Download or read book Essays in Mechanism Design written by Levent Ulku and published by . This book was released on 2008 with total page 71 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation consists of three essays in the theory of mechanism design under incomplete information. In the first essay, we analyze an implementation problem in which monetary transfers are feasible, valuations are interdependent and the set of available choices lies in a product space of lattices. This framework is general enough to subsume many interesting examples, including allocation problems with multiple objects. We identify a class of social choice rules which can be implemented in ex post equilibrium. We identify conditions under which ex post efficient social choice rules are implementable using monotone selection theory. The key conditions are extensions of the single crossing property and supermodularity. These conditions can be replaced with more tractable conditions in multiobject allocation problems with either two objects or two agents. I also show that the payments which implement monotone social decision rules coincide with the payments of (1) the classical Vickrey-Clarke-Groves mechanism with private values, and (2) the generalized Vickrey auction introduced by Ausubel [1999] in multiunit allocation problems. The second essay generalizes the analysis of optimal (revenue maximizing) mechanism design for the seller of a single object introduced by Myerson [1981]. We consider a problem in which the seller has several heterogeneous objects and buyers' valuations depend on each other's private information. We analyze two nonnested environments in which incentive constraints can be replaced with more tractable monotonicity conditions. We establish conditions under which these monotonicity conditions can be ignored, and show that several earlier analyses of the optimal mechanism design problem can be unified and generalized. In particular, problems with two complementary goods in Levin [1997] and multiunit auction problems in Maskin and Riley [1989] and Branco [1996] are special cases. The third essay considers the problem of selling internet advertising slots to advertisers. Under suitable conditions, we solve for the payments imposed by an optimal mechanism and show that it can be decentralized via prices using a linear assignment approach. At every configuration of private information, optimal mechanism can be interpreted as a menu consisting of a price for every slot.

Download or read book Essays in Optimal Mechanism Design written by Igor Legkiy and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays on Mechanism Design written by Gregory Pavlov and published by . This book was released on 2005 with total page 151 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this dissertation we address several open problems in the theory of mechanism design: (i) optimal mechanism design when agents collude; (ii) multidimensional mechanism design problem of the multiproduct monopolist; (iii) robust predictions of the relative revenue loss from the bidders' collusion in the optimal auctions.

Download or read book Essays in Mechanism Design written by Yunan Li and published by . This book was released on 2017 with total page 594 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this thesis, I study mechanism design problems in environments where the information necessary to make decisions is affected by the actions of principal or agents.The first chapter considers the problem of a principal who must allocate a good among a finite number of agents, each of whom values the good. Each agent has private information about the principal's payoff if he receives the good. There are no monetary transfers. The principal can inspect agents' reports at a cost and punish them, but punishments are limited because verification is imperfect or information arrives only after the good has been allocated for a while. I characterize an optimal mechanism featuring two thresholds. Agents whose values are below the lower threshold and above the upper threshold are pooled, respectively. If the number of agents is small, then the pooling area at the top of value distribution disappears. If the number of agents is large, then the two pooling areas meet and the optimal mechanism can be implemented via a shortlisting procedure. The fact that the optimal mechanism depends on the number of agents implies that small and large organizations should behave differently. The second chapter considers the problem of a principal who wishes to distribute an indivisible good to a population of budget-constrained agents. Both valuation and budget are an agent's private information. The principal can inspect an agent's budget through a costly verification process and punish an agent who makes a false statement. I characterize the direct surplus-maximizing mechanism. This direct mechanism can be implemented by a two-stage mechanism in which agents only report their budgets. Specifically, all agents report their budgets in the first stage. The principal then provides budget-dependent cash subsidies to agents and assigns the goods randomly (with uniform probability) at budget-dependent prices. In the second stage, a resale market opens, but is regulated with budget-dependent sales taxes. Agents who report low budgets receive more subsidies in their initial purchases (the first stage), face higher taxes in the resale market (the second stage) and are inspected randomly. This implementation exhibits some of the features of some welfare programs, such as Singapore's housing and development board.The third chapter studies the design of ex-ante efficient mechanisms in situations where a single item is for sale, and agents have positively interdependent values and can covertly acquire information at a cost before participating in a mechanism. I find that when interdependency is low or the number of agents is large, the ex-post efficient mechanism is also ex-ante efficient. In cases of high interdependency or a small number of agents, ex-ante efficient mechanisms discourage agents from acquiring excessive information by introducing randomization to the ex-post efficient allocation rule in areas where the information's precision increases most rapidly.

