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on Economic Design |
| By: | Alex Gershkov (Department of Economics, Hebrew University Jerusalem and School of Economics, University of Surrey); Andreas Kleiner (Department of Economics, Arizona State University); Benny Moldovanu (Department of Economics, University of Bonn); Xianwen Shi (Department of Economics, University of Toronto) |
| Abstract: | We generalize the standard, private values voting model with single-peaked preferences and incomplete information by introducing interdependent preferences. Our main results show how standard mechanisms that are outcome-equivalent and implement the Condorcet winner under complete information or under private values yield starkly different outcomes if values are interdependent. We also propose a new notion of Condorcet winner under incomplete information and interdependent preferences, and discuss its implementation. The new phenomena in this paper arise because diffrent voting rules (including dynamic ones) induce different processes of information aggregation and learning. |
| Date: | 2023–06 |
| URL: | http://d.repec.org/n?u=RePEc:ajk:ajkdps:243&r=des |
| By: | Mengxi Zhang |
| Abstract: | I investigate the design of effort-maximizing mechanisms when agents have both private information and convex effort costs, and the designer has a fixed prize budget. I first demonstrate that it is always optimal for the designer to utilize a contest with as many participants as possible. Further, I identify a necessary and sufficient condition for the winner-takes-all prize structure to be optimal. When this condition fails, the designer may prefer to award multiple prizes of descending sizes. I also provide a characterization of the optimal prize allocation rule for this case. Finally, I illustrate how the optimal prize distribution evolves as the contest size grows. |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2023_156v2&r=des |
| By: | Dmitriy Vorobyev; Azamat Valei; Andrei Matveenko |
| Abstract: | Using a pivotal costly voting model of elections between a status quo and a challenger alternative, we compare participation and approval quorum requirements in terms of how they shape voter incentives to cast votes, and how they ultimately impact voter turnout, election outcomes, and welfare. We first show that approval and participation quorum restrictions of equal strictness result in at most two types of stable non-trivial equilibria: “abstention, ” in which status quo supporters strategically abstain from voting, and “coordination, ” in which they vote with positive probability. While abstention equilibria are always identical in the two quorum settings, coordination equilibria may differ, but only when the cost of voting is sufficiently low and status quo support among voters is neither extremely high or low, nor is it close to the degree of support for the challenger. We show that, in those cases, the difference in the outcomes of interest between approval and participation quorum settings is quantitatively small. The main difference between the two settings therefore arises from the fact that, under an approval quorum, coordination equilibrium exists for a narrower range of status quo support levels than under a participation quorum. We discuss the implications of these findings for designing optimal quorum restrictions, suggesting that choosing an approval quorum over a participation quorum and setting its strictness close to half of the number of voters, or setting no quorum restrictions at all, are often welfare maximizing choices. |
| Keywords: | voting, participation quorum, approval quorum |
| JEL: | D71 D72 |
| Date: | 2023–07 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2023_438&r=des |
| By: | Jibang Wu; Haifeng Xu; Yifan Guo; Weijie Su |
| Abstract: | This paper extends the Isotonic Mechanism from the single-owner to multi-owner settings, in an effort to make it applicable to peer review where a paper often has multiple authors. Our approach starts by partitioning all submissions of a machine learning conference into disjoint blocks, each of which shares a common set of co-authors. We then employ the Isotonic Mechanism to elicit a ranking of the submissions from each author and to produce adjusted review scores that align with both the reported ranking and the original review scores. The generalized mechanism uses a weighted average of the adjusted scores on each block. We show that, under certain conditions, truth-telling by all authors is a Nash equilibrium for any valid partition of the overlapping ownership sets. However, we demonstrate that while the mechanism's performance in terms of estimation accuracy depends on the partition structure, optimizing this structure is computationally intractable in general. We develop a nearly linear-time greedy algorithm that provably finds a performant partition with appealing robust approximation guarantees. Extensive experiments on both synthetic data and real-world conference review data demonstrate the effectiveness of this generalized Isotonic Mechanism. |
| Date: | 2023–06 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2306.11154&r=des |
| By: | Rey, Patrick; Iossa, Elisabetta; Loertscher, Simon; Leslie M. Marx, |
| Abstract: | While antitrust authorities strive to detect, prosecute, and thereby deter collusive conduct, entities harmed by that conduct are also advised to pursue their own strategies to deter collusion. The implications of such delegation of deterrence have largely been ignored, however. In a procurement context, we find that buyers may prefer to accommodate rather than deter collusion among their suppliers. We also show that a multi-market buyer, such as a centralized procurement authority, may optimally deter collusion when multiple independent buyers would not, consistent with the view that “large” buyers are less susceptible to collusion. |
| Keywords: | Collusion; Cartel; Auction; Procurement; Reserves; Sustainability and initiation of collusion; Coordinated effects |
| JEL: | D44 D82 H57 L41 |
| Date: | 2023–06–05 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:128130&r=des |