Bayesian Incentive Compatibility as Feasibility of Execution of Contracts

2006 ◽  
pp. 25-42
Keyword(s):  
Incentive Compatibility

Book Reviews

2016 ◽  
Vol 54 (2) ◽  
pp. 589-591
Keyword(s):  
Graduate Students ◽  
Mechanism Design ◽  
Incentive Compatibility ◽  
Dominant Strategy ◽  
University Of Michigan ◽  
Dynamic Mechanism Design ◽  
Temple University ◽  
The University ◽  
Robust Mechanism Design

Dimitrios Diamantaras of Temple University reviews “An Introduction to the Theory of Mechanism Design,” by Tilman Börgers. The Econlit abstract of this book begins: “Presents explanations of classic results in the theory of mechanism design and examines the frontiers of research in mechanism design in a text written for advanced undergraduate and graduate students of economics who have a good understanding of game theory. Discusses screening; examples of Bayesian mechanism design; examples of dominant strategy mechanisms; incentive compatibility; Bayesian mechanism design; dominant strategy mechanisms; nontransferable utility; informational interdependence; robust mechanism design; and dynamic mechanism design. Börgers is Samuel Zell Professor of the Economics of Risk at the University of Michigan.”

scholarly journals Auction models with resource pooling in modern supply chain management

2019 ◽  
Vol 1 (2) ◽  
pp. 120-134
Author(s):  
Lihua Chen ◽  
Liying Wang ◽  
Yingjie Lan
Keyword(s):  
Supply Chain ◽  
Supply Chain Management ◽  
Incentive Compatibility ◽  
Supply And Demand ◽  
Vickrey Auction ◽  
Chain Management ◽  
Content Type ◽  
Resource Pooling ◽  
Auction Models ◽  
Auction Model

Purpose In this paper, the main focus is on supply and demand auction systems with resource pooling in modern supply chain from a theoretical modeling perspective. The supply and demand auction systems in modern supply chains among manufacturers and suppliers serve as information sharing mechanisms. The purpose of this paper is to match the supply and demand such that a modern supply chain can achieve incentive compatibility and economic efficiency. The authors design such a supply and demand auction system that can integrate resources to efficiently match the supply and demand. Design/methodology/approach The authors propose three theoretic models of modern supply chain auctions with resource pooling according to the Vickrey auction principle. They are supply auction model with demand resource pooling, demand auction model with supply resource pooling, and double auction model with demand and supply resource pooling. For the proposed auction models, the authors present three corresponding algorithms to allocate resources in the auction process by linear programming, and study the incentive compatibility and define the Walrasian equilibriums for the proposed auction models. The authors show that the solutions of the proposed algorithms are Walrasian equilibriums. Findings By introducing the auction mechanism, the authors aim to realize the following three functions. First is price mining: auction is an open mechanism with multiple participants. Everyone has his own utility and purchasing ability. So, the final price reflects the market value of the auction. Second is dynamic modern supply chain construction: through auction, firm can find appropriate partner efficiently. Third is resources integration: in business practices, especially in modern supply chain auctions, auctioneers can integrate resources and ally buyers or sellers to gain more efficiency in auctions. Originality/value In the paper, the authors propose three theoretic models and corresponding algorithms of modern supply chain auctions with resource pooling according using the Vickrey auction principle, which achieves three functions: price mining, dynamic modern supply chain construction and resources integrating. Besides, these proposed models are much closer to practical settings and may have potential applications in modern supply chain management.

scholarly journals Quality Matters: Monopolistic Competition with Heterogeneous Consumers

2019 ◽  
pp. 152-175
Keyword(s):  
Product Quality ◽  
Monopolistic Competition ◽  
Incentive Compatibility ◽  
Industrial Sector ◽  
Differentiated Products ◽  
Optimal Price ◽  
Demand Functions ◽  
Optimum Price ◽  
Heterogeneous Consumers ◽  
Love Of Variety

The paper builds a two-sector monopolistic competition model featuring multi-product firms and heterogeneous consumers endowed with a Cobb–Douglas utility nesting a generalized CES function. In contrast to the standard CES, the generalized CES function includes both the love of variety and the love for product quality, which makes it possible to distinguish consumers differing in their product quality perception. The industrial sector encompasses firms producing differentiated products of varied quality, targeting a certain type of consumer. In such a case, firms set the price and quality for a particular product so as to maximize their profits, while consumers find the optimum price-quality combination, which may be different for groups of consumers having different preferences. The model allows one to derive the demand functions of heterogeneous consumers for goods of different quality and makes it possible to analyze different strategies of firms in their choice of the optimal price-quality ratio for their products. It also allows the formulation of conditions for screening in the case of incomplete information about the type of consumers. The main difference between the equations for screening in the model of monopolistic competition and the standard screening models in theory of contracts lies in the absence of individual rationality restrictions in the monopolistically competitive setting, where only the incentive compatibility is taken into account for both groups of consumers. As a result, in the absence of additional restrictions on the part of the regulatory authorities, the screening procedure in the monopolistic competition setting leads to a decrease in welfare for less affluent consumers.

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