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on Economic Design |
| By: | Umut Mert Dur (North Carolina State University); Robert G. Hammond (University of Alabama); M. Utku Ünver (Boston College) |
| Abstract: | Labor contracts typically do not limit worker mobility. Interesting exceptions exist in foreign worker reemployment, sports transfers and sometimes through non-compete clauses. We develop a model to address contractual designs for such markets. Although legally, a firm can contest its worker’s recruitment by a competitor, it may be more lenient if he can be replaced immediately. We develop a theory of stability suitable for such markets and propose stable-uncontested mechanisms. As our application, we consider transfers in collegiate sports governed by the NCAA, where before 2021, a student-athlete had to sit out a year after a transfer. Beginning in 2021, free mobility was allowed. Anecdotal evidence suggests while pre-2021 regulations were detrimental to student and college welfare, post-2020 regulations led to colleges struggling to keep rosters and withholding new scholarship slots to use in transfers. Our model also captures the NCAA’s pre-2021 and post-2020 regulations as well as our new proposed efficiency-enhancing criterion. Then, using data from men’s collegiate basketball, we estimate college and student-athlete preferences. Using the preferences we estimate from transfer data, we run counterfactual analyses of pre-2021 and post-2020 environments and our proposed regulations. Our proposal achieves closer student-athlete welfare to post-2020 than pre-2021 and increases college welfare with respect to post-2020 and pre-2021. |
| Keywords: | Matching Theory, Market Design, Matching with Contracts, Labor Mobility, NCAA Transfers Market |
| JEL: | C78 D61 D82 Z20 |
| Date: | 2025–12–08 |
| URL: | https://d.repec.org/n?u=RePEc:boc:bocoec:1104 |
| By: | Sriram Tolety |
| Abstract: | We study whether large language models acting as autonomous bidders can tacitly collude by coordinating when to accept platform posted payouts in repeated Dutch auctions, without any communication. We present a minimal repeated auction model that yields a simple incentive compatibility condition and a closed form threshold for sustainable collusion for subgame-perfect Nash equilibria. In controlled simulations with multiple language models, we observe systematic supra-competitive prices in small auction settings and a return to competitive behavior as the number of bidders in the market increases, consistent with the theoretical model. We also find LLMs use various mechanisms to facilitate tacit coordination, such as focal point acceptance timing versus patient strategies that track the theoretical incentives. The results provide, to our knowledge, the first evidence of bidder side tacit collusion by LLMs and show that market structure levers can be more effective than capability limits for mitigation. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.21802 |
| By: | Yijun Liu |
| Abstract: | This paper studies a dynamic screening model in which a principal hires an agent with limited liability. The agent's private cost of working is an i.i.d. draw from a continuous distribution. His working status is publicly observable. The limited liability constraint requires that payments remain nonnegative at all times. In this setting, despite costs being i.i.d. and the payoffs being additively separable across periods, the optimal mechanism does not treat each period independently. Instead, it features backloading payments and requires the agent to work in consecutive periods. Specifically, I characterize conditions under which the optimal mechanism either grants the agent flexibility to start working in any period or restricts the starting period to the first. In either case, once the agent begins working, he is incentivized to work consecutively until the end. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.19838 |
| By: | Vijay V. Vazirani |
| Abstract: | This paper unifies two foundational constructs from economics and algorithmic game theory, the Arctic Auction and the linear Fisher market, to address the efficient allocation of differentiated goods in complex markets. Our main contributions are showing that an equilibrium for the Arctic Auction is captured by a Rational Convex Program, and deriving the first combinatorial polynomial-time algorithm for computing Arctic Auction equilibria. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.21637 |
| By: | Jun Zhang |
| Abstract: | We apply the consistency principle to examine various core concepts in a general allocation model that subsumes several familiar market design models as special cases. The conventional strong core is consistent but may be empty, whereas the exclusion core proposed by Balbuzanov and Kotowski (2019), although nonempty, is not consistent and may include unintuitive allocations. We therefore propose a refinement of the exclusion core, which is both nonempty and consistent. Our solution offers sharper predictions than alternatives and coincides with the strong core and/or the exclusion core in special cases that generalize familiar models. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.21155 |
| By: | Jun Zhang |
