Essays in Mechanism Design

Abstract

This dissertation consists of three essays in mechanism design that study how the structure of strategic games shapes outcomes and equilibrium behavior. In the first essay, I show that firms can benefit from imposing costly ordeals on job applicants, even when these costs provide no information about applicant quality. With partially informative interview technologies satisfying the monotone likelihood ratio property, the firm’s profit-maximizing hiring mechanism is a binary menu with one costless option and one paid option that guarantees an interview; richer menus are strictly worse. The second essay generalizes obviously strategy-proof (OSP) mechanisms by defining Decomposable OSP (DOSP) mechanisms, which split each player into proxies that play in different parts of the game. Under this criterion, sequential ascending clock auctions for additive valuations and the Ausubel clinching auction for identical goods with diminishing marginal utility are simple, recovering intuitive simplicity that strict OSP misses. The third essay, joint work with James Stratton, introduces expansion-contraction invariant equilibria—a refinement of subgame-perfect equilibrium that is robust to coalescing and expanding the game tree while remaining sensitive to contingent reasoning. We characterize these equilibria as the subgame-perfect equilibria of an auxiliary Split game and show that they always exist in finite two-player extensive-form games with perfect recall.