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Robust Private Supply of a Public Good

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  • Wanchang Zhang

Abstract

We study the mechanism design problem of selling a public good to a group of agents by a principal in the correlated private value environment. We assume the principal only knows the expectations of the agents' values, but does not know the joint distribution of the values. The principal evaluates a mechanism by the worst-case expected revenue over joint distributions that are consistent with the known expectations. We characterize maxmin public good mechanisms among dominant-strategy incentive compatible and ex-post individually rational mechanisms for the two-agent case and for a special $N$-agent ($N>2$) case.

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  • Wanchang Zhang, 2022. "Robust Private Supply of a Public Good," Papers 2201.00923, arXiv.org, revised Jan 2022.
    • Handle: RePEc:arx:papers:2201.00923
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    References listed on IDEAS

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    1. Kim-Sau Chung & J.C. Ely, 2007. "Foundations of Dominant-Strategy Mechanisms," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 74(2), pages 447-476.
    2. Çağıl Koçyiğit & Garud Iyengar & Daniel Kuhn & Wolfram Wiesemann, 2020. "Distributionally Robust Mechanism Design," Management Science, INFORMS, vol. 66(1), pages 159-189, January.
    3. Dirk Bergemann & Benjamin Brooks & Stephen Morris, 2016. "Informationally Robust Optimal Auction Design," Working Papers 084_2016, Princeton University, Department of Economics, Econometric Research Program..
    4. Werner Güth & Martin Hellwig, 1986. "The private supply of a public good," Journal of Economics, Springer, vol. 5(1), pages 121-159, December.
    5. Dirk Bergemann & Benjamin Brooks & Stephen Morris, 2017. "First‐Price Auctions With General Information Structures: Implications for Bidding and Revenue," Econometrica, Econometric Society, vol. 85, pages 107-143, January.
    6. Dirk Bergemann & Stephen Morris, 2012. "Robust Mechanism Design," World Scientific Book Chapters, in: Robust Mechanism Design The Role of Private Information and Higher Order Beliefs, chapter 2, pages 49-96, World Scientific Publishing Co. Pte. Ltd..
    7. Songzi Du, 2018. "Robust Mechanisms Under Common Valuation," Econometrica, Econometric Society, vol. 86(5), pages 1569-1588, September.
    8. Chen, Yi-Chun & Li, Jiangtao, 2018. "Revisiting the foundations of dominant-strategy mechanisms," Journal of Economic Theory, Elsevier, vol. 178(C), pages 294-317.
    9. Wanchang Zhang, 2021. "Correlation-Robust Optimal Auctions," Papers 2105.04697, arXiv.org, revised May 2022.
    10. Gabriel Carroll, 2017. "Robustness and Separation in Multidimensional Screening," Econometrica, Econometric Society, vol. 85, pages 453-488, March.
    11. Jonathan Libgober & Xiaosheng Mu, 2021. "Informational Robustness in Intertemporal Pricing [Political Disagreement and Information in Elections]," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 88(3), pages 1224-1252.
    12. Wanchang Zhang, 2021. "Random Double Auction: A Robust Bilateral Trading Mechanism," Papers 2105.05427, arXiv.org, revised May 2022.
    13. Takuro Yamashita & Shuguang Zhu, 2022. "On the Foundations of Ex Post Incentive-Compatible Mechanisms," American Economic Journal: Microeconomics, American Economic Association, vol. 14(4), pages 494-514, November.
    14. Roger B. Myerson, 1981. "Optimal Auction Design," Mathematics of Operations Research, INFORMS, vol. 6(1), pages 58-73, February.
    15. Benjamin Brooks & Songzi Du, 2021. "Optimal Auction Design With Common Values: An Informationally Robust Approach," Econometrica, Econometric Society, vol. 89(3), pages 1313-1360, May.
    16. Ethan Che, 2019. "Distributionally Robust Optimal Auction Design under Mean Constraints," Papers 1911.07103, arXiv.org, revised Feb 2022.
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    Cited by:

    1. Wanchang Zhang, 2022. "Information-Robust Optimal Auctions," Papers 2205.04137, arXiv.org.

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