The Design of Ambiguous Mechanisms

This paper explores the sale of an object to an ambiguity averse buyer. We show that the seller can increase his profit by using an ambiguous mechanism. That is, the seller can benefit from hiding certain features of the mechanism that he has committed to from the agent. We then characterize the profit maximizing mechanisms for the seller and characterize the conditions under which the seller can gain by employing an ambiguous mechanism.

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Year of publication:	2014
Authors:	Tillio, Alfredo Di ; Kos, Nenad ; Messner, Matthias
Institutions:	CESifo
Subject:	optimal mechanism design \| ambiguity aversion \| incentive compatibility \| individual rationality

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Extent:	application/pdf
Series:	CESifo Working Paper Series.
Type of publication:	Book / Working Paper
Notes:	Number 4949
Classification:	C72 - Noncooperative Games ; D44 - Auctions ; D82 - Asymmetric and Private Information
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010889983