nep-des New Economics Papers
on Economic Design
Issue of 2022‒02‒07
five papers chosen by
Alex Teytelboym
University of Oxford

  1. On the Fair Division of a Random Object By Anna Bogomolnaia; Hervé Moulin; Fedor Sandomirskiy
  2. Using Bid Rotation and Incumbency to Detect Collusion: A Regression Discontinuity Approach By Kei Kawai; Jun Nakabayashi; Juan M. Ortner; Sylvain Chassang
  3. A Taxonomy of Non-dictatorial Unidimensional Domains By Shurojit Chatterji; Huaxia Zeng
  4. Robust Private Supply of a Public Good By Wanchang Zhang
  5. Market for Information and Selling Mechanisms By David Bounie; Antoine Dubus; Patrick Waelbroeck

  1. By: Anna Bogomolnaia (HSE St Petersburg - Higher School of Economics - St Petersburg, University of Glasgow, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Hervé Moulin (University of Glasgow); Fedor Sandomirskiy (HSE St Petersburg - Higher School of Economics - St Petersburg)
    Abstract: Ann likes oranges much more than apples; Bob likes apples much more than oranges. Tomorrow they will receive one fruit that will be an orange or an apple with equal probability. Giving one half to each agent is fair for each realization of the fruit. However, agreeing that whatever fruit appears will go to the agent who likes it more gives a higher expected utility to each agent and is fair in the average sense: in expectation, each agent prefers the allocation to the equal division of the fruit; that is, the agent gets a fair share. We turn this familiar observation into an economic design problem: upon drawing a random object (the fruit), we learn the realized utility of each agent and can compare it to the mean of the agent's distribution of utilities; no other statistical information about the distribution is available. We fully characterize the division rules using only this sparse information in the most efficient possible way while giving everyone a fair share. Although the probability distribution of individual utilities is arbitrary and mostly unknown to the manager, these rules perform in the same range as the best rule when the manager has full access to this distribution. This paper was accepted by Ilia Tsetlin, behavioral economics and decision analysis.
    Date: 2021–03–23
  2. By: Kei Kawai; Jun Nakabayashi; Juan M. Ortner; Sylvain Chassang
    Abstract: Cartels participating in procurement auctions frequently use bid rotation or prioritize incumbents to allocate contracts. However, establishing a link between observed allocation patterns and firm conduct has been difficult: there are cost-based competitive explanations for such patterns. We show that by focusing on auctions in which the winning and losing bids are very close, it is possible to distinguish allocation patterns reflecting cost differences across firms from patterns reflecting non-competitive environments. We apply our tests to two datasets: the sample of Ohio milk auctions studied in Porter and Zona (1999), and a sample of municipal procurement auctions from Japan.
    JEL: L41
    Date: 2022–01
  3. By: Shurojit Chatterji; Huaxia Zeng
    Abstract: A preference domain is called a non-dictatorial domain if it allows the design of unanimous social choice functions (henceforth, rules) that are non-dictatorial and strategy-proof; otherwise it is called a dictatorial domain. We study a class of preference domains called unidimensional domains and establish that within this class, the unique seconds property (introduced by Aswal, Chatterji, and Sen (2003)) separates non-dictatorial domains from dictatorial domains. The principal contribution of the paper is the subsequent exhaustive classification of all non-dictatorial unidimensional domains based on a simple property of two-voter rules called invariance. The preference domains that constitute the classification are semi-single-peaked domains (introduced by Chatterji, Sanver, and Sen (2013)) and semi-hybrid domains (introduced here) which are two appropriate weakenings of single-peaked domains and which, importantly, are shown to allow strategy-proof rules to depend on non-peak information of voters' preferences. As a refinement of the classification, single-peaked domains and hybrid domains emerge as the only unidimensional domains that force strategy-proof rules to be determined completely by the peaks of voters' preferences.
    Date: 2022–01
  4. By: Wanchang Zhang
    Abstract: We study the mechanism design problem of selling a public good to a group of agents by a principal in the correlated private value environment. We assume the principal only knows the expectations of the agents' values, but does not know the joint distribution of the values. The principal evaluates a mechanism by the worst-case expected revenue over joint distributions that are consistent with the known expectations. We characterize maxmin public good mechanisms among dominant-strategy incentive compatible and ex-post individually rational mechanisms for the two-agent case and for a special $N$-agent ($N>2$) case.
    Date: 2022–01
  5. By: David Bounie (i3, CNRS, Télécom Paris, Institut Polytechnique de Paris); Antoine Dubus (Department of Management, Technology and Economics, ETH Zurich Leonhardstrasse 21 Switzerland – 8092 Zurich, Switzerland); Patrick Waelbroeck (i3, CNRS, Télécom Paris, Institut Polytechnique de Paris)
    Abstract: A monopolist data intermediary collects consumer information that it strategically sells to competing firms in a product market for price discrimination purposes. The intermediary charges a price of information and chooses the optimal partition that maximizes the willingness to pay of firms for information. Different selling mechanisms are compared: list prices, sequential bargaining, and auctions. The intermediary optimally sells information through auctions, whereas consumer surplus is maximized with sequential bargaining and list prices. We discuss the regulatory implications of our results.
    Keywords: Selling mechanisms; Market for information; Data intermediaries; Competition policy; Regulation of digital markets
    Date: 2022–02

This nep-des issue is ©2022 by 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.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.