Value Design in Optimal Mechanisms

Anja Prummer and Francesco Nava

No 2023-05, Economics working papers from Department of Economics, Johannes Kepler University Linz, Austria

Abstract: A principal allocates a single good to one of several agents whose values are privately and independently distributed, employing an optimal mechanism. The principal shapes the distribution of the agents' values within general classes of constraints. Divisive product designs, which are either highly favored or met with indifference, can simultaneously enhance surplus and diminish information rents by making agents' values more readily discernible. However, such designs also reduce competition among agents. Divisive designs are optimal under various design constraints, as the main drivers of revenue lie in increasing surplus and minimizing information rents, while competition plays a secondary role.

Keywords: Value Design; Mechanism Design; Differentiation (search for similar items in EconPapers)
JEL-codes: D46 D82 L15 (search for similar items in EconPapers)
Pages: 64 pages
Date: 2023-07
New Economics Papers: this item is included in nep-com, nep-des and nep-mic
Note: English
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.econ.jku.at/papers/2023/wp2305.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:jku:econwp:2023-05

Access Statistics for this paper

More papers in Economics working papers from Department of Economics, Johannes Kepler University Linz, Austria Contact information at EDIRC.
Bibliographic data for series maintained by René Böheim ().