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Full-Text Articles in Economics
Introduction To Jet Symposium Issue On ‘Dynamic Contracts And Mechanism Design, Dirk Bergemann, Alessandro Pavan
Introduction To Jet Symposium Issue On ‘Dynamic Contracts And Mechanism Design, Dirk Bergemann, Alessandro Pavan
Cowles Foundation Discussion Papers
The Introduction to the Symposium Issue on “Dynamic Contract and Mechanism Design” of the Journal of Economic Theory provides an overview of the dynamic mechanism design literature. We then introduce the papers that are contained in the Symposium issue and finally conclude by discussing avenues for future research. Several of the papers contained in the Symposium issue were presented at the Economic Theory Workshop of the Cowles Foundation for Research in Economics at Yale University in June 2013.
Dynamic Revenue Maximization: A Continuous Time Approach, Dirk Bergemann, Philipp Strack
Dynamic Revenue Maximization: A Continuous Time Approach, Dirk Bergemann, Philipp Strack
Cowles Foundation Discussion Papers
We characterize the revenue-maximizing mechanism for time separable allocation problems in continuous time. The willingness-to-pay of each agent is private information and changes over time. We derive the dynamic revenue-maximizing mechanism, analyze its qualitative structure and frequently derive its closed form solution. In the leading example of repeat sales of a good or service, we establish that commonly observed contract features such as at rates, free consumption units and two-part tariffs emerge as part of the optimal contract. We investigate in detail the environments in which the type of each agent follows an arithmetic or geometric Brownian motion or a …
A Principal-Agent Model Of Sequential Testing, Dino Gerardi, Lucas Maestri
A Principal-Agent Model Of Sequential Testing, Dino Gerardi, Lucas Maestri
Cowles Foundation Discussion Papers
This paper analyzes the optimal provision of incentives in a sequential testing context. In every period the agent can acquire costly information that is relevant to the principal’s decision. Neither the agent’s effort nor the realizations of his signals are observable. First, we assume that the principal and the agent are symmetrically informed at the time of contracting. We construct the optimal mechanism and show that the agent is indifferent in every period between performing the test and sending an uninformative message which continues the relationship. Furthermore, in the first period the agent is indifferent between carrying out his task …
The Dynamic Pivot Mechanism, Dirk Bergemann, Juuso Välimäki
The Dynamic Pivot Mechanism, Dirk Bergemann, Juuso Välimäki
Cowles Foundation Discussion Papers
We consider truthful implementation of the socially efficient allocation in an independent private-value environment in which agents receive private information over time. We propose a suitable generalization of the pivot mechanism, based on the marginal contribution of each agent. In the dynamic pivot mechanism, the ex-post incentive and ex-post participation constraints are satisfied for all agents after all histories. In an environment with diverse preferences it is the unique mechanism satisfying ex-post incentive, ex-post participation and efficient exit conditions. We develop the dynamic pivot mechanism in detail for a repeated auction of a single object in which each bidder learns …
The Dynamic Pivot Mechanism, Dirk Bergemann, Juuso Välimäki
The Dynamic Pivot Mechanism, Dirk Bergemann, Juuso Välimäki
Cowles Foundation Discussion Papers
We consider truthful implementation of the socially efficient allocation in an independent private-value environment in which agents receive private information over time. We propose a suitable generalization of the pivot mechanism, based on the marginal contribution of each agent. In the dynamic pivot mechanism, the ex-post incentive and ex-post participation constraints are satisfied for all agents after all histories. In an environment with diverse preferences it is the unique mechanism satisfying ex-post incentive, ex-post participation and efficient exit conditions. We develop the dynamic pivot mechanism in detail for a repeated auction of a single object in which each bidder learns …