ESSAYS ON MECHANISM DESIGN

Abstract

This thesis consists of three chapters on optimal mechanism design. The first two chapters investigate contest design problems with incomplete information. A contest designer has a fixed budget to extract effort from a pool of risk neutral contestants using both positive and negative prizes. Each contestant?s ability is his private information. The designer?s goal is to maximize the expected total effort. The first chapter adopts a general mechanism design approach, while the second chapter focuses on all-pay auction so that endogenous entry issue arises. The third chapter studies the cost-minimizing procurement contract when both moral hazard and adverse selection are present. A buyer wishes to procure a product from a supplier. The supplier can conduct R&D before his delivery of the product. His R&D investment, R&D ability, and R&D outcome are all his private information. The buyer?s goal is to design a contract to minimize her expected procurement cost.