Journal Article The Discrete Heal Algorithm With Intermediate Goods Get access Jacques Cremer Jacques Cremer University of Pennsylvania Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 50, Issue 2, April 1983, Pages 383–391, https://doi.org/10.2307/2297424 Published: 01 April 1983 Article history Received: 01 October 1981 Accepted: 01 October 1982 Published: 01 April 1983

This paper argues that overlapping games can provide a natural theory of long-lived organizations. It shows that participation in organizations of infinite duration changes the incentives of agents with finite lives, and will induce more cooperation than a static model would predict. After developing the general theory, we apply it to the description of career paths in organizations and show that it can be optimal to give the youngest workers the most arduous tasks. I.

[This paper describes a decentralized planning procedure which converges to a global optimum--as seen by a central planning board--whether or not the production possibility sets of the firms are convex. All information is exchanged in the form of quantities: the planning board proposes quotas and the firms respond with feasible production programs.]

After being offered a contract, an agent has the possibility to observe the state of nature. This enables him to refuse the contract in unfavorable states but burdens him with an observation cost. We show that the principal offers a contract in which the agent has no incentive to observe the state of nature, and we explore its terms. Later, we show that the principal finds it profitable to organize competition between several agents, even though he has monopoly power and can push a single agent down to his reservation utility.

[Much attention has been devoted recently to the problem of implementing an optimal provision of public goods with imperfect information about preferences. The literature studies mechanisms with individual agents directly revealing information about their preferences, and focuses on two types of truthful equilibria: dominant strategy and Bayesian-Nash. We introduce "Stackelberg" mechanisms with truth-telling a dominant strategy for all agents but the first. The first agent plays "before" the other maximizing his expected utility on the assumption that others will reveal their true preferences. We present sufficient conditions for the construction of Stacekelberg mechanisms which yield an efficient provision of public goods, balance the budget, and induce every participant to reveal their true preferences. These results strengthen and extend the known results of the Bayesian-Nash approach.]

The authors consider auctions for a single indivisible object when bidders have information about each other that is unavailable to the seller. They show that the seller can use this information to his own benefit, and they characterize th e environments in which a well-chosen auction gives him the same expected payoff as that obtainable were he able to see the object und er full information. This hinges on the possibility of constructing lotteries with the correct properties. The authors study the problem for auctions where the bidders have dominant strategies and those where the relevant equilibrium concept is Bayesian-Nash.

[This paper deals with the optimal design of resource allocation mechanisms in the presence of asymmetric information. A buyer's valuation function is allowed to depend on the characteristics of other buyers as well as his own and sufficient conditions are provided under which the seller can extract the full surplus from the buyers in an "ex post Nash" equilibrium. The result is then applied to the important problem of optimal auction design.]

This paper proposes a new framework for studying federal mandates regarding public policies in areas such as environmental quality, public health, highway safety, and the provision of local public goods. Voters have single‐peaked preferences along a single policy dimension. There are two levels of government, federal and local. The federal level can constrain local policy by mandating a minimum (or maximum) policy. Localities are free to adopt any policy satisfying the constraint imposed by the federal mandate. We show that voters choose federal mandates that are too strict, which leads to excessively severe mandates. We show that similar results can obtain when federal provision of the public‐provided good is more efficient than local provision.