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Information Without Rents: Mechanism Design Without Expected Utility

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  • Ernesto Rivera Mora

    (University of Colorado, Boulder)

  • Philipp Strack

    (Yale University)

Abstract

We study mechanism design for a sophisticated agent with non-expected utility (EU) preferences. We show that the revelation principle holds if and only if all types are EU maximizers: if at least one type is a non-EU maximizer, randomizing over dynamic mechanisms generates a strictly larger set of implementable allocations than using static mechanisms. Moreover, dynamic stochastic mechanisms can fully extract the private information of any type who doesn't have uniformly quasi-concave preferences without providing that type any rent. Full-surplus extraction is possible in a broad variety of non-EU environments, but impossible for types with concave preferences.

Suggested Citation

  • Ernesto Rivera Mora & Philipp Strack, 2025. "Information Without Rents: Mechanism Design Without Expected Utility," Cowles Foundation Discussion Papers 2481, Cowles Foundation for Research in Economics, Yale University.
    • Handle: RePEc:cwl:cwldpp:2481
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    File URL: https://cowles.yale.edu/sites/default/files/2026-01/d2481.pdf
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