Download or read book Two Essays in Mechanism Design written by Nicolás Andrés Figueroa González and published by . This book was released on 2006 with total page 146 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays in Mechanism Design written by Weixin Chen (Researcher in microeconomic theory) and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis consists of three papers in mechanism design. Chapter 1 is based on a paper of mine entitled "Quality Disclosure and Price Discrimination". Chapter 2 is based on "Penalty, Voting, and Collusion: a Common Agency Approach to Industrial Regulation and Political Power". Chapter 3 is based on "Partitional Information Revelation under Renegotiation". A key framework in mechanism design is screening: a principal who designs the contract induces agents with private information to select certain action(s) or bundle(s). Classical results are second-best distortion and Myerson ironing, which are derived when the agency involves a single task (or tasks independent across agents), an agent's information is privately known by himself, and there is full commitment. Chapter 1 considers incentivizing tasks that are related through a resource constraint. It studies the second-degree price discrimination when the supply quality follows some exogenous distribution, or more specifically, the design of information and pricing in a monopolistic market with product quality dispersion. The main message is that optimality requires a partial disclosure, and finer results on the allocation distortion depend on the heterogeneity of the buyers' preference. When such preference over assignment, i.e., quality distribution, has a uni-dimensional sufficient statistics in the quality space, the optimal distortion resembles Myerson's ironing and the optimal disclosure takes a partitional form. For more general preference, the optimal distortion departs from Myerson's result. Chapter 2 considers eliciting signals informative of the agent's private information from multiple sources. An interesting case is by considering a voting committee as the principal, where voting aggregates welfare-relevant information but faces corruptive incentives. The key insights are that the optimal rule is a binary verdict, resembling the principle of maximum deterrence, and the corruptive incentives typically push the optimal voting rule towards unanimity. Chapter 3 considers commitment with renegotiation: the counterparties can stick to the previously signed long-term contract or revise it with mutual consent. More specifically, it studies a long-term relationship between a seller and a buyer whose valuation (for a per-period service or a rental good) is private. In such a dynamic game, a new dimension of mechanism design, namely intertemporal type separation, arises as its induced belief-updating affects the rent extraction--efficiency tradeoff. The main message is that all PBE share the following property in the progressive screening process: at each history, the seller partitions the posterior support into countable intervals and offers a pooling contract to each of these intervals.

Download or read book Three Essays in Public Mechanism Design written by Jin Kim and published by . This book was released on 2003 with total page 222 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays in Mechanism Design with Semi exclusive Information and Wrong Beliefs written by Mingjun Xiao and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Mechanism design theories have established basic framework in studying economic problems where agents have private information and behave in their own interests. This framework provides a workhorse for exploring how to implement social choice rules in general. One typical issue is to analyze the decision-making by a social planner or a designer who aims to achieve efficient outcomes that maximize the joint welfare of all agents. Not surprisingly, efficiency essentially requires that the designer know the agents' private information and then choose the corresponding socially optimal outcome. However, the difficulty of mechanism design problem is to characterize these incentive constraints where agents find it optimal to reveal their private information truthfully. Specifically, sufficiently rich private information could entail non-implementability of efficient social choice rules. To overcome this difficulty, this dissertation considers a class of semi-exclusive information structures where agents may observe signals about payoff signals, and a class of problems where agents may have wrong beliefs or the mechanism designer is not informed about the agents' valuation functions, and proposes mechanisms that implement efficient allocations.

