam | 09/24/2010 | sswp1333.pdf | |||
1332 | General revealed preference theory | Chambers, Christopher P. Echenique, Federico Shmaya, Eran | 09/22/2010 | sswp1332.pdf | |||
1328 | Revealed preference tests using supermarket data: The money pump | Echenique, Federico Lee, SangMok Shum, Matthew | 06/28/2010 | 22 | sswp1328.pdf | ||
1322 | Contracts vs. salaries in matching | Echenique, Federico | 05/21/2010 | 6 pages | sswp1322.pdf | ||
1317 | The axiomatic structure of empirical content | Chambers, Christopher P. Echenique, Federico Shmaya, Eran | 01/28/2010 | sswp1317.pdf | |||
1316 | Aggregate matchings | Echenique, Federico Lee, SangMok Shum, Matthew | 01/19/2010 | 43 pages | sswp1316.pdf | ||
1315 | Clearinghouses for two-sided matching: An experimental study | Echenique, Federico Wilson, Alistar J. Yariv, Leeat | 12/21/2009 | 45 | sswp1315.pdf | ||
1310 | Testable implications of gross substitutes in demand | Chambers, Christopher P. Echenique, Federico Shmaya, Eran | 09/01/2009 | 11 pages | sswp1310.pdf | ||
1308 | Implications of Pareto Efficiency for two-agent (household) choice | Echenique, Federico Ivanov, Lozan | 07/01/2009 | 17 pages | sswp1308.pdf | ||
1299 | When does aggregation reduce uncertainty aversion? | Chambers, Christopher P. Echenique, Federico | 02/01/2009 | 24 pages | sswp1299.pdf | ||
1298 | The core matchings of markets with transfers | Chambers, Christopher P. Echenique, Federico | 10/01/2008 | 32 pages | sswp1298.pdf | ||
1281 | You won’t harm me if you fool me | Echenique, Federico Shmaya, Eran | 12/01/2007 | 20 pages | sswp1281.pdf | ||
1278 | A test for monotone comparative statics | Echenique, Federico Komunjer, Ivana | 09/01/2007 | 51 pages | sswp1278.pdf | ||
1270 | On behavioral complementarity and its implications | Chambers, Christopher P. Echenique, Federico Shmaya, Eran | 07/01/2007 | 35 pages | sswp1270.pdf | ||
1269 | Sequential entry in many-to-one matching markets | Boyle, Elette Echenique, Federico | 06/01/2007 | 14 pages | sswp1269.pdf | ||
1252 | What matchings can be stable? The refutability of matching theory | Echenique, Federico | 04/01/2006 | 19 pages | wp1252.pdf | ||
1248 | Supermodularizability | Chambers, Christopher P. Echenique, Federico | 02/01/2006 | 15 pages | wp1248.pdf | ||
1244 | Testing Models w/ multiple equilibria by quantile methods | Echenique, Federico Komunjer, Ivana | 12/01/2005 | 61 pages | sswp1244R.pdf | ||
1234 | An explanation of inefficient redistribution: Transfers insure cohesive groups | Echenique, Federico Eguia, Jon X. | 08/01/2005 | 19 pages | wp1234.pdf | ||
1226 | A Solution to Matching with Preferences over Colleagues | Echenique, Federico Yenmez, Mehmet Bumin | 06/01/2005 | 25 pages | sswp1226c.pdf | We study many-to-one matchings, such as the assignment of students to colleges, where the students have preferences over the other students who would attend the same college. It is well known that the core of this model may be empty, without strong assumptions on agents' preferences. We introduce a method that finds all core matchings, if any exist. The method requires no assumptions on preferences. Our method also finds certain partial solutions that may be useful when the core is empty. | |
1199 | Counting Combinatoral Choice Rules | Echenique, Federico | 04/01/2004 | 17 pages | sswp1199c.pdf | I count the number of combinatorial choice rules that satisfy certain properties: Kelso-Crawford substitutability, and independence of irrelevant alternatives. The results are important for two-sided matching theory, where agents are modeled by combinatorial choice rules with these properties. The rules are a small, and asymtotically vanishing, fraction of all choice rules. But they are still exponentially more than the preference relations over individual agents---which has positive implications for the Gale-Shapley algorithm of matching theory. | |
1185 | A Theory of Stability in Many-to-Many Matching Markets | Echenique, Federico Oviedo, Jorge | 11/01/2003 | 41 pages | sswp1185c.pdf | We develop a theory of stability in many-to-many matching markets. We give conditions under which the setwise-stable set, a core-like concept, is nonempty and can be approached through an algorithm. The setwise-stable set coincides with the pairwise-stable set, and with the predictions of a non-cooperative bargaining model. The set-wise stable set possesses the canonical conflict/coincidence of interest properties from many-to-one, and one-to-one models. The theory parallels the standard theory of stability for many-to-one, and one-to-one, models. We provide results for a number of core-like solutions, besides the setwise-stable set. | |
1178 | Comparative Statics, English Auctions, and the Stolper-Samuelson Theorem | Echenique, Federico Manelli, Alejandro M. | 09/01/2003 | 15 pages | wp1178.pdf | Changes in the parameters of an n-dimensional system of equations induce changes in its solutions. For a class of such systems, we determine the qualitative change in solutions given certain qualitative changes in parameters. Our methods and results are elementary yet useful. They highlight the existence of a common thread, our "own effect" assumption, in formally diverse areas of economics. We discuss several applications; among them we establish the existence of efficient equilibria in English auctions with interdependent valuations, and a version of the Stopler-Samuelson Theorem for an n X n trade model. | |
1153 | Finding All Equilibria | Echenique, Federico | 11/01/2002 | sswp1153c.pdf | |||
1142 | A Characterization of Strategic Complementarities | Echenique, Federico | 10/01/2002 | sswp1142c.pdf | |||
1140 | Core Many-To-One Matchings by Fixed-Point Methods | Echenique, Federico Oviedo, Jorge | 09/01/2002 | sswp1140c.pdf |