Allocation with Correlated Information: Too Good to Be True

Kattwinkel, Deniz

doi:10.2139/ssrn.3615398

Cited by 3 publications

(8 citation statements)

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“…This interpretation connects our analysis to the literature on the design of optimal allocation rules without transfers. Ben‐Porath, Dekel, and Lipman (2014) solve such a problem by exploiting costly verification, whereas Kattwinkel (2019) exploits private information of the principal correlated with the agent's type. We exploit costly reporting costs.…”

Section: Test Design Under Covert Falsificationmentioning

confidence: 99%

Test Design Under Falsification

Pérez

Skreta

2022

ECTA

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We study the optimal design of tests with manipulable inputs. Tests take a unidimensional state of the world as input and output, an informative signal to guide a receiver's approve or reject decision. The receiver wishes to only approve states that comply with her baseline standard. An agent with a preference for approval can covertly falsify the state of the world at a cost. We characterize receiver‐optimal tests and show they rely on productive falsification by compliant states. They work by setting a more stringent operational standard, and granting noncompliant states a positive approval probability to deter them from falsifying to the standard. We also study how falsification‐detection technologies improve optimal tests. They allow the designer to build an implicit cost of falsification into the test, in the form of signal devaluations. Exploiting this channel requires enriching the signal space.

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Section: Test Design Under Covert Falsificationmentioning

confidence: 99%

Test Design Under Falsification

Pérez

Skreta

2022

ECTA

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“…Affiliation is a common assumption in moral hazard (e.g., Hölmstrom (1979), Grossman and Hart (1983), Lambert (1983)), auctions (e.g., Milgrom and Weber (1982), Persico (2000), Pinkse and Tan (2005)), and principal-agent/sender-receiver models (e.g., Ottaviani and Prat (2001), Kattwinkel (2019), Guo and Shmaya (2019)).…”

Section: General Resultsmentioning

confidence: 99%

“…Nevertheless, the comparison between the two papers is interesting as very different predictions emerge under affiliation. While in this paper's model of (pure) imperfect verification, communication has no value under affiliation, in Kattwinkel (2019), communication might have value even if signals are affiliated. I go through the theoretical reasons behind this difference in Section 4.…”

Section: Introductionmentioning

confidence: 84%

“…Kattwinkel (2019) studies a similar model, i.e., two alternatives and correlated signals, but assumes the agent's signal is not a sufficient statistic of the DM's signal 6 . In that sense, Kattwinkel (2019) is not, strictly speaking, a pure model of imperfect verification, because the DM's signal provides information that goes beyond the verification of the agent's information. Nevertheless, the comparison between the two papers is interesting as very different predictions emerge under affiliation.…”

Section: Introductionmentioning

confidence: 99%

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Information transmission in persuasion models with imperfect verification

Silva

2024

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I study a persuasion game between a privately informed agent and a decision maker (DM) who can imperfectly verify the statements made by the agent by observing a signal that is correlated with the agent's information. I find that whether or not the DM benefits from communicating with the agent depends on whether the DM's signal and the agent's private information satisfy a weak affiliation condition. I then discuss the significance of this result to the debate over the use of self‐appraisals in business. I argue that, in general, self‐appraisals are only useful when the workers' abilities are multidimensional.

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“…When a buyer and seller have correlated valuations of a good,Kattwinkel (2020) shows that the seller's optimal mechanism may involve randomization. Reminiscent of some of our results, with positive correlation, the good may not be allocated to a higher-value buyer with higher probability.3 When supply in insufficient, the analysis is broadly similar but requires consideration of multiple cases depending on the severity of the goods' scarcity.…”

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confidence: 99%

Who Cares More? Allocation with Diverse Preference Intensities

Ortoleva¹,

Safonov²,

Yariv³

2021

Preprint

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Goods and services-public housing, medical appointments, schools-are often allocated to individuals who rank them similarly but differ in their preference intensities. We characterize optimal allocation rules when individual preferences are known and when they are not. Several insights emerge. First-best allocations may involve assigning some agents "lotteries" between high-and low-ranked goods. When preference intensities are private information, second-best allocations always involve such lotteries and, crucially, may coincide with first-best allocations. Furthermore, second-best allocations may entail disposal of services.We discuss a market-based alternative and show how it differs.

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Allocation with Correlated Information: Too Good to Be True

Cited by 3 publications

References 0 publications

Test Design Under Falsification

Test Design Under Falsification

Information transmission in persuasion models with imperfect verification

Who Cares More? Allocation with Diverse Preference Intensities

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