Correlated Information and Mecanism Design

McAfee, R. Preston; Reny, Philip J.

doi:10.2307/2951601

Cited by 353 publications

(250 citation statements)

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“…Here we discuss how our results can be used to address surplus extraction in the general mechanism design problems formulated in McAfee and Reny (1992). Let X, (u i ) i2I be a general environment where X is the space of outcomes and u i : X V R !…”

Section: General Mechanism Design Problemsmentioning

confidence: 99%

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Genericity and Robustness of Full Surplus Extraction

Chen

Xiong

2013

Econometrica

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We study whether priors that admit full surplus extraction (FSE) are generic, which becomes a gauge to evaluate the validity of the current mechanism design paradigm.We consider the space of priors on the universal type space, and thereby relax the assumption of a fixed finite number of types in Crémer and McLean (1988). We We thank the editor and anonymous referees for insightful comments which greatly improve the paper.

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Section: General Mechanism Design Problemsmentioning

confidence: 99%

“…McAfee and Reny (1992) characterize FSE in a general mechanism design setting with a continuum of types whose beliefs are given by continuous density functions.…”

Section: Introductionmentioning

confidence: 99%

Genericity and Robustness of Full Surplus Extraction

Chen

Xiong

2013

Econometrica

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“…While in a unique prior setting the optimal auction under IPV does not extract full surplus, a different strand of the literature considers environments with correlated types where it is possible to do so (see Crémer and McLean (1988), Crémer and McLean (1985), McAfee and Reny (1992)). Note however that unlike the mechanisms in this literature, ours do not involve any extraneous lotteries and satisfies limited liability.…”

Section: Introductionmentioning

confidence: 99%

A dynamic mechanism and surplus extraction under ambiguity

Bose

Daripa

2009

Journal of Economic Theory

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We study the question of auction design in an IPV setting characterized by ambiguity. We assume that the preferences of agents exhibit ambiguity aversion; in particular, they are represented by the epsilon-contamination model. We show that a simple variation of a discrete Dutch auction can extract almost all surplus. This contrasts with optimal auctions under IPV without ambiguity as well as with optimal static auctions with ambiguity -in all of these, types other than the lowest participating type obtain a positive surplus. An important point of departure is that the modified Dutch mechanism is dynamic rather than static, establishing that under ambiguity aversion-even when the setting is IPV in all other respects-a dynamic mechanism can have additional bite over its static counterparts. A further general insight is that the standard revelation principle does not automatically extend to environments not characterized by subjective expected utility. 1 We thank the associate editor and two anonymous referees for their insightful comments. We also thank Ludovic Renou, the participants of Birmingham Summer Theory Workshop 08, and of RUD 08 at Oxford for questions and comments that helped clarify our exposition. We are grateful to Peter Klibanoff for many valuable and detailed comments. Finally, we thank Sujoy Mukerji. Several discussions with him in the course of the work shaped our understanding of many of the issues involved.

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“…Riordan and Sappington [7] considered the question of when there will be ex post public information correlated with the agent's type. Cremer and McLean [8] and McAfee and Reny [9] considered the situation in which an uninformed principal faces many privately informed agents whose types are correlated.…”

Section: Introductionmentioning

confidence: 99%