A network solution to robust implementation:The case of identical but unknown distributions

Data de publicació electrònica: 24 de gener de 2023We study robust mechanism design in environments in which agents commonly believe that others’ types are identically distributed, but we do not assume that the actual distribution is common knowledge, nor that it is known to the designer. First, we characterize all incentive compatible transfers under these assumptions. Second, we characterize the conditions under which full implementation is possible via direct mechanisms, that only elicit payoff relevant information, and the transfer schemes which achieve it whenever possible. The full implementation results obtain from showing that the problem can be transformed into one of designing a network of strategic externalities, subject to suitable constraints which are dictated by the incentive compatibility requirements.The BSE benefited from the financial support of the Spanish Ministry of Economy and Competitiveness, through the Severo Ochoa Programme for Centres of Excellence in R&D (CEX2019-000915-S). Antonio Penta acknowledges the financial support of the European Research Council, Starting Grant 759424

Full Implementation and Belief Restrictions

Multiplicity of equilibria and the dependence on strong common knowledge assumptions are well-known problems in mechanism design. We address them by studying full implementation via transfer schemes, under general restrictions on agents' beliefs. We show that incentive-compatible transfers ensure uniqueness-and hence full implementation-if they induce sufficiently weak strategic externalities. We then design transfers for full implementation by using information on beliefs in order to weaken the strategic externalities of the baseline canonical transfers. Our results rely on minimal restrictions on agents' beliefs, specifically on moments of the distribution of types, that arise naturally in applications. (JEL D62, D82, D83

Information Aggregation and Innovation in Market Design

The literature on information aggregation predicts that market growth unambiguously reduces uncertainty about the value of traded goods. The results were developed within the classical model, which assumes that traders’ values for the exchanged good are determined by fundamental (common) shocks. At the same time, design innovation in contemporaneous markets seems to exploit demand interdependence among agents with similar tastes or common information sharing (e.g., Facebook ads, the practice of customer targeting). This paper demonstrates that with heterogeneous interdependence among agents’ values or noise in signals about values, opportunities to innovate in smaller or less connected (in the network-theoretic sense) markets may dominate those in larger or better connected markets

Trženjska strategija za prodajo avtomobilskih nadomestnih delov blagovne znamke Motrio

The literature on information aggregation predicts that market growth unambiguously reduces uncertainty about the value of traded goods. The results were developed within the classical model, which assumes that traders’ values for the exchanged good are determined by fundamental (common) shocks. At the same time, design innovation in contemporaneous markets seems to exploit demand interdependence among agents with similar tastes or common information sharing (e.g., Facebook ads, the practice of customer targeting). This paper demonstrates that with heterogeneous interdependence among agents’ values or noise in signals about values, opportunities to innovate in smaller or less connected (in the network-theoretic sense) markets may dominate those in larger or better connected markets