Herding and the winner's curse in markets with sequential bids

Article Abstract:

A model of social learning in market-like environments with common values demonstrates that the phenomena of information cascades and herding occur in tandem with the winner's curse. In this model, the owner of an object receives in a sequential manner bids for the object from a finite number of potential buyers, all possessing the same ex post valuation of the object but different estimates of the common value. Three classes of equilibria that vary in terms of information aggregation properties and size of the rent the seller secures from the buyers were described.

Analysis, Economics, Information theory, Equilibrium (Economics), Social learning, Information theory in economics

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Public goods provision: applying Jackson-Moulin mechanism for restricted agent characteristics

Article Abstract:

Authors M. Jackson and H. Moulin proposed a game form or mechanism where agents are aware of their own valuation and at least two agents with positive benefits know the total evaluation. The Jackson-Moulin mechanism undertakes an indivisible public project exactly when the sum of the individual benefits surpasses the total cost. A study analyzed the scope of the Jackson-Moulin mechanism beyond the simple indivisible good environment.

Game theory

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The relevance of private information in mechanism design

Article Abstract:

The results in mechanism design show that as long as agents have correlated private information and are sufficiently risk neutral, it is possible to design mechanisms that leave agents with arbitrarily small information rents. Full-rent-extraction results hinge on the implicit assumption that the agents' beliefs uniquely determine their preferences.

Public Finance Activities, Public Administration & Finance, Public Finance-Total Govt, Public Admin & Finance-Total Govt, Public finance

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