Investigating imprecision in preferences and its possible consequences for economics and economic choices. When people's preferences are not clear, their choices become variable and susceptible to theoretically irrelevant influences. Examples can be found in surveys of preferences intended to inform public policy in areas such as health, safety and the environment. Understanding the nature of imprecision in people's values and choices is also likely to be crucial for consumers' ability to advan ....Investigating imprecision in preferences and its possible consequences for economics and economic choices. When people's preferences are not clear, their choices become variable and susceptible to theoretically irrelevant influences. Examples can be found in surveys of preferences intended to inform public policy in areas such as health, safety and the environment. Understanding the nature of imprecision in people's values and choices is also likely to be crucial for consumers' ability to advance their interests in our complex, choice-filled society. We plan to draw out some of the implications of our experimental work on preference imprecision for consumer behaviour and existing business practices, including the regulation of fair trading.Read moreRead less
Choice and Classification in complex and adversarial environments. Any policy must take account of individuals' incentives to strategically manipulate. Mechanism Design is an area of economic theory that addresses precisely this. In its theoretical development however, it overlooks practical constraints for monitoring behavior. For instance, for fraud detection and credit scoring, automated statistical machine learning models discussed in computer science (CS) are used. Here, we constrain ....Choice and Classification in complex and adversarial environments. Any policy must take account of individuals' incentives to strategically manipulate. Mechanism Design is an area of economic theory that addresses precisely this. In its theoretical development however, it overlooks practical constraints for monitoring behavior. For instance, for fraud detection and credit scoring, automated statistical machine learning models discussed in computer science (CS) are used. Here, we constrain monitoring strategies to be such algorithms and address the monitoring of a population of individuals or a similarly constrained large adversary. Notable cross disciplinary implications exist forRead moreRead less
Strategic Thought and Prediction in Strategic Environments. Game theory is now an integral tool for economics and business. It helps predict behavior in strategic environments and thus answers important questions: What form of auction to use in the pending sale of 3G spectrum? How should the government sell its bonds? How to detect implict collusion among companies? What division of benefits of joint research ventures will attract maximum participation?
This project aims to greatly increas ....Strategic Thought and Prediction in Strategic Environments. Game theory is now an integral tool for economics and business. It helps predict behavior in strategic environments and thus answers important questions: What form of auction to use in the pending sale of 3G spectrum? How should the government sell its bonds? How to detect implict collusion among companies? What division of benefits of joint research ventures will attract maximum participation?
This project aims to greatly increase the predictive power of game theory and provide decisive answers to questions such as above. This is achieved by developing a theory that relates individuals' current behavior to their experiences in analogous environments in the past.
Read moreRead less
Linear and non-linear Price Decentralization. General equilibrium theory provides the conceptual foundation for our understanding of efficiency and welfare economics. However, at present it does not provide for an adequate understanding in many seetings: for instance, in the case of incomplete financial markets and markets with imperfect information. This project is part of the ongoing and broad research program in the Economic Theory Center of The University of Melbourne on general equilibriu ....Linear and non-linear Price Decentralization. General equilibrium theory provides the conceptual foundation for our understanding of efficiency and welfare economics. However, at present it does not provide for an adequate understanding in many seetings: for instance, in the case of incomplete financial markets and markets with imperfect information. This project is part of the ongoing and broad research program in the Economic Theory Center of The University of Melbourne on general equilibrium theory and mathematical economics. It seeks to extend the classical theory of price decentralization and rectify some of the defects of modern general equilibrium theory.Read moreRead less
Increasing Returns and Economic Efficiency. The project attempts to increase the international profile of Australian research by extending the analysis of the challenging issues of economic efficiency in the presence of increasing returns. The proposed analysis takes account of both allocational efficiency and organizational efficiency. It will integrate the Dixit-Stiglitz model of the traditional analysis with the Yang-Ng-Shi model of the new framework to provide a more realistic analysis that ....Increasing Returns and Economic Efficiency. The project attempts to increase the international profile of Australian research by extending the analysis of the challenging issues of economic efficiency in the presence of increasing returns. The proposed analysis takes account of both allocational efficiency and organizational efficiency. It will integrate the Dixit-Stiglitz model of the traditional analysis with the Yang-Ng-Shi model of the new framework to provide a more realistic analysis that allows for increasing returns in both home and firm/market production. This conceptual extension constitutes an advance that is of analytical value and will also be relevant for the formulation of public economic policy in the Australian setting and also more generally. Read moreRead less
