Masaki Aoyagi

Bid Rotation and Collusion in Repeated Auctions

This paper studies bidder collusion with communication in repeated auctions when no side transfer is possible. It presents a simple dynamic bid rotation scheme which coordinates bids based on communication history and enables intertemporal transfer of bidders’ payoffs. The paper derives a sufficient condition for such a dynamic scheme to be an equilibrium and characterizes the equilibrium payoffs in a general environment with affiliated signals and private or interdependent values. With IPV, it is shown that this dynamic scheme yields a strictly higher payoff to the bidders than any static collusion scheme which coordinates bids based only on the current reported signals.

Coordinating adoption decisions under externalities and incomplete information

A monopolist sells a good whose value depends on the number of buyers who adopt it as well as on their private types. The seller coordinates the buyersʼ adoption decisions based on their reported types, and charges them the price based on the number of adoptions. We study ex post implementable sales schemes that are collusion-proof, and show that under the revenue maximizing scheme, more buyer types are willing to adopt when there are more adoptions, and the number of adoptions is maximized subject to the participation constraints.

Bertrand Competition under Network Externalities

Two sellers engage in price competition to attract buyers located on a network. The value of the good of either seller to any buyer depends on the number of neighbors on the network who consume the same good. For a generic specification of consumption externalities, we show that an equilibrium price equals the marginal cost if and only if the buyer network is complete or cyclic. When the externalities are approximately linear in the size of consumption, we identify the classes of networks in which one of the sellers monopolizes the market, or the two sellers segment the market.

Strategic Obscurity in the Forecasting of Disasters

A principal acquires information about a shock and then discloses it to an agent. After the disclosure, the principal and agent each decide whether to take costly preparatory actions that yield mutual benefits but only when the shock strikes. The principal maximizes his expected payoff by ex ante committing to the quality of his information, and the disclosure rule. We show that even when the acquisition of perfect information is costless, the principal may optimally acquire imperfect information when his own action eliminates the agents incentive to take action against the risk.A principal acquires information about a shock and then discloses it to an agent. After the disclosure, the principal and agent each decide whether to take costly preparatory actions that yield benefits only when the shock strikes. The principal maximizes his expected payoff by controlling the quality of his information, and the disclosure rule. We show that even when the acquisition of perfect information is costless, the principal may optimally acquire imperfect information when his own action eliminates the agents incentive to take action against the risk.

Monopoly Sale of a Network Good

This paper studies the problem of a monopolist who sells a network good through a price posting scheme. The scheme posts a price of every possible allocation for each buyer, who are then asked to report their private information to the seller. The seller then implements the allocation based on the reports. The social choice functions that are ex post implementable through such a sales scheme are characterized, and the conditions are identified under which the revenue maximizing scheme has the property that the price of a larger network is more affordable than that of a smaller network.