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on Game Theory |
| By: | Yonggyun Kim; Francisco Poggi |
| Abstract: | We introduce a dynamic innovation game where participants race to develop a product using alternative technologies. Race participants dynamically allocate resources across (i) developing the product with the currently available technology and (ii) obtaining a faster technology for posterior development. When firm’s available technologies are publicly observable, there is a unique MPE in which firms react to a rivals’ technological discovery by increasing the share of resources allocated to development. However, without frictions, the firms file patents and license technologies to their rivals. When firm’s available technologies are private information, firms conceal their discoveries by forgoing patenting, even when patent holders retain all bargaining power in licensing negotiations. |
| Keywords: | Direction of Innovation, Patent, License, Trade Secret |
| JEL: | C73 D21 O30 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_648 |
| By: | Frank Yang (University of Chicago); Kai Hao Yang (Yale University) |
| Abstract: | We characterize the extreme points of multidimensional monotone functions from [0, 1]^n to [0, 1], as well as the extreme points of the set of one-dimensional marginals of these functions. These characterizations lead to new results in various mechanism design and information design problems, including public good provision with interdependent values; interim efficient bilateral trade mechanisms; asymmetric reduced form auctions; and optimal private private information structure. As another application, we also present a mechanism anti-equivalence theorem for two-agent, two-alternative social choice problems: A mechanism is payoff-equivalent to a deterministic DIC mechanism if and only if they are ex-post equivalent. |
| Date: | 2025–02–26 |
| URL: | https://d.repec.org/n?u=RePEc:cwl:cwldpp:2428 |
| By: | Dirk Bergemann (Yale University); Rahul Deb (Boston College) |
| Abstract: | We study the robust sequential screening problem of a monopolist seller of multiple cloud computing services facing a buyer who has private information about his demand distribution for these services. At the time of contracting, the buyer knows the distribution of his demand of various services and the seller simply knows the mean of the buyerÕs total demand. We show that a simple Òcommitted spend mechanismÓ is robustly optimal: it provides the seller with the highest profit guarantee against all demand distributions that have the known total mean demand. This mechanism requires the buyer to commit to a minimum total usage and a corresponding base payment; the buyer can choose the individual quantities of each service and is free to consume additional units (over the committed total usage) at a fixed marginal price. This result provides theoretical support for prevalent cloud computing pricing practices while highlighting the robustness of simple pricing schemes in environments with complex uncertainty. |
| Date: | 2025–02–10 |
| URL: | https://d.repec.org/n?u=RePEc:cwl:cwldpp:2423 |
| By: | Robinson, James Alan; Vostroknutov, Alexander; Vostroknutova, Ekaterina |
| Abstract: | This paper proposes a new framework to model institutions and institutional change. It shows how moral agents, who strive to cooperate with others, can form institutions that facilitate cooperation. The framework makes it possible to model informal as well as formal institutions as games played by moral agents: when the quality of the government is low and agents are not willing to use its services they will create informal institutions that allow them to cooperate outside the official channels. It is also possible to conceptualize institutions as inclusive or extractive and model institutional change as a consequence of the choice of moral agents among available institutions as time unfolds. With a series of examples of clientelistic networks, the paper shows that the framework can be useful for understanding how and why such networks form and persist. The framework can be used to model any interactions among moral agents, thus giving rise to a wide variety of possible institutional settings. |
| Date: | 2023–11–08 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10600 |