Download or read book Essays on Mechanism Design and Multiple Privately Informed Principals written by Nicolás Riquelme and published by . This book was released on 2019 with total page 149 pages. Available in PDF, EPUB and Kindle. Book excerpt: "This dissertation is a collection of three papers studying both theoretical and applied aspects of mechanism design. In Chapter 1, we study competing auctions where each seller has private information about the quality of his object and chooses the reserve price of a second-price auction. Buyers observe the reserve prices and decide which auction to participate in. For a class of primitives, we show that a perfect Bayesian equilibrium exists for any finite market. In any such PBE, higher quality is signaled through higher reserve price at the expense of trade opportunities. But there might be bunching regions causing inefficiencies. In fact, in the large-market limit characterized by a directed search model, the interaction of adverse selection and search frictions entail distortion at the bottom: when either the buyer-seller ratio is sufficiently large or a regularity condition is met, there is no separating PBE in which the lowest-quality seller sets reserve price equal to his opportunity cost. This finding carries over to large finite markets and is consistent with observed behavior in auctions for used cars in UK (Choi, Nesheim and Rasul, 2016). In Chapter 2, we study games where a group of privately informed principals design mechanisms to a common agent. The agent has private information (exogenous) and, after observing principals' mechanisms, may have information (endogenous) about feasible allocations and private information from each principal. Thus, each principal may be interested in designing a mechanism to screen all this information, for which a potentially complicated message space to convey this information might be needed. In this project, we provide sufficient conditions on the agent's payoff such that any equilibrium in this setup has an output-equivalent equilibrium using only mechanisms with simple message spaces (direct mechanisms). Depending on the conditions, we propose two different notions of direct mechanisms and discuss their applicability with some examples. In Chapter 3, we study the design of horizontal merger regulation in a Cournot competition setting, where firms are privately informed about production technology. More specifically, a consumer-surplus-maximizer regulator designs a mechanism which determines whether the merger is blocked or accepted, and sets structural remedies (divestitures). This problem does not have the usual quasi-linear structure commonly assumed in the mechanism design literature. We first characterize incentive-compatible mechanisms and then find the optimal one. The complete information case is also presented as a benchmark. Asymmetric information induces important distortions in regulatory decisions. First, every rejected merge would improve consumer surplus. Second, every merge that decreases consumer surplus would be approved. Lastly, every merge rightly approved would be asked fewer divestitures than the optimal one (under-fixing effect). These results seem consistent with recent empirical evidence on the ineffectiveness of the merger regulation"--Pages vii-viii.

Download or read book Essays in Mechanism Design written by and published by . This book was released on 2007 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis consists of three self-contained essays on mechanism design problems: a collective decision problem, a theoretical auction problem, and an applied auction problem. Chapter 1 contains an introduction. In Chapter 2 I consider a problem where a group has to take a collective decision. I study how the decision mechanism should be designed when the information relevant for the decision is dispersed among the group members and when the group members' preferences over decisions might be in conflict. Observed mechanisms differ in whether the most extreme positions are disregarded or not. I find that the designer should never disregard the most extreme positions, but that he should limit the amount by which single group members can affect the decision. In Chapter 3 I analyze a seller's problem to design an optimal first-price auction. Normally the design problem reduces to the problem of determining the lowest admissible bid. I show that the structure of the optimal first-price auction may be non-standard when the seller cannot commit to sell to the highest bidder after observing the bids, and when he is able to fix the auction rules already at a time at which he is still uncertain about his own use value. In this case the seller might allow high and low bids, but forbid intermediate ones. In the last chapter I am interested in the problem of a procurer to organize his procurement process. I compare two procurement systems resembling stylized facts from American and Japanese procurement. In the first system the procurer exerts as much competitive pressure on his incumbent supplier as possible, while in the second system he protects his incumbent supplier by looking only for possible replacements after bilateral negotiations with him break down. I show that either system may induce higher relationship-specific investments and I describe under which conditions which of the two systems is preferable from the procurer's point of view.

