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on Economic Design |
| By: | Dirk Bergemann (Yale University); Kevin Breuer; Peter Cramton (Max Planck Institute for Research on Collective Goods and University of Maryland); Jack Hirsch (Harvard University); Yero S. Ndiaye (University of Cologne and Max Planck Institute for Research on Collective Goods); Axel Ockenfels (University of Cologne and Max Planck Institute for Research on Collective Goods) |
| Abstract: | A soft-floor auction asks bidders to accept an opening price to participate in an ascending auction. If no bidder accepts, lower bids are considered using first-price rules. Soft floors are common despite being irrelevant with standard assumptions. When bidders regret losing, soft-floor auctions are more efficient and profitable than standard optimal auctions. Revenue increases as bidders are inclined to accept the opening price to compete in a regret-free ascending auction. Efficiency is improved since having a soft floor allows for a lower hard reserve price, reducing the frequency of no sale. Theory and experiment confirm these motivations from practice. |
| Date: | 2025–04–14 |
| URL: | https://d.repec.org/n?u=RePEc:cwl:cwldpp:2438 |
| By: | Gretschko, Vitali; Simon, Jasmina |
| Abstract: | We examine a setting of independent private value auctions where bidders can covertly acquire gradual information about their valuations. We demonstrate that a dynamic pivot mechanism implements the rst-best information acquisition and allocation rule. We apply our results to a commonly used model of auctions with information acquisition. The bidders are symmetric and information acquisition costs are moderate. Our analysis shows that the Dutch auction achieves near-eciency. That is, the welfare loss is bounded by the information acquisition cost of a single bidder. In contrast, the English auction may result in greater welfare losses. |
| Keywords: | Information acquisition, dynamic auctions, dynamic pivot mechanism |
| JEL: | D44 D82 D83 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:312569 |
| By: | Knipe, Taylor; Ortega, Josué |
| Abstract: | The Deferred Acceptance algorithm (DA) frequently produces Pareto inefficient allocations in school choice problems. While a number of efficient mechanisms that Pareto-dominate DA are available, a normative question remains unexplored: which students should benefit from efficiency enhancements? We address it by introducing the concept of maximally improvable students, who benefit in every improvement over DA that includes as many students as possible in set-inclusion terms. We prove that common mechanisms such as Efficiency-Adjusted DA (EADA) and Top Trading Cycles applied to DA (DA+TTC) can fall significantly short of this benchmark. These mechanisms may only improve two maximally-improvable students when up to n − 1 could benefit. Addressing this limitation, we develop the Maximum Improvement over DA mechanism (MIDA), which generates an efficient allocation that maximises the number of students improved over DA. We show that MIDA can generate fewer blocking pairs than EADA and DA+TTC, demonstrating that its distributional improvements need not come at the cost of high justified envy. |
| Keywords: | school choice, improvable students |
| JEL: | C78 D47 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:qmsrps:202503 |
| By: | Caspari, Gian |
| Abstract: | We study the problem of distributing subsidies in a market that includes both marginal individuals in need of assistance and infra-marginal individuals who would purchase the subsidized product without additional incentives. We propose the use of a wait time auction, where individuals bid the amount of time they are willing to wait in exchange for a specified subsidy amount. This design enables more direct targeting of marginal individuals, thereby enhancing the overall effectiveness of the subsidy program. Furthermore, screening is costless in equilibrium as no wait times are imposed, and practical robustness against deviations from equilibrium behavior can be ensured by implementing a maximum allowable bid. |
| Keywords: | Subsidies, Market Design, Auctions |
| JEL: | D47 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:313007 |
| By: | Evsyukova, Yulia; Innocenti, Federico; Lomys, Niccolò |
| Abstract: | We study how framing interplays with information design. Whereas Sender conceives all contingencies separately, Receiver cannot initially distinguish among some of them, i.e., has a coarse frame. To influence Receiver's behavior, Sender first decides whether to refine Receiver's frame and then designs an information structure for the chosen frame. Sender faces a trade-off between keeping Receiver under the coarse frame - thus concealing part of the information structure - and re-framing - hence inducing Receiver to revise preferences and prior beliefs after telling apart initially indistinguishable contingencies. Sender benefits from re-framing if this enhances persuasion possibilities or makes persuasion unnecessary. Compared to classical information design, Receiver's frame becomes more critical than preferences and prior beliefs in shaping the optimal information structure. Although a coarse worldview may open the doors to Receiver's exploitation, re-framing can harm Receiver in practice, thus questioning the scope of disclosure policies. |
| Keywords: | Framing, Information Design, Disclosure Policies |
| JEL: | D1 D8 D9 G2 G4 M3 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:312572 |