This paper analyzes a voting model where (i) there is no conflict of interest among the voters, and (ii) information acquisition is costly and unobservable. The optimal mechanism is shown to be sequential. The social planner asks, at random, one voter at a time to invest in information and to report the resulting signal. Voters are informed of neither their position in the sequence nor the reports of previous voters. Obeying the planner by investing and reporting truthfully is optimal for voters. The ex-ante optimal voting scheme among the ex-post efficient ones is characterized. In this scheme, the social planner stops aggregating information and makes a decision when the precision of his posterior exceeds a cut-off which decreases with each additional report. It is also shown that if the cost of information acquisition is small, then the ex-ante optimal mechanism is sometimes necessarily ex-post inefficient.
We study the revenue maximizing allocation of several heterogeneous, commonly ranked objects to impatient agents with privately known characteristics who arrive sequentially according to a Poisson process. There is a deadline after which no more objects can be allocated. We first characterize implementable allocation schemes, and compute the expected revenue for any implementable, deterministic and Markovian allocation policy. The revenue-maximizing policy is obtained by a variational argument which sheds more light on its properties than the usual dynamic programming approach. In particular, we show that this policy does not depend on the characteristics of the available objects at each point in time. Finally, we use our main result in order to: a) establish a comparison with the welfare maximizing policy; b) derive the optimal inventory choice; c) explain empirical regularities about pricing in clearance sales.
In many tournaments investments are made over time. The question whether to conduct a review once at the end, or additionally at points midway through the tournament, is a strategic decision. If the latter course is chosen, then the designer must establish both a rule for aggregating the results of the different reviews and a rule for determining compensations. We first study the case of a fixed, exogenously given prize and then extend the analysis to the case where the prize is not fixed but may vary with the tournament's outcome. It is shown that (1) it is always optimal to assign a higher weight to the final review; (2) this weight increases with the dominance of the first-stage effort in determining the final review's outcome. When the prize is not fixed, the optimal design generates an asymmetric tournament in the second stage that favors the winner of the midterm review
We study an allocation problem where a set of objects needs to be allocated to agents arriving over time. The basic model is of the private, independent values type. The dynamically efficient allocation is implementable if the distribution of agents' values is known. Whereas lack of knowledge about the distribution is inconsequential in the static case, endogenous informational externalities arise if the designer gradually learns about the distribution by observing present values. These externalities may prevent the implementation of the dynamically efficient allocation. We provide necessary and sufficient conditions for the efficient allocation to be implementable. (JEL D11, D82)
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.