Risk and Australian public policy. This project will develop fundamentally new approaches to the theory of risk and uncertainty and their role in the design and management of complex projects and policy initiatives. The results will be applied to the central economic policy choices facing Australia; those connected with globalisation and microeconomic reform. This project will show how the latest advances in economic theory can help to illuminate the major issues in the Australian public debate, ....Risk and Australian public policy. This project will develop fundamentally new approaches to the theory of risk and uncertainty and their role in the design and management of complex projects and policy initiatives. The results will be applied to the central economic policy choices facing Australia; those connected with globalisation and microeconomic reform. This project will show how the latest advances in economic theory can help to illuminate the major issues in the Australian public debate, from the role of government and the market to the assessment of standards of living. The project will also help to bridge the gap between economics and other social sciences.Read moreRead less
New methods in network economics to study environment-friendly behaviours. This project aims to develop two new methodologies for measuring how people interact with each other and how one’s peers affect their outcomes. The project expects to test these new ground-breaking models for investigating the effect of peers and networks on environmental issues, such as recycling behaviours. The anticipated outcomes of this project include new theoretical and empirical advancements for studying the econo ....New methods in network economics to study environment-friendly behaviours. This project aims to develop two new methodologies for measuring how people interact with each other and how one’s peers affect their outcomes. The project expects to test these new ground-breaking models for investigating the effect of peers and networks on environmental issues, such as recycling behaviours. The anticipated outcomes of this project include new theoretical and empirical advancements for studying the economics of networks and peers for better policy design. Benefits include clear policy recommendations to motivate environment-friendly behaviours. Read moreRead less
Theoretically-motivated Long-term Internet Network Adoption Based on Short Time-series: Understanding the Diffusion of an Enabling Network Technology. A recent Government policy concerns innovation as a driver of long-term industry growth and a major determinant of global competitiveness. In particular, the Internet is a ?backbone? infrastructure for the conduct e-commerce, and enables efficiency benefits and product innovations to be realized in other sectors, e.g., banking, finance, health and ....Theoretically-motivated Long-term Internet Network Adoption Based on Short Time-series: Understanding the Diffusion of an Enabling Network Technology. A recent Government policy concerns innovation as a driver of long-term industry growth and a major determinant of global competitiveness. In particular, the Internet is a ?backbone? infrastructure for the conduct e-commerce, and enables efficiency benefits and product innovations to be realized in other sectors, e.g., banking, finance, health and tourism. This study estimates the network effect critical to forecasting Internet growth. Moreover, a structural model enhances understanding of underlying Internet dynamics and impacts on general economic conditions. Importantly, methods developed here apply to any network industry, and many non-network industries characterised by strong complementarity relations.Read moreRead less
Optimism, Pessimism and Confidence - Their economic impacts. When modelling uncertainty, economists typically assume people utilise well-behaved and precise probabilities. As most people have only the vaguest conception of chances of terrorist acts, of contracting SARS, or of extreme market volatility, this limits usefulness of the standard model in predicting or guiding choice. This project aims to incorporate a richer set of attitudes about uncertainty into economic theory, including impreci ....Optimism, Pessimism and Confidence - Their economic impacts. When modelling uncertainty, economists typically assume people utilise well-behaved and precise probabilities. As most people have only the vaguest conception of chances of terrorist acts, of contracting SARS, or of extreme market volatility, this limits usefulness of the standard model in predicting or guiding choice. This project aims to incorporate a richer set of attitudes about uncertainty into economic theory, including imprecise estimates of chance, optimistic (or pessimistic) bias, and relative confidence. This will enable more rigorous analysis of topics like irrational exuberance (panic), consumer stampedes, and (in)tolerance of risk, thereby improving the measurement of benefits and costs of related actions or policies.Read moreRead less
Balancing the risk of harm with productivity in the mercurial firm: economic theory and applications to Australian policy. Australia has had at least one significant chemical spill per month for the last 30 years. While the Longford disaster fades from the news, James Hardy's asbestos problem fills its place. This project will develop a general conceptual framework in which to analyse the economics of risky firms. The framework will be used to evaluate Australian, International, and alternative ....Balancing the risk of harm with productivity in the mercurial firm: economic theory and applications to Australian policy. Australia has had at least one significant chemical spill per month for the last 30 years. While the Longford disaster fades from the news, James Hardy's asbestos problem fills its place. This project will develop a general conceptual framework in which to analyse the economics of risky firms. The framework will be used to evaluate Australian, International, and alternative policies. The end benefit to Australia will be an improvement in policy toward firms that cause accidents.Read moreRead less