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Optimal Mechanisms with Hierarchically Interdependent Values

Authors: Ramtin Salamat;

Optimal Mechanisms with Hierarchically Interdependent Values

Abstract

This paper studies the allocation of an object under hierarchical interdependence: a senior agent's value depends only on her own private information, while a junior agent's value depends both on his own private information and on what the senior privately knows. I characterize the optimal mechanism under ex-post incentive and participation constraints for a general planner objective spanning profit-oriented and welfare-oriented design. Hierarchical interdependence makes the problem tractable by reducing the implementability correction to a sequence of one-dimensional monotonicity corrections (ironing operation in the spirit of Myerson (1981)). The optimal mechanism is two-tiered. In the profit-oriented case, low senior values lead the mechanism to screen the junior through a posted price, while high senior values lead to a virtual-value comparison rule. In the welfare-oriented case, low senior values lead to costless assignment to the junior, while high senior values again lead to a virtual-value comparison rule.

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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
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Average
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