Constrained Signaling in Auction Design

We consider the problem of an auctioneer who faces the task of selling a good (drawn from a known distribution) to a set of buyers, when the auctioneer does not have the capacity to describe to the buyers the exact identity of the good that he is selling. Instead, he must come up with a constrained signalling scheme: a (non injective) mapping from goods to signals, that satisfies the constraints of his setting. For example, the auctioneer may be able to communicate only a bounded length message for each good, or he might be legally constrained in how he can advertise the item being sold. Each candidate signaling scheme induces an incomplete-information game among the buyers, and the goal of the auctioneer is to choose the signaling scheme and accompanying auction format that optimizes welfare. In this paper, we use techniques from submodular function maximization and no-regret learning to give algorithms for computing constrained signaling schemes for a variety of constrained signaling problems

KK-anonymous Signaling Scheme

We incorporate signaling scheme into Ad Auction setting, to achieve better welfare and revenue while protect users' privacy. We propose a new \emph{$K$-anonymous signaling scheme setting}, prove the hardness of the corresponding welfare/revenue maximization problem, and finally propose the algorithms to approximate the optimal revenue or welfare

An Agency Theory of Dividend Taxation

Recent empirical studies of dividend taxation have found that: (1) dividend tax cuts cause large, immediate increases in dividend payouts, and (2) the increases are driven by firms with high levels of shareownership among top executives or the board of directors. These findings are inconsistent with existing "old view" and "new view" theories of dividend taxation. We propose a simple alternative theory of dividend taxation in which managers and shareholders have conflicting interests, and show that it can explain the evidence. Using this agency model, we develop an empirically implementable formula for the efficiency cost of dividend taxation. The key determinant of the efficiency cost is the nature of private contracting. If the contract between shareholders and the manager is second-best efficient, deadweight burden follows the standard Harberger formula and is second-order (small) despite the pre-existing distortion of over-investment by the manager. If the contract is second-best inefficient -- as is likely when firms are owned by diffuse shareholders because of incentives to free-ride when monitoring managers -- dividend taxation generates a first-order (large) efficiency cost. An illustrative calibration of the formula using empirical estimates from the 2003 dividend tax reform in the U.S. suggests that the efficiency cost of raising the dividend tax rate could be close to the amount of revenue raised.

Signaling and indirect taxation

Commodities communicate. Consumers choose a consumption bundle both for its intrinsic characteristics and for what this bundle communicates about their qualities (or .identity.) to spectators. We investigate optimal indirect taxation when consumption choices are motivated by two sorts of concerns: intrinsic consumption and costly signaling. Optimal indirect taxes are introduced into a monotonic signaling game with a finite typespace of consumers. We provide sufficient conditions for the uniqueness of the D1 sequential equilibrium in terms of strategies. In the case of pure costly signaling, signaling goods can in equilibrium be taxed without burden and the optimal quantity taxes on these goods are infinite. When commodities serve both intrinsic consumption and signaling, optimal taxes can be characterized by a generalization of the Ramsey rule, which also deals with the distortions resulting from signaling.Optimal Taxation, Indirect Taxation, Costly Signaling, Identity.

Signaling in Quasipolynomial time

Strategic interactions often take place in an environment rife with uncertainty. As a result, the equilibrium of a game is intimately related to the information available to its players. The \emph{signaling problem} abstracts the task faced by an informed "market maker", who must choose how to reveal information in order to effect a desirable equilibrium. In this paper, we consider two fundamental signaling problems: one for abstract normal form games, and the other for single item auctions. For the former, we consider an abstract class of objective functions which includes the social welfare and weighted combinations of players' utilities, and for the latter we restrict our attention to the social welfare objective and to signaling schemes which are constrained in the number of signals used. For both problems, we design approximation algorithms for the signaling problem which run in quasi-polynomial time under various conditions, extending and complementing the results of various recent works on the topic. Underlying each of our results is a "meshing scheme" which effectively overcomes the "curse of dimensionality" and discretizes the space of "essentially different" posterior beliefs -- in the sense of inducing "essentially different" equilibria. This is combined with an algorithm for optimally assembling a signaling scheme as a convex combination of such beliefs. For the normal form game setting, the meshing scheme leads to a convex partition of the space of posterior beliefs and this assembly procedure is reduced to a linear program, and in the auction setting the assembly procedure is reduced to submodular function maximization

Promises, Promises: Credible Policy Reform via Signaling

Empirical experience and theory both suggest that policy reforms can be aborted or reversed if they lack sufficient credibility, One reason for such credibility problems is the legitimate doubt regarding how serious the government really is about :he reform process. This paper considers a framework in which the private sector is unable to distinguish between a genuinely reformist government and its nemesis, a government which simply feigns interest in reform because it is a precondition for foreign assistance The general conclusion is that the rate at which reforms are introduced may serve to convey the government's future intentions, and hence act as a signal of its "type". More specifically, credible policy reform may require going overboard: the government will have to go much farther than it would have chosen to in the absence of the credibility problem.