|
on Economic Design |
|
Issue of 2022‒01‒17
seven papers chosen by Guillaume Haeringer, Baruch College and Alex Teytelboym, University of Oxford |
| By: | Kasberger, Bernhard; Woodward, Kyle |
| Abstract: | We study multi-unit auctions in which bidders have limited knowledge of opponent strategies and values. We characterize optimal prior-free bids; these bids minimize the maximal loss in expected utility resulting from uncertainty surrounding opponent behavior. Optimal bids are simply computable despite bidders having multi-dimensional private information, and in certain cases admit closed-form solutions. In the pay-as-bid auction the minimax-loss bid is unique; in the uniform-price auction the minimax-loss bid is unique if the bidder is allowed to determine the quantities for which they bid, as in many practical applications. Payments to the seller may be higher in either auction format, but minimax-loss bids are never uniformly higher in the pay-as-bid auction. |
| Keywords: | Auctions; multi-unit auctions; loss minimization; non-Bayesian approaches |
| JEL: | D44 D81 |
| Date: | 2021–12–20 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:111185&r= |
| By: | Dirk Bergemann (Cowles Foundation, Yale University); Benjamin Brooks (Dept. of Economics, University of Chicago); Stephen Morris (Dept. of Economics, MIT) |
| Abstract: | We characterize the revenue-maximizing information structure in the second price auction. The seller faces a classic economic trade-o¤: providing more information improves the efficiency of the allocation but also creates higher information rents for bidders. The information disclosure policy that maximizes the revenue of the seller is to fully reveal low values (where competition will be high) but to pool high values (where competition will be low). The size of the pool is determined by a critical quantile that is independent of the distribution of values and only dependent on the number of bidders. We discuss how this policy provides a rationale for conflation in digital advertising. |
| JEL: | D44 D47 D83 D84 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:2318&r= |
| By: | Demeze-Jouatsa, Ghislain-Herman (Center for Mathematical Economics, Bielefeld University) |
| Abstract: | Call a mechanism that associates each profile of preferences over candidates to an ambiguous act an Ambiguous Social Function (ASCF). This paper studies the strategy-proofness of ASCFs. We find that an ASCF is unanimous and strategyproof if and only if there exists a nonempty subset of voters, called the set of top voters, such that at each preference profile, the range of the selected act equals the set of top-ranked candidates of top voters. We provide a full characterization of the class of unanimous, strategyproof, and anonymous ASCFs, and provide a large subclass of ASCFs that satisfy the additional property of neutrality. |
| Keywords: | Social Choice Function, Ambiguity Aversion, Ellsberg Urns, Strategy-proofness, Unanimity, Anonymity, Neutrality |
| Date: | 2022–01–07 |
| URL: | http://d.repec.org/n?u=RePEc:bie:wpaper:660&r= |
| By: | Marcello Basili; Ernesto Savaglio; Stefano Vannucci |
| Abstract: | The present work is devoted to the study of aggregation rules for several types of approximate judgments and their strategy-proofness properties when the relevant judgment space is lattice-ordered and endowed with a natural metric, and the agents/experts have single-peaked preferences consistent with it. In particular, approximate probability estimates as modeled by intervals of probability values, numerical measurements with explicit error bounds, approximate classifications, and conditional judgments that are amenable to composition by means of a set of logical connectives are considered. Relying on (bounded) distributivity of the relevant lattices, we prove the existence of a large class of inclusive and unanimity-respecting strategy-proof aggregation rules for approximate assessments or conditional judgments, consisting of sup-projections and sup-inf polynomials as parameterized by certain families of locally winning coalitions called committees. Amongst them, the majority aggregation rule is characterized as the only one that ensures both anonymity (i.e. an equal treatment of agents) and bi-idempotence (i.e. a definite choice between the only two judgments nominated by a maximally polarized body). |
| JEL: | D71 D81 |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:usi:wpaper:864&r= |
| By: | Kumar, Ujjwal; Roy, Souvik |
