Informationally Simple Incentives by Simon Gleyze and Agathe Pernoud

 Agathe Pernoud is on the Economics job market from Stanford this year, and is interested in the properties of information in environments in which agents may need to learn their own preferences.

Here are two papers that advance the theory of those situations, and expand on the fragility of 'dominant strategies' as the strategy space is enlarged.

Informationally Simple Incentives by Simon Gleyze and Agathe Pernoud, Journal of Political Economy, forthcoming.

Abstract: We consider a mechanism design setting in which agents can acquire costly information on their preferences as well as others’. A mechanism is informationally simple if agents have no incentive to learn about others’ preferences. This property is of interest for two reasons: First, it is a necessary condition for the existence of dominant strategy equilibria in the extended game.  Second, this endogenizes an “independent private value” property of the interim information structure. We show that, generically, a mechanism is informationally simple if and only if it satisfies a separability condition which rules out most economically meaningful mechanisms."

See also Agathe's job market paper:

How Competition Shapes Information in Auctions by Simon Gleyze and Agathe Pernoud

We consider auctions where buyers can acquire costly information about their valuations and those of others, and investigate how competition between buyers shapes their learning incentives. In equilibrium, buyers find it cost-efficient to acquire some information about their competitors so as to only learn their valuations when they have a fair chance of winning. We show that such learning incentives make competition between buyers less effective: losing buyers often fail to learn their valuations precisely and, as a result, compete less aggressively for the good. This depresses revenue, which remains bounded away from the expected second-highest valuation even when information costs are small. It also undermines price discovery. Finally, we examine the implications for auction design. First, setting an optimal reserve price is more valuable than attracting an extra buyer. Second, the seller can incentivize buyers to learn their valuations, hence restoring effective competition, by maintaining uncertainty over the set of auction participants.