Geoffroy de Clippel

Associate Professor

Economics Department

Brown University

I am an economic theorist, with an interest in experiments too. My research covers topics in mechanism design, bounded rationality, bargaining, distributive justice, and cooperative games.

Working Papers:

Fairness Through the Lens of Cooperative Game Theory: an Experimental Approach (with K. Rozen)

Idea: This paper experimentally investigates cooperative game theory from a normative perspective. Axioms and solution concepts from cooperative game theory provide valuable insights into the data.

The Silent Treatment (with K. Eliaz and K. Rozen) This version: November 2017

Idea: The attention of a principal is sought by multiple agents eager to have their ideas implemented. Such attention-seeking imposes an externality on the principal, who can only implement one idea per period and may overlook valuable proposals. Her only means of providing incentives is her rule for selecting among proposals, which must be rational for her to follow. Can she design an idea-selection mechanism that circumvents this problem? This paper argues that in repeated interactions, the principal can ensure agents refrain from communicating ideas unless they are of the highest quality. The principal may achieve her first-best outcome even when she is fully attention constrained and has minimal information about the ability of agents. Whether her first best is achievable hinges on the the worst possible agent.

Bounded Rationality and Limited Datasets (with K. Rozen, R&R Ecma) Revised: July 2018

Idea: Theories of bounded rationality are typically characterized over an exhaustive data set. This paper develops a methodology that can be helpful to understand if and how a theory of bounded rationality can be tractably tested when the available data is limited, as is the case in most practical settings. We apply our approach to several leading theories. We also point out that the recent literature on bounded rationality has overlooked a methodological pitfall that can lead to ‘false positives’ and ‘empty’ out-of-sample predictions in the presence of limited data.

Testable Implications of Some Classic Assignment Methods (with K. Rozen) New: July 2018

Idea: We study the testable implications of serial dictatorship, stable many-to-one matchings, and the core of housing markets. We show that serial dictatorship is easy to test, and explain how elements of the power ranking between agents can be identified. Stability is also easy to test for an interesting class of many-to-one matching problems, and is tightly related to serial dictatorship. We provide an insightful characterization of the core of Shapley and Scarf (1974)'s housing markets using revealed top-trading cycles. This characterization proves useful in many examples, but is also used to prove that testing the core is generally NP-hard.

Good Enough (with S. Barberà, A. Neme, and K. Rozen) New : July 2018

Idea: A decision maker may not perfectly maximize her preference over the feasible set. She may feel it is good enough to maximize her preference over a sufficiently large consideration set; or just require that her choice is sufficiently well-ranked (e.g., in the top quintile of options); or even endogenously determine a threshold for what is good enough, based on an initial sampling of the options. We introduce and investigate a class of theories, Order-k Rationality, encompassing heuristics such as these.

Consumer Theory with Misperceived Tastes (with K. Rozen) New: July 2018

Idea: Incorporating bounded rationality into the classic consumer theory setting, we study the testable implications of a consumer who may have trouble consistently assessing her subjective tastes. Our model of ε-Rationalizability, which bounds the consumer’s misperception of her marginal rates of substitution, may arise from various choice heuristics. It also offers a natural, preference-based measure of departure from rationality that is more demanding than Afriat’s measure.

Coming Soon:

Bad Repetition (with K. Rozen)

Coming soon...

Bargaining over Contingent Contracts under Asymmetric Information (with J. Fanning and K. Rozen)

Coming soon...

Level-k Mechanism Design with Small Modeling Mistakes (with R. Saran and R. Serrano)

Coming soon...

Communication, Perception, and Strategic Obfuscation (with K. Rozen)

Coming soon... (financial support from the NSF is gratefully acknowledged)

Selected Publications: (Click here for a complete list)

The Type-Agent Core for Exchange Economies under Asymmetric Information (JET 2008)

Idea: The type-agent core is a new solution concept for exchange economies with asymmetric information. It coincides with the set of equilibrium outcomes of a simple competitive screening game. Uninformed intermediaries help the agents to cooperate in an attempt to make some profit. The type-agent core is a subset of Wilson (1978)'s coarse core. It is never empty, even though it may be a strict subset of Wilson's fine core. In addition, it converges towards the set of constrained market equilibria as the economy is replicated.

