Microeconomic Theory in Canada


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Canadian Economic Theory Conference
UBC Summer Workshop in Economic Theory
A website containing information about micro theory in Canada. This contains a working paper repository, linked to RePEc. Also links to the Canadian Economic Theory Conference.

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Recent Papers

  • Efficient Inference in the Classical IV Regression Model with Weak Identification: Asymptotic Power Against Arbitrarily Large Deviations from the Null Hypothesis
    Marmer, Vadim, , vmarmer@interchange.ubc.ca
    Yu, Zhengfei, , yuzhengfei@gmail.com
    This paper considers efficient inference for the coefficient on the endogenous variable in linear regression models with weak instrumental variables (Weak-IV) and homoskedastic errors. We focus on the alternative hypothesis determined by an arbitrarily large deviation from the null hypothesis. The efficient rotation-invariant and asymptotically similar test turns out to be infeasible as it depends on the unknown correlation between structural and first-stage errors (the degree of endogeneity). We compare the asymptotic power properties of popular Weak-IV-robust tests, focusing on the Anderson-Rubin (AR) and the Conditional Likelihood Ratio (CLR) tests. We find that their relative power performance depends on the degree of endogeneity in the model and the number of IVs. Unexpectedly, the AR test outperforms the CLR when the degree of endogeneity is small and the number of IVs is large. We also describe a test that is optimal when IVs are strong and, when IVs are weak, has the same asymptotic power as the AR test against arbitrarily large deviations from the null.
    Creation Date: 2015-09-01   Revision Date: 2015-09-02
  • Eliciting Risk Preferences Using Choice Lists
    Freeman, David, , david_freeman@sfu.ca
    Halevy, Yoram, , yoram.halevy@ubc.ca
    Kneeland, Terri, , t.kneeland@ucl.ac.uk
    We experimentally study the effect of embedding pairwise choices between lotteries within a choice list on measured risk attitude. Subjects choose the riskier lottery significantly more often when responding to a choice list. This failure of incentive compatibility can be rationalized by the interaction between non-expected utility and the random incentive system, as suggested by Karni and Safra (1987).
    Creation Date: 2015-06-08   Revision Date: 2015-06-08
  • Strotz meets Allais: Diminishing Impatience and the Certainty Effect: Reply and Corrigendum
    Chakraborty, Anujit, , anujit2006@gmail.com
    Halevy, Yoram, , yoram.halevy@ubc.ca
    Halevy (2008) establishes a relation between non-standard behaviors in the domains of risk and time by considering a model in which a decision maker with non-expected utility preferences believes that only present consumption is certain while any future consumption is uncertain. This note clarifies the relation between diminishing impatience and the certainty/common ratio effects in the model. It demonstrates that diminishing impatience restricted to one-period delay does not necessarily imply the certainty effect, and proves that if diminishing impatience is required to hold independently of the length of delay considered, then the severed connection between time and risk preferences is re-established.
    Creation Date: 2015-02-07   Revision Date: 2015-09-29
  • External and Internal Consistency of Choices made in Convex Time Budgets
    Calford, Evan, , ecalford@interchange.ubc.ca
    Chakraborty, Anujit, , anujit2006@gmail.com
    Fenig, Guidon, , gfenig@mail.ubc.ca
    Halevy, Yoram, , yoram.halevy@ubc.ca
    We evaluate Andreoni and Sprenger's (2012) data on choices made from Convex Time Budgets (CTB) for external consistency with the Weak Axiom of Revealed Preference (WARP) relative to the pairwise choice benchmark, and for internal consistency with respect to demand, wealth and impatience monotonicity. We find that choices very frequently violate WARP; violations of all three internal measures of monotonicity are concentrated in subjects who take advantage of the novel feature of CTB by making interior choices. Wealth monotonicity violations are more prevalent and pronounced than either demand or impatience monotonicity violations. We believe that the frequency and magnitude of WARP and monotonicity violations found in Andreoni and Sprenger's (2012) data pose a serious challenge for interpreting choice patterns or estimated parameters through CTB as reflecting deep parameters of complete preferences.
    Creation Date: 2014-08-07   Revision Date: 2015-03-15
  • Experimental Elicitation of Ambiguity Attitude using the Random Incentive System
    Baillon, Aurélien, , baillon@ese.eur.nl
    Halevy, Yoram, , yoram.halevy@ubc.ca
    Li, Chen, , c.li@ese.eur.nl
    We demonstrate how the standard usage of the random incentive system in ambiguity experiments is not incentive compatible if the decision maker is ambiguity averse. We propose a slight modification of the procedure in which the randomization takes place before decisions are made and the state is realized and prove that if subjects evaluate the experimental environment in that way (first - risk, second - uncertainty), incentive compatibility may be restored.
    Creation Date: 2014-06-15   Revision Date: 2015-07-21