Laurent Mathevet

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• Lipnowski, E., Mathevet, L., & Wei, D. (2022). Optimal attention management: A tractable framework. Games and Economic Behavior, 133. doi:10.1016/j.geb.2022.01.029
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  A well-intentioned principal provides information to a rationally inattentive agent without internalizing the agent's cost of processing information. Whatever information the principal makes available, the agent may choose to ignore some. We study optimal information provision in a tractable model with quadratic payoffs where full disclosure is not optimal. We characterize incentive-compatible information policies, that is, those to which the agent willingly pays full attention. In a leading example with three states, optimal disclosure involves information distortion at intermediate costs of attention. As the cost increases, optimal information changes from downplaying the state to exaggerating the state.
• Mathevet, L., Perego, J., & Taneva, I. (2020). On information design in games. Journal of Political Economy, 128(4). doi:10.1086/705332
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  Information provision in games influences behavior by affecting agents’ beliefs about the state as well as their higher-order beliefs. We first characterize the extent to which a designer can manipulate agents’ beliefs by disclosing information. We then describe the structure of optimal belief distributions, including a concave-envelope representation that subsumes the single-agent result of Kamenica and Gentzkow. This result holds under various solution concepts and outcome selection rules. Finally, we use our approach to compute an optimal information structure in an investment game under adversarial equilibrium selection.
• Lipnowski, E., & Mathevet, L. (2018). Disclosure to a psychological audience. American Economic Journal: Microeconomics, 10(4). doi:10.1257/mic.20160247
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  We study how a benevolent expert should disclose information to an agent with psychological concerns. We first provide a method to compute an optimal information policy for many psychological traits. The method suggests, for instance, that an agent suffering from temptation à la Gul and Pesendorfer (2001) should not know what he is missing, thereby explaining observed biases as an optimal reaction to costly self-control. We also show that simply recommending actions is optimal when the agent is intrinsically averse to information but has instrumental uses for it. This result, which circumvents the failure of the Revelation Principle in psychological environments, simplifies disclosure and informs the debate regarding mandated disclosure.
• Mathevet, L. (2018). An axiomatization of plays in repeated games. Games and Economic Behavior, 110. doi:10.1016/j.geb.2018.03.012
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  Suppose that, in repeated games, players eventually engage in a pattern of action profiles, which we call a convention. Do some conventions seem more plausible than others? We answer axiomatically based on the principles of stability and efficient simplicity. The main solution says that conventions should be constant repetitions of a static Nash equilibrium, or such that players switch between two Pareto unranked profiles (across which they each change action). In some repeated games, this reduces the multiplicity of outcomes and even leads to uniqueness. The paper also reports experimental evidence that supports our findings.
• Borkovsky, R., Ellickson, P., Gordon, B., Aguirregabiria, V., Gardete, P., Grieco, P., Gureckis, T., Ho, T., Mathevet, L., & Sweeting, A. (2015). Multiplicity of equilibria and information structures in empirical games: challenges and prospects: Session at the 9th Triennial Choice Symposium. Marketing Letters, 26(2). doi:10.1007/s11002-014-9308-z
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  Empirical models of strategic games are central to much analysis in marketing and economics. However, two challenges in applying these models to real-world data are that such models often admit multiple equilibria and that they require strong informational assumptions. The first implies that the model does not make unique predictions about the data, and the second implies that results may be driven by strong a priori assumptions about the informational setup. This article summarizes recent work that seeks to address both issues and suggests some avenues for future research.
• Mathevet, L. (2014). Beliefs and rationalizability in games with complementarities. Games and Economic Behavior, 85(1). doi:10.1016/j.geb.2014.02.005
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  We propose two characteristics of beliefs and study their role in shaping the set of rationalizable strategy profiles in games with incomplete information. The first characteristic, type-sensitivity, is related to how informative a player thinks his type is. The second characteristic, optimism, is related to how "favorable" a player expects the outcome of the game to be. The paper has two main results: the first result provides an upper bound on the size of the set of rationalizable strategy profiles; the second gives a lower bound on the change of location of this set. These bounds are explicit expressions that involve type-sensitivity, optimism, and payoff characteristics. Our results generalize and clarify the well-known uniqueness result of global games (Carlsson and van Damme, 1993). They also imply new uniqueness results and allow us to study rationalizability in new environments. We provide applications to supermodular mechanism design (Mathevet, 2010b) and information processing errors. © 2014 .
