nep-des New Economics Papers
on Economic Design
Issue of 2018‒04‒23
six papers chosen by
Alex Teytelboym
University of Oxford

  1. Dynamic Mechanism Design: An Introduction By Dirk Bergemann; Juuso Valimaki
  2. Comparative Statics in the Multiple-Partners Assignment Game By David Pérez-Castrillo; Marilda Sotomayor
  3. Positively responsive collective choice rules and majority rule: a generalization of May's theorem to many alternatives By HORAN, Sean; OSBORNE, Martin J.; SANVER, M. Remzi
  4. Policy Experimentation, Redistribution and Voting Rules By Anesi, Vincent; Bowen, T. Renee
  5. An Informational Basis for Voting Rules By Alexander V. Karpov
  6. The Likelihood of the Consistency of Collective Rankings under Preferences Aggregation with Four Alternatives using Scoring Rules: A General Formula and the Optimal Decision Rule By Eric Kamwa; Vincent Merlin

  1. By: Dirk Bergemann (Cowles Foundation, Yale University); Juuso Valimaki (Aalto School of Economics)
    Abstract: We provide an introduction into the recent developments of dynamic mechanism design with a primary focus on the quasilinear case. First, we describe socially optimal (or efficient) dynamic mechanisms. These mechanisms extend the well known Vickrey-Clark-Groves and D’Aspremont-Gérard-Varet mechanisms to a dynamic environment. Second, we discuss results on revenue optimal mechanism. We cover models of sequential screening and revenue maximizing auctions with dynamically changing bidder types. We also discuss models of information management where the mechanism designer can control (at least partially) the stochastic process governing the agent’s types. Third, we consider models with changing populations of agents over time. This allows us to address new issues relating to the properties of payment rules. After discussing related models with risk-averse agents, limited liability, and different performance criteria for the mechanisms, we conclude by discussing a number of open questions and challenges that remain for the theory of dynamic mechanism design.
    Keywords: Dynamic Mechanism Design, Sequential Screening, Dynamic Pivot Mechanism, Bandit Auctions, Information Management
    JEL: D44 D82 D83
    Date: 2017–08
  2. By: David Pérez-Castrillo; Marilda Sotomayor
    Abstract: The multiple partners game (Sotomayor, 1992) extends the assignment game to a matching model where the agents can have several partners, up to their quota, and the utilities are additively separable. The present work fills a gap in the literature of that game by studying the effects on agents’ payoffs caused by the entrance of new agents in the market under both the cooperative and the competitive approaches. The results obtained have no parallel in the one-to-one assignment game.
    Keywords: Matching, stability, Competitive Equilibrium, comparative statics.
    JEL: C78 D78
    Date: 2018–04
  3. By: HORAN, Sean; OSBORNE, Martin J.; SANVER, M. Remzi
    Abstract: A collective choice rule selects a set of alternatives for each collective choice problem. Suppose that the alternative ’x’, is in the set selected by a collective choice rule for some collective choice problem. Now suppose that ‘x’ rises above another selected alternative ‘y’ in some individual’s preferences. If the collective choice rule is “positively responsive”, ‘x’ remains selected but ‘y’ is no longer selected. If the set of alternatives contains two members, an anonymous and neutral collective choice rule is positively responsive if and only if it is majority rule (May 1952). If the set of alternatives contains three or more members, a large set of collective choice rules satisfy these three conditions. We show, however, that in this case only the rule that assigns to every problem its strict Condorcet winner satisfies the three conditions plus Nash’s version of “independence of irrelevant alternatives” for the domain of problems that have strict Condorcet winners. Further, no rule satisfies the four conditions for the domain of all preference relations.
    Date: 2018
  4. By: Anesi, Vincent; Bowen, T. Renee
    Abstract: We study conditions under which optimal policy experimentation can be implemented by a committee. We consider a dynamic bargaining game in which, each period, committee members choose to implement a risky reform or implement a policy with known returns. We first show that when no redistribution is allowed the unique equilibrium outcome is generically inefficient. When committee members are allowed to redistribute resources (even arbitrarily small amounts), there always exists an equilibrium that supports optimal experimentation for any non-collegial voting rule. With collegial voting rules, however, optimal policy experimentation is possible only with a sufficient amount of redistribution. We conclude that veto rights, not constraints on redistribution, constitute the main obstacle to optimal policy experimentation.
    Keywords: Committees; Endogenous Status Quo; Experimentation; redistribution; reforms; Voting rules
    JEL: C73 C78 D61 D71 H23
    Date: 2018–03
  5. By: Alexander V. Karpov (National Research University Higher School of Economics)
    Abstract: This paper presents a novel combinatorial approach for voting rule analysis. Applying reversal symmetry, we introduce a new class of preference profiles and a new representation (bracelet representation). By applying an impartial, anonymous, and neutral culture model for the case of three alternatives, we obtain precise theoretical values for the number of voting situations for the plurality rule, the run-off rule, the Kemeny rule, the Borda rule, and the scoring rules in the extreme case. From enumerative combinatorics, we obtain an information utilization index for these rules. The main results are obtained for the case of three alternative
    Keywords: ANEC, IANC, plurality, run-off, Kemeny, Borda, scoring rules, reversal symmetry
    JEL: D70
    Date: 2018
  6. By: Eric Kamwa (LC2S - Laboratoire Caribéen de Sciences Sociales - UAG - Université des Antilles et de la Guyane); Vincent Merlin (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - CNRS - Centre National de la Recherche Scientifique)
    Abstract: In most of the social choice literature dealing with the computation of the exact probability of voting events under the impartial culture assumption, authors deal with no more than four constraints to describe voting events. With more than four constraints, most of the authors rely on Monte-Carlo simulations. It is usually more tricky to estimate the probability of events described by five constraints. Gehrlein and Fishburn (1980) have tried, but their conclusions are based on conjectures. In this paper, we circumvent this conjecture by having recourse to the technique suggested by Saari and Tataru (1999) in order to compute the limit probability of the consistency of collective rankings when there are four competing alternatives given that the decision rule is a scoring rule. We provide a general formula for the limit probability of the consistency and we determine the optimal decision rules among the scoring rules that provide the best guarantee of consistency. Given the collective ranking on a set A, we have consistency if the collective ranking on B a proper subset of A is not altered after some alternatives are removed from A.
    Date: 2018–04–03

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