nep-des New Economics Papers
on Economic Design
Issue of 2019‒06‒24
nine papers chosen by
Guillaume Haeringer, Baruch College and Alex Teytelboym, University of Oxford

  1. Decentralizing Centralized Matching Markets: Implications from Early Offers in University Admissions By Julien Grenet; Yinghua He; Dorothea Kübler
  2. Stability against Robust Deviations in the Roommate Problem By Daisuke Hirata; Yusuke Kasuya; Kentaro Tomoeda
  3. Expressiveness and robustness of first-price position auctions By Dütting, Paul; Fischer, Felix; Parkes, David C.
  4. First-Price Auctions with Budget Constraints By Kotowski, Maciej
  5. On the optimal entry fee and reserve price for auctions with selective entry: A comment on Gentry, Li, Lu (2017) By Nicola Doni; Domenico Menicucci
  6. A family of rules to share the revenues from broadcasting sport events By Bergantiños, Gustavo; Moreno-Ternero, Juan D.
  7. Introduction to Voting and the Blockchain: some open questions for economists By Dhillon, Amrita; Kotsialou, Grammateia; McBurney, Peter; Riley, Luke
  8. Does a promise script work to reduce the hypothetical bias? Evidence from an induced value experiment By Qin, Botao
  9. Incentives to Persevere By Elif Incekara-Hafalir; Grace HY Lee; Audrey KL Siah; Erte Xiao

