Contracting with Type-Dependent Naïveté

Subir Bose and Arup Daripa ()

No 16/04, Discussion Papers in Economics from Division of Economics, School of Business, University of Leicester

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.

Keywords: Ambiguity; ?-maxmin preferences; maxmin preferences; elicitation of beliefs and ? (search for similar items in EconPapers)
JEL-codes: D81 D82 (search for similar items in EconPapers)
Date: 2016-03
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