|
on Economic Design |
|
Issue of 2018‒03‒12
three papers chosen by Guillaume Haeringer, Baruch College and Alex Teytelboym, University of Oxford |
| By: | Clark, Derek J. (School of Business and Economics, University of Tromsø); Nilssen, Tore (Dept. of Economics, University of Oslo) |
| Abstract: | We consider an effort-maximizing principal distributing a prize fund over two consecutive all-pay auctions. The two contestants are doubly heterogeneous: one of them has a head start in the fi rst contest; and winning contest one gives an advantage in contest two that varies between players. We show that, with a large head start, the principal chooses a zero prize in contest two, i.e., runs a single contest. Otherwise, the laggard winning contest one may overturn the leaders head start, possibly inciting expected efforts equal to the prize value, avoiding the laggard giving up, and this way mitigating the Matthew effect. |
| Keywords: | Contest; All-pay auction; Head start; Catching up; Mathhew effect |
| JEL: | D72 D74 |
| Date: | 2018–02–27 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:osloec:2018_002&r=des |
| By: | Schlegel, J. C. |
| Abstract: | We study ex-ante priority respecting (ex-ante stable) lotteries in the context of object allocation under thick priorities. We show that ex-ante stability as a fairness condition is very demanding: Only few agent-object pairs have a positive probability of being matched in an ex-ante stable assignment. We interpret our result as an impossibility result. With ex-ante stability one cannot go much beyond randomly breaking ties and implementing a (deterministically) stable matching with respect to the broken ties. |
| Keywords: | Matching; School Choice; Lotteries; Ex-Ante Stability |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:cty:dpaper:17/06&r=des |
| By: | Deniz Dizdar; Benny Moldovanu; Nora Szech |
| Abstract: | Agents in a finite two-sided market are matched assortatively, based on costly investments. Besides signaling private, complementary types, investments generate direct benefits for partners. We explore quantitative properties of the equilibrium investment behavior. The bilateral external benefits induce an investment multiplier effect. This multiplier effect depends in a complex way on agents’ uncertainty about their own rank and about the types and investments of potential partners. We characterize how the multiplier effect hinges on market size, and how it interacts with other important factors such as the costs of investment and the signaling incentives induced by competition. |
| Keywords: | matching, signaling, investment, multiplier effect |
| JEL: | C78 D44 D82 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6803&r=des |