Pandora's Box Problem with Correlations: Some Results for the Case of Stochastic Dominance

Matteo Bizzarri and Niccolò Lomys ()
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Niccolò Lomys: CSEF and Università degli Studi di Napoli Federico II, https://csef.it/people/niccolo-lomys/

CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy

Abstract: We develop a method to recover primitives from data generated by artificial intelligence (AI) agents in strategic environments such as online marketplaces and auctions. Building on how leading online learning AIs are designed, we assume agents minimize their regret. Under asymptotic no regret, we show that time-average play converges to the set of Bayes coarse correlated equilibrium (BCCE) predictions. Our econometric procedure is based on BCCE restrictions and convergence rates of regretminimizing AIs. We apply the method to pricing data in a digital marketplace for used smartphones. We estimate sellersÕ cost distributions and find lower markups than in centralized platforms.

Keywords: Sequential Search; PandoraÕs Box Problem; Correlation; Stochastic Dominance. (search for similar items in EconPapers)
JEL-codes: C6 D8 (search for similar items in EconPapers)
Date: 2024-11-15
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