
on Economic Design 
Issue of 2017‒12‒18
seven papers chosen by Guillaume Haeringer, Baruch College and Alex Teytelboym, University of Oxford 
By:  Andersson, Tommy (Department of Economics, Lund University) 
Abstract:  This note contains a few brief remarks on the similarities and differences between some standard market design applications (e.g., kidney exchange and school choice) and the refugee assignment problem. The main conclusion is that the refugee assignment problem is more complex in some dimensions than many of the standard market design applications. Consequently, classical mechanisms cannot be used to solve the problem and more research is needed to, e.g., understand how to model preferences, and how to define relevant axioms and multidimensional constraints. 
Keywords:  forced migration; asylum seekers; refugee assignment; matching; market design 
JEL:  C78 F22 
Date:  2017–08–12 
URL:  http://d.repec.org/n?u=RePEc:hhs:lunewp:2017_016&r=des 
By:  Gentry, Matthew; Komarova, Tatiana; Schiraldi, Pasquale; Shin, Wiroy 
Abstract:  We explore existence and properties of equilibrium when N>1 bidders compete for L>1 objects via simultaneous but separate auctions. Bidders have private combinatorial valuations over all sets of objects they could win, and objects are complements in the sense that these valuations are supermodular in the set of objects won. We provide a novel partial order on types under which best replies are monotone, and demonstrate that Bayesian Nash equilibria which are monotone with respect to this partial order exist on any finite bid lattice. We apply this result to show existence of monotone Bayesian Nash equilibria in continuous bid spaces when a single global bidder competes for L objects against many local bidders who bid for single objects only, highlighting the step in this extension which fails with multiple global bidders. We therefore instead consider an alternative equilibrium with endogenous tiebreaking building on Jackson, Simon, Swinkels and Zame (2002), and demonstrate that this exists in general. Finally, we explore efficiency in simultaneous auctions with symmetric bidders, establishing novel sufficient conditions under which inefficiency in expectation approaches zero as the number of bidders increases. 
Keywords:  simultaneous auctions; complementarities; synergies; equilibria existence; efficiency; multiobject auctions; monotone strategies 
JEL:  C72 D44 
Date:  2017–12 
URL:  http://d.repec.org/n?u=RePEc:cpr:ceprdp:12483&r=des 
By:  Daniel Marszalec (Faculty of Economics, The University of Tokyo) 
Date:  2017–12 
URL:  http://d.repec.org/n?u=RePEc:tky:fseres:2017cf1074&r=des 
By:  Compte, Olivier; Jehiel, Philippe 
Abstract:  We develop a simple model that rationalizes why less stringent majority rules are preferable to unanimity in large committees. Proposals are randomly generated and the running proposal is adopted whenever it is approved by a sufficiently large share of voters. Unanimity induces excessive delays while too weak majority requirements induce the adoption of suboptimal proposals. The optimal majority rule balances these two inefficiencies: it requires the approval by a share equal to the probability (assumed to be constant across proposals) that a given member gets more than the average welfare associated with the running proposal. Various extensions are considered. 
Date:  2017–12 
URL:  http://d.repec.org/n?u=RePEc:cpr:ceprdp:12492&r=des 
By:  NAKADA, Satoshi; NITZAN, Shmuel; UI, Takashi 
Abstract:  This paper proposes normative consequentialist criteria for voting rules under Knightian uncertainty about individual preferences to characterize a weighted majority rule (WMR). The criteria stress the significance of responsiveness, i.e., the probability that the social outcome coincides with the realized individual preferences. A voting rule is said to be robust if, for any probability distribution of preferences, responsiveness of at least one individual is greater than onehalf. Our main result establishes that a voting rule is robust if and only if it is a WMR without ties. This characterization of a WMR avoiding the worst possible outcomes complements the wellknown characterization of a WMR achieving the optimal outcomes, i.e., efficiency regarding responsiveness. 
Keywords:  majority rule, weighted majority rule, responsiveness, Knightian uncertainty 
JEL:  D71 D81 
Date:  2017–12 
URL:  http://d.repec.org/n?u=RePEc:hit:hiasdp:hiase60&r=des 
By:  Crutzen, Benoît SY; Flamand, Sabine; Sahuguet, Nicolas 
Abstract:  We study a contest between teams that compete for multiple indivisible prizes. Team output is a CES function of all the team members' efforts. We use a generalized Tullock contest success function to allocate prizes between teams. We study how different intrateam prize allocation rules impact team output. We consider an egalitarian rule that gives all members the same chance of receiving a prize, and a list rule that sets exante the order in which members receive a prize. The convexity of the cost of effort function and the complementarity of individual efforts determine which rule maximizes team output and success. Our results speak to many real world situations, such as elections, contests for the allocation of local public goods and the internal organization of firms. 
Date:  2017–12 
URL:  http://d.repec.org/n?u=RePEc:cpr:ceprdp:12493&r=des 
By:  Jun Feng; Tatsuyoshi Saijo (Research Institute for Humanity and Nature); Junyi Shen (Research Institute for Economics and Business Administration, Kobe University); Xiangdong Qin (Antai College of Economics and Management,Shanghai Jiaotong University) 
Abstract:  We conduct experiments to investigate the convergence of contributions in the voluntary contribution mechanism (VCM) with two quasilinear payoff functions. One is linear with respect to private goods and nonlinear with respect to public goods; we call it â€œQL1.â€ The other is linear with respect to public goods and nonlinear with respect to private goods; we call it â€œQL2.â€ The system with QL1, built on the assumption of selfinterested players and myopic Cournot best response dynamics, is not stable, but the system with QL2 has a dominant Nash equilibrium. This theoretical result predicts a â€œpulsingâ€ of contributions in the VCM with QL1. Our experimental observations demonstrate that individual contributions are certainly converging to the dominant Nash equilibrium in the experiment with QL2. In the experiments with QL1, however, the dispersion of individual contributions increases progressively with repeated trials, and the contributions are still volatile in the experimentsâ€™ last periods, although we do not find a clearly unstable pulsing in the groupâ€™s total contribution. 
Keywords:  Instability, public goods game, lab experiment, voluntary contribution mechanism, conditional cooperator 
JEL:  H41 
Date:  2017–12 
URL:  http://d.repec.org/n?u=RePEc:kch:wpaper:sdes201725&r=des 