Counter Marginalization of Information Rents under Collusion

I study a multi-player mechanism design problem where the players are able to collude. I characterize the extent that the principal can link the compensation level of one of these players to the production performance of the other. I use this characterization result to identify the optimal contract for a principal with budget constraints.Collusion, Mechanism design

Mechanism Design with Weaker Incentive Compatibility Constraints

We study an adverse selection problem, where an agent is able to understate his productivity, but not allowed to overstate it. The solution to this problem is generally different than the solution to the standard problem, where no restriction is made on the statements of the agent. We identify a sufficient condition, that does not depend on the distribution of types, under which these two solutions coincide.Mechanism Design, Incentive Compatibility

Optimal Auctions with Simultaneous and Costly Participation

We study the optimal auction problem with participation costs in the symmetric independent private values setting, where bidders know their valuations when they make independent participation decisions. After characterizing the optimal auction in terms of participation cutoffs, we provide an example where it is asymmetric. We then investigate when the optimal auction will be symmetric/asymmetric and the nature of possible asymmetries. We also show that, under some conditions, the seller obtains her maximal profit in an (asymmetric) equilibrium of an anonymous second price auction. In general, the seller can also use non-anonymous auctions that resemble the ones that are actually observed in practice.

To Give In or Not To Give In To Bribery? Setting the Optimal Fines for Violations of Rules when the Enforcers are Likely to Ask for Bribes

In this paper, we develop a model of law enforcement with the possibility of corruption between enforcers and potential offenders. We study how the violation rate changes with the level of the fine imposed on violations. We find, in contrast to the conventional wisdom, that the fine level that minimizes violations can be intermediate rather than large. Finally, we study conditions under which different fine levels would be optimal.Corruption, Law Enforcement

Equilibrium Rejection of a Mechanism

We study a mechanism design problem in which players can take part in a mechanism to coordinate their actions in a default game. By refusing to participate in the mechanism, a player can revert to playing the default game non-cooperatively. We show with an example that some allocation rules are implementable only with mechanisms which will be rejected on the equilibrium path. In our construction, a refusal to participate conveys information about the types of the players. This information causes the default game to be played under different beliefs, and more importantly under different higher order beliefs, than the interim ones. We find a lower bound on all the implementable payoffs. We use this bound to establish a condition on the default game under which all the implementable outcomes are truthfully implementable, without the need to induce rejection of the mechanism.Mechanism design; Default game; Cartel agreements

Mechanism Design with Collusive Supervision

We analyze an adverse selection environment with third party supervision. We assume that the "supervisor" and the "agent" can collude while interacting with the "principal". As long as the supervisor is symmetrically informed with the agent, the former's existence does not improve the principal's rent extraction. This is due to the "coalitional efficiency" between the supervisor and the agent. However, asymmetric information between these two parties can cause a "collusion failure", which undermines the coalitional efficiency. In that case, we show that the principal can increase his payoff, by manipulating the agent's opportunity cost for colluding with the supervisor. Delegating the authority to contract with the agent to the supervisor is not successful in enhancing the principal's payoff, since the principal loses the instrument to manipulate the opportunity cost of collusion under this organizational form. The increase in the principal's rent extraction does not necessarily imply an overall welfare improvement. Social welfare may decline with the introduction of the supervisor.Collusion, supervision, mechanism design

Aggregate Information and Organizational Structures

We study an organization with a top management (principal) and multiple subunits (agents) with private information that determine the organization's aggregate efficiency. Under centralization, eliciting the agents' private information may induce the principal to manipulate aggregate information, which obstructs an effective use of information for the organization. Under delegation, the principal concedes more information rent, but is able to use the agents' information more effectively. The trade-off between the organizational structures depends on the likelihood that the agents are efficient. Centralization is optimal when such likelihood is low. Delegation, by contrast, is optimal when it is high

Aggregate Information and Organizational Structures

We study information flows in an organization with a top management (principal) and multiple subunits (agents) with private information that determines the organization's aggregate efficiency. Under centralization, eliciting the agents' private information may induce the principal to manipulate aggregate information, which obstructs an effective use of information for the organization. Under delegation, the principal concedes more information rent, but is able to use the agents' information more effectively. The trade-off between the organizational structures depends on the likelihood that the agents are efficient. Centralizing information flows is optimal when such likelihood is low. Delegation, by contrast, is optimal when it is high

Dual Cross-Attention for Medical Image Segmentation

We propose Dual Cross-Attention (DCA), a simple yet effective attention module that is able to enhance skip-connections in U-Net-based architectures for medical image segmentation. DCA addresses the semantic gap between encoder and decoder features by sequentially capturing channel and spatial dependencies across multi-scale encoder features. First, the Channel Cross-Attention (CCA) extracts global channel-wise dependencies by utilizing cross-attention across channel tokens of multi-scale encoder features. Then, the Spatial Cross-Attention (SCA) module performs cross-attention to capture spatial dependencies across spatial tokens. Finally, these fine-grained encoder features are up-sampled and connected to their corresponding decoder parts to form the skip-connection scheme. Our proposed DCA module can be integrated into any encoder-decoder architecture with skip-connections such as U-Net and its variants. We test our DCA module by integrating it into six U-Net-based architectures such as U-Net, V-Net, R2Unet, ResUnet++, DoubleUnet and MultiResUnet. Our DCA module shows Dice Score improvements up to 2.05% on GlaS, 2.74% on MoNuSeg, 1.37% on CVC-ClinicDB, 1.12% on Kvasir-Seg and 1.44% on Synapse datasets. Our codes are available at: https://github.com/gorkemcanates/Dual-Cross-AttentionComment: Code: https://github.com/gorkemcanates/Dual-Cross-Attentio

Resale in second-price auctions with costly participation

Abstract We study sealed-bid second-price auctions with costly participation and resale. Each bidder chooses to participate in the auction if her valuation is higher than her optimally chosen participation cutoff. If resale is not allowed and the bidder valuations are drawn from a strictly convex distribution function, the symmetric equilibrium (where all bidders use the same cutoff) is less efficient than a class of two-cutoff asymmetric equilibria. Existence of these equilibria without resale is sufficient for existence of similarly constructed two-cutoff equilibria with resale. Moreover, the equilibria with resale are “more asymmetric” and (under a sufficient condition) more efficient than the corresponding equilibria without resale