Matching Allocation Problems with Endogenous Information Acquisition

Sophie Bade ()
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Sophie Bade: Max Planck Institute for Research on Collective Goods, Bonn

No 2010_46, Discussion Paper Series of the Max Planck Institute for Research on Collective Goods from Max Planck Institute for Research on Collective Goods

Abstract: The paper introduces the assumption of costly information acquisition to the theory of mechanism design for matching allocation problems. It is shown that the assumption of endogenous information acquisition greatly changes some of the cherished results in that theory: in particular, the first-best might not be implementable. Moreover, it might not even be possible to implement the second-best through trade. In addition, the paper highlights the use of randomness in setting incentives for efficient learning. The trade-offs among simultaneous and sequential learning and among efficient learning and efficient allocations are discussed.

Keywords: Bubbles; Rational Expectations; Bonuses; Compensation Schemes; Financial Crises; Financial Policy (search for similar items in EconPapers)
JEL-codes: C78 (search for similar items in EconPapers)
Date: 2010-11
New Economics Papers: this item is included in nep-cta and nep-gth
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