Mechanism Design With Aftermarkets: Cutoff Mechanisms

Dworczak, Piotr

doi:10.3982/ecta15768

Cited by 41 publications

(21 citation statements)

References 40 publications

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“…Our paper also contributes to the rapidly growing literature on Bayesian persuasion with transferable utility (Bergemann and Pesendorfer (2007), Eső and Szentes (2007), Li and Shi (2017), Bergemann et al (2018), and Dworczak (2020)). Similar to these papers, we use tools from mechanism design and Bayesian persuasion.…”

Section: Introductionmentioning

confidence: 87%

Relational communication

Kolotilin¹,

Li²

2021

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We study a communication game between an informed sender and an uninformed receiver with repeated interactions and voluntary transfers. Transfers motivate the receiver's decision‐making and signal the sender's information. Although full separation can always be supported in equilibrium, partial or complete pooling is optimal if the receiver's decision‐making is highly responsive to information. In this case, the receiver's decision‐making is disciplined by pooling states where she is most tempted to defect.

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Section: Introductionmentioning

confidence: 87%

Relational communication

Kolotilin¹,

Li²

2021

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“…Carroll and Segal (2019) show that second price auction with reserve prices is the robustly revenue optimal mechanisms with unknown resale opportunities. Dworczak (2020) considers the design of information released to the secondary markets and show that the information structure that induces truthful behaviors are cutoff rules. He also provides sufficient conditions for simple information structure to be optimal.…”

Section: Related Workmentioning

confidence: 99%

Making Auctions Robust to Aftermarkets

Babaioff¹,

Immorlica²,

Li³

et al. 2021

Preprint

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A common assumption in auction theory is that the information available to the agents is given exogenously and that the auctioneer has full control over the market. In practice, agents might be able to acquire information about their competitors before the auction (by exerting some costly effort), and might be able to resell acquired items in an aftermarket. The auctioneer has no control over those aspects, yet their existence influences agents' strategic behavior and the overall equilibrium welfare can strictly decrease as a result.We show that if an auction is smooth (e.g., first-price auction, all-pay auction), then the corresponding price of anarchy bound due to smoothness continues to hold in any environment with (a) information acquisition on opponents' valuations, and/or (b) an aftermarket satisfying two mild conditions (voluntary participation and weak budget balance). We also consider the special case with two ex ante symmetric bidders, where the first-price auction is known to be efficient in isolation. We show that information acquisition can lead to efficiency loss in this environment, but aftermarkets do not: any equilibrium of a first-price or all-pay auction combined with an aftermarket is still efficient.

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“…3 Methodologically, this paper is related to the literature of mechanism design and information design (see, for instance, Mussa and Rosen (1978), Myerson (1981), Kamenica and Gentzkow (2011) and Bergemann and Morris (2016)). More particularly, my paper can be regarded as a mechanism design problem where the information structure is also part of the design object (see, for instance, Bergemann and Pesendorfer (2007), Yamashita (2017) and Dworczak (2020)).…”

Section: Related Literaturementioning

confidence: 99%

Selling Consumer Data for Profit: Optimal Market-Segmentation Design and its Consequences

Yang¹

2020

SSRN Journal

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A data broker sells market segmentations created by consumer data to a producer with private production cost who sells a product to a unit mass of consumers with heterogeneous values. In this setting, I completely characterize the revenue-maximizing mechanisms for the data broker. In particular, every optimal mechanism induces quasi-perfect price discrimination. That is, the data broker sells the producer a market segmentation described by a cost-dependent cutoff, such that all the consumers with values above the cutoff end up buying and paying their values while the rest of consumers do not buy. The characterization of optimal mechanisms leads to additional economically relevant implications. I show that the induced market outcomes remain unchanged even if the data broker becomes more active in the product market by gaining the ability to contract on prices; or by becoming an exclusive retailer, who purchases both the product and the exclusive right to sell the product from the producer, and then sells to the consumers directly. Moreover, vertical integration between the data broker and the producer increases total surplus while leaving the consumer surplus unchanged, since consumer surplus is zero under any optimal mechanism for the data broker.

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Mechanism Design With Aftermarkets: Cutoff Mechanisms

Cited by 41 publications

References 40 publications

Relational communication

Relational communication

Making Auctions Robust to Aftermarkets

Selling Consumer Data for Profit: Optimal Market-Segmentation Design and its Consequences

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