Dynamic Mechanism Design: An Introduction

Dirk Bergemann*, Juuso Valimaki

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

185 Downloads (Pure)

Abstract

We provide an introduction to the recent developments of dynamic mechanism design, with a primary focus on the quasilinear case. First, we describe socially optimal (or efficient) dynamic mechanisms. These mechanisms extend the well-known Vickrey-Clark-Groves and D'Aspremont-Gerard-Varet mechanisms to a dynamic environment. Second, we discuss revenue optimal mechanisms. We cover models of sequential screening and revenue-maximizing auctions with dynamically changing bidder types. We also discuss models of information management where the mechanism designer can control (at least partially) the stochastic process governing the agents' types. Third, we consider models with changing populations of agents over time. After discussing related models with risk-averse agents and limited liability, we conclude with a number of open questions and challenges that remain for the theory of dynamic mechanism design.

Original languageEnglish
Pages (from-to)235-274
Number of pages40
JournalJOURNAL OF ECONOMIC LITERATURE
Volume57
Issue number2
DOIs
Publication statusPublished - Jun 2019
MoE publication typeA1 Journal article-refereed

Keywords

  • CONTINUOUS-TIME
  • INTERDEPENDENT VALUATIONS
  • INFORMATION DISCLOSURE
  • REVENUE MAXIMIZATION
  • SECURITY DESIGN
  • PRINCIPAL
  • AGENT
  • IMPLEMENTATION
  • CONTRACTS
  • ARRIVALS

Cite this