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on Economic Design |
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Issue of 2018‒09‒24
six papers chosen by Guillaume Haeringer, Baruch College and Alex Teytelboym, University of Oxford |
| By: | Hitoshi Matsushima (University of Tokyo) |
| Abstract: | This study investigates implementation of a social choice function with complete information, where we impose various restrictions such as boundedness, permission of only small transfers, and uniqueness of iterative dominance in strict terms. We assume that the state is ex-post verifiable after the determination of allocation. We show that with three or more players, any social choice function is uniquely and exactly implementable in iterative dominance. Importantly, this study does not assume either expected utility or quasi-linearity, even if we utilize the stochastic method of mechanism design explored by Abreu and Matsushima (1992, 1994). |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:cfi:fseres:cf443&r=des |
| By: | Triossi, Matteo; Romero Medina, Antonio |
| Abstract: | We present the renegotiable acceptance mechanism in the context of the multi-unit assignment problem. This mechanism combines features of the immediate and deferred acceptance mechanisms and implements the set of stable matchings in both Nash and undominated Nash equilibria under substitutable priorities. In addition, we prove that under slot-specific priorities, the immediate acceptance mechanism also implements the set of stable matchings in Nash and undominated Nash equilibria. Finally, we present modifications of both mechanisms and show that we can dramatically reduce the complexity of the message space when preferences are responsive. |
| Keywords: | stability; multi-unit assignment; immediate acceptance; renegotiable acceptance |
| JEL: | D71 C78 C71 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:cte:werepe:27388&r=des |
| By: | Rene (J.R.) van den Brink (VU Amsterdam); Marina Nunez (Universitat de Barcelona); Francisco Robles (Universidad Carlos III de Madrid) |
| Abstract: | In this paper, we investigate the possibility of having stable rules for two-sided markets with transferable utility, that satisfy some valuation monotonicity and fairness axioms. Valuation fairness requires that changing the valuation of a buyer for the object of a seller leads to equal changes in the payoffs of this buyer and seller. This is satisfied by the Shapley value, but is incompatible with stability. A main goal in this paper is to weaken valuation fairness in such a way that it is compatible with stability. It turns out that requiring equal changes only for buyers and sellers that are matched to each other before as well as after the change, is compatible with stability. In fact, we show that the only stable rule that satisfies weak valuation fairness is the well-known fair division rule which is obtained as the average of the buyers-optimal and the sellers-optimal payoff vectors. Our second goal is to characterize these two extreme rules by valuation monotonicity axioms. We show that the buyers-optimal (respectively sellers-optimal) stable rule is characterized as the only stable rule that satisfies buyer-valuation monotonicity which requires that a buyer cannot be better off by weakly decreasing his/her valuations for all objects, as long as he is assigned the same object as before (respectively object-valuation antimonotonicity which requires that a buyer cannot be worse off when all buyers weakly decrease their valuations for the object that is assigned to this specific buyer, as long as this buyer is assigned the same object as before). Finally, adding a consistency axiom, the two optimal rules are characterized in the general domain of allocation rules for two-sided assignment markets with a variable population. |
| Keywords: | assignment problems; stability; valuation monotonicity; valuation fairness; fair division rule; optimal rules |
| JEL: | C71 C78 |
| Date: | 2018–07–19 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20180071&r=des |
| By: | Stéphane Gonzalez (Univ Lyon, UJM Saint-Etienne, GATE UMR 5824, F-42023 Saint-Etienne, France); Aymeric Lardon (Université Côte d’Azur, CNRS, GREDEG, France) |
| Abstract: | We provide an axiomatic characterization of the core of games in effectiveness form. We point out that the core, whenever it applies to appropriate classes of these games, coincides with a wide variety of prominent stability concepts in social choice and game theory, such as the Condorcet winner, the Nash equilibrium, pairwise stability, and stable matchings, among others. Our characterization of the core invokes the axioms of restricted non-emptiness, coalitional unanimity, and Maskin invariance together with a principle of independence of irrelevant states, and uses in its proof a holdover property echoing the conventional ancestor property. Taking special cases of this general characterization of the core, we derive new characterizations of the previously mentioned stability concepts. |
| Keywords: | Effectiveness function, core, axiomatization, holdover property, consistency |
| JEL: | C70 C71 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:1817&r=des |
| By: | Ole Jakob Sønstebø |
| Abstract: | Auctions have been used as a pricing mechanism for a wide range of goods over thousands of years. In contrast to common practice in most of the world, auctions also have a central place in the Norwegian real estate market, even for non-distressed properties and in non-boom markets. However, there exists little empirical evidence for optimal bidding strategies from real estate auctions. By using unique bidding journal data from 2280 dwellings sold in the Trondheim region, this paper compares price premiums for two distinct bidding strategies – placing a low or a high opening bid. Results indicate that, on average, placing a low opening bid yields the lower price premium. Furthermore, while a higher number of bidders increases the price premium, this paper finds evidence that signaling and intimidation in the form of placing a high opening bid has a negative impact on the number of bidders compared to placing a low opening bid. However, results show that the strategy fails in reducing the number of bidders more than a medium sized opening bid does. |
| Keywords: | Asset Pricing; English auctions; Real estate auctions |
| JEL: | R3 |
| Date: | 2018–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:arz:wpaper:eres2018_231&r=des |
| By: | Vincent Anesi (University of Nottingham, School of Economics); T Renee Bowen (University of California, San Diego and NBER) |
| Abstract: | We study conditions under which optimal policy experimentation can be implemented by a committee. We consider a dynamic bargaining game in which committee members choose to implement either a risky reform or a safe alternative with known returns each period. We find 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 voting rule with no veto players. With veto players, however, optimal policy experimentation is possible only with a sufficient amount of redistribution. We conclude that veto rights are more of an obstacle to optimal policy experimentation than constraints on redistribution. |
| Keywords: | voting, redistribution, policy experimentation |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcdx:2018-09&r=des |