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Pricing Without Priors

Dirk Bergemann () and Karl Schlag ()

Chapter 12 in Robust Mechanism Design:The Role of Private Information and Higher Order Beliefs, 2012, pp 405-415 from World Scientific Publishing Co. Pte. Ltd.

Abstract: AbstractWe consider the problem of pricing a single object when the seller has only minimal information about the true valuation of the buyer. Specifically, the seller only knows the support of the possible valuations and has no further distributional information. The seller is solving this choice problem under uncertainty by minimizing her regret. The pricing policy hedges against uncertainty by randomizing over a range of prices. The support of the pricing policy is bounded away from zero. Buyers with low valuations cannot generate substantial regret and are priced out of the market. We generalize the pricing policy without priors to encompass many buyers and many qualities.

Keywords: Mechanism Design; Game Theory; Auction Theory; Implementation; Private Information; First and Higher-Order Belief; BayesNash Equilibrium; Ex Post Equilibrium; Rationalizability; Vickrey-Clarke-Groves Mechanisms; Private Value; Interdependent Value; Common Value; Belief-Free Mechanisms (search for similar items in EconPapers)
JEL-codes: G34 (search for similar items in EconPapers)
Date: 2012
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Journal Article: Pricing without Priors (2008) Downloads
Working Paper: Pricing without Priors (2007) Downloads
Working Paper: Pricing without Priors (2007) Downloads
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