Frans Spinnewyn | Katholieke Universiteit Leuven (original) (raw)

Uploads

Papers by Frans Spinnewyn

Research paper thumbnail of The cost of consumption and wealth in models with habit formation

Economics Letters, 1979

Habit formation and its effects on consumption can be treated by applying a standard model of the... more Habit formation and its effects on consumption can be treated by applying a standard model of the consumer with wealth and costs of consumption redefined.

Research paper thumbnail of Optimal Membership, Employment, and Income Distribution in Unionized and Labor-Managed Firms

Journal of Labor Economics, 1990

... Moreover, if the expected utility function of the potential new members displays a preference... more ... Moreover, if the expected utility function of the potential new members displays a preference for greater employment (4j < 0), the employment range of the LMF becomes even narrower as the lower bound (faHl/L = Y0 + (1 + t1)ajo) approaches the upper bound (afll/L = Y0). ...

Research paper thumbnail of The Non Transferable Utility Bargaining Model with Two Privately Informed and Patient Players

For a NTU-bargaining game with two privately informed and patient players and an ex- ogenously fi... more For a NTU-bargaining game with two privately informed and patient players and an ex- ogenously fixed disagreement outcome, consider any ex-ante efficient social choice func- tion which is truthfully implementable in Bayesian Nash equilibrium with a fixed number of messages. Conditions are derived under which this social choice function can be imple- mented in Perfect Bayesian equilibrium of an escalation

Research paper thumbnail of Gradual Revelation Mechanism with Two-Sided Screening

We investigate the mechanism that provides the optimal decision rule for two agents making joint ... more We investigate the mechanism that provides the optimal decision rule for two agents making joint decisions. It is shown that, a special rectangular mechanism with two sided screening, elicit correct information when agents?preferences are private information. Such mechanism is presented as a game of incomplete information. It is shown that if types are uniformly distributed, then a three stage sequential game with an exogenously given probability of a terminal break down cannot be improved upon within a restricted class of models.

Research paper thumbnail of Revising Claims and Resisting Ultimatums in Bargaining Problems

SSRN Electronic Journal, 2000

We propose a mechanism which implements a unique solution to the bargaining problem with two play... more We propose a mechanism which implements a unique solution to the bargaining problem with two players in subgame-perfect equilibrium. Players start by making claims and accept a compromise only if they cannot gain by pursuing their claim in an ultimatum. The player o¤ering the lowest resistance to his opponent's claim can propose a compromise. The unique solution depends on the extent to which claims can be revised. If no revisions are allowed, compatible claims implement the Nash solution. If all revisions are allowed, maximal claims implement the Kalai-Smorodinsky solution.

Research paper thumbnail of The Multiperiod Principal-Agent Problem

The Review of Economic Studies, 1988

In repeated principal-agent models, long-term contracts can improve on short-term contracts only ... more In repeated principal-agent models, long-term contracts can improve on short-term contracts only if they commit ei ther the principal or agent to a payoff in some future circumstances lower than could be obtained from a short-term contract negotiated if that circumstance occurs. The authors show that efficient contractin g under moral hazard alone does not require long-term commitment from that principal. Provided a short-term contract can punish the agent sufficiently (in a sense made precise), it requires no commitment fro m the agent either. Then linking payoffs in one period to outcomes in previous periods does not improve the trade-off between incentives a nd risk sharing. Copyright 1988 by The Review of Economic Studies Limited.

Research paper thumbnail of Insurance and Perceptions: How to Screen Optimists and Pessimists

The Economic Journal, 2013

Individuals have di¤ering beliefs about risks they face and their ability to mitigate these risks... more Individuals have di¤ering beliefs about risks they face and their ability to mitigate these risks. Pro…t-maximizing …rms screen identical agents with di¤erent beliefs by providing less insurance to optimists than to pessimists. Optimists perceive the risk to be less likely than pessimists given their respective choices of precautionary e¤orts. Depending on the nature of competition, the screening distortions in insurance coverage are determined by di¤erences in beliefs about the likelihood or the marginal return to e¤ort. I show that heterogeneity in beliefs strengthens the case for government intervention in insurance markets and can explain the negative correlation between risk occurrence and insurance coverage found in empirical studies.

