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on Economic Design |
| By: | Sukanya Kudva; Anil Aswani |
| Abstract: | We study the problem of auction design in the presence of bidder collusion. Specifically, we consider a multi-unit auction of identical items with single-minded bidders, where a subset of bidders may collude by coordinating bids and transferring payments and items among themselves. While the classical Vickrey-Clarke-Groves (VCG) mechanism achieves efficient and truthful outcomes, it is highly vulnerable to collusion. In contrast, fully collusion-proof mechanisms are limited to posted-price formats, which fail to guarantee even approximate efficiency. This paper aims to bridge this gap by designing auctions that achieve good welfare and revenue guarantees even when some bidders collude. We first characterize the strategic behavior of colluding bidders under VCG and prove that such bidders optimally bid shade: they never overbid or take additional items, but instead reduce the auction price. This characterization enables a Bulow-Klemperer type result: adding colluding bidders can only improve welfare and revenue relative to running VCG on the non-colluding group alone. We then propose a Hybrid VCG (H-VCG) mechanism that combines VCG applied to non-colluding bidders with a posted-price mechanism for colluding bidders, assuming access to a black-box collusion detection algorithm. We show that H-VCG is ex-post dominant-strategy incentive compatible (DSIC) and derive probabilistic guarantees on expected welfare and revenue under both known and unknown valuation distributions. Numerical experiments across several distributions demonstrate that H-VCG consistently outperforms VCG restricted to non-colluding bidders and approaches the performance of the ideal VCG mechanism assuming universal truthfulness. Our results provide a principled framework for incorporating collusion detection into mechanism design, offering a step toward collusion-resistant auctions. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.12456 |
| By: | Minoru Kitahara; Hiroshi Uno |
| Abstract: | This paper studies one-sided matching under a complete exchange (CE) requirement, where each agent must be assigned an object different from its initial endowment. We introduce assignment partition -- a partition of agents and choice sets that builds CE into feasibility -- and, within this structure, propose two new mechanisms. Chain Serial Dictatorship (C-SD) operates within the partition as a binding-choice chain: the highest-priority agent picks from its allowed set and the right to pick passes to the owner of the chosen object; if that owner has already picked, the right reverts to the highest-priority remaining agent. Two-Stage Serial Dictatorship (T-SD) operates within the partition as a nominate-then-assign procedure: in Stage 1, agents tentatively nominate objects in exogenous priority, and the owners of nominated objects determine an endogenous final priority; in Stage 2, serial dictatorship runs within the partition using that final priority. For any given assignment partition, C-SD and T-SD simultaneously satisfy strategy-proofness, respecting improvement, and efficiency relative to the partition. We then examine the limits of pursuing market-wide efficiency under the CE constraint. As a benchmark, we study a modified TTC, CE-TTC, which first enforces a CE-compliant reassignment and then runs a self-avoiding top-trading-cycles phase; CE-TTC achieves efficiency within the CE constraint and strategy-proofness but fails respecting improvement. Moreover, for three and four agents, no mechanism can simultaneously achieve efficiency within the CE constraint, respecting improvement, and strategy-proofness. These findings underscore the value of partition-based design for truthful implementation with investment incentives under a hard CE mandate. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.11278 |
| By: | Francis Bloch; Bhaskar Dutta; Marcin Dziubi\'nski |
| Abstract: | A planner wants to select one agent out of n agents on the basis of a binary characteristic that is commonly known to all agents but is not observed by the planner. Any pair of agents can either be friends or enemies or impartials of each other. An individual's most preferred outcome is that she be selected. If she is not selected, then she would prefer that a friend be selected, and if neither she herself or a friend is selected, then she would prefer that an impartial agent be selected. Finally, her least preferred outcome is that an enemy be selected. The planner wants to design a dominant strategy incentive compatible mechanism in order to be able choose a desirable agent. We derive sufficient conditions for existence of efficient and DSIC mechanisms when the planner knows the bilateral relationships between agents. We also show that if the planner does not know these relationships, then there is no efficient and DSIC mechanism and we compare the relative efficiency of two ``second-best'' DSIC mechanisms. Finally, we obtain sharp characterization results when the network of friends and enemies satisfies structural balance. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.11157 |
| By: | Eric Gao; Eric Tang |
