two mechanisms that implement the same allocation rule must yield the same expected payoffs to th... more two mechanisms that implement the same allocation rule must yield the same expected payoffs to the agents and hence the same expected revenue regardless of the transfer scheme and of the information disclosed by the mechanism to the agents. We then use the result as a tool for designing profit maximizing mechanisms. As an example of the applications we analyze the problem of designing a profit-maximizing sequence of auctions when the bidders' types follow a linear AR(1)-process.
This paper analyzes equilibrium and welfare for a tractable class of economies with externali- ti... more This paper analyzes equilibrium and welfare for a tractable class of economies with externali- ties, strategic complementarity or substitutability, and incomplete information. We first charac- terize the equilibrium use of information and show how strategic payoff effects can heighten the sensitivity of equilibrium actions to noise. We next characterize the efficient use of information, which allows us to address whether such heightened sensitivity is socially undesirable. We show how the efficient use of information trades off volatility for dispersion, and how this relates to the socially optimal degree of coordination. We finally show how the relation between equilibrium and efficient use of information is instrumental in understanding the social value of information. We conclude with a few applications, including production externalities, Keynesian frictions, inefficient fluctuations, efficient market competition, and large Cournot and Bertrand games.
two mechanisms that implement the same allocation rule must yield the same expected payoffs to th... more two mechanisms that implement the same allocation rule must yield the same expected payoffs to the agents and hence the same expected revenue regardless of the transfer scheme and of the information disclosed by the mechanism to the agents. We then use the result as a tool for designing profit maximizing mechanisms. As an example of the applications we analyze the problem of designing a profit-maximizing sequence of auctions when the bidders' types follow a linear AR(1)-process.
This paper analyzes equilibrium and welfare for a tractable class of economies with externali- ti... more This paper analyzes equilibrium and welfare for a tractable class of economies with externali- ties, strategic complementarity or substitutability, and incomplete information. We first charac- terize the equilibrium use of information and show how strategic payoff effects can heighten the sensitivity of equilibrium actions to noise. We next characterize the efficient use of information, which allows us to address whether such heightened sensitivity is socially undesirable. We show how the efficient use of information trades off volatility for dispersion, and how this relates to the socially optimal degree of coordination. We finally show how the relation between equilibrium and efficient use of information is instrumental in understanding the social value of information. We conclude with a few applications, including production externalities, Keynesian frictions, inefficient fluctuations, efficient market competition, and large Cournot and Bertrand games.
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Papers by Alessandro Pavan