Time and Location: M., W., 9:00-10:20, 28 Hillhouse, Room 106.
Dirk Bergemann (Instructor): Office Hours: W 1:00-2:30,
30 Hillhouse Avenue, Room 24, email@example.com.
Juuso Välimäki (Instructor): Office Hours: W 1:00-2:30,
30 Hillhouse Avenue, Room 20, firstname.lastname@example.org.
This course covers selected topics in the economics of information and uncertainty. The theme of the course this year is “Mechanism Design and Information”. The theory of mechanism design as laid out in the seminal contributions of Vickrey (1961) and Hurwicz (1972) analyzes the performance of various institutions in an economy where information is dispersed among participating agents. The key underlying idea is that information is similar to other economic goods in the sense that the agents have autonomy over the decisions regarding their information. How information is used depends on the mechanism in place.
The first generation of (positive) results for mechanism design characterized surplus maximizing mechanisms within private value economies. The second step towards a general theory resulted from a change in focus. Rather than start with surplus maximization as the objective, the work of Myerson (1979) on revenue maximizing mechanisms started with a characterization of all implementable allocation rules. This opened up the field for a large number of applications ranging from optimal auctions and bilateral trade to regulation and negotiations.
Perhaps surprisingly, almost all of the theory and most of the applications are set in a completely static economic model. The available information comes in the form of an initial endowment and it is collected from the agents in a static revelation game. Furthermore, the allocation is decided once and for all. The relatively recent literatures on multi-object auctions and auctions with resale are notable exceptions to this.
If information on the potential uses of a resource arrives over time, then it is quite likely that any optimal allocation mechanism also reallocates the resource over time.
The objective of this course is twofold: First, it is meant to provide an introduction into the main themes and techniques of mechanism design. Second, we suggest a interpretation parallet to mechanism design for the desing of information. We then discuss recent work on the value of information in strategic environment, the desing and the pricing of information.
Course requirements. This course has four basic requirements. They are: (i) reading the assigned papers before the presentation in class, (ii) solving the problem sets, (iii) presenting one or two research paper and (iv) writing a term paper. The assignments will be given weekly or biweekly. Class participation, assignments, and the term paper will jointly determine the final grade.
Weekly Schedule and Reading:
- 1/20 – 1/22 (JV): : Review of Mechanism Design from static point of view; Mechanism Design with correlated private values and common values.
- 1/25 – 1/27 (JV): Dynamic Pivot Mechanism, Dynamic Team Mechanism; Extensions of Efficient dynamic mechanisms to dynamic populations, correlation and common values.
- 2/1 – 2/3 (JV) Sequential Screening; Information management in sequential screening.
- 2/8 – 2/10 (DB): Dynamic Revenue Maximization
- 2/15 – 2/17 (DB): Sequential Arrival of Agents and Information
- 2/22 – 2/24 (DB): Dynamic Matching Models and Other Applications (with Leeat Yariv)
- 2/29 – 3/2 (DB): Information Design, Bayesian Persuasion, and Bayes Correlated Equilibrium
- Information Design, Information Design (2016)
- Bayes Correlated Equilibrium and the Comparison of Information Structures
- Emin Dokumaci (Competition in Persuasion)
- Ian Ball (Beeps)
- Jian Xin Heng (Suspense and Surprise)
- 3/7 – 3/9 (DB): The Value of Information in Strategic Settings: Applications.
- The Limits of Price Discrimination
- Michael Xu: Preventives vs. Treatments
- Xiangliang Li: Strategic Information Transmission
- Yujie Qian: Biais et al. (2010): Large Risks
- Office Hours:
- 3:00 Yujie
- 3.30 Ian
- 4.30 Michael
- 5.00 Xiangliang
- 5.30 Xinyang
- 3/30 (DB): Multi-Item Bundling
- 4/4 – 4/6 (DB): Information and Privacy (with Mallesh Pai): A Brief Bibliography
- Value of Privacy
- Calzolari and Pavan, “On the optimality of Privacy in Sequential contracting” JET 2006.
- Taylor, “Consumer Privacy and the market for customer information” RAND 2004.
- Differential Privacy
- Cummings, Liggett, Pai and Roth, “The Strange Case of Privacy in Equilibrium Models” mimeo 2016.
- Pai and Roth, “Privacy and Mechanism Design”, SigEcom Exchanges 2013;
- Dwork and Roth, “The Algorithmic foundations of Differential Privacy” (Monograph).
- Value of Privacy
- 4/11 – 4/13 (JV): Dynamic Moral Hazard
- 4/18 – 4/20 (JV): Applications of Dynamic Moral Hazard
- 4/25 – 4/27 (JV): Dynamic Signalling