Public Goods in Networks: Comparative Statics Results (with Sebastian Bervoets; Journal of Economic Theory - Vol 228, 106054, 2025)
Robust Mechanism Design on Networks with Externalities (The Best Student Paper Prize, the 28th CTN congress, Paris)
Abstract: This paper studies a mechanism design problem to allocate a good with positive externalities among agents embedded in an information network, without monetary transfers. Each agent observes their own valuation and those of their neighbors. A principal seeks to allocate the good to the highest-valuation agent through a mechanism robust to agents’ heterogeneous belief hierarchies, leveraging the network structure and the partial incentive alignment created by allocative externalities. We characterize the network structures for which a robustly efficient mechanism exists: a necessary and sufficient condition is that at least two agents are connected to all others. Relaxing robustness to rule out weakly dominated strategies, one universally connected agent suffices. We generalize the results to a broader class of utility functions, show that welfare maximization requires the complete network, and establish that ex post incentive compatibility holds if and only if no agent is isolated.
Keyworks: network, full implementation, belief-free implementation, interdependent valuations, mechanism design without transfers
Efficient liability assignment under shock propagation (with J. Gudmundsson, J. L. Hougaard, A. Rigos) - submitted
Abstract: We study a model in which shocks propagate along a path chosen by agents embedded in a network. When a shock hits an agent, the affected agent cancels one of her outgoing edges. This cancellation cascades sequentially along a chosen path until reaching a terminal agent, resulting in a systemic cost equal to the sum of individual cancellation losses. A liability rule determines agent payments for realized losses, and we seek to implement efficient path selection in the induced sequential-move game. Our main axiomatic result characterizes a family of rules, which set each agent's liability to be proportional to the system's total realized losses with agent weights depending only on the network structure. We propose a way to set such weights based on a simple path-based procedure that assigns equal importance to all non-sink agents along each path and then aggregates these contributions across paths. These weights coincide with the Shapley value of an associated "path-counting" cooperative game and can be computed in polynomial time. A simulation study illustrates the mechanics of our approach.
Keywords: Network externality, liability assignment, efficient implementation, supplychain disruptions
Morality in a General Positive Externality Environment (with M. Faure)
Kantian Players, Social Networks and Public Goods (with S. Bervoets)