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on Economic Design |
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Issue of 2017‒07‒23
eight papers chosen by Guillaume Haeringer, Baruch College and Alex Teytelboym, University of Oxford |
| By: | Haris Aziz; Bettina Klaus |
| Abstract: | We consider stability concepts for random matchings where agents have preferences over objects and objects have priorities for the agents. When matchings are deterministic, the standard stability concept also captures the fairness property of no (justified) envy. When matchings can be random, there are a number of natural stability / fairness concepts that coincide with stability / no envy whenever matchings are deterministic. We formalize known stability concepts for random matchings for a general setting that allows weak preferences and weak priorities, unacceptability, and an unequal number of agents and objects. We then present a clear taxonomy of the stability concepts and identify logical relations between them.Furthermore, we provide no envy / claims interpretations for some of the stability concepts that are based on a consumption process interpretation of random matchings. Finally, we present a transformation from the most general setting to the most restricted setting, and show how almost all our stability concepts are preserved by that transformation. |
| Keywords: | Matching Theory; Stability Concepts; Fairness; Random Matching |
| JEL: | C63 C70 C71 C78 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:lau:crdeep:17.09&r=des |
| By: | Battal Dogan; Bumin Yenmez |
| Abstract: | The Chicago Board of Education is implementing a centralized clearinghouse to assign students to schools for 2018-19 admissions. In this clearinghouse, each student can simultaneously be admitted to a selective and a nonselective school. We study this divided enrollment system and show that an alternative unified enrollment system, which assigns each student to only one school, is better for all students. We also examine systems with two stages of admissions, which has also been considered in Chicago, and establish conditions under which the unified enrollment system is better than the divided enrollment system. |
| Keywords: | Market design, school choice, unified enrollment |
| JEL: | C72 C78 I21 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:lau:crdeep:17.10&r=des |
| By: | Philippe Jehiel (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Laurent Lamy (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | We revisit the Tiebout hypothesis in a world in which agents may learn extra information as to how they value the various local public goods once located, and jurisdictions are free to commit to whatever mechanism to attract citizens. It is shown in quasi-linear environments that efficiency can be achieved as a competitive equilibrium when jurisdictions seek to maximize local revenues but not necessarily when they seek to maximize local welfare. Interpretations and limitations of the result are discussed. |
| Keywords: | mechanism design,competing mechanisms,endogenous entry,Tiebout hypothesis,local public goods |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:ciredw:halshs-01557585&r=des |
| By: | Patricia Charléty; Marie-Cécile Fagart; Saïd Souam |
| Abstract: | This paper characterizes the equilibria of a costly voting game in which shareholders heterogeneous in both size and preferences strategically vote for or against a proposed resolution or withhold. It is shown that a minimum quorum generates (1) equilibria in which one or several shareholders form voting coalitions in favor of the resolution that is adopted (2) an equilibrium in which shareholders strategically abstain from voting and the resolution is rejected. The size of blockholders and their preferences (in favor or against the resolution) play a crucial role in the existence of equilibria, their nature, the size and the number of voters in coalitions. We derive conditions under which the dominant shareholder controls the meeting. We also examine how large shareholders influence the result of the vote. In particular, we analyze the interaction between blockholders and discuss the situations in which large shareholders jointly control annual meetings or form coalitions to counter the dominant shareholder. |
| Keywords: | Shareholder Meeting, Strategic voting, Coalitions, Quorum rule, Dominant, Controlling and Reference shareholders. |
| JEL: | D72 G34 K20 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:drm:wpaper:2017-35&r=des |
| By: | Taneli Mäkinen (Bank of Italy); Francesco Palazzo (Bank of Italy) |
| Abstract: | In over-the-counter markets with heterogeneous asset qualities and individual valuations, private information about both of these value components amplifies the adverse selection problem attributable only to privately known asset quality. Specifically, when gains from trade are low, asymmetric information creates a double bind: either the market breaks down due to a classic lemons problem or low-quality assets are traded excessively, generating a congestion externality. A market designer may improve efficiency without incurring losses by acquiring all assets, issuing asset-backed securities of publicly known quality and capturing at least a part of the surplus from the future trades of these securities. |
| Keywords: | asymmetric information, over-the-counter markets, search frictions, market design |
| JEL: | D82 D83 G14 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1128_17&r=des |
| By: | Philippe Jehiel (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Laurent Lamy (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | Set-asides programs consist in forbidding access to specific participants, and they are commonly used in procurement auctions. We show that when the set of potential participants is composed of an incumbent (who bids for sure if allowed to) and of entrants who show up endogenously (in such a way that their expected rents are fixed by outside options), then it is always beneficial for revenues to exclude the incumbent in the second-price auction. This exclusion principle is generalized to auction formats that favor the incumbent in the sense that he would always gets the good when he values it most. By contrast, set-asides need not be desirable if the incumbent's payoff is included into the seller's objective or in environments with multiple incumbents. Various applications are discussed. |
| Keywords: | set-asides, entry restrictions, auctions with endogenous entry,entry deterrence, asymmetric buyers, incumbents, government procurement,procurement competition policy |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:ciredw:halshs-01557657&r=des |
| By: | Joachim Freyberger; Bradley J. Larsen |
| Abstract: | This study provides new identification and estimation results for ascending (traditional English or online) auctions with unobserved auction-level heterogeneity and an unknown number of bidders. When the seller's reserve price and two order statistics of bids are observed, we derive conditions under which the distributions of buyer valuations, unobserved heterogeneity, and number of participants are point identified. We also derive conditions for point identification in cases where reserve prices are binding (in which case bids may be unobserved in some auctions) and present general conditions for partial identification. We propose a nonparametric maximum likelihood approach for estimation and inference. We apply our approach to the online market for used iPhones and analyze the effects of recent regulatory changes banning consumers from circumventing digital rights management technologies used to lock phones to service providers. We find that buyer valuations for unlocked phones dropped after the unlocking ban took effect. |
| JEL: | C1 C57 D44 L0 L96 O3 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23569&r=des |
| By: | LOMBARDI, Michele; YOSHIHARA, Naoki |
| Abstract: | We study Nash implementation by natural price-quantity mechanisms in pure exchange economies when agents have intrinsic preferences for responsibility. An agent has an intrinsic preference for responsibility if she cares about truth-telling that is in line with the goal of the mechanism designer besides her material well-being. A semi-responsible agent is an agent who, given what her opponents do, acts in an irresponsible manner when a responsible behavior poses obstacles to her material well-being. The class of efficient allocation rules that are Nash implementable is identified provided that there is at least one agent who is semi-responsible. The Walrasian rule is shown to belong to that class. |
| Keywords: | Nash equilibrium, exchange economies, intrinsic preferences for responsibility,, boundary problem, price-quantity mechanism |
| JEL: | C72 D71 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:hit:hiasdp:hias-e-48&r=des |