| Abstract: | In many auctions, bidders may be reluctant to reveal private information to the auctioneer and other bidders. Among deterministic bilateral communication protocols, reducing what bidders learn requires increasing what the auctioneer learns. A protocol implementing a given social choice rule is on the privacy Pareto frontier if no alternative protocol reveals less to both bidders and the auctioneer. For first-price auctions, the descending protocol and the sealed-bid protocol are both on the privacy Pareto frontier. For second-price auctions, the ascending protocol and the ascending-join protocol of Haupt and Hitzig (2025) are both on the privacy Pareto frontier, but the sealed-bid protocol is not. A designer can flexibly trade off between what bidders learn and what the auctioneer learns by "stitching" different protocols together. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.10349 |
| By: | Carmelo Rodríguez à lvarez (Instituto Complutense de Análisis Económico (ICAE), Universidad Complutense de Madrid (Spain)) |
| Abstract: | We analyze strategy-proof rules that select sets of alternatives based on voters’ preferences over those sets. Sets of alternatives represent social choices pending a final resolution and voters are expected utility maximizers that assign probabilities to alternatives within each set using Bayesian updating from a common prior probability assessment. If there are at least three alternatives, then, for generic priors, only dictatorial rules are strategy-proof and unanimous. However, when the prior probability assessment assigns equal probability to all alternatives, strategyproofness also permits rules that select the set of best elements determined by two fixed voters. |
| Keywords: | Strategy-Proofness; Social Choice Functions over Sets; Cardinal Decision Schemes. |
| JEL: | D71 D82 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ucm:doicae:2507 |
| By: | Georgy Artemov; Kentaro Tomoeda |
| Abstract: | We study how school choice mechanisms shape wealth segregation in the long term by endogenizing residential choice. Families buy houses in school zones that determine admission priority, experience shocks to school preferences, and participate in one of three mechanisms: neighborhood assignment (N), Deferred Acceptance (DA), or Top Trading Cycles (TTC). Neighborhood segregation increases from N to DA to TTC. DA and TTC reduce school-level segregation relative to neighborhoods but typically not enough to reverse this ranking, and housing prices in oversubscribed zones rise in the same order. Two desegregation policies further illustrate how short- and long-term perspectives can differ. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.09967 |
| By: | Yu-Ting Ho |
| Abstract: | This paper studies a decentralized many-to-one matching market where preferences remain uncertain during the matching process. Institutions initiate matching by sending offers, and applicants decide whether to accept upon receiving them. Since applicants learn their preferences only after receiving offers, institutions face a challenge in deciding how many offers to issue. I address this challenge by introducing probabilistic offers (admitting applicants with a probability less than one), which ensure that ex-ante market clearing and stability are achievable. However, the welfare effect of information is subtle: applicants may become worse off as they acquire more information. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.09988 |
| By: | Deryugina, Tatyana (University of Illinois at Urbana-Champaign); Zaldokas, Alminas (National University of Singapore); Fedyk, Anastassia (University of California at Berkeley); Gorodnichenko, Yuriy (University of California, Berkeley); Hodson, James (AI for Good); Sologoub, Ilona (VoxUkraine) |
| Abstract: | We develop a novel, scalable method for assessing the quality of public procurement systems using standard administrative data. Our approach compares the distribution of procurement opportunities to the distribution of contract awards across firms. We first derive a simple theoretical benchmark that relates the expected distribution of contract value winning firms, measured as a Herfindahl-Hirschman index (HHI), to the distribution of auction values, measured as a respective HHI, and the number of winning firms. Significant deviations of winning firms' HHI from this benchmark indicate potential governance failures such as corruption or unchecked collusion. Our method requires no subjective input, is transparent and reproducible, and allows for meaningful comparisons across countries, industry sectors, and over time. We use procurement data from Ukraine and EU member states in 2018-2021 to assess the performance of five large sectors. Ukraine's procurement performance in four of the five sectors is comparable to many other European countries, but Ukraine's construction sector consistently displays the largest excess concentration among all countries considered, consistent with anecdotal evidence of corruption in this sector. |
| Keywords: | Ukraine, corruption, procurement, collusion |
| JEL: | D73 L10 H11 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18257 |
| By: | Itai Arieli; Colin Stewart |
| Abstract: | We introduce a model of persuasion in which a sender without any commitment power privately gathers information about an unknown state of the world and then chooses what to verifiably disclose to a receiver. The receiver does not know how many experiments the sender is able to run, and may therefore be uncertain as to whether the sender disclosed all of her information. Despite this challenge, we show that, under general conditions, the sender is able to achieve the same payoff as in the full-commitment Bayesian persuasion case. |
| Keywords: | Persuasion, information design, disclosure, verifiable information |
| JEL: | D82 D83 |
| Date: | 2025–11–25 |
| URL: | https://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-808 |