Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/323229 
Year of Publication: 
2025
Series/Report no.: 
Discussion Paper No. 2025/5
Publisher: 
Freie Universität Berlin, School of Business & Economics, Berlin
Abstract: 
We study a principal who allocates a good to agents with private, independently distributed values through an optimal mechanism. The principal can strategically shape these value distributions by modifying the good's features, which affect agents' valuations. Our analysis reveals that optimal designs are frequently divisive-creating goods that appeal strongly to specific agents or agent types while being less valued by others. These divisive designs reduce information rents and increase total surplus, at the expense of competition. Even when total surplus is constrained, some divisiveness in designs remains optimal.
Subjects: 
Value Design
Mechanism Design
Differentiation
JEL: 
D82
D46
L15
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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