Impartial Division of a Dollar (with H. Moulin and N. Tideman, JET 2008)

Idea: For impartial division, each participant reports only her opinion about the fair relative shares of the other participants, and this report has no effect on her own share. If a specific division is compatible with all reports, it is implemented. We propose a family of natural methods meeting these requirements, for a division among four or more participants. No such method exists for a division among three participants.

Marginal Contributions and Externalities in the Value (Ecma 2008)

Idea: The paper studies how to extend the theory of the Shapley value to problems involving externalities. Using the standard axiom systems behind the Shapley value leads to the identification of bounds on players’ payoffs around an “externality-free” value. The approach determines the direction and maximum size of Pigouvian-like transfers among players, transfers based on the specific nature of externalities that are compatible with basic normative principles.

No Profitable Decompositions in Quasi-Linear Allocation Problems (with C. Bejan, JET 2011)

Idea: We study the problem of allocating a bundle of perfectly divisible private goods from an axiomatic point of view, in situations where compensations can be made through monetary transfers. The key property we impose on the allocation rule requires that no agent should be able to gain by decomposing the problem into sequences of subproblems. Combined with additional standard properties, it leads to a characterization of the rule that shares the total surplus equally. Hence a traditional welfarist rule emerges as the unique consequence of our axioms phrased in a natural economic environment.

Reason-Based Choice (with K. Eliaz, TE 2012)

Idea: Two well-documented violations of rationality (the attraction and compromise effects) can be captured as the cooperative solution to an intrapersonal bargaining problem among two different criteria for choosing. We first axiomatically characterize our solution when the two criteria are known, and then discuss the testable implications of our model when the two criteria are unknown. Alternatively, our analysis may be reinterpreted as a study of (interpersonal) bilateral bargaining over a finite set of options.

On the Selection of Arbitrators (with K. Eliaz and B. Knight, AER 2014)

Idea: The problem of arbitrator selection is studied using implementation theory. Combining theory and experiments, we document some issues with the veto-rank procedure that is commonly used in practice, and develop a new sequential procedure, shortlisting, with better properties.

Competing for Consumer Inattention (with K. Eliaz and K. Rozen, JPE 2014)

Idea: How do markets respond when consumers are able to examine only a limited number of markets for the best price? A firm’s price can deflect or draw attention to its market, and consequently, limited attention introduces a new dimension of cross-market competition. We characterize the equilibrium of a stylized model capturing these features, and show that having consumers who are only partially attentive increases consumer welfare. With less attention, consumers are more likely to miss the best offers; but enhanced cross-market competition decreases average price paid, as leading firms try to stay under the consumers’ radar.

Behavioral Implementation (AER 2014)

Idea: Implementation theory assumes that participants’ choices are rational, in the sense of being consistent with the maximization of a context-independent preference. The paper investigates implementation under complete information when individuals’ choices need not be rational.

Strategic Disclosure of Feasible Options (with K. Eliaz, GEB 2015)

Idea: An important, yet overlooked, step in bargaining is figuring out the set of feasible options. Once options are on the table, different compromise rules can be used to decide on which final option to settle on. These compromise rules impact the willingness to disclose feasible options. Both in a static and in a dynamic setting, we show how the Nash compromise rule is second-best when it comes to disclosing options.

On the Redundancy of the Implicit Welfarist Axiom in Bargaining Theory (JET 2015)

Idea: There is a mismatch between the general motivation provided for Nash’s (1950) axioms and their actual mathematical content because they are phrased in the space of joint (Bernoulli) utilities. Alternatively, it is easy to rephrase these axioms in an economic environment so as to match their intuitive meaning, but Nash’s proof then applies only if one adds a cardinal welfarist axiom requiring that the solution of two problems that happen to have the same image in the space of joint utilities for some linear representation of von Neumann/Morgenstern preferences, must coincide in that space. Using a more elaborate argument, this paper shows, however, that this implicit cardinal welfarist axiom is redundant on a natural economic domain. This non-welfarist characterization of the Nash solution is shown to extend to a larger class of preferences that accommodate some forms of non-expected utility

Level-k Mechanism Design (with R. Saran and R. Serrano, ReStud forthcoming)

Idea: In my paper on behavioral implementation, bounded rationality was understood as a failure of preference maximization. The assumption of rational expectations was maintained, however. In this paper, agents do maximize a preference ordering, but the notion of Nash equilibrium is replaced by a level-k behavioral model.