This set of lecture notes covers a general model of adverse selection as well as a leading example— that of a price discriminating monopolist— due to Maskin and Riley (1984). At the end of this unit, students should understand the application of the revelation principal to this class of models, the general solution techniques, and the key economic trade-o¤— e¢ ciency versus information rent sav...

Geographically dispersed sellers in electronic reverse-marketplaces such as those hosted by Freemarkets are uncertain about the number of competitors they face in any given market-session. Over the course of several market-sessions they learn about the competitive nature of the marketplace. How sellers learn to reduce the market-structure uncertainty depends on the market-transparency scheme, o...

Truthful revelation of preferences has emerged as a desideratum in the design of school choice programs. Gale-Shapley’s deferred acceptance mechanism is strategy-proof for students but limits their ability to communicate their preference intensities. This results in ex-ante inefficiency when ties at school preferences are broken randomly. We propose a variant of deferred acceptance mechanism wh...

The paper describes a framework for multi-function system testing. Multi-function system testing is considered as fusion (or revelation) of clique-like structures. The following sets are considered: (i) subsystems (system parts or units/components/modules), (ii) system functions and a subset of system components for each system function, and (iii) function clusters (some groups of system functi...

Humanbeings arrive at truth in fourways: Faith, authority, revelation, andobservation. All other animals rely only upon authority, by observing adults, and observation, by, for example, tasting fruit or experiencing the changing of the seasons. Very few species other than Man, although they, too, may experience territorialism, practice genocide or wage organized war. This is perhaps a commentar...

This paper studies the structure of optimal finance contracts in an agency model of outside finance, when investors possess private information. We show that, depending on the intensity of the entrepreneur’s moral hazard problem, optimal contracts induce full, partial, or no revelation of the investor’s private information. A partial or non– revelation of information is optimal, when it mitigat...

Bester and Strausz (2000) showed that the revelation principle of Bester and Strausz (2001) does not apply in a setting of many agents and no commitment. In their counterexample only one agent has private information. We show that if the parties can make ex ante transfers the revelation principle does extend to this setting. However, we show that it does not extend to a setting in which more th...

The article describes multi-function system testing based on fusion (or revelation) of clique-like structures. The following sets are considered: (i) subsystems (system parts or units/components/modules), (ii) system functions and a subset of system components for each system function, and (iii) function clusters (some groups of system functions which are used jointly). Test procedures (as unit...