Abstract. We develop a network-flow approach for characterizing interim-allocation rules that can be implemented by ex post allocations. Our method can be used to characterize feasible interim allocations in general multi-unit auctions where agents face capacity constraints, both ceilings and floors. Applications include a variety of settings of practical interest, ranging from individual and group-specific capacity constraints, set-aside sale, partnership dissolution, and government license reallocation.

We consider a model of firm pricing and consumer choice, where consumers are loss averse and uncertain about their future demand. Possibly, consumers in our model prefer a flat rate to a measured tariff, even though this choice does not minimize their expected billing amount-a behavior in line with ample empirical evidence. We solve for the profit-maximizing two-part tariff, which is a flat rate if (a) marginal costs are not too high, (b) loss aversion is intense, and (c) there are strong variations in de-mand. Moreover, we analyze the optimal nonlinear tariff. This tariff has a large flat part when a flat rate is optimal among the class of two-part tariffs.JEL classification: D11; D43; L11

We consider a decision maker (DM) who, before taking an action, seeks information by allocating her limited attention dynamically over different news sources that are biased toward alternative actions. Endogenous choice of information generates rich dynamics: The chosen news source either reinforces or weakens the prior, shaping subsequent attention choices, belief updating, and the final action. The DM adopts a learning strategy biased toward the current belief when the belief is extreme and against that belief when it is moderate. Applied to consumption of news media, observed behavior exhibits an "echo-chamber" effect for partisan voters and a novel "anti echo-chamber" effect for moderates. DDMs, which lead to a continuous belief process, are more suitable for the problem of learning the properties of a data-generating process from a sequence of samples, as in clinical trials, or for the analysis of statistical information. Poisson models, which lead to discontinuous updating, are useful to model the discovery of individual pieces of information that are very informative, as is common in the political 10 Since the belief is a martingale, we have λαDividing by dt and letting dt → 0 yields (2.1).11 These examples are similar in spirit to Suen (2004) and Burke (2008), except that information is not costly in these models, which leads to a different characterization. In particular, dynamics has no significant effect in these models, in contrast to the point made here.

Abstract. A dynamic mechanism design problem with multi-dimensional private information is studied. There is one object and two buyers who arrive in two different periods. In addition to his privately known valuation, the first buyer also has a privately known deadline for purchasing the object. The seller wants to maximize revenue.Depending on the type distribution, the incentive compatibility constraint for the deadline may or may not be binding in the optimal mechanism. Sufficient conditions on the type distribution and examples are given for either case.An optimal mechanism for the binding case is derived. It can be implemented by a fixed price in period one and an asymmetric auction in period two. The asymmetry prevails even if the valuations of both buyers are identically distributed. In order to prevent buyer one from buying in the first period when his deadline is two, the seller sets a reserve price that is lower than in the classical (Myerson, 1981) optimal auction and gives him a (non-linear) bonus. The bonus leads to robust bunching at the top of the type-space. The optimal mechanism can be characterized in terms of generalized virtual valuations which depend endogenously on the allocation rule.

This paper provides a tractable characterization of feasibility of asymmetric reduced form auctions. Using this, auction design problems can be stated in terms of the reduced form only. This allows to solve optimal auction problems when classical solution techniques fail. AbstractThis paper provides a tractable characterization of feasibility of asymmetric reduced form auctions. Using this, auction design problems can be stated in terms of the reduced form only. This allows to solve optimal auction problems when classical solution techniques fail.