Part 1.1
- “Cost-Benefit Analysis in Reasoning” (Alaoui and Penta, 2022) analyses the foundations of a cost-benefit approach to reasoning, by identifying the primitive properties of reasoning that must hold for the decision to stop thinking to be represented by a cost-benefit analysis. We identify additional properties that give more structure to the value-of-reasoning function and show that the cost-benefit model applies to a variety of settings, including R&D applications in Industrial Organization, models of Response Time in individual decision-making, and models of Strategic Reasoning.
- “Reasoning about others’ reasoning” (Alaoui, Janezic and Penta, 2020) studies to what extent individuals’ behaviour in games is driven by their reasoning about others’ cognitive capacities, as opposed to their own cognitive limitations.
- “Coordination and Sophistication” (Alaoui, Janezic and Penta, 2023) shows that a large class of reasoning processes, the cost-benefit approach delivers sharp results about a long-lasting question in game theory. That is, whether equilibrium coordination can emerge, in the absence of focal points, as the outcome of purely introspective reasoning. We show that this is the case if players perceive heterogeneity in their cognitive abilities, rather than homogeneity. In addition, being of higher cognitive sophistication is not necessarily beneficial to the agent: in some coordination games, the opposite is true.
Part 1.2
- “Efficient Implementation via Transfers: Uniqueness and Sensitivity in Symmetric Environments” (Ollár and Penta, 2022) and “A Network Solution to Robust Implementation: The Case of Identical but Unknown Distributions” (Ollár and Penta, 2023) identify the conditions under which, with minimal information about agents’ beliefs, monetary incentives can be designed to extract agents’ private information, so as to induce socially desirable goals, while at the same time eliminating SU.
- “Safe Implementation” (Gavan and Penta, 2023) introduces a new framework that allows to accommodate, within classical implementation theory, a variety of extra desiderata that include robustness with respect to mistakes in play, model misspecification, behavioural considerations, and others.
- "Rationalizability, Observability, and Common Knowledge” (Penta and Zuazo-Garin, 2022) provides a systematic analysis of SU when players face higher-order uncertainty over the observability of their moves. It shows that key game theoretic insights on the determinants of strategic advantage are fragile, and in fact overturned, when one considers even small departures from the standard assumptions on the observability of actions. Our result is consistent with a wide body of experimental evidence.
Part 2
- “Marketing Agencies and Collusive Bidding in Online Ad Auctions” (Decarolis, Goldmanis and Penta, 2020) provides a theoretical analysis of the questions that DMAs face in the online ad auctions.
-“Bid Coordination in Sponsored Search Auctions: Detection Methodology and Empirical Analysis” (Decarolis, Goldmanis, Shakhgildyan and Penta, 2023) provides an empirical methodology to detect coordinated bidding and to estimate bounds on the revenue losses it entails.
- “Market Effects of Sponsored Search Auctions” (Motta and Penta, 2023) provides a theoretical analysis of the market effects of brand search advertising.
The results of the project have been presented in tens of seminars and conferences worldwide, including keynotes and plenary or semi-plenary talks. The project has funded the organisation of seven workshops. The results of Part 2 have also been presented at the Dutch Competition Authority (ACM).
