Shifting Supports in Dynamic Mechanism Design
15 Pages Posted: 9 Apr 2019
Date Written: March 16, 2019
Abstract
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