wouter Vergote | Université Saint-Louis - Bruxelles (original) (raw)
Papers by wouter Vergote
We develop a model of insurance with an informational asymmetry between the insurer and the polic... more We develop a model of insurance with an informational asymmetry between the insurer and the policy holder that amounts to the inability of the policy holder to assign a unique probability distribution to the relevant events. We show that this asymmetric ambiguity influences the choices of the contracting parties. In fact, the contract itself has potential to reveal information to the contracting party that has the least information : the insured .We observe however, that when the insurer has better quality of information it is indeed better not to disclose this information. This happens through offering the contract it would offer as if it were to be as ambiguous about the probability distribution as the agent. The result could povide some intuitive explanation of why insurance companies are very reluctant to show their customers estimates of accident probabilities. We stress that we cannot reinterpret a model with ambiguity as a model with agents using heterogenous priors. The implications of this finding is that we need to be careful when we analyze optimal contracts when uncertainty is present and people display aversion toward it. The very fact that information is channeled through contracts needs to be taken into account by the parties at both end of the contract.
We adopt the notion of von Neumann-Morgenstern farsightedly stable sets to predict which matching... more We adopt the notion of von Neumann-Morgenstern farsightedly stable sets to predict which matchings are possibly stable when agents are farsighted in one-to-one matching problems. We provide the characterization of von Neumann-Morgenstern farsightedly stable sets: a set of matchings is a von Neumann-Morgenstern farsightedly stable set if and only if it is a singleton set and its element is a corewise stable matching. Thus, contrary to the von Neumann-Morgenstern (myopically) stable sets, von Neumann-Morgenstern farsightedly stable sets cannot include matchings that are not corewise stable ones. Moreover, we show that our main result is robust to manyto-one matching problems with responsive preferences.
Journal of International Economics, 2008
The goal of the current paper is to analyze the role of retaliation in trade agreements. Its main... more The goal of the current paper is to analyze the role of retaliation in trade agreements. Its main result consists in showing that, in the presence of private information, retaliation can always be used to increase the value of such agreements for the participating governments.
This paper analyzes the role of retaliation in trade agreements. It shows that, in the presence o... more This paper analyzes the role of retaliation in trade agreements. It shows that, in the presence of private information, retaliation can always be used to increase the welfare derived from such agreements by the participating governments. In particular, it is shown that retaliation is a necessary feature of any efficient equilibrium.
This paper analyzes the role of retaliation in trade agreements. It shows that, in the presence o... more This paper analyzes the role of retaliation in trade agreements. It shows that, in the presence of private information, retaliation can always be used to increase the welfare derived from such agreements by the participating governments. In particular, it is shown that retaliation is a necessary feature of any e¢ cient equilibrium.
In a setting of R&D co-opetition we study, by using an all-pay auction approach, how collaboratio... more In a setting of R&D co-opetition we study, by using an all-pay auction approach, how collaboration affects strategic decisions during a patent contest, and how the latter influences the possible collaboration network structures the firms can hope to form. The all pay auction approach allows us to 1) endogenize both network formation and R&D intensities and 2) take heterogeneous and private valuations for patents into account. We find that, different from previous literature, the complete network is not always the only pairwise stable network, even and especially if the benefits from cooperating are important. Interestingly, the other possible stable networks all have the realistic property that some firms decide not to participate in the contest. Thus, weak cooperation through network formation can serve as a barrier to entry on the market for innovation. We further show that there need not be any network that survives a well known refinement of pairwise stability, strong stability, which imposes networks to be immune to coalitional deviations.
In a setting of R&D competition, we study how collaboration affects strategic decisions during a ... more In a setting of R&D competition, we study how collaboration affects strategic decisions during a patent contest, and how the latter influences the collaboration network structures the firms can form. We use an all pay auction approach to endogenize both network formation and R&D intensities, and to take heterogeneous and private valuations for patents into account. We find that the complete network is not always the only pairwise stable one. The other stable networks have the realistic property that some firms drop out of the contest. Thus, ‘weak’ cooperation can serve as a barrier to entry on the market for innovation.
