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on Economic Design |
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Issue of 2020‒01‒20
five papers chosen by Guillaume Haeringer, Baruch College and Alex Teytelboym, University of Oxford |
| By: | Tomoya Kazumura; Debasis Mishra; Shigehiro Serizawa |
| Abstract: | A seller is selling multiple objects to a set of agents, who can buy at most one object. Each agent's preference over (object, payment) pairs need not be quasilinear. The seller considers the following desiderata for her mechanism, which she terms desirable: (1) strategy-proofness, (2) ex-post individual rationality, (3) equal treatment of equals, (4) no wastage (every object is allocated to some agent). The minimum Walrasian equilibrium price (MWEP) mechanism is desirable. We show that at each preference profile, the MWEP mechanism generates more revenue for the seller than any desirable mechanism satisfying no subsidy. Our result works for the quasilinear domain, where the MWEP mechanism is the VCG mechanism, and for various non-quasilinear domains, some of which incorporate positive income effect of agents. We can relax no subsidy to no bankruptcy in our result for certain domains with positive income effect. .Creation-Date: 2017-05 |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:dpr:wpaper:1001r&r=all |
| By: | Jingfeng Lu; Zongwei Lu; Christian Riis |
| Abstract: | We study collusion in a second price auction with two bidders in a dynamic environment. One bidder can make a take-it-or-leave-it collusion proposal, which consists of both an offer and a request of bribes, to the opponent. We show there always exists a robust equilibrium in which the collusion success probability is one. In the equilibrium, the interim expected payoff of the collusion initiator Pareto dominates the counterpart in any robust equilibria of the single-option model (Es\"{o} and Schummer (2004)) and any other separating equilibria in our model. |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1912.03607&r=all |
| By: | Teemu Pennanen |
| Abstract: | This paper proposes a simple descriptive model for discrete-time double auction markets of divisible assets. As in the classical models of exchange economics, we consider a finite set of agents described by their initial endowments and preferences. Instead of the classical Walrasian-type market models, however, we assume that all trades take place in double auctions where the agents communicate through sealed limit orders for buying and selling. We find that, in repeated call auctions, nonstrategic bidding leads to a sequence of allocations that converges to individually rational Pareto allocations. |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2001.02071&r=all |
| By: | Mumcu, Ayse; Saglam, Ismail |
| Abstract: | We consider strategic issues in one-to-one matching with externalities. We show that no core (stable) mechanism is strategy-proof, extending an impossibility result of Roth (1982) obtained in the absence of externalities. Moreover, we show that there are no limits on successful manipulation of preferences by coalitions of men and women, in contrast with the result of Demange et al. (1987) obtained in the absence of externalities. |
| Keywords: | One-to-one matching; externalities; stability; core; strategic manipulation. |
| JEL: | C71 C78 D62 |
| Date: | 2019–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:97698&r=all |
| By: | Simon P. Anderson; Martin Peitz |
| Abstract: | e customize the aggregative game approach to oligopoly to study media platforms which may differ by popularity. Advertiser, platform, and consumer surplus are tied together by a simple summary statistic. When media are ad-financed and ads are a nuisance to consumers we establish see-saws between consumers and advertisers. Entry increases consumer surplus, but decreases advertiser surplus if total platform profits decrease with entry. Merger decreases consumer surplus, but advertiser surplus tends to increase. By contrast, when platforms use two-sided pricing or consumers like advertising, advertiser and consumer interests are often aligned. We show see-saws under alternative homing assumptions. |
| Keywords: | two-sided markets, media economics, mergers, entry, advertising, aggregative games, single-homing, multi-homing, competitive bottleneck |
| JEL: | D43 L13 |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2019_089v2&r=all |