Abstract
This thesis investigates the design of effective market mechanisms to address critical challenges of information asymmetry and costs in diverse operational contexts.The first essay examines the strategic use of a price cap in auctions where bidders face heterogeneous outside options. We show that a price cap can enhance seller revenue by softening competition among high-valuation bidders, thereby incentivizing the participation of those with valuable outside alternatives.
The second essay analyzes stalking horse auctions, modeling it as a game of delegation and signaling. We find that the optimal contract format depends non-monotonically on bidder valuation correlation, revealing a delicate trade-off between fostering competition through signaling and managing agency costs.
The final essay delves into the micro-foundations of information asymmetry by modeling an agent’s endogenous and costly information acquisition. We first analyze a firm selling a new product to a rationally inattentive consumer, finding that the optimal sales strategy is a two-regime policy that either induces or deters learning based on its cost. We then demonstrate the robustness of this core principle by extending the analysis to a procurement auction where the auctioneer himself is rationally inattentive, showing that the same fundamental trade-offs drive the optimal reserve price policy.
Collectively, these essays demonstrate that optimal mechanism design in operations management requires a nuanced approach tailored to the specific informational, institutional, and even cognitive structure of the market.
| Date of Award | 2025 |
|---|---|
| Original language | English |
| Awarding Institution |
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| Supervisor | Xuan WANG (Supervisor) & Ying Ju CHEN (Supervisor) |
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