Olivier Compte

We explore a model of non-Bayesian information aggregation in networks. Agents noncooperatively choose among Friedkin-Johnsen-type aggregation rules to maximize payoffs. The DeGroot rule is chosen in equilibrium if and only if there is noiseless information transmission, leading to consensus. With noisy transmission, while some disagreement is inevitable, the optimal choice of rule amplifies the disagreement: even with little noise, individuals place substantial weight on their own initial opinion in every period, exacerbating the disagreement. We use this framework to think about equilibrium versus socially efficient choice of rules and its connection to polarization of opinions across groups.

We consider the issue of allotment design: goods are divisible and may be cut into various possibly heterogeneous lots. We investigate conditions under which it is preferable from the seller’s perspective to create two or more lots out of an initial one, or to group various initial lots into a single one. We identify two effects. De-grouping always increases efficiency of the final allocation. Nevertheless, it modifies asymmetries across bidders, and this may possibly end up hurting the seller. We examine the applications to procurement for cash flow management services, and to auctions for commercial links or space on internet.

We consider the issue of allotment design: goods are divisible and may be cut into various possibly heterogeneous lots. We investigate conditions under which it is preferable from the seller’s perspective to create two or more lots out of an initial one, or to group various initial lots into a single one. We identify two effects. De-grouping always increases efficiency of the final allocation. Nevertheless, it modifies asymmetries across bidders, and this may possibly end up hurting the seller. We examine the applications to procurement for cash flow management services, and to auctions for commercial links or space on internet.

There is a large repeated games literature illustrating how future interactions provide incentives for cooperation. Much of the earlier literature assumes public monitoring. Departures from public monitoring to private monitoring that incorporate differences in players’ observations may dramatically complicate coordination and the provision of incentives, with the consequence that equilibria with private monitoring often seem unrealistically complex or fragile. We set out a model in which players accomplish cooperation in an intuitively plausible fashion. Players process information via a mental system – a set of psychological states and a transition function between states depending on observations. Players restrict attention to a relatively small set of simple strategies, and consequently, might learn which perform well.

The coalitional Nash bargaining solution is defined to be the core allocation for which the product of players’ payoffs is maximal. We consider a non-cooperative model with discounting in which one team may form and every player is randomly selected to make a proposal in every period. The grand team, consisting of all players, generates the largest surplus. But a smaller team may form. We show that as players get more patient if an efficient and stationary equilibrium exists, it must deliver payoffs that correspond to the coalitional Nash bargaining solution. We also characterize when an efficient and stationary equilibrium exists, which requires conditions that go beyond the nonemptiness of the core.

We study collective search processes in, which members of a committee decide whether to accept the current proposal or continue searching. The acceptance decision is made according to majority rule. We study which members have more impact on the decision, as well as the degree of randomness of the decision. When proposals vary along a single dimension, the accpetance set is small, and at most two members determine the outcome whatever the majority rule. When proposals vary along many dimensions, the acceptance set is large except under unaminity and all members affect the distribution of decisions. Various implications are drawn.

We consider bargaining problems in which parties have access to outside options, the size of the pie is commonly known and each party privately knows the realization of her outside option. We allow for correlations in the distributions of outside options. Parties have a veto right, which allows them to obtain at least their outside option payoff in any event. Besides, agents can receive no subsidy ex post. We show that inefficiencies are inevitable whatever the exact form of correlation, as long as private information is dispersed. We also illustrate how veto constraints differ from ex post participation constraints.

A principal has to choose among several agents to fulfill a task and then provide the right incentives to perform it. Agents do not a priori know how competent they are for the task. It is shown that the principal should propose a contract that leads the agents to gather information about their competence prior to signing the contract. This insight is in sharp contrast with Crémer and Khalil [J. Crémer, F. Khalil: “Gathering information before signing a contract”, American Economic Review, 82, 1992, 566-578] who consider a setup with one agent (or alternatively a setup with several agents in which the private information commonly applies to all agents). It emerges because, in our private value setup, information acquisition accompanied by a proper screening device increases the chance that the principal will pick a competent agent.