| Essay 1: Bayes-Nash Equilibria of the Generalized Second-Price Auction (with Renato Gomes): We develop a Bayes-Nash analysis of the Generalized Second-Price auction (GSP), the multi- unit auction used by search engines to sell sponsored advertising positions. Our main result characterizes the efficient Bayes-Nash equilibrium of the GSP and provides a necessary and sufficient condition that guarantees existence of such an equilibrium. With only two posi- tions, this condition requires that the click-through rate of the second position is sufficiently smaller than that of the first. When an efficient equilibrium exists, we provide a necessary and sufficient condition for the auction revenue to decrease as click-through rates increase. Fortunately, under optimal reserve prices, revenue increases with the click-through rates of all positions.;Essay 2: Health Insurance Pre-Exchanges: I propose a centralized marketplace, a pre-exchange, for health insurer-provider network formation and examine its welfare impact. The key innovation of the pre-exchange is the introduction of explicitly multilateral contracting. In particular, providers set prices that depend both on the identity of the insurer as well as the identities of the other hospitals in the insurer's network. I refer to this as network-specific pricing. I argue that the introduction of network-specific pricing enhances efficiency and dramatically lowers equilibrium health care prices.;Essay 3: Cost-Effective Health Care: Incentives and Market Design: Cost-effectiveness analysis is a significant part of of health care research and seen as a major mechanism for controlling the rise in health care spending. In this paper, we take a market design approach and investigate the equilibrium properties of a widely-used system, which is based on an incremental cost-effectiveness ratio (ICER). We first show how the existing mechanism performs poorly in a dynamic model, and then propose a new mechanism which performs well in both the static and dynamic settings. The key insight is that the current ICER mechanism does not sufficiently harness competition between substitutable treatments. Using insights from market design, we adapt the ICER mechanism to maintain efficiency while lowering payments from the social planner. |
