Working Papers

Security-bid Auctions with Information Acquisition (with Zongbo Huang) (New!)

Abstract We study security-bid auctions in which bidders compete for an asset by bidding with securities whose payments are contingent on the asset’s realized value and can covertly acquire information at some cost before participating in an auction. We first consider auctions with ordered securities in which the seller restricts the security design to an ordered set and uses a first- or second-price auction. We show that steeper securities give agents lower marginal return to information and may yield lower revenues. We then study linear mechanisms in which payments linearly depend on the asset’s realized value. We show that the revenue-maximizing linear mechanism assigns the asset efficiently, and the winner pays in cash if their expected values are high and pays in stock if their expected values are low. This result implies that the use of cash payment is positively correlated to synergies in merges and acquisitions. We empirically test this implication and find consistent results.

Collective Decision Through an Intermediary (with Xingtan Zhang) (Jan. 2021)

Abstract An intermediary must make a decision on behalf of a group of agents, who are privately informed about their valuations attached to decisions. Examples include the government acting as an intermediary in the provision of public goods. We show that an imperfectly informed intermediary can help achieve an ex post efficient decision. We propose a cross-subsidization mechanism that implements an efficient decision. A condition on the intermediary’s information that ensures efficiency is characterized. Our results provide a rationale for the government’s involvement in public good projects based on information.

Published and Forthcoming Papers

Endogenous Labor Market Cycles (with Cheng Wang) (Oct. 2021), International Economic Review (forthcoming)

Mechanism Design with Financially Constrained Agents and Costly Verification, Theoretical Economics, 16.3 (2021): 1139-1194.

Mechanism Design with Costly Verification and Limited Punishments, Journal of Economic Theory, 186 (2020): 105000.

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.)

Dormant Papers

An Efficient Ascending Auction (Oct. 2016)