Working Papers

Mechanism Design with Financially Constrained Agents and Costly Verification (Aug. 2019), R&R at Theoretical Economics


A principal wishes to distribute an indivisible good to a population of budget-constrained agents. Both valuation and budget are an agent’s private information. The principal can inspect an agent’s budget through a costly verification process and punish an agent who makes a false statement. I characterize the direct surplus-maximizing mechanism. This direct mechanism can be implemented by a two-stage mechanism in which agents only report their budgets. Specifically, all agents report their budgets in the first stage. The principal then provides budget-dependent cash subsidies to agents and assigns the goods randomly (with uniform probability) at budget-dependent prices. In the second stage, a resale market opens, but is regulated with budget-dependent sales taxes. Agents who report low budgets receive more subsidies in their initial purchases (the first stage), face higher taxes in the resale market (the second stage) and are inspected randomly. This implementation exhibits some of the features of some welfare programs, such as the affordable housing program in Singapore.

An Efficient Ascending Auction (Oct. 2016) 


This paper proposes an ascending auction that yields an efficient outcome when the seller is restricted to sell bundles whose elements form a basis of a matroid and agents have interdependent values. This ascending auction generalizes Bikhchandani et al. (2011) who assume agents have independent private values; and Perry and Reny (2005) who study multi-unit good auctions. The key feature of the auction is that agents are permitted to express different demands against different elements.

Endogenous Labor Market Cycles (with Cheng Wang) (Mar. 2019)


This paper shows that in a perfectly stationary physical environment of the labor market, moral hazard and competition in long-term contracts can generate cycles in the tightness of the market, which in turn may induce job creation and destruction, and two periods or much longer cycles in employment and output. We claim that the model may shed light on the unemployment volatility puzzle, which has inspired many discussions in the literature.


Mechanism Design with Costly Verification and Limited Punishments (Mar. 2019), Accepted at Journal of Economic Theory, Supplementary Appendix

Efficient Mechanisms with Information Acquisition, Journal of Economic Theory, 182 (2019): 279-328.

Approximation in Mechanism Design with Interdependent Values, Games and Economic Behavior, 103 (2017): 225-253. (A one-page abstract of an earlier version of this paper appeared in Proceedings of the 14th ACM Conference on Electronic Commerce. ACM, pp. 675-676.)