Essays on Repeated Games and Mechanism Design

Download or read book Essays on Repeated Games and Mechanism Design written by Yangwei Song and published by . This book was released on 2017 with total page 124 pages. Available in PDF, EPUB and Kindle. Book excerpt: "My dissertation consists of two essays: the first essay studies infinitely repeated games in which discount factors can depend on actions; the second essay studies efficient implementation in a single object allocation problem in which valuations are interdependent and agents are ambiguity aversion. The broad theme is to investigate how standard results in the study of game theory need to be modified when we allow for non-standard preferences. The first chapter studies infinitely repeated games in which the players' rates of time preference may evolve over time, depending on what transpires in the game. A key result is that in any first best equilibrium of the repeated prisoners' dilemma, the players must eventually cooperate. If we assume that the players become more patient as they obtain better outcomes, we show that cooperation prevails from the beginning of the game and is thus the unique outcome of any first best equilibrium. The latter result is suitably extended to all symmetric two player games. A separate contribution is to propose a framework in which intertemporal trade can emerge as a first best equilibrium of a repeated strategic interaction, generating predictions that differ from those in the standard framework. The second chapter considers a single object allocation problem with multidimensional signals and interdependent valuations. When agents' signals are statistically independent, Jehiel and Moldovanu [42] show that efficient and Bayesian incentive compatible mechanisms generally do not exist. In this paper, we extend the standard model to accommodate maxmin agents and obtain necessary as well as sufficient conditions under which efficient allocations can be implemented. In particular, we derive a condition that quantifies the amount of ambiguity necessary for efficient implementation. We further show that under some natural assumptions on the preferences, this necessary amount of ambiguity becomes sufficient. Finally, we provide a definition of informational size such that given any nontrivial amount of ambiguity, efficient allocations can be implemented if agents are sufficiently informationally small."--Pages vii-viii.