Working Papers

Vijay Krishna

The following working papers can be downloaded in PDF format.

Krishna, V. and J. Morgan: "On the Benefits of Costly Voting," May 2008.

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Abstract: We study strategic voting in a Condorcet type model in which voters have identical preferences but differential information. Voters incur private costs of going to the polls and may abstain if they wish; hence voting is voluntary. We show that in large majority elections, there exists a unique equilibrium. In this equilibrium, voting is sincere. Thus, in contrast to situations with compulsory voting, there is no conflict between strategic and sincere behavior. Furthermore, participation rates are such that in the limit, the correct candidate is elected with probability one. Finally, we show that in large elections, voluntary voting is welfare superior to compulsory voting.

Hafalir, I. and V. Krishna: "Revenue and Efficiency Effects of Resale in First-Price Auctions," May 2008. To appear in the Journal of Mathematical Economics.
Download	Abstract: We study first-price auctions in a model with asymmetric, independent private values. Asymmetries lead to inefficient allocations, thereby creating a motive for resale after the auction is over. In our model, resale takes place via monopoly pricing---the winner of the auction makes a take-it-or-leave-it offer to the loser. Our goal is to compare equilibria of the first-price auction without resale (FPA) with those of the first-price auction with resale (FPAR). For the three major families of distributions for which equilibria of the FPA are available in closed form, we show that resale possibilities increase the revenue of the original seller. We also show by example that, somewhat paradoxically, resale may actually decrease efficiency.
Krishna, V. and J. Morgan: "Contracting for Information under Imperfect Commitment," February 2008. To appear in the Rand Journal of Economics.
Download Supplementary Notes	Abstract: Mechanism design theory rests critically on the assumption that the principal can fully commit to the workings of the mechanism (or contract), yet in many situations of economic interest, this assumption is clearly false. We study optimal contracting between an uninformed principal and informed agent where the principal can commit to compensation schemes but not to other aspects of the contract. Although the standard revelation principle is not valid in this setting, we derive a limited version that nevertheless allows us to identify all feasible contracts. We then find the optimal contract under imperfect commitment and show that the principal should (a) never induce the agent to fully reveal what he knows---even though this is feasible---and (b) never pay the agent for imprecise information. We compare the optimal contract with imperfect commitment to that under full commitment as well as to several "informal" institutional arrangements and find that gains from contracting are greatest when the misalignment of preferences between the principal and the agent is moderate.

Benoit, J-P. and V. Krishna: "The Folk Theorems for Repeated Games: A Synthesis," December 1998.
Download	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: "Efficient Mechanism Design," April 1998.
Download	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. This result is then used to study multiple object auctions in situations where 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 efficiently when budget balance considerations are important. The generalized VCG mechanism, therefore, serves to unify many results in mechanism design theory.