14th journées Louis-André Gérard-Varet

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Selling to the mean
Matthias Messner, Nenad Kos

Last modified: 2015-03-15

Abstract


We study optimal selling strategies of a seller who is poorly informed about the buyer's value for the object. When the maxmin seller only knows that the mean of the distribution of the buyer's valuations belongs to some interval the nature can keep him to payoff zero no matter how much information the seller has about the mean. However, when the seller in addition also has information about the variance, or if he knows the upper bound on the support of the distribution of valuations, then his payoff is strictly positive. In such a case he values the information about the mean and/or the variance.

Keywords


Optimal mechanism design, Robustness, Incentive compatibility, Individual rationality, Ambiguity aversion