• Mathevet, L., & Steiner, J. (2013). Tractable dynamic global games and applications. Journal of Economic Theory, 148(6). doi:10.1016/j.jet.2013.07.015
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  We present a family of tractable dynamic global games and its applications. Agents privately learn about a fixed fundamental, and repeatedly adjust their investments while facing frictions. The game exhibits many externalities: payoffs may depend on the volume of investment, on its volatility, and on its concentration. The solution is driven by an invariance result: aggregate investment is (in a pivotal contingency) invariant to a large family of frictions. We use the invariance result to examine how frictions, including those similar to the Tobin tax, affect equilibrium. We identify conditions under which frictions discourage harmful behavior without compromising investment volume. © 2013 Elsevier Inc.
• Mathevet, L., & Taneva, I. (2013). Finite supermodular design with interdependent valuations. Games and Economic Behavior, 82. doi:10.1016/j.geb.2013.07.006
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  This paper studies supermodular mechanism design in environments with arbitrary (finite) type spaces and interdependent valuations. In these environments, the designer may have to use Bayesian equilibrium as a solution concept, because ex-post implementation may not be possible. We propose direct (Bayesian) mechanisms that are robust to certain forms of bounded rationality while controlling for equilibrium multiplicity. In quasi-linear environments with informational and allocative externalities, we show that any Bayesian mechanism that implements a social choice function can be converted into a supermodular mechanism that also implements the original decision rule. The proposed supermodular mechanism can be chosen in a way that minimizes the size of the equilibrium set, and we provide two sets of sufficient conditions to this effect. This is followed by conditions for supermodular implementation in unique equilibrium. © 2013 Elsevier Inc.
• Healy, P., & Mathevet, L. (2012). Designing stable mechanisms for economic environments. Theoretical Economics, 7(3). doi:10.3982/TE898
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  We study the design of mechanisms that implement Lindahl or Walrasian allocations and whose Nash equilibria are dynamically stable for a wide class of adaptive dynamics. We argue that supermodularity is not a desirable stability criterion in this mechanism design context, focusing instead on contractive mechanisms. We provide necessary and sufficient conditions for a mechanism to Nash-implement Lindahl or Walrasian allocations, show that these conditions are inconsistent with the contraction property when message spaces are one-dimensional, and then show how to use additional dimensions to achieve dynamic stability while gaining budget balance out of equilibrium. © 2012 Paul J. Healy and Laurent Mathevet.
• Mathevet, L. (2010). Supermodular mechanism design. Theoretical Economics, 5(3). doi:10.3982/TE604
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  This paper introduces a mechanism design approach that allows dealing with the multiple equilibrium problem, using mechanisms that are robust to bounded rationality. This approach is a tool for constructing supermodular mechanisms, i.e., mechanisms that induce games with strategic complementarities. In quasilinear environments, I prove that if a social choice function can be implemented by a mechanism that generates bounded strategic substitutes-as opposed to strategic complementarities-then this mechanism can be converted into a supermodular mechanism that implements the social choice function. If the social choice function also satisfies some efficiency criterion, then it admits a supermodular mechanism that balances the budget. Building on these results, I address the multiple equilibrium problem. I provide sufficient conditions for a social choice function to be implementable with a supermodular mechanism whose equilibria are contained in the smallest interval among all supermodular mechanisms. This is followed by conditions for supermodular implementability in unique equilibrium. Finally, I provide a revelation principle for supermodular implementation in environments with general preferences. Copyright © 2010 Laurent Mathevet.
• Mathevet, L. (2009). A contraction principle for finite global games. Economic Theory, 42(3). doi:10.1007/s00199-008-0411-3
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  I provide a new proof of uniqueness of equilibrium in a wide class of global games. I show that the joint best-response in these games is a contraction. The uniqueness result then follows as a corollary of the contraction principle. Furthermore, the contraction-mapping approach provides an intuition for why uniqueness arises: complementarities in games generate multiplicity of equilibria, but the global-games structure dampens complementarities so that only one equilibrium exists. © Springer-Verlag 2008.