Shifting Supports in Dynamic Mechanism Design

The common-support assumption of future type distributions is standard in the dynamic mechanism design literature (e.g., Baron and Besanko, 1984, Courty and Li, 2000, Eső and Szentes, 2007, Krähmer and Strausz, 2011, and Pavan, Segal, and Toikka, 2014). It is widely perceived that the assumption is innocuous, and yet no formal analysis of shifting supports has been provided in the literature. In this paper, we fill this gap in the setting of Eső and Szentes (2007) and formally show that both analytical methodology and key insights can be extended. Our findings contribute to building up a firm foundation for enlarging the scope of technically tractable dynamic models.

Keywords: Adverse selection, Dynamic mechanism design, Shifting supports

JEL Classification: D44, D82, D86

Suggested Citation: Suggested Citation

Liu, Bin and Liu, Dongri and Lu, Jingfeng, Shifting Supports in Dynamic Mechanism Design (March 16, 2019). Available at SSRN: https://ssrn.com/abstract=3353625 or http://dx.doi.org/10.2139/ssrn.3353625