| Abstract: | We explore the relation between different notions of local incentive compatibility (LIC) and incentive compatibility (IC) on ordinal type-spaces. In this context, we introduce the notion of ordinal local global equivalent (OLGE) and cardinal local global equivalent (CLGE) environments. First, we establish the equivalence between the two environments on strict ordinal type-spaces. Next, we consider ordinal type-spaces admitting indifference. We introduce the notion of almost everywhere IC and strong LIC, and provide a necessary and sufficient condition on ordinal type spaces for their equivalence. Finally, we provide results on how to (minimally) check the IC property of a given mechanism on any ordinal type-space and show that local types along with the boundary types form a minimal set of incentive constraints that imply full incentive compatibility. |
| Keywords: | point-wise local incentive compatibility, adjusted local incentive compatibility, uniform local incentive compatibility, (global) incentive compatibility, ordinal type-spaces |
| JEL: | D44 D47 D82 |
| Date: | 2021–12–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:110994&r= |
| By: | Hiller, Victor (Universite Paris II Pantheon-Assas (LEMMA), Paris, France); Wu, Jiabin (Department of Economics, University of Oregon, Eugune, OR); Zhang, Hanzhe (Michigan State University, Department of Economics) |
| Abstract: | We demonstrate that marital preferences, the marriage market, and intergenerational transmission mechanisms must be jointly considered to gain a more complete picture of cultural evolution. We characterize cultural processes in settings with different combinations of (i) homophilic and heterophilic marital preferences, (ii) men-optimal or women-optimal stable matching scheme, and (iii) familial, societal, and rational forces of intergenerational transmission. First, with perfect vertical transmission in homogamies and oblique transmission in heterogamies, the presence of even a small fraction of heterophilic proposers leads to complete cultural homogeneity; cultural heterogeneity arises only when proposers are all homophilic. Notably, a stable matching scheme that is optimal for a gender in the short run can lead to suboptimal outcomes for them in the long run. Second, when transmission in heterogamies incorporates Darwinian consideration, persistent or temporary cycles between cultural homogeneity and heterogeneity may arise. Third, with imperfect vertical transmission in homogamies, heterophilic preferences and heterogamies play a significant role in the determination of cultural distribution; cultural substitutability is neither sufficient nor necessary for cultural heterogeneity. Finally, we discuss our model's implications for matriarchal and patriarchal societies, the evolution of gender roles as well as cultural assimilation and identity formation of minorities and immigrants. |
| Keywords: | cultural evolution; marital preferences; stable matching; intergenerational cultural transmission; imitative dynamics; evolutionary game theory |
| JEL: | C73 C78 D10 Z10 |
| Date: | 2021–12–31 |
| URL: | http://d.repec.org/n?u=RePEc:ris:msuecw:2022_001&r= |
| By: | Pengcheng You; Yan Jiang; Enoch Yeung; Dennice F. Gayme; Enrique Mallada |
| Abstract: | This paper focuses on the operation of an electricity market that accounts for participants that bid at a sub-minute timescale. To that end, we model the market-clearing process as a dynamical system, called market dynamics, which is temporally coupled with the grid frequency dynamics and is thus required to guarantee system-wide stability while meeting the system operational constraints. We characterize participants as price-takers who rationally update their bids to maximize their utility in response to real-time schedules of prices and dispatch. For two common bidding mechanisms, based on quantity and price, we identify a notion of alignment between participants' behavior and planners' goals that leads to a saddle-based design of the market that guarantees convergence to a point meeting all operational constraints. We further explore cases where this alignment property does not hold and observe that misaligned participants' bidding can destabilize the closed-loop system. We thus design a regularized version of the market dynamics that recovers all the desirable stability and steady-state performance guarantees. Numerical tests validate our results on the IEEE 39-bus system. |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2112.05811&r= |