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on Economic Design |
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Issue of 2017‒10‒08
five papers chosen by Guillaume Haeringer, Baruch College and Alex Teytelboym, University of Oxford |
| By: | Bernhard Kasberger; Karl H. Schlag |
| Abstract: | Bidding optimally in first-price auctions is complicated. In the classical equilibrium framework, optimal bidding relies on detailed beliefs about other bidders' value distributions and bidding functions. This article shows how to and a robust bidding rule that does well with minimal information and thus achieves good performance in many situations. Robust bidding means to minimize the maximal difference between the payoff and the payo that could be achieved if one knew the other bidders' value distributions and bidding functions. We derive robust bidding rules under di erent scenarios, including complete uncertainty. Our bid recommendations are evaluated with experimental data. |
| JEL: | C72 D44 D81 |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:vie:viennp:1707&r=des |
| By: | Krumer, Alex; Megidish, Reut; Sela, Aner |
| Abstract: | We study the optimal design of round-robin tournaments with three symmetric players. We characterize the subgame perfect equilibrium in these tournaments with either one or two prizes. Our results show that the players who wish to maximize their expected payoffs or their probabilities of winning have different preferences about the order of games under tournaments with one or two prizes. We analyze the optimal allocations of players for a designer who wishes to maximize the players' expected total effort in the tournaments with one and two prizes, and by comparing between them, it is demonstrated that in order to maximize the players' expected total effort the designer should allocate only one prize. |
| Keywords: | Multi-stage contests, all-pay auctions, first-mover advantage, second-mover advantage, round-robin tournaments |
| JEL: | D00 L00 D20 D44 O31 |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:usg:econwp:2017:13&r=des |
| By: | Abhinaba Lahiri; Anup Pramanik |
| Abstract: | We study strategy-proof rules for choosing between two alternatives. We consider the full preference domain which allows for indifference. In this framework, for strategy-proof rules, ontoness does not imply efficiency. We weaken the requirement of efficiency to ontoness and characterizes the class of strategy-proof rules. We argue that the notion of efficiency is not desirable always. Our main result provides a simple characterization of the class of onto, anonymous and strategy-proof rules in this framework. Our analysis can help policy makers choose among these rules. |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:dpr:wpaper:1013&r=des |
| By: | Michele Lombardi (Adam Smith Business School, University of Glasgow); Naoki Yoshihara (Department of Economics, University of Massachusetts Amherst) |
| Abstract: | A partially-honest individual is a person who follows the maxim, "Do not lie if you do not have to" to serve your material interest. By assuming that the mechanism designer knows that there is at least one partially-honest individual in a society of more than 3 individuals, a social choice rule (SCR) that can be Nash implemented is termed partially-honestly Nash implementable. The paper offers a complete characterization of the n-person SCRs that are partially-honestly Nash implementable. It establishes a condition which is both necessary and sufficient for the partially-honest Nash implementation. If all individuals are partially-honest, then all SCRs that satisfy the property of unanimity are partially-honestly Nash implementable. The partially-honest Nash implementation of SCRs is examined in a variety of environments. |
| Keywords: | Nash implementation, pure strategy Nash equilibrium, partial-honesty, Condition mu^* |
| JEL: | C72 D71 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ums:papers:2017-15&r=des |
| By: | Chatterji, Shurojit (School of Economics, Singapore Management University); Sen, Arunava (Indian Statistical Institute); Zeng, Huaxia (School of Economics, Singapore Management University) |
| Abstract: | This paper proves the following result: every path-connected domain of preferences that admits a strategy-proof, unanimous, tops-only random social choice function satisfying a compromise property is single-peaked. Conversely, every single-peaked domain admits a random social choice function satisfying these properties. Single-peakedness is defined with respect to arbitrary trees. The paper provides a justification of the salience of single-peaked preferences and evidence in favor of the Gul conjecture (Barberà 2010). |
| Keywords: | Random social choice functions; strategy-proofness; compromise; single-peaked preferences. |
| JEL: | D71 |
| Date: | 2016–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:ris:smuesw:2016_011&r=des |