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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, even though they reduce competition. Even when total surplus is
constrained, some divisiveness in designs remains optimal.