We develop a model of insurance with an informational asymmetry between the insurer and the polic... more We develop a model of insurance with an informational asymmetry between the insurer and the policy holder that amounts to the inability of the policy holder to assign a unique probability distribution to the relevant events. We show that this asymmetric ambiguity influences the choices of the contracting parties. In fact, the contract itself has potential to reveal information to the contracting party that has the least information : the insured .We observe however, that when the insurer has better quality of information it is indeed better not to disclose this information. This happens through offering the contract it would offer as if it were to be as ambiguous about the probability distribution as the agent. The result could povide some intuitive explanation of why insurance companies are very reluctant to show their customers estimates of accident probabilities. We stress that we cannot reinterpret a model with ambiguity as a model with agents using heterogenous priors. The implications of this finding is that we need to be careful when we analyze optimal contracts when uncertainty is present and people display aversion toward it. The very fact that information is channeled through contracts needs to be taken into account by the parties at both end of the contract.
We adopt the notion of von Neumann-Morgenstern farsightedly stable sets to predict which matching... more We adopt the notion of von Neumann-Morgenstern farsightedly stable sets to predict which matchings are possibly stable when agents are farsighted in one-to-one matching problems. We provide the characterization of von Neumann-Morgenstern farsightedly stable sets: a set of matchings is a von Neumann-Morgenstern farsightedly stable set if and only if it is a singleton set and its element is a corewise stable matching. Thus, contrary to the von Neumann-Morgenstern (myopically) stable sets, von Neumann-Morgenstern farsightedly stable sets cannot include matchings that are not corewise stable ones. Moreover, we show that our main result is robust to manyto-one matching problems with responsive preferences.
Journal of International Economics, 2008
The goal of the current paper is to analyze the role of retaliation in trade agreements. Its main... more The goal of the current paper is to analyze the role of retaliation in trade agreements. Its main result consists in showing that, in the presence of private information, retaliation can always be used to increase the value of such agreements for the participating governments.
This paper analyzes the role of retaliation in trade agreements. It shows that, in the presence o... more This paper analyzes the role of retaliation in trade agreements. It shows that, in the presence of private information, retaliation can always be used to increase the welfare derived from such agreements by the participating governments. In particular, it is shown that retaliation is a necessary feature of any efficient equilibrium.
This paper analyzes the role of retaliation in trade agreements. It shows that, in the presence o... more This paper analyzes the role of retaliation in trade agreements. It shows that, in the presence of private information, retaliation can always be used to increase the welfare derived from such agreements by the participating governments. In particular, it is shown that retaliation is a necessary feature of any e¢ cient equilibrium.
In a setting of R&D co-opetition we study, by using an all-pay auction approach, how collaboratio... more In a setting of R&D co-opetition we study, by using an all-pay auction approach, how collaboration affects strategic decisions during a patent contest, and how the latter influences the possible collaboration network structures the firms can hope to form. The all pay auction approach allows us to 1) endogenize both network formation and R&D intensities and 2) take heterogeneous and private valuations for patents into account. We find that, different from previous literature, the complete network is not always the only pairwise stable network, even and especially if the benefits from cooperating are important. Interestingly, the other possible stable networks all have the realistic property that some firms decide not to participate in the contest. Thus, weak cooperation through network formation can serve as a barrier to entry on the market for innovation. We further show that there need not be any network that survives a well known refinement of pairwise stability, strong stability, which imposes networks to be immune to coalitional deviations.
In a setting of R&D competition, we study how collaboration affects strategic decisions during a ... more In a setting of R&D competition, we study how collaboration affects strategic decisions during a patent contest, and how the latter influences the collaboration network structures the firms can form. We use an all pay auction approach to endogenize both network formation and R&D intensities, and to take heterogeneous and private valuations for patents into account. We find that the complete network is not always the only pairwise stable one. The other stable networks have the realistic property that some firms drop out of the contest. Thus, ‘weak’ cooperation can serve as a barrier to entry on the market for innovation.