Adverse selection with general behavioral types

Material type: 文書・図像類

Author: Murooka, Takeshiほか

Publisher: Osaka School of International Public Policy, Osaka University

Publication date: 2020-03-09

Material Format: Paper

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Note (General)：: There is accumulating evidence that some consumers are behavioral in the sense that they may make suboptimal decisions. This paper investigates advers...

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Paper

Material Type: 文書・図像類
Title: Adverse selection with general behavioral types
Author/Editor: Murooka, Takeshi
Yamashita, Takuro
Author Heading: Murooka, Takeshi
https://nrid.nii.ac.jp/nrid/1000010796345
Yamashita, Takuro
Publication, Distribution, etc.: Osaka School of International Public Policy, Osaka University
Publication Date: 2020-03-09
Publication Date (W3CDTF): 2020-03-09
Periodical title: OSIPP Discussion Paper
No. or year of volume/issue: DP-2020-E-002
Volume: DP-2020-E-002
Pages: 1-7
Text Language Code: eng
Subject Heading: adverse selection
bounded rationality
mechanism design
no-trade theorem
Target Audience: 一般
Note (General): There is accumulating evidence that some consumers are behavioral in the sense that they may make suboptimal decisions. This paper investigates adverse selection with general types of such behavioral biases. In our model, some buyers (i.e., consumers) may take actions that do not necessary optimize own payoffs, which encompass virtually any type of biases including subjective probability, framing, model misspecification, random errors, and inferential naivety. We focus on a situation in which there exists severe adverse selection where only no-trade outcome is possible under rational agents. We show that the no-trade theorem remains to hold without imposing any additional assumption on buyers' behavior. That is, if there is any trade under a mechanism which is incentive compatible for sellers, then the expected payoff from the trade is negative (i.e., ex ante individual rationality constraint is violated) for some type of buyers. Our result sheds light on a new trade-off between social surplus and payoff losses of boundedly-rational buyers.
References (URI): URI
http://www.osipp.osaka-u.ac.jp/archives/DP/2020/DP2020E002.pdf
Data Provider (Database): 国立情報学研究所 : 学術機関リポジトリデータベース（IRDB）（機関リポジトリ）
https://irdb.nii.ac.jp
Original Data Provider (Database): 大阪大学 : 大阪大学学術情報庫　桜華