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on Economic Design |
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Issue of 2023‒02‒13
ten papers chosen by Guillaume Haeringer, Baruch College and Alex Teytelboym, University of Oxford |
| By: | Isa E. Hafalir; Fuhito Kojima; M. Bumin Yenmez |
| Abstract: | Given a policy objective on the distribution of student types to schools, we study the existence of a mechanism that weakly improves the distributional objective and satisfies constrained efficiency, individual rationality, and strategy-proofness. We show that such a mechanism need not exist in general. We introduce a new notion of discrete concavity that we call pseudo M$^{\natural}$-concavity and construct a mechanism with the desirable properties when the distributional objective satisfies this notion. We show that several distributional objectives, that are natural in our setting, satisfy M$^{\natural}$-concavity. |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2301.00232&r=des |
| By: | Leanne Streekstra (Research Centre of Quantitative Social and Management Sciences, Budapest University of Technology and Economics); Christian Trudeau (Department of Economics, University of Windsor) |
| Abstract: | We extend the familiar shortest path problem by supposing that agent shave demands over multiple periods. This potentially allows agents to combine their paths if their demands are complementary; for instance if one agent only needs a connection to the source in the summer while the other requires it only in the winter. We not only show that the resulting cost sharing problem always generates a totally balanced game, regardless of the number of agents and periods, the cost structure or the demand profile, but that all totally balanced games are representable as MSP problems. We then exploit the fact that the model encompasses many well-studied problems to obtain or reobtain balancedness and total-balancedness results for source-connection problems, market problems and minimum coloring problems. |
| Keywords: | Shortest path; Demand over multiple periods; Cooperative game; Core; Total-balancedness; Source-conenction; Assignment |
| JEL: | C71 D63 |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:azp:qsmswp:2201&r=des |
| By: | Larionov, Daniil; Pham, Hien; Yamashita, Takuro; Zhu, Shuguang |
| Abstract: | We study mechanism design with flexible but costly information acquisition. There is a principal and four or more agents, sharing a common prior over the set of payoff-relevant states. The principal proposes a mechanism to the agents who can then acquire information about the state of the world by privately designing a signal device. As long as it is costless for each agent to acquire a signal that is independent from the state, we show that there exists a mechanism which allows the principal to implement any social choice rule at zero information acquisition cost to the agents. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:22064&r=des |
| By: | Haris Aziz; Alexander Lam; Bo Li; Fahimeh Ramezani; Toby Walsh |
| Abstract: | We consider the obnoxious facility location problem (in which agents prefer the facility location to be far from them) and propose a hierarchy of distance-based proportional fairness concepts for the problem. These fairness axioms ensure that groups of agents at the same location are guaranteed to be a distance from the facility proportional to their group size. We consider deterministic and randomized mechanisms, and compute tight bounds on the price of proportional fairness. In the deterministic setting, not only are our proportional fairness axioms incompatible with strategyproofness, the Nash equilibria may not guarantee welfare within a constant factor of the optimal welfare. On the other hand, in the randomized setting, we identify proportionally fair and strategyproof mechanisms that give an expected welfare within a constant factor of the optimal welfare. |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2301.04340&r=des |
| By: | Brian Duricy |
| Abstract: | This paper formalizes the lattice structure of the ballot voters cast in a ranked-choice election and the preferences that this structure induces. These preferences are shown to be counter to previous assumptions about the preferences of voters, which indicate that ranked-choice elections require different considerations for voters and candidates alike. While this model assumes that voters vote sincerely, the model of ranked-choice elections this paper presents allows for considerations of strategic voting in future work. |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2301.02697&r=des |
| By: | Kemal Yildiz |
| Abstract: | Consider a population of agents whose choice behaviors are partially comparable according to given primitive orderings. A choice theory specifies the set of choice functions admissible in the population. A choice theory is self-progressive if any aggregate choice behavior consistent with the theory can uniquely be represented as a probability distribution over admissible choice functions that are comparable to each other. We establish an equivalence between self-progressive choice theories and (i) well-known algebraic structures called lattices; (ii) the maximizers of supermodular functions over choice functions. Keywords: Random choice, heterogeneity, identification, lattice, supermodular optimization, multiple behavioral characteristics. |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2212.13449&r=des |
| By: | Kemal Kivanc Akoz (Faculty of Economic Sciences, HSE University); Arseniy Samsonov (Research Centre of Quantitative Social and Management Sciences, Budapest University of Technology and Economics) |
| Abstract: | How transparent are informational institutions if their founders have to agree on the design? We analyze a model where several agents bargain over persuasion of a single receiver. We characterize the existence of anagreement that is beneficial for all agents relative to some fixed benchmark information structure, when the preferences of agents are state-independent, and provide sufficient conditions for general preferences. We further show that a beneficial agreement exists if, for every coalition of a fixed size, there is a belief that generates enough surplus for its members. Next, we concentrate on agent-partitional environments, where for each agent there is a state where the informed decision of the receiver benefits her the most. In these environments, we define endorsement rules that fully reveal all such agent-states. Endorsement rules are Pareto efficient when providing information at all agent-states generates enough surplus, and they correspond to a Nash Bargaining solution when the environment is also symmetric. We provide two political economic applications of our model. In a running example, we discuss the implication of our model to bargaining of authoritarian elites over media policy. The last section applies the model to an electoral campaign in a multiparty democracy. |
| Keywords: | Persuasion; Bargaining solution; Efficiency |
| JEL: | C71 D82 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:azp:qsmswp:2301&r=des |
| By: | Sheung Man Yuen; Warut Suksompong |
| Abstract: | In the allocation of indivisible goods, the maximum Nash welfare rule has recently been characterized as the only rule within the class of additive welfarist rules that satisfies envy-freeness up to one good. We extend this characterization to the class of all welfarist rules. |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2301.03798&r=des |
| By: | Christopher Chambers; Siming Ye |
| Abstract: | We introduce a generalization of the concept of sufficientarianism, intended (but not limited) to study multiple consumption goods. We discuss three properties that uniquely pin down our family and, up to continuity requirements, endogenize the sufficientarian threshold. Two, anonymity and reinforcement, are standard. The third, sufficientarian monotonicity, generalizes classical monotonicity and requires that for any two lists of bundles in which individuals are ordered similarly by how much they receive, the worse of the two is indifferent to the new list of bundles considered by taking the componentwise minimum of the two bundles for each agent. |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2301.08666&r=des |
| By: | José Miguel Cardoso da Costa; Rui Albuquerque; José Afonso Faias |
| Abstract: | The paper uses bids submitted by primary dealer banks at auctions of sovereign bonds to quantify the price elasticity of demand. The price elasticity of demand correlates strongly with the volatility of returns of the same bonds traded in the secondary market but only weakly with their bid-ask spread. The price elasticity of demand predicts same-bond post-auction returns in the secondary market, even after controlling for pre-auction volatility. The evidence suggests that the price elasticity of demand is associated with the magnitude of price pressure in the secondary market around auction days, and proxies for primary dealer risk-bearing capacity. |
| JEL: | G12 G20 G24 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ptu:wpaper:w202302&r=des |