Essays on Information Economics and Mechanism Design PDF Download

Author: Fangrui Ouyang
Publisher:
ISBN:
Category : Auctions
Languages : en
Pages : 158

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Author: Agathe Alysse Pernoud
Publisher:
ISBN:
Category :
Languages : en
Pages : 0

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This dissertation comprises three essays in information economics. Each essay employs tools from mechanism design and game theory to examine individuals' incentives when acquiring information and when sharing that information with others. The first chapter considers a mechanism design setting in which agents can obtain costly information about their own preferences and those of others. A mechanism is informationally simple if agents have no incentive to learn about others' preferences. This property is of interest for two reasons: First, it is a necessary condition for the existence of dominant strategy equilibria in the extended game. Second, it endogenizes an "independent private value" property of the interim information structure. We show that, generically, a mechanism is informationally simple if and only if it satisfies a separability condition which rules out most economically meaningful mechanisms. The second chapter examines auctions in which buyers can acquire costly information about their own valuations and those of others, and investigates how competition among buyers shapes their learning incentives. In equilibrium, buyers find it cost-efficient to acquire some information about their competitors so as to only learn their valuations when they have a fair chance of winning. We show that such learning incentives make competition between buyers less effective: losing buyers often fail to learn their valuations precisely and, as a result, compete less aggressively for the good. The third chapter deviates from the preceding two by focusing on how individuals communicate with each other. It seeks to understand how individuals' subjective models of the world, or worldviews, affect communication.

Author: Mukul Majumdar
Publisher: Cambridge University Press
ISBN: 9780521553001
Category : Business & Economics
Languages : en
Pages : 372

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There have been systematic attempts over the last twenty-five years to explore the implications of decision making with incomplete information and to model an 'economic man' as an information-processing organism. These efforts are associated with the work of Roy Radner, who joins other analysts in this collection to offer accessible overviews of the existing literature on topics such as Walrasian equilibrium with incomplete markets, rational expectations equilibrium, learning, Markovian games, dynamic game-theoretic models of organization, and experimental work on mechanism selection. Some essays also take up relatively new themes related to bounded rationality, complexity of decisions, and economic survival. The collection overall introduces models that add to the toolbox of economists, expand the boundaries of economic analysis, and enrich our understanding of the inefficiencies and complexities of organizational design in the presence of uncertainty.

Author: Walter Trockel
Publisher: Springer
ISBN: 3319938096
Category : Business & Economics
Languages : en
Pages : 340

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This book contains invited essays in memory of Leonid Hurwicz spanning a large area of economic, social and other sciences where the implementation or enforcement of institutions and rules requires the design of effective mechanisms. The foundations of these articles are set by social choice concepts; game theory; Nash, Bayesian and Walrasian equilibria; complete and incomplete information. Besides in-depth treatments of well-established parts of mechanism and implementation theory, contributions on novel directions deal, for instance, with a quantum approach to game and decision making under uncertainty; digitalization; and the design of block chain for trading. The outstanding competence and reputation of the authors reflect the appreciation of the fundamental contributions and the lasting admiration of the personality and the work of Leonid Hurwicz.

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Category :
Languages : en
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Author: Delong Meng
Publisher:
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Category :
Languages : en
Pages :

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This thesis consists of three essays on the economics of information. We study economic situations that involve information asymmetry. For example in an informal insurance market the borrower has private information about her income that the lender cannot observe. In a social learning context different agents possess different signals about the state of the world. In a principal-agent problem the agent could privately observe a productivity shock that is unknown to the principal. We study these situations using tools from mechanism design. In Chapter 1 we study repeated communication between a long-run sender and a long-run receiver. In each period the sender observes the state of the world -- which is i.i.d. across time -- and reports the state to the receiver. The receiver takes an action based on the history of the sender's reports and public randomization signals. The receiver fully commits to her action at each point in history, and the sender commits to nothing. We allow arbitrary state space, action space, and preferences. We characterize the set of possible payoffs for the sender and the receiver when both are infinitely patient -- i.e., as the discount factor goes to one. We also study the payoff set when the discount factor is less than (but close to) one. In particular we bound the rate of convergence to points on the frontier of the limit payoff set; the rate of convergence differs radically for discrete and continuous models, and we provide a unified view of the rate of convergence results based on the shape of the frontier of the limit payoff set. We discuss three applications of our results. First for dynamic CEO compensation we characterize the firm's revenue from the optimal contract as the interest rate goes to zero. Second we show that dynamic delegation -- a common problem in agencies -- is equivalent to our model. Third we study a reputation problem where the sender's preference is unknown, and we give a lower bound for the receiver's expected payoff as the discount factor goes to one. In Chapter 2 we study a social learning model in which people choose who to talk to and strategically exchange information. Agents start with heterogeneous priors about an unknown state of the world. First each agent chooses a partner. Then everyone observes a private i.i.d. signal and sends a message to her partner. Finally everyone takes an action based on her prior, her private signal, and her partner's message. Our main finding is that when the signal space and action space are binary, assortative matching arises in equilibrium, but it is generally inefficient for social welfare and information aggregation. In addition we construct counter-examples (non-assortative matching) in the case of multiple signals or multiple actions. In Chapter 3 (joint with Gabriel Carroll) we study a principal-agent problem where the agent has private information about her productivity shock. Our goal is to investigate the idea that linear contracts are reliable because they give the same incentives for effort at every point along the contract. We ask whether this reliability leads to a microfoundation for linear contracts, when the principal is profit-maximizing. We consider a principal-agent model with risk neutrality and limited liability, in which the agent observes the realization of a mean-zero shock to output before choosing how much effort to exert. We show that such a model can indeed provide a foundation for reliable contracts, and illustrate what elements are required. In particular, we must assume that the principal knows a lower bound, but not an upper bound, on the shocks.

