Co-authored Paper by Assistant Researcher Liu Dongri Published Online in Top International Economics Journal Games and Economic Behavior

The co-authored paper An implementation of the general optimal mechanism in Eso and Szentes (2007) by Assistant Researcher Liu Dongri from the School of Economics, Shandong University, and Professor Jingfeng Lu from the Department of Economics, National University of Singapore, was published online in Games and Economic Behavior, a top international economics journal. Liu Dongri is the first author, and Lu Jingfeng is the corresponding author.

This paper proposes a three-stage handicap auction mechanism that can successfully implement the optimal mechanism proposed by Eso and Szentes (2007) in a general environment without assuming constant marginal utility for buyers. In the first stage, each buyer, knowing his first-stage type, is required to select a handicap menu by paying a menu fee; a higher menu fee leads to a more favorable handicap menu, which charges a lower handicap fee for every possible handicap level. Through this design, the buyer's choice behavior when paying the menu fee indirectly reveals his private information. In the second stage, the buyer, informed of his second-stage signal, selects a specific handicap level from the previously chosen handicap menu and pays the corresponding handicap fee. In the third stage, all buyers compete for the object via a second-price auction with handicaps. The highest bidder wins and pays the sum of his chosen handicap and the second highest bid. This conclusion effectively solves a long-standing open problem in the field of dynamic mechanism design, expands the scope of application of the optimal mechanism, and provides solid theoretical support for a wider and more complex auction environment.

Liu Dongri is an Assistant Researcher at Shandong University, with a Ph.D. from the National University of Singapore. He has published many papers in economic journals such as JME, IME and EL, and presided over the Natural Science Foundation of Shandong Province.