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This paper characterizes the equilibria of first price auctions with participation costs in the independent private values environment. Bidders use cutoff strategies to decide whether they will participate in the auction. It is shown that, when bidders are homogeneous, there always exists a...
Persistent link: https://www.econbiz.de/10008495012
This paper deals with the problem of incentive mechanism design in non-convex production economies when production sets and preferences both are unknown to the designer. We consider Nash-implementation of loss-free, average cost, marginal cost, voluntary trading, and quantity-taking pricing...
Persistent link: https://www.econbiz.de/10005066753
Persistent link: https://www.econbiz.de/10005409089
Persistent link: https://www.econbiz.de/10005413887
This paper provides a new explanation for the dominance of the low-powered incentive contract over the high-powered incentive contract using a hybrid model of moral hazard and adverse selection. We first show that unobservable risk aversion or cost leads to low-powered incentives. We then...
Persistent link: https://www.econbiz.de/10010603333