Research paper thumbnail of Optimal Membership, Employment, and Income Distribution in Unionized and Labor-Managed Firms

Journal of Labor Economics, 1990

... Moreover, if the expected utility function of the potential new members displays a preference... more ... Moreover, if the expected utility function of the potential new members displays a preference for greater employment (4j < 0), the employment range of the LMF becomes even narrower as the lower bound (faHl/L = Y0 + (1 + t1)ajo) approaches the upper bound (afll/L = Y0). ...

Research paper thumbnail of True indexes and rational habit formation

European Economic Review, 1984

In this paper we discuss the construction of true indexes when tastes change endogenously. True i... more In this paper we discuss the construction of true indexes when tastes change endogenously. True indexes take the substitution possibilities of the consumer to a changing economic situation into account when equating ,he utility level of a particular period to the utility level attained in the base period through an appropriate change in income or the wage level. When tastes change endogenously, the current decision depends on the past history of con:amption but, by the same token, the future path of consumption will depend on the current chalice, in a true index, these intertemporal links of the current decisien have to be taken into ac.:ount. For a particular specification of the habi~ formation procer~ this is achieved by an appropriate transformation of prices and expenditures. A true intertemporal wage index is computed for the period 1946-1967 in the U.S. Because el ~ increasing nee(is and intertemporal rationafi'ty, this index is roughly constant and equal to 1: real wages remained constant! *We are grateful to A.P. Barten for helpful discussions, to two anonymot,;; referees for stimulating criticisms and to D. Van Grunderbeeck for cheerful computational a~,,sistanc-.. The second author acknowledges financial assistance by N.F.W.O. {Belgian Nav:iona~ Science Foundation).

Research paper thumbnail of Doves and hawks, conservatives and progressives in a two-player Bayesian bargaining problem

We develop an incentive-compatible and individually rational mechanism for a two-player Bayesian ... more We develop an incentive-compatible and individually rational mechanism for a two-player Bayesian bargaining problem. We provide conditions that guarantee the mechanism to be incentive e¢ cient. The mechanism is gradually implemented through a …- nite number of rounds. The Bayesian perfect equilibrium within each round is characterized through a sequence of critical risk lim- its (Zeuthen, Haranyi). The bargaining solution

Research paper thumbnail of The cost of consumption and wealth in models with habit formation

Economics Letters, 1979

Habit formation and its effects on consumption can be treated by applying a standard model of the... more Habit formation and its effects on consumption can be treated by applying a standard model of the consumer with wealth and costs of consumption redefined.

Research paper thumbnail of Optimal Membership, Employment, and Income Distribution in Unionized and Labor-Managed Firms

Journal of Labor Economics, 1990

... Moreover, if the expected utility function of the potential new members displays a preference... more ... Moreover, if the expected utility function of the potential new members displays a preference for greater employment (4j < 0), the employment range of the LMF becomes even narrower as the lower bound (faHl/L = Y0 + (1 + t1)ajo) approaches the upper bound (afll/L = Y0). ...

Research paper thumbnail of The Non Transferable Utility Bargaining Model with Two Privately Informed and Patient Players

For a NTU-bargaining game with two privately informed and patient players and an ex- ogenously fi... more For a NTU-bargaining game with two privately informed and patient players and an ex- ogenously fixed disagreement outcome, consider any ex-ante efficient social choice func- tion which is truthfully implementable in Bayesian Nash equilibrium with a fixed number of messages. Conditions are derived under which this social choice function can be imple- mented in Perfect Bayesian equilibrium of an escalation

Research paper thumbnail of Gradual Revelation Mechanism with Two-Sided Screening

We investigate the mechanism that provides the optimal decision rule for two agents making joint ... more We investigate the mechanism that provides the optimal decision rule for two agents making joint decisions. It is shown that, a special rectangular mechanism with two sided screening, elicit correct information when agents?preferences are private information. Such mechanism is presented as a game of incomplete information. It is shown that if types are uniformly distributed, then a three stage sequential game with an exogenously given probability of a terminal break down cannot be improved upon within a restricted class of models.

