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Contracting with Type-Dependent Naïveté

Author

Listed:
  • Subir Bose
  • Arup Daripa

Abstract

We study the problem of elicitation of subjective beliefs of an agent when the beliefs are ambiguous (the set of beliefs is a non-singleton set) and the agent’s preference exhibits ambiguity aversion; in particular, as represented by ?-maxmin preferences. We construct a direct revelation mechanism such that truthful reporting of beliefs is the agent’s unique best response. The mechanism uses knowledge of the preference parameter ? and we construct a mechanism that truthfully elicits a. Finally, using the two as ingredients, we construct a grand mechanism that elicits ambiguous beliefs and a concurrently.

Suggested Citation

  • Subir Bose & Arup Daripa, 2016. "Contracting with Type-Dependent Naïveté," Discussion Papers in Economics 16/04, Division of Economics, School of Business, University of Leicester.
    • Handle: RePEc:lec:leecon:16/04
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    File URL: https://www.le.ac.uk/economics/research/RePEc/lec/leecon/dp16-04.pdf
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    References listed on IDEAS

    as
    1. Edi Karni, 2009. "A Mechanism for Eliciting Probabilities," Econometrica, Econometric Society, vol. 77(2), pages 603-606, March.
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    3. Gilboa, Itzhak & Schmeidler, David, 1989. "Maxmin expected utility with non-unique prior," Journal of Mathematical Economics, Elsevier, vol. 18(2), pages 141-153, April.
    4. Gneiting, Tilmann & Raftery, Adrian E., 2007. "Strictly Proper Scoring Rules, Prediction, and Estimation," Journal of the American Statistical Association, American Statistical Association, vol. 102, pages 359-378, March.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Ambiguity; ?-maxmin preferences; maxmin preferences; elicitation of beliefs and ?;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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