Selling to the Mean
We study optimal selling strategies of a seller who is poorly informed about the buyerâ€™s value for the object. When the maxmin seller only knows that the mean of the distribution of the buyerâ€™s valuations belongs to some interval then nature can keep him to payoff zero no matter how much information the seller has about the mean. However, when the seller has information about the mean and the variance, or the mean and the upper bound of the support, the seller optimally commits to a randomization over prices and obtains a strictly positive payoff. In such a case additional information about the mean and/or the variance affects his payoff.
|Date of creation:||2015|
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- Alfredo Di Tillio & Nenad Kos & Matthias Messner, 2012. "The Design of Ambiguous Mechanisms," Working Papers 446, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
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"Optimal auctions with ambiguity,"
Econometric Society, vol. 1(4), pages 411-438, December.
- Andreas Pape & Subir Bose & Emre Ozdenoren, 2004. "Optimal auctions with ambiguity," Econometric Society 2004 North American Summer Meetings 609, Econometric Society.
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