Author: Theodore Groves
Publisher:
ISBN: 9780816668663
Category : Business & Economics
Languages : en
Pages : 408

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Information, Incentives, and Economics Mechanisms was first published in 1987.In 1960, economist Leonid Hurwicz formulated a theoretical model that initiated a field of research on the design and analysis of economic mechanisms (the institutional rules and structures by which economic activity is coordinated). By treating mechanisms as a "variable," this research provided a methodology for their comparison. The inefficiency of mechanisms arises from 1) the dispersion of information among agents, and 2) agents' incentives to seek private advantage from this dispersion. Exploration of these limits to efficiency was pioneered by Hurwicz in 1972, and has become a major area of active research. In part, this research enables economic theory to be a more effective instrument for the study of how a society can and should organize its economic activity.The fourteen new papers in this volume -- by a group of distinguished economists, all former students, colleagues, and collaborators of Hurwicz -- address major themes in the study of information and incentives for implementing desired economic allocations. Two comprehensive survey essays provide introductions to the topics of incentive in decentralized organizations generally and, more specifically, in classical models of private goods and public goods economies. The following sections deal with informational aspects of mechanism theory, information and the stability of general resource allocation mechanisms, market mechanisms, and nonmarket and general mechanisms.In addition to the editors, the contributors are: Masahiko Aoki, Kenneth J. Arrow, Xavier Calsamiglia, Jerry R. Green, James S. Jordan, Jean-Jacques Laffont, John Ledyard, Thomas Marschak, Eric Maskin, Andreu Mas-Coleli, Kenneth R. Mount, Andrew Postlewaite, Jean-Charles Rochet, John Roberts, David Schmeidler, and William Thomson.

Author: Biung-Ghi Ju
Publisher:
ISBN:
Category : Economics
Languages : en
Pages : 378

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Author: Dirk Bergemann
Publisher: World Scientific
ISBN: 981437458X
Category : Business & Economics
Languages : en
Pages : 471

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Foreword by Eric Maskin (Nobel Laureate in Economics, 2007)This volume brings together the collected contributions on the theme of robust mechanism design and robust implementation that Dirk Bergemann and Stephen Morris have been working on for the past decade. The collection is preceded by a comprehensive introductory essay, specifically written for this volume with the aim of providing the readers with an overview of the research agenda pursued in the collected papers.The introduction selectively presents the main results of the papers, and attempts to illustrate many of them in terms of a common and canonical example, namely a single unit auction with interdependent values. It is our hope that the use of this example facilitates the presentation of the results and that it brings the main insights within the context of an important economic mechanism, namely the generalized second price auction.

Author: John O. Ledyard
Publisher: Springer Science & Business Media
ISBN: 1461522617
Category : Business & Economics
Languages : en
Pages : 448

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In this volume are papers written by students and co-authors of Stanley Reiter. The collection reflects to some extent the range of his interests and intellectual curiosity. He has published papers in statistics, manage ment science, international trade, and welfare economics. He co-authored early papers in economic history and is reported to be largely responsible for giving the field its name of Cliometrics. He helped initiate, nurture and establish the area of economics now known as mechanism design which studies information decentralization, incentives, computational complexity and the dynamics of decentralized interactions. The quality, craft, depth, and innovative nature of his work has always been at an exceptionally high level. Stan has had a strong and important direct effect on many students at Purdue University and Northwestern University. He created and taught a course which all of his students have both dreaded and respected. Using the Socratic method in remarkably effective ways to teach theory skills, he has guided, prodded, and encouraged us to levels we did not think we were capable of. Some of his students are represented in this volume. But even those whose careers took directions other than mathematical economics still consider that training to be an important component of their success. Stan's students include department chairmen, business executives, Deans, a Secretary of the Air Force, and a College President. His guidance has been necessary and fundamental to whatever successes we have had.