In [1] the use of VCG in matching markets is motivated by saying that in order to compute market clearing prices in a matching market, the auctioneer needs to know the true valuations of the bidders. Hence VCG and corresponding personalized prices are proposed as an incentive compatible mechanism. The same line of argument pops up in several lecture sheets and other documents related to courses...

We investigate an automobile supply chain where a manufacturer and a retailer serve heterogeneous consumers with electric vehicles (EVs) under a government’s price-discount incentive scheme that involves a price discount rate and a subsidy ceiling. We show that the subsidy ceiling is more effective in influencing the optimal wholesale pricing decision of the manufacturer with a higher unit prod...

This paper deals with the problem of providing adequate incentives to an advisor who might be tempted to conceal his true opinion because of his desire to appear competent. We show that if a competent advisor never makes mistakes, the incentive problem will disappear if the time horizon is long enough. If a competent advisor makes infrequent mistakes, the incentive problem will disappear for in...

Ishiguro(2004) shows that discriminatory wage schemes are optimal among collusion-proof contracts under relative performance evaluation when agents collude. However, that analysis depends on the assumption that the agents cannot observe their performances. We investigate how optimal contracts should be modified when the agents observe the realized firm value. We show that the optimal collusion-...

We analyze the implications of short-selling and margin purchase constraints for management compensation and portfolio optimization under moral hazard. First, looking at the manager’s problem, we show that her active portfolio (that is, net of the benchmark) will not be independent of the benchmark design. We solve analytically for the benchmark composition that maximizes e¤ort expenditure. Ana...

We study the problem of designing the hyperlink structure of a website to maximize the revenue generated by a random walk on the website. We ask if each webpage is controlled by an autonomous agent, is it possible to give all coalitions incentive to cooperate and build the optimal hyperlink design? We show that the optimal design is in the core of the transferable utility game. For non-transfer...

In a sponsored search auction the advertisement slots on a search result page are generally ordered by click-through rate. Bidders have a valuation, which is usually assumed to be linear in the click-through rate, a budget constraint, and receive at most one slot per search result page (round). We study multi-round sponsored search auctions, where the different rounds are linked through the bud...