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on Economic Design |
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Issue of 2022‒10‒10
eight papers chosen by Guillaume Haeringer, Baruch College and Alex Teytelboym, University of Oxford |
| By: | Basteck, Christian (WZB Berlin); Ehlers, Lars (Université de Montréal) |
| Abstract: | We study the random assignment of indivisible objects among a set of agents with strict preferences. We show that there exists no mechanism which is unanimous, strategy-proof and envy-free. Weakening the first requirement to q-unanimity – i.e., when every agent ranks a different object at the top, then each agent shall receive his most-preferred object with probability of at least q – we show that a mechanism satisfying strategy-proofness, envy-freeness and ex-post weak non-wastefulness can be q-unanimous only for q ≤ n2 (where n is the number of agents). To demonstrate that this bound is tight, we introduce a new mechanism, Random-Dictatorship-cum-Equal-Division (RDcED), and show that it achieves this maximal bound when all objects are acceptable. In addition, for three agents, RDcED is characterized by the first three properties and ex-post weak efficiency. If objects may be unacceptable, strategy-proofness and envy-freeness are jointly incompatible even with ex-post weak non-wastefulness. |
| Keywords: | random assignment; strategy-proofness; envy-freeness; q-unanimity; |
| JEL: | D63 D70 |
| Date: | 2021–12–22 |
| URL: | http://d.repec.org/n?u=RePEc:rco:dpaper:307&r= |
| By: | Bester, Helmut (HU Berlin and FU Berlin); Sákovics, József (University of the Balearic Islands and University of Edinburgh) |
| Abstract: | We investigate the welfare effect of increasing competition in an anonymous two-sided matching market, where matched pairs play an infinitely repeated Prisoner’s Dilemma. Higher matching efficiency is usually considered detrimental as it creates stronger incentives for defection. We point out, however, that a reduction in matching frictions also increases welfare because more agents find themselves in a cooperative relationship. We characterize the conditions for which increasing competition increases overall welfare. In particular, this is always the case when the incentives for defection are high. |
| Keywords: | cooperation; prisoner's dilemma; competition; welfare; matching; trust building; |
| JEL: | C72 C73 C78 |
| Date: | 2022–07–21 |
| URL: | http://d.repec.org/n?u=RePEc:rco:dpaper:332&r= |
| By: | Yuhang Guo; Dong Hao; Bin Li |
| Abstract: | This paper studies one emerging procurement auction scenario where the market is constructed over the social networks. In a social network composed of many agents, smartphones or computers, one requester releases her requirement for goods or tasks to suppliers, then suppliers who have entered the market are also encouraged to invite some other suppliers to join and all the suppliers in the network could compete for the business. The key problem for this networked auction is about how to incentivize each node who have entered the sell not only to truthfully use her full ability, but also to forward the task to her neighbours. Auctions conducting over social networks have attracted considerable interests in recent years. However, most of the existing works focus on classic forward auctions. Moreover, there is no existing valid networked auction considering multiple goods/tasks. This work is the first to explore procurement auction for both homogeneous and heterogeneous goods or tasks in social networks. From both theoretical proof and experimental simulation, we proved that the proposed mechanisms are proved to be individual-rational and incentive-compatible, also both the cost of the system and the requester could get decreased. |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2208.14591&r= |
| By: | Huiyi Guo; Wei He; Bin Liu |
| Abstract: | We study the revenue-maximizing mechanism when a buyer's value evolves endogenously because of learning-by-consuming. A seller sells one unit of a divisible good, while the buyer relies on his private, rough valuation to choose his first-stage consumption level. Consuming more leads to a more precise valuation estimate, after which the buyer determines the second-stage consumption level. The optimum is a menu of try-and-decide contracts, consisting of a first-stage price-quantity pair and a second-stage per-unit price for the remaining quantity. In equilibrium, a higher first-stage valuation buyer pays more for higher first-stage consumption and enjoys a lower second-stage per-unit price. Methodologically, we deal with the difficulty that due to the failure of single-crossing condition, monotonicity in allocation plus the envelope condition is insufficient for incentive compatibility. Our results help to understand contracts about sequential consumption with the learning feature; e.g., leasing contracts for experience goods and trial sessions for certain courses. |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2209.01453&r= |