Download or read book Essays on Prior Free Mechanism Design written by Pavel Andreyanov and published by . This book was released on 2019 with total page 169 pages. Available in PDF, EPUB and Kindle. Book excerpt: My dissertation contributes to the literature on prior-free (robust) mechanism design. Prior-freeness can be interpreted differently, but a common feature is that certain mechanisms can be ranked above the others without the exact knowledge of distributions and/or utilities. According to the Wilson critique, the knowledge of fine details of the setting such as distributions and utilities is an unrealistic assumption and, moreover, optimal mechanisms in the classic (Bayesian) sense are often too complex to be implemented in reality. In the first chapter I study a scoring auction and the welfare implications of switching between the two leading designs of the scoring rule: linear (``weighted bid'') and log-linear (``adjusted bid''), when the designer's preferences for quality and money are unknown. Motivated by the empirical application, I formulate a new model of scoring auctions, with two key elements: exogenous quality and a reserve price, and characterize the equilibrium for a rich set of scoring rules. The data is drawn from the Russian public procurement sector in which the linear scoring rule was applied from 2011 to 2013. I estimate the underlying distribution of firms' types nonparametrically and simulate the equilibria for both scoring rules with different weights. The empirical results show that for any log-linear scoring rule, there exists a linear one, yielding a higher expected quality and rebate. Hence, at least with risk-neutral preferences, the linear design is superior to the log-linear. In the second chapter (Co-authored with Jernej Copic and Byeong-hyeon Jeong, UCLA) I study robust allocation of a divisible public good among n agents with quasi-linear utilities, when the budget is exactly balanced. Under several additional assumptions, we prove that such mechanism is equivalent to a distribution over simple posted prices. A robustly optimal mechanism minimizes expected welfare loss among robust divisible ones. For any prior belief, I show that a simple posted prices is robustly optimal. This justifies a restriction to binary allocations commonly found in the mechanism design literature. Robustness comes at a high cost. For certain beliefs, we show that the expected welfare loss of an optimal posted price is as big as 1/2 of the expected welfare in the corresponding optimal Bayesian mechanism, independently of the size of the economy. This bound is tight for the special case of two agents. In the third chapter (Co-authored with Tomasz Sadzik, UCLA) I provide mechanisms for exchange economies with private information and interdependent values, which are ex-post individually rational, incentive compatible, generate budget surplus and are ex-post nearly efficient, when there are many agents. Our framework is entirely prior-free, and I make no symmetry restrictions. The mechanisms can be implemented using a novel discriminatory conditional double auction, without knowledge of information structure or utility functions. I also show that no other mechanism satisfying the constraints can generate inefficiency of smaller order.

Download or read book Essays in Optimal Taxation and Dynamic Mechanism Design written by Luigi Balletta and published by . This book was released on 2010 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays in Optimal Taxation and Dynamic Mechanism Design written by Luigi Balletta and published by . This book was released on 2010 with total page 170 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays in Robust Mechanism and Contract Design written by Aleksei Suzdaltsev and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In this thesis, we propose solutions to three problems in the area of robust mechanism design. The first two problems concern revenue maximization by a seller facing several potential buyers whose knowledge of the probability distribution of buyers' valuations is scarce. The third problem concerns contracting under unknown production technology. More specifically: In Chapter 2 (first substantive chapter), we consider the following model. An indivisible object may be sold to one of n agents who know their valuations of the object. The seller would like to use a revenue-maximizing mechanism but her knowledge of the values' distribution is limited: she knows only the means (which may be different) an upper bound for valuations. Valuations may be correlated. Using a constructive approach based on duality, we prove that a mechanism that maximizes the worst-case expected revenue among all deterministic dominant-strategy incentive compatible, ex post individually rational mechanisms takes the following form: (1) the bidders submit bids; (2) for each bidder, a bidder-specific linear function of the bid is calculated (we call it a ``linear score''); (3) the object is awarded to the agent with the highest score, provided it's nonnegative; (4) the winning bidder pays the minimal amount he would need to bid to still win in the auction. The set of optimal mechanisms includes other mechanisms but all those have to be close to the optimal linear score auction in a certain sense. When means are high, all optimal mechanisms share the linearity property. Second-price auction without a reserve is an optimal mechanism when the number of symmetric bidders is sufficiently high. In Chapter 3, we consider a related problem in which the valuations are constrained to be independent draws from a partially known distribution. The seller knows one or two moments of the distribution. We ask what would be a reserve-price in a second-price auction that maximizes worst-case expected revenue. Using a technique different from Chapter 2, we prove that it is always optimal to set the reserve price to seller's own valuation. However, the maxmin reserve price may not be unique. If the number of bidders is sufficiently high, all prices below the seller's valuation, including zero, are also optimal. In the final chapter, we seek a robust solution of a hidden-action, rather than a hidden-information problem. A principal is uncertain about a technology mapping an agent's effort to the distribution of output. The agent is risk neutral and there is a participation constraint but no limited liability constraint. Transfers can be costly. An example of this setting is the case where the principal is a society trying to properly incentivize a firm to carry out innovation. We first show that when the principal employs minimax-regret criterion in the face of the technological uncertainty, an optimal contract is affine. We then characterize the full set of optimal contracts. A contract is optimal if and only if it lies within certain affine, increasing bounds that collapse to a point when output reaches its maximum value.

