Theoretical Economics
@econtheory.bsky.social
Theoretical Economics, a journal of the Econometric Society, publishes research in all areas of economic theory. All content is freely available.
When is ruling out beneficial two-agent swaps enough for full efficiency? The paper shows that for monotonic object-allocation rules, pairwise efficiency and non-wastefulness together imply Pareto efficiency www.econometricsociety.org/publications...
We prove that any stable matching mechanism suffers from systematic inefficiency of striking magnitude: in large random markets, any stable allocation is Pareto-inefficient with high probability, and almost all students can simultaneously improve www.econometricsociety.org/publications...
An agent privately observes a Markov chain online and reports it to a designer. We show that, in general, keeping track of the empirical frequency of transition counts in the agent’s reports is insufficient, despite the true state being Markovian www.econometricsociety.org/publications...
Theoretical Economics Volume 21, Issue 3 (July 2026) is now online www.econometricsociety.org/publications...
Does expanding the range of available contractual terms always improve welfare? This paper shows that adding contractual terms can harm agents and identifies conditions under which such welfare losses are prevented. www.econometricsociety.org/publications...
We introduce semi-stability, a novel notion that guarantees existence and restores stability in roommate problems through minimal policy or group interventions www.econometricsociety.org/publications...
TE is fortunate to have thoughtful & committed AEs who are essential for the smooth running of the journal. We are pleased to announce Arjada Bardhi (NYU), Giacomo Lanzani (UC, Berkeley), Lucas Maestri (FGV), Ludovic Renou (QMUL, ASU), & Venky Venkateswaran (NYU) joined July 1st.
How should information be sold? We show a monopolist info provider will use threshold signals/menus to shape sellers’ prices, often raising welfare relative to full information. Welfare rises if production cost is high, but falls if low www.econometricsociety.org/publications...
New in Theoretical Economics: “Combinator Dynamics: Multi-Dimensional Evolutionary Learning” by Srinivas Arigapudi, Omer Edhan, Yuval Heller & Ziv Hellman. A model of how agents imitate and recombine traits across decision dimensions. @heller_yuval www.econometricsociety.org/publications...
We study multi-group teams tackling binary projects. Equilibrium features gradualism, inaction & contribution cycles. Delay grows super-proportionally with project size. Two-group teams outperform homogeneous ones, even with near equal preferences www.econometricsociety.org/publications...
A privately informed principal chooses a communication device to influence players without ex-ante commitment. We characterize the resulting equilibria and relate them to standard communication equilibria www.econometricsociety.org/publications...
How much experimentation occurs in games where players observe each other's actions but not outcomes? This paper shows that the equilibrium amount of experimentation exceeds that under public observation, and quantifies this excess www.econometricsociety.org/publications...
How should information be disclosed to strategic players? The paper develops a tractable framework and shows that optimal policies are often simple: targeted or linear disclosure. Applications include VC, belief polarization, and price competition www.econometricsociety.org/publications...
Why do people think streaks are unlikely? This paper develops a formal account of a belief in mean reversion and shows how it can generate some of the core implications of the Law of Small Numbers www.econometricsociety.org/publications...
In auctions for income-generating assets such as intellectual property licenses, the revenue-maximizing mechanism combines upfront payments and royalties: higher bidders pay more upfront and face lower royalty caps www.econometricsociety.org/publications...
How does the amount of information required to monitor many players scale with their number? In repeated games, we show cooperation turns on the ratio of the discount rate and the per-capita channel capacity of the stage game monitoring structure www.econometricsociety.org/publications...
This paper develops a general theory to recover the inverse welfare function that rationalizes a given tax schedule as optimal in complex environments. This inverse welfare function can be used to find Pareto and/or welfare improving reforms www.econometricsociety.org/publications...
In the context of school choice, it is possible to compare stable mechanisms in terms of coalitional manipulability econtheory.org/ojs/index.ph...
How do platforms keep you scrolling? This paper shows the optimal strategy is "dilution"—rare but highly informative signals that drive users to extreme beliefs, extract all surplus, and remain credible even without platform's long-term commitment econtheory.org/ojs/index.ph...
Can consumer reviews form barriers to entry? If so, what can review platforms do about it? The answer: stop well-established firms from acquiring new reviews econtheory.org/ojs/index.ph...
A news platform shapes consumers' beliefs with information and narratives (models of what determines outcomes). The strategy that maximizes their anticipatory utility combines biased information and false narratives, and induces belief polarization econtheory.org/ojs/index.ph...
How does ambiguous product information affect trade between a price-setting seller and an ambiguity-sensitive buyer? We find that the right kind of ambiguous information makes the buyer or seller better off than any possible unambiguous information econtheory.org/ojs/index.ph...
This paper characterizes when and how robust decisions can be objectively improved with data econtheory.org/ojs/index.ph...
Does freer trade necessarily raise welfare for all? No. This paper shows that a country prefers autarky to frictionless trade with a sufficiently less productive partner. Losses arise due to displaced domestic varieties. @JustinTumlinson econtheory.org/ojs/index.ph...
Our new paper “Efficient investment, search, and sorting in matching markets” is at @TE. We show a new second welfare theorem for search markets, e.g. labour, marriage, or products: the market can overcome the hold-up and matching problems econtheory.org/ojs/index.ph...
The paper focuses on a single intrinsic difference between physical and digital currency: traceability. This technological advance in record-keeping can be used by the monetary authority to achieve efficiency in a wide range of circumstances econtheory.org/ojs/index.ph...
The paper studies reputational bargaining in which the stubborn type can choose their initial demand. Types can pool or separate in equilibrium. When the probability of the stubborn type is small, any feasible payoff can be achieved in equilibrium econtheory.org/ojs/index.ph...
