Shifting Supports in Dynamic Mechanism Design

15 Pages Posted: 9 Apr 2019

See all articles by Bin Liu

Bin Liu

The Chinese University of Hong Kong, Shenzhen

Dongri Liu

National University of Singapore (NUS), Department of Economics

Jingfeng Lu

National University of Singapore (NUS) - Department of Economics

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

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

Bin Liu (Contact Author)

The Chinese University of Hong Kong, Shenzhen ( email )

Dongri Liu

National University of Singapore (NUS), Department of Economics ( email )

Singapore
Singapore

Jingfeng Lu

National University of Singapore (NUS) - Department of Economics ( email )

1 Arts Link, AS2 #06-02
Singapore 117570, Singapore 119077
Singapore

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