Download or read book Essays in Applied Mechanism Design written by Wiroy Shin and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation consists of two chapters.Chapter 1: On Monotone Strategy Equilibria in Simultaneous Auctions for Complementary GoodsWe explore existence and properties of Bayesian Nash equilibrium in simultaneous first-price auctions for complementary goods. We introduce a novel partial order on bidder types and apply methodology in Athey (2001), McAdams (2003) and Reny (2011) to demonstrate existence of monotone equilibria in these auctions when the bid space is finite. We then apply this finding to demonstrate two new results on monotone equilibria in continuous bid spaces. The first of these establishes existence of monotone equilibria in a setting similar to Krishna and Rosenthal (1996), in which a single global bidder bids for multiple objects against a set of local bidders who bid for single objects only. The second considers equilibria with communication as in Jackson, Simon, Swinkels and Zame (2002), showing that in our setting their statements on distributional strategies can be refined to be monotone. Finally, we discuss conditions under which these results can be extended to all-pay, second-price and other standard simultaneous auctions.Chapter 2: Discrimination in OrganizationsA number of the largest U.S. firms have been involved in labor discrimination despite having policies in place designed to avoid that outcome. This paper diagnoses the phenomenon and proposes contractual and regulatory solutions to ameliorate the situation. Existing research (e.g., Becker (1957), Coate and Loury (1993)) studies a situation in which an individual person practices discrimination. In contrast, this paper considers a hierarchical organization in which a manager (the agent) may or may not have a discriminatory taste toward his subordinates, whereas an owner (the principal) is unbiased and only cares about profit. The manager perfectly observes productivity levels of the subordinates and decides whom to promote. The owner only sees results of the managers decision: the promoted workers identity and that workers performance. In this environment, I study a direct mechanism and characterize an optimal contract. Additionally, I compare the allocation implemented by the optimal direct mechanism to the first-best (full information) allocation and discuss the effectiveness of current regulations (e.g., affirmative action, taxation on the minority promotion ratio): I find that a regulator (such as the U.S. Equal Employment Opportunity Commission) can improve compliance with non-discriminatory conduct, despite the fact that the person on whom the regulation is directly incidentthe principalis not intrinsically biased. I also show that the regulation can be counter-productive if it attempts to enforce perfect fairness (the first-best allocation) when that allocation is not incentive feasible. Finally, I review the U.S. law of discrimination and analyze statutory and jurisprudential issues regarding the optimal mechanism.

Download or read book Essays on Mechanism Design written by Min Ho Shin and published by . This book was released on 1993 with total page 294 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays in Mechanism Design written by Biung-Ghi Ju and published by . This book was released on 2001 with total page 378 pages. Available in PDF, EPUB and Kindle. Book excerpt: