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This paper proposes a new argument to explain why media firms silence information and why this behavior may vary across firms and market structures. We build on the literature of career concerns and consider firms that seek to maximize their reputation for high quality. Crucial to our results is the idea that media firms' reporting strategies affect the probability that consumers learn the state of the world. We show that reputational concerns introduce an incentive for firms to withhold scoops and that this incentive is higher in firms with high levels of initial reputation and/or great social influence. We also show that the incentive to withhold information may persist when we consider competition. In particular, we show that sequential competition is not a powerful force towards accuracy; however, simultaneous competition can be. These results suggest that market competition matters for how much information is revealed by firms. [ABSTRACT FROM AUTHOR]

Organizations often rotate employees' jobs. This paper proposes a market design approach to organize job rotation. In our model each employee has occupied a position, and if any employee wants to move to another position, the current occupier must leave the position. This requirement is described by a priority structure in which each employee has the lowest priority for his position and others have the equal priority. It is the "opposite" to the famous housing market priority structure in which every owner has the highest priority for his endowment and others have the equal priority. We adapt Top Trading Cycle to solve our model. Our mechanism is novel in that employees are not allowed to point to their positions during the mechanism and cycles are cleared by backward induction after all of them are generated. Our mechanism is stable, constrained efficient and weakly group strategy-proof. [ABSTRACT FROM AUTHOR]

Abstract Principal-agent relationships between the supervisory board and the management of firms are widespread in multi-object markets such as spectrum auctions. The management aims at winning the highest valued licenses whereas the board wants to maximize profit and limits exposure. If efficiency requires multiple firms to coordinate on winning smaller sets of objects, we demonstrate that principals would do so while agents would not and inflate demand to larger sets. We first show that even if the principal has complete information about the valuations she cannot generally incentive-align the agent with only budgets constraints in first-price sealed-bid package auctions. With hidden information the principal needs to determine contingent transfers, which can be impossible with strong value-maximizing motives of the agent. Contrary, in ascending package auctions this is straightforward. The second-price payment rule of the ascending auction enables the principal to overcome the agency problem and the dynamic mechanism further facilitates coordination. Highlights • A principal-agent model of bidding firms in high-stakes multi-object auctions is proposed. • Different objectives of principal and agent lead to an agency dilemma. • Sometimes the principals would coordinate in the efficient solution, but the agents would not. • It is not always possible to align agent incentives with budget constraints. [ABSTRACT FROM AUTHOR]

This paper presents a theoretical and experimental study of affirmative action policies in school choice problems focusing on the minority reserve mechanism, or DA-Reserve, proposed by Hafalir et al. (2013) and the majority quota mechanism, or DA-Quota, proposed by Abdulkadiroglu and Sönmez (2003) , Kojima (2012) and Matsubae (2011) . An evaluation of the performance of these mechanisms showed that, (1) while truth-telling is a dominant strategy in both mechanisms, the rate of its occurrence was less than 60%; (2) the average payoff was significantly higher with DA-Reserve than with DA-Quota, as theoretically predicted; (3) surprisingly, the proportion of students exhibiting justified envy was higher with DA-Reserve than with DA-Quota; and (4) a systematic pattern of deviation from the dominant strategy (referred to as skipping-down ) was observed, and it was theoretically proven that this constituted Nash equilibrium with DA-Quota in some environments but not with DA-Reserve. More generally, the set of stable matchings was found to be larger with DA-Quota than with DA-Reserve, which explains the matching instability observed with the latter. [ABSTRACT FROM AUTHOR]

An investor has some funds invested through portfolio managers. By the end of the year, she reallocates the funds among these managers according to the managers' performance. While the investor tries to maximize her subjective utility (that depends on the total expected earnings), each portfolio manager tries to maximize the overall amount of funds bestowed in his hands to manage. A reward scheme is a rule that determines how funds should be allocated among the managers based on their performance. A reward scheme is optimal if it induces the (self-interested) managers to act in accordance with the interests of the investor. We show that an optimal reward scheme exists under quite general conditions. [ABSTRACT FROM AUTHOR]

We characterize solutions for two-sided matching, both in the transferable- and in the nontransferable-utility frameworks, using a cardinal formulation. Our approach makes the comparison of the matching models with and without transfers particularly transparent. We introduce the concept of a no-trade stable matching to study the role of transfers in matching. A no-trade stable matching is one in which the availability of transfers does not affect the outcome. [ABSTRACT FROM AUTHOR]

While much of the school choice literature advocates strategyproofness, recent research has aimed to improve efficiency using mechanisms that rely on non-truthtelling equilibria. We address two issues that arise from this approach. We first show that even in simple environments with ample feedback and repetition, agents fail to reach non-truthtelling equilibria. We offer another way forward: implementing truth-telling as an ordinal Bayes–Nash equilibrium rather than as a dominant strategy equilibrium. We show that this weaker solution concept can allow for more efficient mechanisms in theory and provide experimental evidence that this is also the case in practice. In fact, truth-telling rates are basically the same whether truthtelling is implemented as an ordinal Bayes–Nash equilibrium or a dominant strategy equilibrium. This provides a proof-of-concept that ordinal Bayes–Nash design might provide a middle path, achieving efficiency gains over strategy-proof mechanisms without relying on real-life agents playing a non-truth-telling equilibrium. [ABSTRACT FROM AUTHOR]

We provide a new perspective on how to operate matching markets when there are many types of markets. Our finding is that the market-wise adaptation of strategy-proof and non-wasteful rules yields a strategy-proof rule with the following efficiency property: no strategy-proof rule Pareto-dominates the rule. Such rules are abundant as they include the market-wise use of the well-known priority-based rules of the top trading cycles and the deferred acceptance. This result gives theoretical support to the independent operation of markets observed in real-life markets as well as our practice in Market Design that separately treats each market for its design. [ABSTRACT FROM AUTHOR]

We investigate strategic behavior in a centralized matching clearinghouse based on the Gale–Shapley deferred acceptance algorithm. To do so, we conduct a laboratory experiment to test the degree to which agents strategically misrepresent their preferences by submitting a “truncation” of their true preferences. Our experimental design uses a restricted environment in which a particular form of truncation is always a best response. We find that subjects do not truncate their preferences more often when truncation is profitable. They do, however, truncate their preferences less often when truncation is dangerous – that is, when there is a risk of “over-truncating” and remaining unmatched. Our findings suggest that behavioral insights can play an important role in the field of market design. [ABSTRACT FROM AUTHOR]

Two principals engage in Hotelling competition for an agent's services under incomplete information as to her outside option (location). This renders the agent's participation decision probabilistic from the perspective of each principal. Regardless of the market structure at equilibrium the optimal contract features a trade-off between participation probability and incentives. Rent and effort are inversely related and non-monotonic in the agent's transport cost and so in market structures; they increase (decrease) with competition. Uncertainty as to the agent's location may increase or decrease the rent compared to full information. This correspondingly harms or benefits principals. [ABSTRACT FROM AUTHOR]