Essays in Dynamic Delegation and Matching

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This dissertation is a collection of three essays that study (dynamic) incentive provision in multi-agent settings with asymmetric information: delegation of projects in organizations, dynamic matching on a platform, and arbitration between partners in a dispute.', "The first chapter studies dynamic delegation of heterogeneous projects to agents with diverse capabilities. Each agent's (e.g., division managers, employees) true ability to carry out projects varies over time based on his expertise and private idiosyncratic compatibility with the specifics of the current project. The principal's (e.g., headquarters, management) ability to credibly provide incentives in order to assign projects efficiently hinges on the degree of specialization across agents. Efficiency - where each project is assigned to the agent best suited for it - is attainable if and only if specialization does not exceed a threshold. If specialization is sufficiently high, communication breaks-down entirely. The derivation of a necessary and sufficient condition for efficiency - over all primitives including discounting - enables constructing a simple class of assignment rules that are efficient whenever any rule is, and deriving the key properties of such rules. These properties shed light on the potential benefits or drawbacks of certain management practices in the absence of monetary incentives. The analysis establishes an equivalence between ex-post equilibria - in which agents' ex-post incentive", 'constraints are satisfied in each period - and a natural class of equilibria in which delegation is driven by past performance, but does not condition directly on past communication. The analysis also studies optimal project assignment when the principal is unable to discriminate between the agents, and characterizes the cost associated with this inability.', "The second chapter, written in collaboration with Professor Alessandro Pavan, studies mediated many-to-many matching in markets in which valuations evolve over time as the result of shocks, learning through experimentation, or a preference for variety. The analysis uncovers the key trade-offs that platforms face in the design of their matching protocols. It shows that the dynamics that maximize either the platform's profits or welfare can often be sustained through auctions implementing the matches with the highest bilateral score up to capacity. In equilibrium, bidding is straight-forward and myopic. The analysis also sheds light on the merits of regulating such markets. When match values are positive, profit maximization involves fewer and shorter interactions than welfare maximization. This conclusion need not extend to markets where certain agents dislike certain interactions.The third chapter, written in collaboration with Bela Szabadi, studies efficient resolution of partnership disputes where - in a departure from the partnership dissolution literature (Cramton et al. (1987)) - efficiency need not imply dissolution. The analysis characterizes which disputes can be resolved efficiently. Unless a dispute is sufficiently severe, its efficient resolution is infeasible without external subsidy. Furthermore, a dispute's severity has a non-monotonic effect on the cost of efficient resolution. The analysis has implications for the design of arbitration when partners' decision to enter arbitration is itself endogenous. It is shown that a simple two-stage mechanism where partners first choose whether to initiate arbitration, in which case a second-price auction ensues, achieves efficient resolution whenever it is possible. When efficient resolution is impossible, the analysis characterizes when a profit-oriented arbitrator benefits from being more/less conservative in opting for dissolution."]

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  • 10/08/2019
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