| By: | Frédéric Koessler (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Marie Laclau (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Tristan Tomala (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique, HEC Paris - Ecole des Hautes Etudes Commerciales) |
| Abstract: | We study the interaction between multiple information designers who try to influence the behavior of a set of agents. When each designer can choose information policies from a compact set of statistical experiments with countable support, such games always admit subgame perfect equilibria. When designers produce public information, every equilibrium of the simple game in which the set of messages coincides with the set of states is robust in the sense that it is an equilibrium with larger and possibly infinite and uncountable message sets. The converse is true for a class of Markovian equilibria only. When designers produce information for their own corporation of agents, robust pure strategy equilibria exist and are characterized via an auxiliary normal form game in which the set of strategies of each designer is the set of outcomes induced by Bayes correlated equilibria in her corporation. |
| Keywords: | Statistical experiments,Splitting games,Sharing rules,Information design,Bayesian persuasion |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:hal:pseptp:halshs-01791918&r= |
| By: | Maxim Senkov |
| Abstract: | This paper studies the optimal design of self-reporting on the progress of a project by a rent-seeking agent reporting to a principal who is concerned with accomplishing the project before an exogenous deadline. The project has two stages: completing the first stage serves as a milestone and completing the second stage accomplishes the project. I show that if the project is sufficiently promising ex ante, then the agent commits to provide only the good news that the project is accomplished. If the project is not promising enough ex ante, the agent persuades the principal to start the funding by committing to provide not only good news but also the bad news that the milestone of the project has not been reached by an interim deadline. |
| Keywords: | dynamic Bayesian persuasion; informational incentives; interim deadline; multistage project; |
| JEL: | D82 D83 G24 |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:cer:papers:wp734&r= |
| By: | Vijay V. Vazirani |
| Abstract: | LP-duality theory has played a central role in the study of cores of games, right from the early days of this notion to the present time. The classic paper of Shapley and Shubik \cite{Shapley1971assignment} introduced the "right" way of exploiting the power of this theory, namely picking problems whose LP-relaxations support polyhedra having integral vertices. So far, the latter fact was established by showing that the constraint matrix of the underlying linear system is {\em totally unimodular}. We attempt to take this methodology to its logical next step -- {\em using total dual integrality} -- thereby addressing new classes of games which have their origins in two major theories within combinatorial optimization, namely perfect graphs and polymatroids. In the former, we address the stable set and clique games and in the latter, we address the matroid independent set game. For each of these games, we prove that the set of core imputations is precisely the set of optimal solutions to the dual LPs. Another novelty is the way the worth of the game is allocated among sub-coalitions. Previous works follow the {\em bottom-up process} of allocating to individual agents; the allocation to a sub-coalition is simply the sum of the allocations to its agents. The {\em natural process for our games is top-down}. The optimal dual allocates to "objects" in the grand coalition; a sub-coalition inherits the allocation of each object with which it has non-empty intersection. |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2209.04903&r= |
| By: | Victor Ginsburgh; J.D. Moreno-Ternero |
| Abstract: | We analyze and evaluate the rules and results at the 2021 Eurovision Song Contest. We first concentrate on the various voting procedures and explore several alternatives (inspired by classical contributions in social choice and game theory) that could make a difference for the results. We also discuss other important issues, such as simplicity, contrast effects and whether experts are better judges than tele-voters. Our findings raise the question of whether the voting procedures used by the Eurovision Song Contest authorities are fail-safe. We endorse instead the use of the so-called Shapley voting procedure for judges as well as tele-voters. |
| Keywords: | Biases; Borda; Eurovision song contest; Shapley method; Voting |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ulb:ulbeco:2013/349633&r= |