  1. By: Julien Grenet (PSE - Paris School of Economics, 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); Yinghua He (Rice University [Houston], TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - CNRS - Centre National de la Recherche Scientifique - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales); Dorothea Kübler (WZB - Social Science Research Center Berlin - Social Science Research Center Berlin, Technical University Berlin)
    Abstract: The matching literature commonly assumes that every agent's preferences are time-invariant and known to herself at the outset. Consequently, market centralization is preferred. We find counterevidence from a quasi-experiment in Germany's university admissions---a clearinghouse that implements the early stages of the deferred-acceptance mechanism in real time, resembling a decentralized market with continuous offers, rejections, and acceptances. We show that early offers are accepted more often than later ones, despite not being more desirable. These results and survey evidence imply that it is costly for students to learn about universities. We propose a hybrid, welfare-improving mechanism that balances centralization and decentralization.
    Keywords: Centralized Matching Market,Gale-Shapley Deferred Acceptance,Mechanism,University Admissions,Early Offers,Information Acquisition
    Date: 2019–06
  2. By: Daisuke Hirata (Hitotsubashi University); Yusuke Kasuya (Kobe University); Kentaro Tomoeda (University of Technology Sydney)
    Abstract: We propose a new solution concept in the roommate problem, based on the “robustness” of deviations (i.e., blocking coalitions). We call a deviation from a matching robust up to depth k, if none of the deviators gets worse off than at the original matching after any sequence of at most k subsequent deviations. We say that a matching is stable against robust deviations (for short, SaRD) up to depth k, if there is no robust deviation up to depth k. As a smaller k imposes a stronger requirement for amatching to be SaRD, we investigate the existence of a matching that is SaRD with a minimal depth k. We constructively demonstrate that a SaRDmatching always exists for k = 3, and establish sufficient conditions for k = 1 and 2.
    Keywords: matching; stability; robustness; roommate problem
    JEL: C78 C71
    Date: 2019–06–04
  3. By: Dütting, Paul; Fischer, Felix; Parkes, David C.
    Abstract: Ideally, the properties of an economic mechanism should hold in a robust way across multiple equilibria and under varying assumptions regarding the information available to participants. Focusing on the design of robust position auctions, we seek mechanisms that possess an efficient equilibrium and guarantee high revenue in every efficient equilibrium, under complete and incomplete information. A generalized first-price auction that is expressive in the sense of allowing multidimensional bids turns out to be the only standard design able to achieve this goal, even when valuations are one dimensional. The equilibria under complete information are obtained via Bernheim and Whinston’s profit target strategies, those under incomplete information via an appropriate generalization thereof. Particularly interesting from a technical perspective is the incomplete information case, where the standard technique for establishing equilibrium existence due to Myerson is generalized to a setting in which the bid space has higher dimension than the valuation space.
    Keywords: simplicity-expressiveness tradeoffs; generalized first-price auction; profit-target strategies
    JEL: J1
    Date: 2019–02–01
  4. By: Kotowski, Maciej (Harvard Kennedy School)
    Abstract: Consider a first-price, sealed-bid auction with interdependent valuations and private budget constraints. Private budget constraints introduce subtle strategic tradeoffs with first-order consequences for equilibrium bidding. In a pure-strategy, symmetric equilibrium, agents may adopt discontinuous bidding strategies resulting in a stratification of competition along the budget dimension. In an asymmetric setting, equilibria in “nondecreasing†strategies exist, albeit in a qualified sense. Private budgets introduce significant confounds for the interpretation of bidding data due to their interaction with risk preferences and their countervailing strategic implications.
    JEL: D44
    Date: 2019–06
  5. By: Nicola Doni; Domenico Menicucci
    Abstract: Gentry, Li, Lu (2017) (GLL henceforth) study an auction model with endogenous entry in which, before the entry decision, each bidder observes a private signal; a higher signal implies a better distribution for the bidder's valuation. GLL claim that the optimal reserve price is greater than the seller's value for the object on sale and that the optimal entry fee is positive. We prove that these claims are incorrect: The seller may want to subsidize entry to stimulate competition in the auction (through a negative entry fee or through a reserve price below the seller's value), or to provide appropriate entry incentives if a suitable reserve price is effective at maximizing total surplus and at extracting bidders' rents. We provide conditions under which the claims in GLL hold true.
    Keywords: Auctions; Endogenous Entry; Reserve price; Entry fee.
    JEL: D44 D82
    Date: 2019
  6. By: Bergantiños, Gustavo; Moreno-Ternero, Juan D.
    Abstract: We consider the problem of sharing the revenues from broadcasting sport league events, introduced by Bergantiños and Moreno-Ternero (2019). We characterize a family of rules compromising between two focal and somewhat polar rules: the equal-split rule and concede-and-divide. The characterization only makes use of three basic axioms: equal treatment of equals, additivity and maximum aspirations. We also show further interesting features of the family: (i) if we allow teams to vote for any rule within the family, then a majority voting equilibrium exists; (ii) the rules within the family yield outcomes that are fully ranked according to the Lorenz dominance criterion; (iii) the family provides rationale for existing schemes in real-life situations.
    Keywords: resource allocation, broadcasting, sport events, concede-and-divide, equal-split.
    JEL: C71
    Date: 2019–06–04
  7. By: Dhillon, Amrita (King’s College London); Kotsialou, Grammateia (King’s College London); McBurney, Peter (King’s College London); Riley, Luke (King’s College London)
    Abstract: This work discusses the potential of a blockchain based infrastructure for a decentralised online voting platform. When compared to paper based voting, online voting can vastly increase the speed that votes can be counted, expand the overall accessibility of the election system and decrease the cost of turnout. Yet despite these advantages, online voting for political office is subject to fraud at various levels due to its centralised nature. In this paper, we describe a general architecture of a centralised online voting system and detail which areas of such a system are vulnerable to electoral fraud. We then proceed to introduce the key ideas underlying blockchain technology as a decentralised mechanism that can address these problems. We discuss the advantages and weaknesses of the blockchain technology, the protocols the technology uses and what criteria a good blockchain protocol should satisfy (depending on the voting application). We argue that the decentralisation inherent in the blockchain technology could increase the public’s trust in national elections, as well as eliminate voter impersonation and double voting. We conclude with a discussion regarding how economists and social scientists can collaborate with the blockchain community in a research agenda on the design of efficient blockchain protocols and new voting systems such as liquid democracy.
    Keywords: JEL Classification:
    Date: 2019
  8. By: Qin, Botao
    Abstract: This paper explores whether a truth-telling promise can work to reduce the hypothetical bias in preference elicitation. Using an induced value experiment in China with a random nthprice auction, the author finds: 1) Hypothetical bias exists in a random nth-price auction with induced values and making a truth-telling promise can reduce the hypothetical bias. 2) All treatments are demand-revealing except for the hypothetical baseline.
    Keywords: hypothetical bias,oath,random nth-price auction,induced value experiment
    JEL: C90 D44 Q51
    Date: 2019
  9. By: Elif Incekara-Hafalir (University of Technology Sydney); Grace HY Lee (Monash University (Malaysia)); Audrey KL Siah (Monash University (Malaysia)); Erte Xiao (Monash University)
    Abstract: Achieving success often requires persistent efforts. We study the effectiveness of two reward mechanisms, all-or-nothing and piece-rate, to incentivize full completion of repeated tasks over a period of time. Data from two randomized controlled trials show that the full completion rate under the all-or-nothing mechanism does not differ from that under the regular piece-rate mechanism. However, when given the choice between the all-or-nothing and piece-rate mechanisms in a third (self-select) treatment, a significant number of participants chose the all-or-nothing mechanism despite the risk. The overall full completion rate is significantly higher in the selfselect treatment than the piece-rate treatment. Our results highlight the importance of choice in incentivising persistent efforts.
    Keywords: Perseverance; incentives; self-control; field experiments
    JEL: C93 D91
    Date: 2019–06–04

This nep-des issue is ©2019 by Guillaume Haeringer and Alex Teytelboym. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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