Recently, the paper Information Design in Allocation with Costly Verification, co-authored by Associate Professor (Tenured) Hu Gaoji of the Department of Microeconomics at our School, Associate Professor Yang Xiangqian of Hunan University, and Professor Yi-Chun Chen of the National University of Singapore, was officially published online in International Economic Review, an international Class I economics journal.
Abstract
We study information design in a single-agent allocation problem with costly verification, where the principal has a positive reservation value. The agent learns privately a signal about the principal's allocation value, drawn from a distribution controlled by an information designer. Given the signal distribution, the principal designs a mechanism to maximize her net value. We show that the agent-optimal information pools high values at a signal just worth verification, whereas the principal-optimal information features full disclosure. Moreover, any agent-optimal information is principal-worst, despite their partially aligned interests and the absence of transfers.
Author Biography
Hu Gaoji is an Associate Professor (Tenured) at the School of Economics, Shanghai University of Finance and Economics, and holds a Ph.D. in Economics from the National University of Singapore. He also serves as an Associate Editor of Journal of Mathematical Economics. His research areas include matching theory, mechanism design, and revealed preference theory. His research findings have been published in academic journals such as Theoretical Economics, American Economic Journal: Microeconomics, International Economic Review, Games and Economic Behavior (two papers), and Social Choice and Welfare. His research projects include a Youth Program project, a General Program project, and participation in a Major Program project funded by the National Natural Science Foundation of China, as well as the Shanghai Pujiang Talent Program.
