Advances in Information Economics: 10 Years Since Nobel on Mechanism Design
Saturday, Jan. 7, 2017 12:30 PM – 2:15 PM
Hyatt Regency Chicago, Toronto
- Chair: In-Uck Park, University of Bristol and Sungkyunkwan University
Robustness in Dynamic Screening
AbstractWe characterize properties of optimal contracts using a novel variational approach that permits us to tackle directly the full program, thus bypassing many of the technical conditions necessary to validate the first-order, Myersonian, approach (which focuses on local incentive compatibility constraints). In particular, we show how the average dynamics of allocations are driven by two simple and economically meaningful conditions on the process governing the evolution of the agent's type, ergodicity and stochastic monotonicity (i.e., FOSD). In passing, we also clarify how distortions need not be monotone in types, or time, and relate their dynamics to the dynamics of the impulse responses.
A Theory of Efficient Negotiations
AbstractNegotiation involves determining not only an agreement's price, but also its content, which typically has many aspects. We model such negotiations and provide conditions under which negotiation leads to efficient outcomes, even in the face of substantial asymmetric information regarding the value of each aspect. With sufficient information about the overall potential surplus, if the set of offers that agents can make when negotiating is sufficiently rich, then negotiation leads the agents to efficient agreements in all equilibria. Furthermore, no ``planner'' or ``mechanism designer'' who knows the statistical structure of information is required: the same negotiation game works regardless of the setting. The theory and examples explore the anatomy of negotiation and may shed light on why many situations with significant asymmetric information exhibit little inefficiency.
Third-Party Sale of Information
AbstractWe characterize the optimal selling mechanism by a third party (advisor) who has sole access to the information on the continuous value of the good for the buyer in a seller-buyer relationship. We show that it suffices to consider mechanisms with binary advice (buy or not) contingent on the seller’s price, and discuss the impacts on welfare. We extend the analysis to the case that the buyer has additional private information on the value of the good.
University of Illinois-Urbana-Champaign
University of Pennsylvania
Kyungmin Teddy Kim,
University of Miami
University of Michigan
- C7 - Game Theory and Bargaining Theory
- D8 - Information, Knowledge, and Uncertainty