Hinnosaar, Toomas - Collegio Carlo Alberto, Università degli Studi di Torino - 2015
Risk-neutral sellers can extract high profits from risk-loving buyers by selling them lotteries. To limit this problem …, gambling is heavily regulated in most countries. I show that protecting risk-loving buyers against profit-maximizing sellers is … essentially impossible. Even if buyers are risk-loving in the weakest sense, the seller can construct a nonrandom winner …