We provide several generalizations of Mailath’s (1987) result that in games of asymmetric information with a continuum of types incentive compatibility plus separation implies differentiability of the informed agent’s strategy. The new results extend the theory to classic models in finance such as Leland and Pyle (1977), Glosten (1989), and DeMarzo and Duffie (1999), that were not previously co...

This paper considers three solution concepts in a large private information economy, namely, Walrasian expectations equilibrium, private core, and insurance equilibrium. It shows that these three concepts coincide with each other when the agents are informationally negligible in such an economy. In contrast to the finite-agent setting, one can construct a large private information economy in wh...

Contemporary networks are distributed, complex, and heterogeneous. Ensuring an efficient, fair, and incentive-compatible allocation of bandwidth among their users constitutes a challenging and multi-faceted research problem. This chapter presents three control and game-theoretic approaches that address rate control problems from different perspectives. First, a noncooperative rate control game ...

Lindahl equilibrium is an application of price-taking behavior to achieve efficiency in the allocation of public goods. Such an equilibrium requires individuals to be strategically naive, i.e., Lindahl equilibrium is not incentive compatible. Correlated equilibrium is defined precisely to take account of strategic behavior and incentive compatibility. Using the duality theory of linear programm...

Experimental studies of the WTP-WTA gap avoid social trading by implementing an incentive compatible mechanism for each individual trader. We compare a traditional random price mechanism and a novel elicitation mechanism preserving social trading, without sacrificing mutual incentive compatibility. Furthermore, we focus on risky goods— binary monetary lotteries—for which asymmetries in evaluati...

We study the problem of matching bidders to items where each bidder i has general, strictly monotonic utility functions ui,j(pj) expressing his utility of being matched to item j at price pj . For this setting we prove that a bidder optimal outcome always exists, even when the utility functions are non-linear and noncontinuous. We give sufficient conditions under which every mechanism that find...

Experimental economists currently lack a convention for how to pay subjects in experiments with multiple tasks. We provide a theoretical framework for analyzing this question. Assuming monotonicity (dominated gambles are never chosen) and nothing else, we prove that paying for one randomly-chosen problem—the random problem selection (RPS) mechanism—is (usually) the only incentive compatible mec...

We characterize dominant-strategy incentive compatibility with multi-dimensional types. A deterministic social choice function is dominant-strategy incentive compatible if and only if it is weakly monotone (W-Mon). W-Mon is the following requirement: if changing one agent’s type (while keeping the types of other agents fixed) changes the outcome under the social choice function, then the result...