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Mechanism design with financially constrained agents and costly verification

Li, Yunan - In: Theoretical Economics 16 (2021) 3, pp. 1139-1194

A principal distributes an indivisible good to budget-constrained agents when both valuation and budget are agents' private information. The principal can verify an agent's budget at a cost. The welfare-maximizing mechanism can be implemented via a two-stage scheme. First, agents report their...

Persistent link: https://www.econbiz.de/10013189054

Disputes, debt and equity

Duncan, Alfred J. M.; Nolan, Charles - In: Theoretical Economics 14 (2019) 3, pp. 887-925

We show how the prospect of disputes over firms' revenue reports promotes debt financing over equity. This is demonstrated in a costly state verification model with a risk averse entrepreneur. The prospect of disputes encourages incentive contracts that limit penalties and avoid stochastic...

Persistent link: https://www.econbiz.de/10012215300

Efficient dynamic mechanisms in environments with interdependent valuations: The role of contingent transfers

Liu, Heng - In: Theoretical Economics 13 (2018) 2, pp. 795-829

This paper addresses the problem of implementing socially efficient allocations in dynamic environments with interdependent valuations and evolving private information. In the case where the agents' information is correlated across time, we construct efficient and incentive compatible direct...

Persistent link: https://www.econbiz.de/10012010044

Optimal structure and dissolution of partnerships

Loertscher, Simon; Wasser, Cédric - In: Theoretical Economics 14 (2018) 3, pp. 1063-1114

For a partnership model with general type distributions and interdependent values, we derive the optimal dissolution mechanisms that, for arbitrary initial ownership, maximize any convex combination of revenue and social surplus. The solution involves ironing around typically interior worst-off...

Persistent link: https://www.econbiz.de/10012215302

Efficient multiunit auctions for normal goods

Baisa, Brian - In: Theoretical Economics 15 (2020) 1, pp. 361-413

. Without quasilinearity, the Vickrey auction loses its desired incentive and efficiency properties. I give conditions under … which we can design a mechanism that retains the Vickrey auction's desirable incentive and efficiency properties: (1 …) individual rationality, (2) dominant strategy incentive compatibility, and (3) Pareto efficiency. I show that there is a …

Persistent link: https://www.econbiz.de/10012215333

On Groves mechanisms for costly inclusion

MacKenzie, Andrew; Trudeau, Christian - In: Theoretical Economics 18 (2023) 3, pp. 1181-1223

We investigate Groves mechanisms for economies where (i) a social outcome specifies a group of winning agents, and (ii) a cost function associates each group with a monetary cost. In particular, we characterize both (i) the class of cost functions for which there are Groves mechanisms such that...

Persistent link: https://www.econbiz.de/10014536965

Who's afraid of aggregating money metrics?

Bosmans, Kristof; Decancq, Koen; Ooghe, Erwin - In: Theoretical Economics 13 (2018) 2, pp. 467-484

-to-poorer transfers that preserve the overall efficiency of the distribution. This transfer principle - together with the basic axioms of …

Persistent link: https://www.econbiz.de/10012010032

Efficient cooperation by exchanging favors

Olszewski, Wojciech; Safronov, Mikhail - In: Theoretical Economics 13 (2018) 3, pp. 1191-1231

We study chip-strategy equilibria in two-player repeated games. Intuitively, in these equilibria players exchange favors by taking individually suboptimal actions if these actions create a "gain" for the opponent larger than the player's "loss" from taking them. In exchange, the player who...

Persistent link: https://www.econbiz.de/10012010055

Matching with floor constraints

Akin, Sumeyra - In: Theoretical Economics 16 (2021) 3, pp. 911-942

Floor constraints are a prominent feature of many matching markets, such as medical residency, teacher assignment, and military cadet matching. We develop a theory of matching markets under floor constraints. We introduce a stability notion, which we call floor respecting stability, for markets...

Persistent link: https://www.econbiz.de/10013189041

School choice under partial fairness

Dur, Umut Mert; Gitmez, A. Arda; Yilmaz, Özgür - In: Theoretical Economics 14 (2019) 4, pp. 1309-1346

We generalize the school choice problem by defining a notion of allowable priority violations. In this setting, a weak axiom of stability (partial stability) allows only certain priority violations. We introduce a class of algorithms called the Student Exchange under Partial Fairness (SEPF)....

Persistent link: https://www.econbiz.de/10012215296

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