Research

Awaya, Y. and V. Krishna (2024): "Spreading Information via Social Networks: An Irrelevance Result"

Abstract: An informed planner wishes to spread information among a group of agents in order to induce efficient coordination---say the adoption of a new technology with positive externalities. The agents are connected via a social network. The planner informs a seed and then the information spreads via the network. While the structure of the network affects the rate of diffusion, we show that the rate of adoption is the same for all acyclic networks. 

Awaya, Y. and V. Krishna (2023): "Commonality of Information and Commonality of Beliefs"

Abstract: A group of agents with a common prior receive informative signals about an unknown state repeatedly over time. If these signals were public, agents' beliefs would be identical and commonly known. This suggests that if signals were private, then the more correlated these are, the greater the commonality of beliefs. We show that, in fact, the opposite is true. In the long run, conditionally independent signals achieve greater commonality of beliefs than correlated ones.

Awaya, Y. and V. Krishna (2024): "Panics and Prices" (forthcoming in the Journal of Economic Theory)

Abstract: Rumors of a shortage may create higher-order uncertainty and cause panic buying even when there is no real shortage and most consumers are aware of this fact. We study the role of prices in alleviating, or even preventing, panic buying caused by such rumors. Under some circumstances, flexible prices fail to do so and panic buying is the unique equilibrium outcome. In our model consumers do not know their future tastes perfectly and panic buying reduces welfare because consumers now buy with only imperfect information about tastes. In these circumstances, a minimum support price---a price floor---prevents panic buying and leads to higher consumer surplus. Producer surplus may be higher as well.

Awaya, Y. and V. Krishna (2020): "On Fundamental versus Strategic Uncertainty"

Abstract:  In global games in which one player has better information than his rival, it may be that in the unique equilibrium, the better informed player has a lower payoff than the poorly informed player.  The reason is that while the better informed player faces less (or even no) uncertainty about economic fundamentals he may face greater strategic uncertainty.

Benoît, J-P. and V. Krishna (1998): "The Folk Theorems for Repeated Games: A Synthesis"

Abstract: We present a synthesis of the various folk theorems for repeated games using a model that accommodates both finitely and infinitely repeated games with discounting. We derive a central result for this model and show that the various folk theorems follow as a consequence. Our result encompasses theorems involving epsilon equilibria and incomplete information.

Krishna, V. and M. Perry (1998): "Efficient Mechanism Design"

Abstract: We study Bayesian mechanism design in situations where agents' information may be multi-dimensional, concentrating on mechanisms that lead to efficient allocations. Our main result is that a generalization of the well-known Vickrey-Clarke-Groves mechanism maximizes the planner's "revenue" among all efficient mechanisms. The result is then used to study multiple object auctions in situations where the bidders have privately known "demand curves" and extended to include situations with complementarities across objects or externalities across bidders. We also illustrate how the main result may be used to analyze the possibility of allocating both private and public goods when budget balance considerations are important. The generalized VCG mechanism, therefore, serves to unify many results in mechanism design theory.