Allocation of an indivisible object on the full preference domain: Axiomatic characterizations

We study the problem of allocating an indivisible object to one of several agents on the full preference domain when monetary transfers are not allowed. Our main requirement is strategy-proofness. The other properties we seek are Pareto optimality, non-dictatorship, and non-bossiness. We provide characterizations of strategy-proof rules that satisfy Pareto optimality and non-bossiness, non-dictatorship and non-bossiness, and Pareto optimality and non-dictatorship. As a consequence of these characterizations, we show that a strategy-proof rule cannot satisfy Pareto optimality, non-dictatorship, and non-bossiness simultaneously

A Theory of Managerial Compensation and Taxation with Endogenous Risk

We study the impact of endogenous shocks driven by collective actions of managers. We analyze how such endogenous shocks impact social welfare by employing an overlapping-generations model. We first prove that the competitive equilibrium allocation is suboptimal because of the externalities in managers’ wages and in equity market. We establish that a socially optimal allocation can be achieved if the planner imposes wage taxes (or subsidies) on managers and equity taxes. Our results help provide an alternative explanation as to why managers are compensated and taxed differently than other workers. We then extend the model by incorporating unobservable actions for managers and show that a second-best allocation can be implemented if the planner imposes equity taxes

Price stickiness and markup variations in market games

In this paper, we show that the Shapley–Shubik market game model with production naturally generates an equilibration mechanism that can accommodate price stickiness arising from strategic interactions of firms. Unlike New Keynesian models that show similar price stickiness results, the market game model does not require enforcing menu costs or other additional restraints on price adjustment mechanisms in order to generate price stickiness. As such, we suggest that the market game model can provide a good micro-foundation for macroeconomic analysis. We then explicitly show the relationship between a typical firm’s markup of price over marginal cost and its market share

Innovative online platforms: Research opportunities

Economic growth in many countries is increasingly driven by successful startups that operate as online platforms. These success stories have motivated us to define and classify various online platforms according to their business models. This study discusses strategic and operational issues arising from five types of online platforms (resource sharing, matching, crowdsourcing, review, and crowdfunding) and presents some research opportunities for operations management scholars to explore

Optimal Duration of Innovation Contests

Problem definition: We study the contest duration and the award scheme of an innovation contest where an organizer elicits solutions to an innovation-related problem from a group of agents. Academic/practical relevance: Our interviews with practitioners at crowdsourcing platforms have revealed that the duration of a contest is an important operational decision. Yet, the theoretical literature has long overlooked this decision. Also, the literature fails to adequately explain why giving multiple unequal awards is so common in crowdsourcing platforms. We aim to fill these gaps between the theory and practice. We generate insights that seem consistent with both practice and empirical evidence. Methodology: We use a game-theoretic model where the organizer decides on the contest duration and the award scheme while each agent decides on her participation and determines her effort over the contest duration by considering potential changes in her productivity over time. The quality of an agent’s solution improves with her effort, but it is also subject to an output uncertainty. Results: We show that the optimal contest duration increases as the relative impact of the agent uncertainty on her output increases, and it decreases if the agent productivity increases over time. We characterize an optimal award scheme and show that giving multiple (almost always) unequal awards is optimal when the organizer’s urgency in obtaining solutions is below a certain threshold. We also show that this threshold is larger when the agent productivity increases over time. Finally, consistent with empirical findings, we show that there is a positive correlation between the optimal contest duration and the optimal total award. Managerial implications: Our results suggest that the optimal contest duration increases with the novelty or sophistication of solutions that the organizer seeks, and it decreases when the organizer can offer support tools that can increase the agent productivity over time. These insights and their drivers seem consistent with practice. Our findings also suggest that giving multiple unequal awards is advisable for an organizer who has low urgency in obtaining solutions. Finally, giving multiple awards goes hand in hand with offering support tools that increase the agent productivity over time. These results help explain why many contests on crowdsourcing platforms give multiple unequal awards

Assignment Rules of a Single Indivisible Object under the Full Preference Domain

We consider the allocation problem of a single indivisible object to one of several agents under the full preference domain when monetary transfers are not allowed. Our central requirement is strategy-proofness. The additional properties we seek are Pareto optimality, non-dictatorship, and non-bossiness. We provide characterizations of strategy-proof rules that satisfy two out of three additional properties: Pareto optimality and non-bossiness; non-dictatorship and non-bossiness; and Pareto optimality and non-dictatorship. As a consequence of these characterizations, we show that a strategy-proof rule cannot satisfy these three additional properties simultaneously

The Market Game with Production: Coordination Equilibrium and Price Stickiness

In this paper, we show that the Shapley-Shubik market game model with production and the possibility of increasing returns to scale technologies naturally generates indeterminate coordination equilibria with endogenous nominal price rigidities, without any need for invoking menu costs or other artificial restraints on price adjustment. As such, we suggest that the market game model may be a better micro-foundation for new Keynesian general equilibrium analysis