This paper explores the sale of an object to an ambiguity averse buyer. We show that the seller can increase his profit by using an ambiguous mechanism. That is, the seller can benefit from hiding certain features of the mechanism that he has committed to from the agent. We then characterize the...

We characterize the boundaries of the set of transfers implementing a given allocation rule without imposing any assumptions on the agent's type space or utility function besides quasi-linearity. In particular, we characterize the pointwise largest and the pointwise smallest transfer that...

This paper considers the optimal mechanism design problem of an expected revenue maximizing principal who wants to sell a single unit of a good to an agent who is ambiguity averse in the sense of Gilboa and Schmeidler (1989). We show that the optimal static mechanism is an ambiguous mechanism....

We derive several implications of incentive compatibility in general (i.e., not necessarily quasilinear) environments. Building on Kos and Messner (2013), we provide a (partial) characterization of incentive compatible mechanisms.

We characterize the boundaries of the set of transfers (extremal transfers) implementing a given allocation rule without imposing any assumptions on the agentʼs type space or utility function besides quasi-linearity. Exploiting the concept of extremal transfers allows us to obtain an exact...

We analyze the value of information in the market for corporate control. The raider and the shareholders are privately and imperfectly informed about the post-takeover value of the firm. We show that public information provision reduces the dispersion of the shareholders’ beliefs resulting in...

We examine a model of limited communication in which the seller is selling a single good to two potential buyers. In each of the finite number of periods the seller asks one of the two buyers a binary question. After the final answer, the allocation and the transfers are executed. The model...

We examine a model of limited communication in which the seller is selling a single good to two potential buyers. Limited communication is modeled as follows: in each of the finite number of periods the seller asks one of the two buyers a binary question. After the final answer, the allocation...

We consider the problem of selling a firm to a single buyer. The magnitude of the post-sale cash flow rights (v) as well as the benefits of control (b) are the buyer’s private information. In contrast to research that assumes the private information of the buyer is one-dimensional, the optimal...

We study auctions under restricted communication. Agents have valuations distributed over an interval but can only report one of a finite number of messages. We provide necessary conditions for welfare as well as revenue maximizing auctions in the independent private values case when bidders...