Dynamic Mechanism Design: An Introduction
Journal of Economic Literature
vol. 57,
no. 2, June 2019
(pp. 235-74)
Abstract
We provide an introduction to the recent developments of dynamic mechanism design, with a primary focus on the quasilinear case. First, we describe socially optimal (or efficient) dynamic mechanisms. These mechanisms extend the well-known Vickrey–Clark–Groves and D'Aspremont–Gérard–Varet mechanisms to a dynamic environment. Second, we discuss revenue optimal mechanisms. We cover models of sequential screening and revenue-maximizing auctions with dynamically changing bidder types. We also discuss models of information management where the mechanism designer can control (at least partially) the stochastic process governing the agents' types. Third, we consider models with changing populations of agents over time. After discussing related models with risk-averse agents and limited liability, we conclude with a number of open questions and challenges that remain for the theory of dynamic mechanism design.Citation
Bergemann, Dirk, and Juuso Välimäki. 2019. "Dynamic Mechanism Design: An Introduction." Journal of Economic Literature, 57 (2): 235-74. DOI: 10.1257/jel.20180892Additional Materials
JEL Classification
- D44 Auctions
- D81 Criteria for Decision-Making under Risk and Uncertainty
- D82 Asymmetric and Private Information; Mechanism Design