| Abstract: | We examine core concepts in the classical model of \cite{shapley1974cores} under full preferences. Among the standard notions, the strong core may be empty, whereas the weak core, though always nonempty, can be overly large and include unreasonable allocations. Our main findings are: (1) The exclusion core of Balbuzanov and Kotowski (2019) -- a recent concept shown to outperform standard cores in complex environments under strict preferences -- can also be empty. We establish a necessary and sufficient condition for its nonemptiness, showing that it is more often nonempty than the strong core. (2) We introduce two new core concepts, built on the exclusion core and the strong core respectively, by refining the assumptions on how indifferent agents may block. Both are nonempty and Pareto efficient, and coincide with the strong core whenever the latter is nonempty. (3) These core concepts are ordered by set inclusion, with the strong core as the smallest and the weak core as the largest. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.21158 |
| By: | Gian Caspari; Manshu Khanna |
| Abstract: | We analyze the problem of matching asylum seekers to member states, incorporating wait times, preferences of asylum seekers, and the priorities, capacities, and burden-sharing commitments of member states. We identify a unique choice rule that addresses feasibility while balancing priorities and capacities. We examine the effects of both homogeneous and heterogeneous burden-sizes among asylum seekers on the matching process. Our main result shows that when all asylum seekers are treated as having identical burden-sizes, the asylum-seeker-proposing cumulative offer mechanism guarantees both stability and strategy-proofness. In contrast, when burden-sizes vary, there are scenarios where achieving stability or strategy-proofness is no longer possible. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.21147 |
| By: | Rustamdjan Hakimov; Manshu Khanna |
| Abstract: | Many assignment systems require applicants to rank multi-attribute bundles (e.g., programs combining institution, major, and tuition). We study whether this reporting task is inherently difficult and how reporting interfaces affect accuracy and welfare. In laboratory experiments, we induce preferences over programs via utility over attributes, generating lexicographic, separable, or complementary preferences. We compare three reporting interfaces for the direct serial dictatorship mechanism: (i) a full ranking over programs; (ii) a lexicographic-nesting interface; and (iii) a weighted-attributes interface, the latter two eliciting rankings over attributes rather than programs. We also study the sequential serial dictatorship mechanism that is obviously strategy-proof and simplifies reporting by asking for a single choice at each step. Finally, we run a baseline that elicits a full ranking over programs but rewards pure accuracy rather than allocation outcomes. Four main findings emerge. First, substantial misreporting occurs even in the pure-accuracy baseline and increases with preference complexity. Second, serial dictatorship induces additional mistakes consistent with misperceived incentives. Third, simplified interfaces for the direct serial dictatorship fail to improve (and sometimes reduce) accuracy, even when they match the preference structure. Fourth, sequential choice achieves the highest accuracy while improving efficiency and reducing justified envy. These findings caution against restricted reporting languages and favor sequential choice when ranking burdens are salient. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.22834 |
| By: | Xinquan Hu; Jun Zhang |
| Abstract: | In the housing market model introduced by Shapley and Scarf (1974), we propose a new axiom, local unanimity, that extends the unanimity condition widely used in social choice theory. It applies the unanimity condition to any subset of agents in the model who unanimously agree on the best exchange of their endowments. Building on this axiom, we provide several concise characterizations of the Top Trading Cycles (TTC) mechanism under both strict and weak preference domains. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.22027 |
| By: | Jordana Blazek; Frederick C. Harris Jr |
| Abstract: | We consider a bipartite network of buyers and sellers, where the sellers run locally independent Progressive Second-Price (PSP) auctions, and buyers may participate in multiple auctions, forming a multi-auction market with perfect substitute. The paper develops a projection-based influence framework for decentralized PSP auctions. We formalize primary and expanded influence sets using projections on the active bid index set and show how partial orders on bid prices govern allocation, market shifts, and the emergence of saturated one-hop shells. Our results highlight the robustness of PSP auctions in decentralized environments by introducing saturated components and a structured framework for phase transitions in multi-auction dynamics. This structure ensures deterministic coverage of the strategy space, enabling stable and truthful embedding in the larger game. We further model intra-round dynamics using an index to capture coordinated asynchronous seller updates coupled through buyers' joint constraints. Together, these constructions explain how local interactions propagate across auctions and gives premise for coherent equilibria--without requiring global information or centralized control. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.19225 |
