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Screening for experiments

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  • Min, Daehong

Abstract

I study a problem in which the principal is a decision maker and the agent is an “experimenter.” Neither the agent nor the principal observes the true state, but the agent can conduct an experiment that reveals information about the true state. The agent has private information about which experiments are feasible, his type. Before the agent conducts an experiment, the principal commits to a decision rule which is contingent on the experiments and their results. When the first-best outcome is unachievable, the principal faces a trade-off between the quality of the experiment and the ex post optimal decisions given experimental results. I characterize two kinds of optimal decision rules: one that sacrifices the ex post optimal decisions for the quality of the experiment, and the other that resolves the trade-off the other way around; which one is optimal depends on the properties of each type's set of feasible experiments.

Suggested Citation

  • Min, Daehong, 2023. "Screening for experiments," Games and Economic Behavior, Elsevier, vol. 142(C), pages 73-100.
    • Handle: RePEc:eee:gamebe:v:142:y:2023:i:c:p:73-100
    DOI: 10.1016/j.geb.2023.07.009
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    Keywords

    Information design; Mechanism design without transfers; Information control; Bayesian persuasion; Experiments;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law

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