Research paper thumbnail of Revising Claims and Resisting Ultimatums in Bargaining Problems

SSRN Electronic Journal, 2000

We propose a mechanism which implements a unique solution to the bargaining problem with two play... more We propose a mechanism which implements a unique solution to the bargaining problem with two players in subgame-perfect equilibrium. Players start by making claims and accept a compromise only if they cannot gain by pursuing their claim in an ultimatum. The player o¤ering the lowest resistance to his opponent's claim can propose a compromise. The unique solution depends on the extent to which claims can be revised. If no revisions are allowed, compatible claims implement the Nash solution. If all revisions are allowed, maximal claims implement the Kalai-Smorodinsky solution.

Research paper thumbnail of The Multiperiod Principal-Agent Problem

The Review of Economic Studies, 1988

In repeated principal-agent models, long-term contracts can improve on short-term contracts only ... more In repeated principal-agent models, long-term contracts can improve on short-term contracts only if they commit ei ther the principal or agent to a payoff in some future circumstances lower than could be obtained from a short-term contract negotiated if that circumstance occurs. The authors show that efficient contractin g under moral hazard alone does not require long-term commitment from that principal. Provided a short-term contract can punish the agent sufficiently (in a sense made precise), it requires no commitment fro m the agent either. Then linking payoffs in one period to outcomes in previous periods does not improve the trade-off between incentives a nd risk sharing. Copyright 1988 by The Review of Economic Studies Limited.

Research paper thumbnail of Insurance and Perceptions: How to Screen Optimists and Pessimists

The Economic Journal, 2013

Individuals have di¤ering beliefs about risks they face and their ability to mitigate these risks... more Individuals have di¤ering beliefs about risks they face and their ability to mitigate these risks. Pro…t-maximizing …rms screen identical agents with di¤erent beliefs by providing less insurance to optimists than to pessimists. Optimists perceive the risk to be less likely than pessimists given their respective choices of precautionary e¤orts. Depending on the nature of competition, the screening distortions in insurance coverage are determined by di¤erences in beliefs about the likelihood or the marginal return to e¤ort. I show that heterogeneity in beliefs strengthens the case for government intervention in insurance markets and can explain the negative correlation between risk occurrence and insurance coverage found in empirical studies.

Research paper thumbnail of Optimal Membership, Employment, and Income Distribution in Unionized and Labor-Managed Firms

Journal of Labor Economics, 1990

... Moreover, if the expected utility function of the potential new members displays a preference... more ... Moreover, if the expected utility function of the potential new members displays a preference for greater employment (4j < 0), the employment range of the LMF becomes even narrower as the lower bound (faHl/L = Y0 + (1 + t1)ajo) approaches the upper bound (afll/L = Y0). ...

Research paper thumbnail of True indexes and rational habit formation

European Economic Review, 1984

In this paper we discuss the construction of true indexes when tastes change endogenously. True i... more In this paper we discuss the construction of true indexes when tastes change endogenously. True indexes take the substitution possibilities of the consumer to a changing economic situation into account when equating ,he utility level of a particular period to the utility level attained in the base period through an appropriate change in income or the wage level. When tastes change endogenously, the current decision depends on the past history of con:amption but, by the same token, the future path of consumption will depend on the current chalice, in a true index, these intertemporal links of the current decisien have to be taken into ac.:ount. For a particular specification of the habi~ formation procer~ this is achieved by an appropriate transformation of prices and expenditures. A true intertemporal wage index is computed for the period 1946-1967 in the U.S. Because el ~ increasing nee(is and intertemporal rationafi'ty, this index is roughly constant and equal to 1: real wages remained constant! *We are grateful to A.P. Barten for helpful discussions, to two anonymot,;; referees for stimulating criticisms and to D. Van Grunderbeeck for cheerful computational a~,,sistanc-.. The second author acknowledges financial assistance by N.F.W.O. {Belgian Nav:iona~ Science Foundation).

Research paper thumbnail of Doves and hawks, conservatives and progressives in a two-player Bayesian bargaining problem

We develop an incentive-compatible and individually rational mechanism for a two-player Bayesian ... more We develop an incentive-compatible and individually rational mechanism for a two-player Bayesian bargaining problem. We provide conditions that guarantee the mechanism to be incentive e¢ cient. The mechanism is gradually implemented through a …- nite number of rounds. The Bayesian perfect equilibrium within each round is characterized through a sequence of critical risk lim- its (Zeuthen, Haranyi). The bargaining solution