Open Access. Powered by Scholars. Published by Universities.®
Articles 1 - 3 of 3
Full-Text Articles in Economics
Optimal Design For Social Learning, Yeon-Koo Che, Johannes Hörner
Optimal Design For Social Learning, Yeon-Koo Che, Johannes Hörner
Cowles Foundation Discussion Papers
This paper studies the design of a recommender system for organizing social learning on a product. To improve incentives for early experimentation, the optimal design trades off fully transparent social learning by over-recommending a product (or “spamming”) to a fraction of agents in the early phase of the product cycle. Under the optimal scheme, the designer spams very little about a product right after its release but gradually increases the frequency of spamming and stops it altogether when the product is deemed sufficiently unworthy of recommendation. The optimal recommender system involves randomly triggered spamming when recommendations are public — as …
Dynamic Mechanisms Without Money, Yingni Guo, Johannes Hörner
Dynamic Mechanisms Without Money, Yingni Guo, Johannes Hörner
Cowles Foundation Discussion Papers
We analyze the optimal design of dynamic mechanisms in the absence of transfers. The designer uses future allocation decisions as a way of eliciting private information. Values evolve according to a two-state Markov chain. We solve for the optimal allocation rule, which admits a simple implementation. Unlike with transfers, efficiency decreases over time, and both immiseration and its polar opposite are possible long-run outcomes. Considering the limiting environment in which time is continuous, we show that persistence hurts.
Nonlinear Pricing With Finite Information, Dirk Bergemann, Ji Shen, Yun Xu, Edmund M. Yeh
Nonlinear Pricing With Finite Information, Dirk Bergemann, Ji Shen, Yun Xu, Edmund M. Yeh
Cowles Foundation Discussion Papers
We analyze nonlinear pricing with finite information. A seller offers a menu to a continuum of buyers with a continuum of possible valuations. The menu is limited to offering a finite number of choices representing a finite communication capacity between buyer and seller. We identify necessary conditions that the optimal finite menu must satisfy, either for the socially efficient or for the revenue-maximizing mechanism. These conditions require that information be bundled, or “quantized” optimally. We show that the loss resulting from using the n -item menu converges to zero at a rate proportional to 1 = n 2 . We …