Optimal Procurement Contracts with Pre–Project Planning

The paper studies procurement contracts with pre–project investigations in the presence of adverse selection and moral hazard. To model the procurer’s roblem, we extend a standard sequential screening model to endogenous information acquisition with moral hazard. The optimal contract displays systematic distortions in information acquisition. Due to a rent effect, adverse selection induces too much information acquisition to prevent cost overruns and too little information acquisition to prevent false project cancelations. Moral hazard mitigates the distortions related to cost overruns yet exacerbates those related to false negatives. The optimal mechanism is a menu of option contracts that achieves the dual goal of providing incentives for information acquisition and truthful information revelation

Ex post information rents and disclosure in sequential screening

We study ex post information rents in sequential screening models where the agent receives private ex ante and ex post information. The principal has to pay ex post information rents for preventing the agent to coordinate lies about his ex ante and ex post information. When the agent’s ex ante information is discrete, these rents are positive, whereas they are zero in continuous models. Consequently, full disclosure of ex post information is generally suboptimal. Optimal disclosure rules trade off the benefits from adapting the allocation to better information against the effect that more information aggravates truth-telling

The Benefits of Sequential Screening

This paper considers the canonical sequential screening model and shows that when the agent has an expost outside option, the principal does not benefit from eliciting the agent’s information sequentially. Unlike in the standard model without expost outside options, the optimal contract is static and conditions only on the agent’s aggregate final information. The benefits of sequential screening in the standard model are therefore due to relaxed participation rather than relaxed incentive compatibility constraints. We argue that in the presence of expost participation constraints, the classical, local approach fails to identify binding incentive constraints and develop a novel, inductive procedure to do so instead. The result extends to the multi–agent version of the problem

Optimal Procurement Contracts with Pre–Project Planning

The paper studies procurement contracts with pre–project investigations in the presence of adverse selection and moral hazard. To model the procurer’s roblem, we extend a standard sequential screening model to endogenous information acquisition with moral hazard. The optimal contract displays systematic distortions in information acquisition. Due to a rent effect, adverse selection induces too much information acquisition to prevent cost overruns and too little information acquisition to prevent false project cancelations. Moral hazard mitigates the distortions related to cost overruns yet exacerbates those related to false negatives. The optimal mechanism is a menu of option contracts that achieves the dual goal of providing incentives for information acquisition and truthful information revelation.Information acquisition; procurement; dynamic mechanism design

VCG mechanisms and efficient ex ante investments with externalities

For mechanism design with independent values, we identify a subclass of Vickrey--Clarke--Groves (VCG) mechanisms that induce efficient ex ante investments even with externalities. The Vickrey second price auction does not belong to this class.externalities, ex ante investments, efficient mechanisms, mechanism design, second price auction

Spatial Sign Correlation

A new robust correlation estimator based on the spatial sign covariance matrix (SSCM) is proposed. We derive its asymptotic distribution and influence function at elliptical distributions. Finite sample and robustness properties are studied and compared to other robust correlation estimators by means of numerical simulations.Comment: 20 pages, 7 figures, 2 table

The spatial sign covariance matrix and its application for robust correlation estimation

8 pages, 2 figures, to be published in the conference proceedings of 11th international conference "Computer Data Analysis & Modeling 2016" http://www.ajs.or.at/index.php/ajs/about/editorialPolicies#openAccessPolicyPeer reviewedPublisher PD

A unified theory for excited-state, fragmented, and equilibrium-like Bose condensation in pumped photonic many-body systems

We derive a theory for Bose condensation in nonequilibrium steady states of bosonic quantum gases that are coupled both to a thermal heat bath and to a pumped reservoir (or gain medium), while suffering from loss. Such a scenario describes photonic many-body systems such as exciton-polariton gases. Our analysis is based on a set of kinetic equations for a gas of noninteracting bosons. By identifying a dimensionless scaling parameter controlling the boson density, we derive a sharp criterion for which system states become selected to host a macroscopic occupation. We show that with increasing pump power, the system generically undergoes a sequence of nonequilibrum phase transitions. At each transition a state either becomes or ceases to be Bose selected (i.e. to host a condensate): The state which first acquires a condensate when the pumping exceeds a threshold is the one with the largest ratio of pumping to loss. This intuitive behavior resembles simple lasing. In the limit of strong pumping, the coupling to the heat bath becomes dominant so that eventually the ground state is selected, corresponding to equilibrium(-like) Bose condensation. For intermediate pumping strengths, several states become selected giving rise to fragmented nonequilibrium Bose condensation. We compare these predictions to experimental results obtained for excitons polaritons in a double-pillar structure [Phys. Rev. Lett. 108, 126403 (2012)] and find good agreement. Our theory, moreover, predicts that the reservoir occupation is clamped at a constant value whenever the system hosts an odd number of Bose condensates