Entry-Restriction Mechanisms: From Bayesian Persuasion to All-Pay Contests
- Yanwei Sun, Imperial College Business School
- Time: 2024-08-23 10:00
- Host: Turing Class Research Committee
- Venue: Room 204, Courtyard No.5, Jingyuan
Abstract
This presentation examines the strategic application of entry-restriction mechanisms from Bayesian persuasion in online lead-selling platforms to all-pay contests. In the first section, we analyze a Bayesian persuasion model within a lead-selling platform, where the platform (sender), aware of the total number of service providers (receivers), designs an information structure to influence their decision to join or not. The more providers that join, the lower the utility for each. The platform aims to maximize revenue through tailored information and state-dependent pricing. We show that, interestingly, information design with a single price achieves the second-best revenue. Besides, the optimal information structure can be implemented by a simple entry-restriction mechanism.
The second part addresses all-pay contests, focusing on a scenario where only players with high abilities are allowed entry, enhancing the contest's competitiveness. Here, the players admitted into the contest update their beliefs about their opponents based on the signal that their abilities are among the top. We find that their posterior beliefs, even with IID priors, are correlated and depend on players' private abilities, representing a unique feature of this game. We explicitly characterize the symmetric and unique Bayesian equilibrium strategy and compare it with a contest that admits all players. We also discuss a two-stage extension where players with top first-stage efforts can proceed to the second stage competing for prizes.
The first part of the talk is based on the work "Information Design and Pricing of Supply Competition in Lead-Selling Platforms," and the second part is based on "Restricting Entries to All-Pay Contests." Preliminaries of both works were accepted by the 2024 ACM EC conference.
Biography
Yanwei Sun is a third-year PhD student of Analytics & Operations at Imperial College Business School, London. He is broadly interested in problems involving incentive constraints, with a recent focus on marketplace & mechanism design, and information design. Yanwei is visiting UC Berkeley during the 2024-2025 academic year.