Theoretical Economics

doi: 10.3982/TE73BMpmid: N/A

doi: 10.3982/TE73FMpmid: N/A

Bochet, Olivier; İlkılıç, Rahmi; Moulin, Hervé; Sethuraman, Jay

doi: 10.3982/TE893pmid: N/A

In a moneyless market, a nondisposable homogeneous commodity is reallocated between agents with single‐peaked preferences. Agents are either suppliers or demanders. Transfers between a supplier and a demander are feasible only if they are linked. The links form an arbitrary bipartite graph. Typically, supply is short in one segment of the market, while demand is short in another.

Gerardi, Dino; Maestri, Lucas

doi: 10.3982/TE914pmid: N/A

This paper analyzes the optimal provision of incentives in a dynamic information acquisition process. In every period, the agent can acquire costly information that is relevant to the principal's decision. Each signal may or may not provide definitive evidence in favor of the good state. Neither the agent's effort nor the realizations of his signals is observable. First, we assume that the agent has no private information at the time of contracting. Under the optimal mechanism, the agent is rewarded only when his messages are consistent with the state. The payments that the agent receives when he correctly announces the good state increase over time. We then characterize the optimal mechanisms when the agent has superior information about the state at the outset of the relationship. The principal prefers to offer different contracts if and only if the agent types are sufficiently diverse. Finally, all agent types benefit from their initial private information.

Mylovanov, Tymofiy; Tröger, Thomas

doi: 10.3982/TE787pmid: N/A

We provide a solution to the problem of mechanism selection by a privately informed principal in generalized‐private‐value environments. In a broad class of these environments, the mechanism‐selection game has a perfect‐Bayesian equilibrium that has a strong neologism‐proofness property. Equilibrium allocations that satisfy this property are characterized in terms of the players' incentive and participation constraints, and can be computed using standard methods.

Renou, Ludovic; Tomala, Tristan

doi: 10.3982/TE921pmid: N/A

This paper studies a mechanism design model where the players and the designer are nodes in a communication network. We characterize the communication networks (directed graphs) for which, in any environment (utilities and beliefs), every incentive compatible social choice function is partially implementable. We show that any incentive compatible social choice function is implementable on a given communication network, in all environments with either common independent beliefs and private values or a worst outcome, if and only if the network is strongly connected and weakly 2‐connected. A network is strongly connected if for each player, there exists a directed path to the designer. It is weakly 2‐connected if each player is either directly connected to the designer or indirectly connected to the designer through two disjoint paths, not necessarily directed. We couple encryption techniques together with appropriate incentives to secure the transmission of each player's private information to the designer.

Nascimento, Leandro

doi: 10.3982/TE896pmid: N/A

This paper presents an analysis of the problem of aggregating preference orderings under subjective uncertainty. Individual preferences, or opinions, agree on the ranking of risky prospects, but are quite general because we do not specify the perception of ambiguity or the attitude toward it. A convexity axiom for the ex ante preference characterizes a (collective) decision rule that can be interpreted as a compromise between the utilitarian and the Rawlsian criteria. The former is characterized by the independence axiom as in Harsanyi (1955). Existing results are special cases of our representation theorems, which also allow us to interpret Segal's (1987) two‐stage approach to ambiguity as the ex ante aggregation of (Bayesian) future selves' opinions.

Chade, Hector; Schlee, Edward

doi: 10.3982/TE671pmid: N/A

We solve the principal–agent problem of a monopolist insurer selling to an agent whose riskiness (loss chance) is private information, a problem introduced in Stiglitz's (1977) seminal paper.

Healy, Paul J.; Mathevet, Laurent

doi: 10.3982/TE898pmid: N/A

We study the design of mechanisms that implement Lindahl or Walrasian allocations and whose Nash equilibria are dynamically stable for a wide class of adaptive dynamics. We argue that supermodularity is not a desirable stability criterion in this mechanism design context, focusing instead on contractive mechanisms. We provide necessary and sufficient conditions for a mechanism to Nash‐implement Lindahl or Walrasian allocations, show that these conditions are inconsistent with the contraction property when message spaces are one‐dimensional, and then show how to use additional dimensions to achieve dynamic stability while gaining budget balance out of equilibrium.

Reffgen, Alexander; Svensson, Lars‐Gunnar

doi: 10.3982/TE909pmid: N/A

In a voting model where the set of feasible alternatives is a subset of a product set A = A1×⋯×Am of m finite categories, we characterize the set of all strategy‐proof social choice functions for three different types of preference domains over A, namely for the domains of additive, completely separable, and weakly separable preferences over A.