| By: | Maxwell Rosenthal |
| Abstract: | This paper introduces a prior-free framework for information design based on partial identification and applies it to robust causal inference. The decision maker observes the distribution of signals generated by an information structure and ranks alternatives by their worst-case payoff over the state distributions consistent with those signals. We characterize the set of robustly implementable actions and show that each can be implemented by an information structure that withholds at most one dimension of information from the decision maker. In the potential outcomes model, every treatment is implementable via an experiment that is almost fully informative. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.18647 |
| By: | Xiaopeng Zeng; Erbao Cao; Xiangqian Yang |
| Abstract: | When are dynamics valuable? In Bayesian environments with public signals and no intertemporal commitment, we study a seller who allocates an economically single-shot resource over time. We provide necessary and sufficient conditions under which the optimal dynamic mechanism collapses to a simple terminal design: a single public experiment at date 0 followed by a posterior-dependent static mechanism executed at a deterministic date, with no further disclosure. The key condition is the existence of a global affine shadow value that supports the posterior-based revenue frontier and uniformly bounds all history-dependent revenues. When this condition fails, a collapse statistic pinpoints the dates and public state variables that generate genuine dynamic value. The characterization combines martingale concavification on the belief space with an affine-support duality for concave envelopes. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.19781 |
| By: | Chen, Qianmiao |
| Abstract: | Public procurement is highly susceptible to corruption, especially in developing countries. Although open auctions are widely adopted to curb it, this paper finds that corruption remains prevalent even within this procurement format. Procurement officers can collaborate with firms to manipulate scoring rules, ensuring predetermined winners, while corrupt firms submit noncompetitive bids to meet minimum bidder requirements. Using extensive data from Chinese public procurement auctions, the paper introduces model-driven statistical tools to detect such corruption, identifying a corruption rate of 65 percent. A procurement expert audit survey confirms the tools’ reliability, with a 91 percent probability that experts recognize suspicious scoring rules when flagged. Firm-level analysis reveals that local, state-owned, and less productive firms are favored in corrupt auctions. Lastly, the paper explores policy implications. Analysis of the national anti-corruption campaign since 2012 suggests that general investigations may be insufficient to address deeply ingrained corrupt practices. Using counterfactuals based on an estimated structural model, the paper shows that implementing anonymous call-for-tender evaluations could improve social welfare by 10 percent by eliminating suspicious rules and encouraging broader participation. |
| Date: | 2025–12–02 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11267 |
| By: | Yuan Gao; Xi Jin; Manshu Khanna |
| Abstract: | We study allocation problems with reserve systems under minimum beneficiary-share guarantees, requirements that targeted matches constitute at least a specified percentage of total matches. While such mandates promote targeted matches, they inherently conflict with maximizing total matches. We characterize the complete non-domination frontier using minimal cycles, where each point represents an allocation that cannot increase targeted matches without sacrificing total matches. Our main results: (i) the frontier exhibits concave structure with monotonically decreasing slope, (ii) traversing from maximum targeted matches to maximum total matches reduces matches by at most half, (iii) the Repeated Hungarian Algorithm computes all frontier points in polynomial time, and (iv) mechanisms with beneficiary-share guarantees can respect category-dependent priority orderings but necessarily violate path-independence. These results enable rigorous evaluation of beneficiary-share policies across diverse allocation contexts. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.20077 |
| 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. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.18662 |
| By: | Alfred Galichon; Antoine Jacquet; Georgy Salakhutdinov |
| Abstract: | We present a general framework for matching with transferable utility (TU) that accommodates arbitrary heterogeneity without relying on the logit structure. The optimal assignment problem is characterized by tractable linear programming formulation, allowing flexible error distributions and correlation patterns. We introduce an iterative algorithm that solves large-scale assignment problems with guaranteed convergence and an intuitive economic interpretation, and we show how the same structure supports a simulated moment-matching estimator of the systematic surplus. Experiments using simulated data demonstrate the algorithm's scalability and the estimator's consistency under correct specification, as well as systematic bias arising from logit misspecification. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.23116 |