Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/102113
Authors: 
Di Tillio, Alfredo
Kos, Nenad
Messner, Matthias
Year of Publication: 
2014
Series/Report no.: 
CESifo Working Paper 4949
Abstract: 
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.
Subjects: 
optimal mechanism design
ambiguity aversion
incentive compatibility
individual rationality
JEL: 
C72
D44
D82
Document Type: 
Working Paper

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