IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/113150.html
   My bibliography  Save this paper

A type-adjustable mechanism where the designer may obtain more payoffs by optimally controlling distributions of agents' types

Author

Listed:
  • Wu, Haoyang

Abstract

In a mechanism, a designer may reveal some information to influence agents' private types in order to obtain more payoffs. In the literature, the information is usually represented as random variables, the value of which are realized by the nature. However, this representation of information may not be proper in some practical cases. In this paper, we propose a type-adjustable mechanism where the information sent by the designer is modeled as a solution of her optimization problem. From the designer's perspective, the probability distributions of agents' private types may be optimally controlled. By constructing a type-adjustable first-price sealed-bid auction, we show that the seller may obtain more expected payoffs than what she could obtain at most in the traditional optimal auction model. Interestingly, to the satisfaction of all, each agent's \emph{ex-ante} expected payoffs may be increased too. In the end, we compare the type-adjustable mechanism with other relevant models.

Suggested Citation

  • Wu, Haoyang, 2022. "A type-adjustable mechanism where the designer may obtain more payoffs by optimally controlling distributions of agents' types," MPRA Paper 113150, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:113150
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/113150/1/MPRA_paper_113150.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Dirk Bergemann & Stephen Morris, 2019. "Information Design: A Unified Perspective," Journal of Economic Literature, American Economic Association, vol. 57(1), pages 44-95, March.
    2. Dirk Bergemann & Juuso Välimäki, 2019. "Dynamic Mechanism Design: An Introduction," Journal of Economic Literature, American Economic Association, vol. 57(2), pages 235-274, June.
    3. Dirk Bergemann & Juuso Valimaki, 2005. "Information in Mechanism Design," Cowles Foundation Discussion Papers 1532R, Cowles Foundation for Research in Economics, Yale University, revised Jan 2006.
    4. Szech, Nora, 2011. "Optimal advertising of auctions," Journal of Economic Theory, Elsevier, vol. 146(6), pages 2596-2607.
    5. Bergemann, Dirk & Pesendorfer, Martin, 2007. "Information structures in optimal auctions," Journal of Economic Theory, Elsevier, vol. 137(1), pages 580-609, November.
    6. Hedlund, Jonas, 2015. "Persuasion with communication costs," Games and Economic Behavior, Elsevier, vol. 92(C), pages 28-40.
    7. Roger B. Myerson, 1981. "Optimal Auction Design," Mathematics of Operations Research, INFORMS, vol. 6(1), pages 58-73, February.
    8. Alessandro Pavan & Ilya Segal & Juuso Toikka, 2014. "Dynamic Mechanism Design: A Myersonian Approach," Econometrica, Econometric Society, vol. 82(2), pages 601-653, March.
    9. Szech, Nora, 2011. "Optimal disclosure of costly information packages in auctions," Journal of Mathematical Economics, Elsevier, vol. 47(4-5), pages 462-469.
    10. Nguyen, Anh & Tan, Teck Yong, 2021. "Bayesian persuasion with costly messages," Journal of Economic Theory, Elsevier, vol. 193(C).
    11. Emir Kamenica, 2019. "Bayesian Persuasion and Information Design," Annual Review of Economics, Annual Reviews, vol. 11(1), pages 249-272, August.
    12. Alex Gershkov, 2009. "Optimal auctions and information disclosure," Review of Economic Design, Springer;Society for Economic Design, vol. 13(4), pages 335-344, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bergemann, Dirk & Wambach, Achim, 2015. "Sequential information disclosure in auctions," Journal of Economic Theory, Elsevier, vol. 159(PB), pages 1074-1095.
    2. Bergemann, Dirk & Pavan, Alessandro, 2015. "Introduction to Symposium on Dynamic Contracts and Mechanism Design," Journal of Economic Theory, Elsevier, vol. 159(PB), pages 679-701.
    3. Farzaneh Farhadi & Demosthenis Teneketzis, 2022. "Dynamic Information Design: A Simple Problem on Optimal Sequential Information Disclosure," Dynamic Games and Applications, Springer, vol. 12(2), pages 443-484, June.
    4. Terstiege, Stefan, 2013. "Precontractual Investigation and Sequential Screening," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 429, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    5. Schweizer, Nikolaus & Szech, Nora, 2017. "Revenues and welfare in auctions with information release," Journal of Economic Theory, Elsevier, vol. 170(C), pages 86-111.
    6. Shih-Tang Su & Vijay G. Subramanian & Grant Schoenebeck, 2021. "Bayesian Persuasion in Sequential Trials," Papers 2110.09594, arXiv.org, revised Nov 2021.
    7. Hao Li & Xianwen Shi, 2017. "Discriminatory Information Disclosure," American Economic Review, American Economic Association, vol. 107(11), pages 3363-3385, November.
    8. Dirk Bergemann & Alessandro Pavan, 2015. "Introduction to JET Symposium Issue on "Dynamic Contracts and Mechanism Design"," Cowles Foundation Discussion Papers 2016, Cowles Foundation for Research in Economics, Yale University.
    9. Pycia, Marek & Woodward, Kyle, 2021. "Auctions of Homogeneous Goods: A Case for Pay-as-Bid," CEPR Discussion Papers 15656, C.E.P.R. Discussion Papers.
    10. Bergemann, Dirk & Strack, Philipp, 2022. "Progressive participation," Theoretical Economics, Econometric Society, vol. 17(3), July.
    11. Monte, Daniel & Linhares, Luis Henrique, 2023. "Stealth Startups, Clauses, and Add-ons: A Model of Strategic Obfuscation," MPRA Paper 115926, University Library of Munich, Germany.
    12. Papadimitriou, Christos & Pierrakos, George & Psomas, Alexandros & Rubinstein, Aviad, 2022. "On the complexity of dynamic mechanism design," Games and Economic Behavior, Elsevier, vol. 134(C), pages 399-427.
    13. Dirk Bergemann & Tibor Heumann & Stephen Morris, 2022. "Screening with Persuasion," Cowles Foundation Discussion Papers 2338, Cowles Foundation for Research in Economics, Yale University.
    14. Cristián Troncoso-Valverde, 2018. "Releasing information in private-value second-price auctions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 65(3), pages 781-817, May.
    15. Jihyeok Jung & Chan-Oi Song & Deok-Joo Lee & Kiho Yoon, 2024. "Optimal Mechanism in a Dynamic Stochastic Knapsack Environment," Papers 2402.14269, arXiv.org.
    16. Schottmüller, Christoph, 2023. "Optimal information structures in bilateral trade," Theoretical Economics, Econometric Society, vol. 18(1), January.
    17. Shi, Xianwen, 2012. "Optimal auctions with information acquisition," Games and Economic Behavior, Elsevier, vol. 74(2), pages 666-686.
    18. Haoyang Wu, 2023. "Constructing a type-adjustable mechanism to yield Pareto-optimal outcomes," Papers 2309.01096, arXiv.org, revised Dec 2023.
    19. Pham, Hien, 2023. "How Information Design Shapes Optimal Selling Mechanisms," MPRA Paper 120462, University Library of Munich, Germany, revised 17 Mar 2024.
    20. Kiho Yoon, 2021. "Dynamic mechanism design: An elementary introduction," Papers 2106.04850, arXiv.org.

    More about this item

    Keywords

    Mechanism design; Optimal auction; Bayesian implementation.;
    All these keywords.

    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:113150. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.