nep-des New Economics Papers
on Economic Design
Issue of 2022‒10‒31
seven papers chosen by
Guillaume Haeringer, Baruch College and Alex Teytelboym, University of Oxford

  1. Rank-Preserving Multidimensional Mechanisms By Sushil Bikhchandani; Debasis Mishra
  2. Aftermarket Frictions and the Cost of Off-Platform Options in Centralized Assignment Mechanisms By Adam Kapor; Mohit Karnani; Christopher Neilson
  3. Imperfect Competition and Sanitation: Evidence from Randomized Auctions in Senegal By Jean-François Houde; Terence R. Johnson; Molly Lipscomb; Laura A. Schechter
  4. Setting reserve prices in repeated procurement auctions By Sümeyra Atmaca; Riccardo Camboni; Elena Podkolzina; Koen Schoors; Paola Valbonesi
  5. Implementation with Uncertain Evidence By Soumen Banerjee; Yi-Chun Chen
  6. Statistical Inference for Fisher Market Equilibrium By Luofeng Liao; Yuan Gao; Christian Kroer
  7. Equilibrium (non-)Existence in Games with Competing Principals By Attar, Andrea; Campioni, Eloisa; Piaser, Gwenaël

  1. By: Sushil Bikhchandani; Debasis Mishra
    Abstract: We show that the mechanism design problem for a monopolist selling multiple heterogeneous objects with ex ante symmetric values for the buyer is equivalent to the mechanism design problem for a monopolist selling identical objects with decreasing marginal values. We apply this equivalence result to (a) give new sufficient conditions under which an optimal mechanism is revenue monotone in both the models; (b) derive new results on optimal deterministic mechanisms in the heterogeneous objects model; and (c) show that a uniform price mechanism is robustly optimal in the identical objects model when the monopolist knows the average of the marginal distributions of the units.
    Date: 2022–09
  2. By: Adam Kapor (Princeton University); Mohit Karnani (MIT); Christopher Neilson (Princeton University)
    Abstract: We study the welfare and human-capital impacts of the configuration of on- and off-platform options in the context of Chile’s centralized higher education platform, leveraging administrative data and two policy changes: the introduction of a large scholarship program, and an expansion of the number of on-platform slots by approximately 40%. We first show that more programs’ joining the platform led students to start college sooner and raised the share of students who graduated on time. We then develop a model of college applications, offers, waitlists, and matriculation choices, which we estimate using students’ ranked-ordered applications, on- and off-platform enrollment, and on-time graduation outcomes. When more programs join the platform, welfare increases, and the extent of aftermarket frictions matters less for welfare, enrollment, and graduation rates. High-SES students have greater access to off-platform options, and gains from platform expansion are larger for students from lower-SES backgrounds. Our results indicate that expanding the scope of a higher education platform can have real impacts on welfare and human capital.
    Keywords: Chile, On-platform options, Off-platform options, College, Education, Mechanism Design, Off Platform Design, College Admissions, College Enrollment
    JEL: D82 I20 I23
    Date: 2022–06
  3. By: Jean-François Houde; Terence R. Johnson; Molly Lipscomb; Laura A. Schechter
    Abstract: We study the extent to which collusion can explain the under-provision of clean sanitation technologies in developing countries. Using desludging services in Dakar as a case-study, we document that prices are 66% higher in areas where prices are likely coordinated by a large trade association, compared to nearby neighborhoods supplied by unaffiliated companies. We then develop an experimental just-in-time auction platform with random variation in several design features aimed at learning about the extent of competition. Consistent with the collusion hypothesis, we find that most bidders systematically avoid competition by placing round bids and refusing to undercut rivals.
    JEL: L12 L41 O55
    Date: 2022–09
  4. By: Sümeyra Atmaca (University of Ghent); Riccardo Camboni (University of Padova); Elena Podkolzina (HSE-NRU); Koen Schoors (University of Ghent); Paola Valbonesi (University of Padova)
    Abstract: We use a large dataset of Russian public procurement auctions for standard gasoline over the period 2011-2013, to investigate how buyers set the reserve price - i.e. the buyer’s announced maximum willingness to pay for the good awarded. We provide empirical evidence that repeated past contracts between a buyer and a supplier affect the reserve price set by this buyer in future auctions where the same supplier takes part and wins. Specifically, we find that in these auctions the reserve price, the level of competition, and the winning unit price are lower than in the average auction in the dataset. We conjecture that, in setting the reserve price for a new auction, public buyers exploit information gained about the winners of previous auctions. This intuition is supported by empirically studying the reserve price in a dynamic framework, which allows buyers to take into account information from previous procurement transactions with given suppliers. Finally, we show that our empirical results are in line with a simple theoretical setting in which the buyer collects information about one supplier’s costs and exploits this in setting the reserve price in future auctions.
    Keywords: Publicprocurement, First-priceauction, Buyer-supplier repeated interactions, Reserve price
    JEL: D44 H57
    Date: 2022–10
  5. By: Soumen Banerjee; Yi-Chun Chen
    Abstract: We study a full implementation problem with hard evidence where the state is common knowledge but agents face uncertainty about the evidence endowments of other agents. We identify a necessary and sufficient condition for implementation in mixed-strategy Bayesian Nash equilibria called No Perfect Deceptions. The implementing mechanism requires only two agents and a finite message space, imposes transfers only off the equilibrium, and invoke no device with "...questionable features..." such as integer or modulo games. Requiring only implementation in pure-strategy equilibria weakens the necessary and sufficient condition to No Pure-Perfect Deceptions. In general type spaces where the state is not common knowledge, a condition called higher-order measurability is necessary and sufficient for rationalizable implementation with arbitrarily small transfers alongside.
    Date: 2022–09
  6. By: Luofeng Liao; Yuan Gao; Christian Kroer
    Abstract: Statistical inference under market equilibrium effects has attracted increasing attention recently. In this paper we focus on the specific case of linear Fisher markets. They have been widely use in fair resource allocation of food/blood donations and budget management in large-scale Internet ad auctions. In resource allocation, it is crucial to quantify the variability of the resource received by the agents (such as blood banks and food banks) in addition to fairness and efficiency properties of the systems. For ad auction markets, it is important to establish statistical properties of the platform's revenues in addition to their expected values. To this end, we propose a statistical framework based on the concept of infinite-dimensional Fisher markets. In our framework, we observe a market formed by a finite number of items sampled from an underlying distribution (the "observed market") and aim to infer several important equilibrium quantities of the underlying long-run market. These equilibrium quantities include individual utilities, social welfare, and pacing multipliers. Through the lens of sample average approximation (SSA), we derive a collection of statistical results and show that the observed market provides useful statistical information of the long-run market. In other words, the equilibrium quantities of the observed market converge to the true ones of the long-run market with strong statistical guarantees. These include consistency, finite sample bounds, asymptotics, and confidence. As an extension, we discuss revenue inference in quasilinear Fisher markets.
    Date: 2022–09
  7. By: Attar, Andrea; Campioni, Eloisa; Piaser, Gwenaël
    Abstract: We study competing-mechanism games, in which multiple principals contract with multiple agents. We reconsider the issue of non-existence of an equilibrium as first raised by Myerson (1982). In the context of his example, we establish the existence of a perfect Bayesian equilibrium. We clarify that Myerson (1982)’s non-existence result is an implication of the additional requirement he imposes, that each principal selects his preferred continuation equilibrium in the agents’ game.
    Keywords: Competing Mechanisms; Equilibrium Existence
    JEL: D82
    Date: 2022–09–27

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