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on Economic Design |
| By: | Siddharth Prasad; Maria-Florina Balcan; Tuomas Sandholm |
| Abstract: | We derive the revenue-optimal efficient (welfare-maximizing) mechanism in a general multidimensional mechanism design setting when type spaces -- that is, the underlying domains from which agents' values come from -- can capture arbitrarily complex informational constraints about the agents. Type spaces can encode information about agents representing, for example, machine learning predictions of agent behavior, institutional knowledge about feasible market outcomes (such as item substitutability or complementarity in auctions), and correlations between multiple agents. Prior work has only dealt with connected type spaces, which are not expressive enough to capture many natural kinds of constraints such as disjunctive constraints. We provide two characterizations of the optimal mechanism based on allocations and connected components; both make use of an underlying network flow structure to the mechanism design. Our results significantly generalize and improve the prior state of the art in revenue-optimal efficient mechanism design. They also considerably expand the scope of what forms of agent information can be expressed and used to improve revenue. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2505.13687 |
| By: | Siddharth Prasad; Maria-Florina Balcan; Tuomas Sandholm |
| Abstract: | Core-selecting combinatorial auctions are popular auction designs that constrain prices to eliminate the incentive for any group of bidders -- with the seller -- to renegotiate for a better deal. They help overcome the low-revenue issues of classical combinatorial auctions. We introduce a new class of core-selecting combinatorial auctions that leverage bidder information available to the auction designer. We model such information through constraints on the joint type space of the bidders -- these are constraints on bidders' private valuations that are known to hold by the auction designer before bids are elicited. First, we show that type space information can overcome the well-known impossibility of incentive-compatible core-selecting combinatorial auctions. We present a revised and generalized version of that impossibility result that depends on how much information is conveyed by the type spaces. We then devise a new family of core-selecting combinatorial auctions and show that they minimize the sum of bidders' incentives to deviate from truthful bidding. We develop new constraint generation techniques -- and build upon existing quadratic programming techniques -- to compute core prices, and conduct experiments to evaluate the incentive, revenue, fairness, and computational merits of our new auctions. Our new core-selecting auctions directly improve upon existing designs that have been used in many high-stakes auctions around the world. We envision that they will be a useful addition to any auction designer's toolkit. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2505.13680 |
| By: | Anand Chopra; Malachy James Gavan; Antonio Penta |
| Abstract: | Safe Implementation (Gavan and Penta, 2025) combines standard implementation with the requirement that the implementing mechanism is such that, if up to k agents deviate from the relevant solution concept, the outcomes that are induced are still 'acceptable' at every state of the world. In this paper, we study Safe Implementation of social choice correspondences in mixed Nash Equilibrium. We identify a condition, Set-Comonotonicity, which is both necessary and (under mild domain restrictions) almost sufficient for this implementation notion. |
| Keywords: | implementation, mechanism design, mixed implementation, robustness, safe implementation, Set-Comonotonicity |
| JEL: | C72 D82 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:bge:wpaper:1497 |
| By: | Leandro Arozamena; Federico Weinschelbaum; Juan-José Ganuza |
| Abstract: | A sponsor –e.g. a government agency– uses a procurement auction to select a supplier who will be in charge of the execution of a contract. That contract is incomplete: it may be renegotiated once the auction's winner has been chosen. We examine a setting where one firm may bribe the agent in charge of monitoring contract execution so that the former is treated preferentially if renegotiation actually occurs. If a bribe is accepted, the corrupt firm will be more aggressive at the initial auction and thus win with a larger probability. We show that the equilibrium probability of corruption is larger when the initial contract is less complete, when the corrupt firm's cost is more likely to be similar to her rivals', and when it faces fewer competitors. |
| Keywords: | auctions, Procurement, corruption, renegotiation, cost overruns |
| JEL: | C72 D44 D82 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:bge:wpaper:1492 |
| By: | Matias Nunez; Danilo Coelho; Carlos Alós-Ferrera; Salvador Barberà |
| Abstract: | Arbitrators for high-stakes conflicts, as well as judges and other officials, are of- ten appointed through structured bargaining protocols. The theoretical literature models these protocols as extensive-form games with perfect information, evaluating them based on the merits of their subgame-perfect equilibria, such as efficiency. However, decision makers often fail to implement backward induction and exhibit other-regarding preferences. In a large experiment, we compare two prominent protocols and show that those concerns affect outcomes. Bargaining protocols whose equilibria are unfair (in a maximin sense) fare poorly compared to those favoring compromises. However, lengthy protocols face limitations because they elicit non-equilibrium behavior. |
| Keywords: | bargaining, fairness, backward induction, Appointment rules |
| JEL: | C78 C92 D63 D74 D82 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:bge:wpaper:1490 |