Skip to content

Research Article

Informational cascades elicit private information

    Olivier Gossner and Nicolas Melissas
    International Economic Review, 47: 297-325, 2006


    Abstract: We introduce cheap talk in a dynamic investment model with information externalities. We first show how social learning adversely affects the credibility of cheap talk messages. Next, we show how an informational cascade makes truthtelling incentive compatible. A separating equilibrium only exists for high-surplus projects. Both an investment subsidy and an investment tax can increase welfare. The more precise the sender’s information, the higher her incentives to truthfully reveal her private information.


    Empirical distributions of beliefs under imperfect observation

      Olivier Gossner and Tristan Tomala
      Mathematics of Operations Research, 31: 13-30, 2006


      Abstract: Let (x_n) be a process with values in a finite set X and law P, and let y_n = f(x_n) be a function of the process. At stage n, the conditional distribution p_n = P[x_n |x_1 … x_{n−1}], element of Pi = Delta(X), is the belief that a perfect observer, who observes the process online, holds on its realization at stage n. A statistician observing the signals y_1 …, y_n holds a belief e_n = P[p_n |x_1,…,x_n] ∈ Delta(Pi) on the possible predictions of the perfect observer. Given X and f, we characterize the set of limits of expected empirical distributions of the process e_n when P ranges over all possible laws of (x_n).


      On the consequences of behavioural adaptations in the cost-benefits analysis of road safety measures

        Olivier Gossner and Pierre Picard
        Journal of Risk and Insurance, 7: 577-599, 2005


        Abstract: It is sometimes argued that road safety measures or automobile safety standards fail to save lives because safer highways or safer cars induce more dangerous driving. A similar but less extreme view is that ignoring the behavioral adaptation of drivers would bias the cost–benefit analysis of a traffic safety measure. This article derives cost–benefit rules for automobile safety regulation when drivers may adapt their risk-taking behavior in response to changes in the quality of the road network. The focus is on the financial externalities induced by accidents because of the insurance system as well as on the consequences of drivers’ risk aversion. We establish that road safety measures are Pareto improving if their monetary cost is lower than the difference between their (adjusted for risk aversion) direct welfare gain with unchanged behavior and the induced variation in insured losses due to drivers’ behavioral adaptation. The article also shows how this rule can be extended to take other accident external costs into account.



        Dynamiques de Communication

          Olivier Gossner, Penélope Hernández, Abraham Neyman
          Revue Économique, 55: 509-516,2004


          Abstract: Nous introduisons un modèle de communication avec état de la nature dynamique. En utilisant l’entropie comme mesure d’information, nous caractérisons les distributions empiriques espérées sur les actions qui sont réalisables. Nous présentons des applications aux jeux avec et sans intérêts communs.