nep-des New Economics Papers
on Economic Design
Issue of 2022‒12‒19
six papers chosen by
Guillaume Haeringer, Baruch College and Alex Teytelboym, University of Oxford

  1. Quota Adjustment Process By Taro Kumano; Morimitsu Kurino
  2. Multi-object Auction Design Beyond Quasi-linearity: Leading Examples By Yu Zhou; Shigehiro Serizawa
  3. Revenue Comparisons of Auctions with Ambiguity Averse Sellers By Sosung Baik; Sung-Ha Hwang
  4. Firm-worker hypergraphs By Chao Huang
  5. Stable and metastable contract networks By Danilov, Vladimir; Karzanov, Alexander
  6. Incentivizing Participation in Clinical Trials By Yingkai Li; Aleksandrs Slivkins

  1. By: Taro Kumano (Yokohama National University, Department of Economics); Morimitsu Kurino (Keio University, Faculty of Economics)
    Abstract: In designing priority-based matching problems, such as school choice, the quota of each school is, to some extent, a design variable for a market designer. We define an ex-post student-optimal stable matching (ESOSM) as a matching that is stable at some implementable quota distribution, and is not Pareto dominated by any stable matching among all implementable quota distributions. A simple question is whether the total resources subject to several constraints are optimally distributed in the above sense. As optimal quota distributions vary depending on students f preferences realized, no predetermined quota distribution is optimal for all of the students f preferences. This requires a new matching mechanism design for the variable quota distributions. We propose the novel mechanism called quota adjustment process (QAP), which endogenously finds an ESOSM and the corresponding optimal quota distribution for any preferences and any initial quota distribution. To put this into practice, we proposed the QAP in the process of admission reform at the University of Tsukuba in Japan. Our proposal was officially approved and implemented at the University of Tsukuba in 2021.
    Keywords: quota adjustment process;stability;deferred acceptance mechanism;effciency;quota-adjustment stable improvement cycles
    JEL: C78 D47 D78 I21
    Date: 2022–11–22
  2. By: Yu Zhou; Shigehiro Serizawa
    Abstract: In multi-object auction models with unitary demand agents, if agents' utility functions satisfy quasi-linearity, three auction formats, sealed-bid auction, exact ascending auction, and approximate ascending auction, are known to identify the minimum price equilibrium (MPE), and exhibit elegant efficiency and incentive-compatibility. These auctions are conjured to preserve their properties beyond quasi-linearity. Nevertheless, we exemplify that with general utility functions, these auctions fail to identify the MPEs and are substantially inefficient and manipulatable. The implications of our negative results for multi-object auction models with agents with multi-unit demand, and matching with contracts models are also discussed.
    Date: 2021–01
  3. By: Sosung Baik; Sung-Ha Hwang
    Abstract: We study the revenue comparison problem of auctions when the seller has a maxmin expected utility preference. The seller holds a set of priors around some reference belief, interpreted as an approximating model of the true probability law or the focal point distribution. We develop a methodology for comparing the revenue performances of auctions: the seller prefers auction X to auction Y if their transfer functions satisfy a weak form of the single-crossing condition. Intuitively, this condition means that a bidder's payment is more negatively associated with the competitor's type in X than in Y. Applying this methodology, we show that when the reference belief is independent and identically distributed (IID) and the bidders are ambiguity neutral, (i) the first-price auction outperforms the second-price and all-pay auctions, and (ii) the second-price and all-pay auctions outperform the war of attrition. Our methodology yields results opposite to those of the Linkage Principle.
    Date: 2022–11
  4. By: Chao Huang
    Abstract: A firm-worker hypergraph consists of edges in which each edge joins a firm and its possible staff. We show that a stable matching exists in both discrete many-to-one matching and many-to-one matching with continuous transfers and quasilinear utilities when the firm-worker hypergraph is balanced. Firms' preferences satisfying this condition arise in a problem of matching specialized firms with specialists.
    Date: 2022–11
  5. By: Danilov, Vladimir; Karzanov, Alexander
    Abstract: We consider a hypergraph (I, C), with possible multiple (hyper)edges and loops, in which the vertices i ∈ I are interpreted as agents, and the edges c ∈ C as contracts that can be concluded between agents. The preferences of each agent i concerning the contracts where i takes part are given by use of a choice function fi possessing the so-called path independent property. In this general setup we introduce the notion of stable network of contracts. The paper contains two main results. The first one is that a general problem on stable systems of contracts for (I, C, f) is reduced to a set of special ones in which preferences of agents are described by use of so-called weak orders, or utility functions. However, for a special case of this sort, the stability may not exist. Trying to overcome this trouble when dealing with such special cases, we introduce a weaker notion of metastability for systems of contracts. Our second result is that a metastable system always exists.
    Keywords: Plott choice functions, Aizerman-Malishevski theorem, stable marriage, roommate problem, Scarf lemma
    JEL: C71 C78 D74
    Date: 2022–11–29
  6. By: Yingkai Li; Aleksandrs Slivkins
    Abstract: The difficulty of recruiting patients is a well-known issue in clinical trials which inhibits or sometimes precludes them in practice. We incentivize participation in clinical trials by leveraging information asymmetry between the trial and the patients. We obtain an optimal solution in terms of the statistical performance of the trial, as expressed by an estimation error. Namely, we provide an incentive-compatible mechanism with a particular guarantee, and a nearly matching impossibility result for any incentive-compatible mechanism.
    Date: 2022–02

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