Theme：Ambiguous Persuasion in Contests

Lecturer：Xinyi Xu,Lingnan College, Sun Yat-sen University

Time：2022.05.26 14:00

Site：Tecent meeting 896-901-823

  Abstract:

  This paper studies optimal royalty auction design when bidders are heterogeneous in type distributions, and seller moral hazard arises in the form of post-auction effort input. By the communication revelation principle, we first characterize all incentive compatible, individual rational, and sequential rational direct mechanisms (feasible direct mechanisms). Then, we apply the inequalities for the covariance of monotone functions to derive the upper bound of seller’s expected payoff for all feasible direct mechanisms and provide a mechanism to attain the upper bound, which is called the optimal royalty auction mechanism. The optimal mechanism selects the bidder of the highest non-negative virtual surplus among all participants and generates a deterministic post-auction effort recommendation for the seller. We construct a“quasi-dominant strategy”royalty auction that uses the information of the first and the second highest bids to implement the optimal mechanism. We then consider discrimination in allocation and winner’s payment. Lastly, we discuss the impact of royalty rate, and compare the characteristics and discrimination of the optimal auctions with that in the case of post-auction perfect information.

  Introduction to the lecturer：

  Xinyi Xu is an assistant professor at Lingnan College, Sun Yat-sen University. She graduated from the Chinese University of Hong Kong with a PhD in economics in 2017. His research interests include contract theory and mechanism design. The research was published in the Journal of Mathematical Economics. Presided over a national project.