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on Economic Design |
| By: | Omerovic Smajlovic, Mirheta; Zöll, Anne; Rami, Alhasan |
| Abstract: | The implementation of artificial intelligence (AI) requires significant resources, which creates a conflict in light of the growing importance of sustainable practices. To address this challenge, it is essential to consider its reusability but the unique nature of AI necessitates the development of specific design principles tailored to AI systems. Thus, we utilize design science research and leverage established design knowledge that encompasses principles for creating AI solutions that can be reused. Our approach incorporates Wenger's (1998) framework of Community of Practice and involves iterative refinement and evaluation of our design knowledge through design thinking workshops, focus group discussions, and expert interviews. Furthermore, we explore how the established design principles for developing reusable AI solutions can contribute to the promotion of socially and environmentally sustainable business practices. By discussing these topics, we aim to inspire further exploration and investigation in the field of Information Systems research. |
| Date: | 2023–09–20 |
| URL: | http://d.repec.org/n?u=RePEc:dar:wpaper:138495&r=des |
| By: | Haoyang Wu |
| Abstract: | In mechanism design theory, agents' types are described as their private information, and the designer may reveal some public information to affect agents' types in order to obtain more payoffs. Traditionally, both each agent's private type and the public information are represented as a random variable respectively. In this paper, we propose a type-adjustable mechanism where each agent's private type is represented as a function of two parameters, \emph{i.e.}, his intrinsic factor and an external control factor. Each agent's intrinsic factor is modeled as a private random variable, and the external control factor is modeled as a solution of the designer's optimization problem. The advantage of the type-adjustable mechanism is that by choosing an optimal value of control factor as public information, the designer may obtain Pareto-optimal outcomes, beneficial not only to herself but also to all agents. As a comparison, in an auction with interdependent values where the public information is represented as a random variable, only the seller will benefit from public information. In the end, we compare the type-adjustable mechanism with other relevant models. |
| Date: | 2023–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2309.01096&r=des |
| By: | Xinyu Li (PBL Netherlands); Marco Haan (University of Amsterdam); Sander Onderstal (University of Groningen); Jasper Veldman (University of Amsterdam) |
| Abstract: | Globally, governments increasingly rely on auctions to advance renewable energy. This paper studies the design of wind farm auctions and evaluates the impact of price guarantees and subsidies on auction efficiency, government revenue, and renewable-energy production. While the theoretical analysis suggests that the price guarantee has no effect, our laboratory experiment suggests that the price guarantee improves efficiency and that it often increases production and revenue. An important explanation for these results is that less risk averse subjects tend to bid less aggressively and produce less. Without the price guarantee, and hence with more uncertainty in the auction, this increases the chances that risk-loving bidders win the auction, thus compromising auction efficiency. The subsidy is less effective than suggested by theory. Bidders with a higher valuation tend to bid more conservatively than the equilibrium prediction, thus neutralizing the efficiency-enhancing effect of the subsidy. |
| Keywords: | Auctions, Experiments, Wind farms, Renewable energy |
| JEL: | C92 D44 F64 H23 Q58 |
| Date: | 2023–08–03 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20230046&r=des |