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on Economic Design |
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Issue of 2023‒06‒12
four papers chosen by Guillaume Haeringer, Baruch College and Alex Teytelboym, University of Oxford |
| By: | Giacomo Rubbini |
| Abstract: | Does dropping the rational expectations assumption mean the social planner can implement a larger class of social choice rules? This paper proposes a generalized model of implementation that does not assume rational expectations and characterizes the class of solution concepts requiring Bayesian Incentive Compatibility for full implementation. Surprisingly, full implementation of social choice functions turns out not to be significantly more permissive than with rational expectations. This implies some classical results, such as the impossibility of efficient bilateral trade (Myerson and Satterthwaite, 1983) hold for a broad range of non-equilibrium solution concepts, confirming their relevance even in boundedly rational setups. |
| Date: | 2023–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2305.07472&r=des |
| By: | Ceesay, Muhammed |
| Abstract: | When collusion is analyzed for Independent private value auctions, it is implicitly assumed that ring presence is commonly known to colluding and non-colluding bidders. We drop this assumption and analyze a simple model of a first price Independent Private Value auction with uniformly distributed values where a single bidder knows privately of the existence of collusion by others. We show that this knowledge leads him to bid shading (weakly) in the first price auction compared to what he would have bid otherwise. This in turn yields the result that the second price auction dominates the first price auction in terms of seller revenue. This contrasts results from the literature showing that under our framework, when bidding is done while the presence of colluding bidders is common knowledge, the first price auction dominates the second price auction. |
| Keywords: | Almost-All-Inclusive-Ring, Informational Structures |
| JEL: | D44 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:270874&r=des |
| By: | Minoru Kitahara; Yasunori Okumura |
| Abstract: | We consider a school choice matching model where the priorities for schools are represented by binary relations that may not be weak order. We focus on the (total order) extensions of the binary relations. We introduce a class of algorithms to derive one of the extensions of a binary relation and characterize them by using the class. We show that if the binary relations are the partial orders, then for each stable matching for the profile of the binary relations, there is an extension for which it is also stable. Moreover, if there are multiple stable matchings for the profile of the binary relations that are ranked by Pareto dominance, there is an extension for which all of those matchings are stable. We provide several applications of these results. |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2305.00641&r=des |
| By: | Barelli, Paulo (U of Rochester); Govindan, Srihari (U of Rochester); Wilson, Robert (Stanford U) |
| Abstract: | We study an economy with traders whose payoffs are quasilinear and their private signals are informative about an unobserved state parameter. The limit economy has infinitely many traders partitioned into a finite set of symmetry classes called types. It has a unique rational expectations Walrasian equilibrium (REE) whose price reveals the state. Total monotonicity, a property that limits heterogeneity across types, determines whether an efficient social choice function (SCF) is attainable using mechanisms in a class that includes auctions. An average crossing property on the primitives is a sufficient condition for total monotonicity. The REE is an efficient SCF so it is attainable by an auction if and only if it satisfies total monotonicity. REE with total monotonicity is not only attainable, but also implementable: it is approximated by the equilibrium outcomes of auctions with finitely many traders of each type and fine grids of the state, signals and bids. |
| JEL: | C7 D44 D82 |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:4042&r=des |