IDEAS home Printed from https://ideas.repec.org/p/syd/wpaper/2123-7493.html
   My bibliography  Save this paper

Discontinuous Payoff Functions under Incomplete Information

Author

Listed:
  • Gill, Flora
  • Rose, Colin

Abstract

Discontinuous payoff functions have attracted some attention in the literature, especially in economic games. This paper considers such functions when the location of the discontinuity is known incompletely. Under this scenario, the presence of a discontinuity creates risk for economic agents. Standard intuition does not hold perfectly here: for instance, we show that an agent's optimal choice is a U-shaped function of the amount of risk, which is most surprising. We show that these results apply to many economic problems including issues of mechanism design, double auctions and standard monopoly pricing models.

Suggested Citation

  • Gill, Flora & Rose, Colin, 1994. "Discontinuous Payoff Functions under Incomplete Information," Working Papers 209, University of Sydney, School of Economics.
    • Handle: RePEc:syd:wpaper:2123/7493
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/2123/7493
    Download Restriction: no
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:syd:wpaper:2123/7493. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Vanessa Holcombe (email available below). General contact details of provider: https://edirc.repec.org/data/deusyau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.