|
on Economic Design |
| By: | Philipp Strack (Yale University); Kai Hao Yang (Yale University) |
| Abstract: | A monopolist offers personalized prices to consumers with unit demand, heterogeneous values, and idiosyncratic costs, who differ in a protected characteristic, such as race or gender. The seller is subject to a non-discrimination constraint: consumers with the same cost, but different characteristics must face identical prices. Such constraints arise in regulated markets like credit or insurance. The setting reduces to an optimal transport, and we characterize the optimal pricing rule. Under this rule, consumers may retain surplus, and either group may benefit. Strengthening the constraint to cover transaction prices redistributes surplus, harming the low-value group and benefiting the high-value group. |
| Date: | 2025–06–26 |
| URL: | https://d.repec.org/n?u=RePEc:cwl:cwldpp:2447 |
| By: | Juan Ortner (Boston University); Sylvain Chassang (Princeton University); Kei Kawai (University of California Berkeley and& University of Tokyo); Jun Nakabayashi (Kyoto University) |
| Abstract: | Auctioneers suspecting bidder collusion often lack the formal evidence needed for legal recourse. A practical alternative is to design auctions that hinder collusion. Since Abreu et al. (1986), economic theory has emphasized imperfect monitoring as a constraint on collusion, but evidence remains scarce on whether: (i) information frictions meaningfully limit real-world collusion; and (ii) auctioneers can effectively exploit these frictions. Indeed, transparency concerns prevent the introduction of explicit randomness in auction design. We make progress on this issue by studying the impact of subjective scoring in auctions run by Japan’s Ministry of Land, Infrastructure, and Transportation. The adoption of scoring auctions significantly reduced winning bids in ways inconsistent with competition. Model-based inference suggests that the cartel’s dynamic obedience constraints were binding and tightened by imperfect monitoring. Subjective scoring can successfully leverage imperfect monitoring frictions to reduce the scope of collusion. |
| Keywords: | procurement, scoring, cartel discipline, imperfect monitoring |
| JEL: | D44 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:pri:cepsud:342 |
| By: | Yulia Evsyukova (University of Mannheim and ZEWÐLeibniz Centre for European Economic Research); Federico Innocenti (Università di Verona); Niccolò Lomys (CSEF and Università degli Studi di Napoli Federico II) |
| 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 reframing — 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: | 2024–12–01 |
| URL: | https://d.repec.org/n?u=RePEc:sef:csefwp:743 |
| By: | Miguel Martinez Rodriguez; Chi Kong Chyong; Timothy Fitzgerald; Miguel Vazquez Martínez |
| Keywords: | Hydrogen infrastructure, pipeline regulation, third-party access (TPA), unbundling, market design |
| JEL: | L95 L51 Q48 Q42 D47 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:enp:wpaper:eprg2514 |
| By: | Christoph Becker; Dietmar Fehr; Hannes Rau; Stefan T. Trautmann; Yilong Xu |
| Abstract: | How do different characteristics of pay-for-performance schemes affect fairness perceptions? In two studies, we systematically consider three major classes of incentive schemes: continuous piece rate incentives, discrete bonus schemes, and tournament incentives. We find that pay inequality has a strong negative effect on perceived fairness. Controlling for pay inequality, people consider piece rate schemes fairer than those with a discrete bonus and a tournament design in particular. Adding performance-dependent resource advantages or handicaps negatively influences perceived fairness. We find that procedural fairness judgments are an important factor influencing overall judgments and demonstrate in a third study that the latter have relevant behavioral consequences. |
| Keywords: | incentives, merit, contract design, fairness, inequality |
| JEL: | C90 D63 J31 J41 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11943 |
| By: | Keita Sunada; Kohei Izumi |
| Abstract: | We study treatment assignment problems under capacity constraints, where a planner aims to maximize social welfare by assigning treatments based on observable covariates. Such constraints are common in practice, as treatments are often costly or limited in supply. However, they introduce nontrivial challenges for deriving optimal statistical assignment rules because the planner needs to coordinate treatment assignment probabilities across the entire covariate distribution. To address these challenges, we reformulate the planner's constrained maximization problem as an optimal transport problem, which makes the problem effectively unconstrained. We then establish locally asymptotic optimality results of assignment rules using a limits of experiments framework. Finally, we illustrate our method with a voucher assignment problem for private secondary school attendance using data from Angrist et al. (2006). |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.12225 |