The consumption of an indivisible good causes identity-dependent externalities to non-consumers. We analyse resale markets where the current owner designs the trading procedure, but cannot commit to future actions. We ask the following questions: (1) Does the identity of the initial owner matter for the determination of the final consumer? (2) Is the outcome always efficient? The major conclusion of our paper is that the irrelevance of the initial structure of property rights arises in resale processes even if there are transaction costs that hinder efficiency. This result complements the Coasian view where the irrelevance of the assignment of property rights is a consequence of efficiency.

We study efficient, Bayes-Nash incentive compatible mechanisms in a social choice setting that allows for informational and allocative externalities. We show that such mechanisms exist only if a congruence condition relating private and social rates of information substitution is satisfied. If signals are multi-dimensional, the congruence condition is determined by an integrability constraint, and it can hold only in nongeneric cases where values are private or a certain symmetry assumption holds. If signals are one-dimensional, the congruence condition reduces to a monotonicity constraint and it can be generically satisfied. We apply the results to the study of multi-object auctions, and we discuss why such auctions cannot be reduced to one-dimensional models without loss of generality.

We study the strategic equilibria of a negotiation game where potential buyers are affected by identity-dependent, negative externalities. The unique equilibrium of long, finitely repeated generic games can either display delay--where a transaction can take place only in several stages before the deadline--or, in spite of the random element in the game, a well-defined buyer exists that obtains the object with probability close to one.

In 1797 Johann Wolfgang von Goethe sold a manuscript through a second‐price auction. We investigate Goethe's motivation in the context of the late eighteenth century's book market and relate it to modern auction theory.

We consider situations where a sale affects the ensuing interaction between potential buyers. These situations are modeled by assuming that an agent who does not acquire the object for sale incurs an identity-dependent externality. We construct a revenue-maximizing auction for the seller. We observe that: 1) outside options and participation constraints are endogenous. 2) The seller extracts surplus also from agents who do not obtain the auctioned object. 3) The seller is better-off by not selling at all (while obtaining some payments) if externalities are much larger than valuations.

We analyze sequential, binary voting schemes in settings where several privately informed agents have single-peaked preferences over a finite set of alternatives, and we focus on robust equilibria that do not depend on assumptions about the players' beliefs about each other. Our main results identify two intuitive conditions on binary voting trees, ensuring that sincere voting at each stage forms an ex post perfect equilibrium. In particular, we uncover a strong rationale for content-based agendas: if the outcome should not be sensitive to beliefs about others, nor to the deployment of strategic skills, the agenda needs to be built “from the extremes to the middle” so that more extreme alternatives are both more difficult to adopt, and are put to vote before other, more moderate options. An important corollary is that, under simple majority, the equilibrium outcome of the incomplete information game is always the Condorcet winner. Finally, we aim to guide the practical design of schemes that are widely used by legislatures and committees and we illustrate our findings with several case studies.

We study an allocation problem where a set of objects needs to be allocated to agents arriving over time. The basic model is of the private, independent values type. The dynamically efficient allocation is implementable if the distribution of agents' values is known. Whereas lack of knowledge about the distribution is inconsequential in the static case, endogenous informational externalities arise if the designer gradually learns about the distribution by observing present values. These externalities may prevent the implementation of the dynamically efficient allocation. We provide necessary and sufficient conditions for the efficient allocation to be implementable.

We study a contest with multiple, nonidentical prizes. Participants are privately informed about a parameter (ability) affecting their costs of effort. The contestant with the highest effort wins the first prize, the contestant with the second-highest effort wins the second prize, and so on until all the prizes are allocated. The contest's designer maximizes expected effort. When cost functions are linear or concave in effort, it is optimal to allocate the entire prize sum to a single “first” prize. When cost functions are convex, several positive prizes may be optimal.

We derive the incentive compatible and ex-ante welfare maximizing (i.e. utilitarian) mechanism for settings with an arbitrary number of agents and alternatives where the privately informed agents have single-crossing and single-peaked preferences. The optimal outcome can be implemented by modifying a sequential voting scheme that is used in many legislatures and committees. The modification uses a flexible majority threshold for each of several alternatives, and allows us to replicate, via a single sequential procedure, the entire class of anonymous, unanimous, and dominant strategy incentive compatible mechanisms. Our analysis relies on elegant characterizations of this class of mechanisms for single-peaked and single-crossing preferences.

We study two-sided markets with a finite number of agents on each side, and with two-sided incomplete information. Agents are matched assortatively on the basis of costly signals. Asymmetries in signalling activity between the two sides of the market can be explained by asymmetries either in size or in heterogeneity. Our main results identify general conditions under which the potential increase in expected output due to assortative matching (relative to random matching) is offset by the costs of signalling. Finally, we examine the limit model with a continuum of agents and point out differences and similarities to the finite version. Technically, the paper is based on the elegant theory about stochastic order relations among differences of order statistics, pioneered by Barlow and Proschan in 1966 in the framework of reliability theory.