In a Vickrey auction, if one bidder can invest to increase his value, the combined mechanism including investments is still fully optimal. By contrast, for any β 1, there exist monotone allocation rules that guarantee a fraction β of the allocative optimum in the worst case, but such that the...

How do individuals value noisy information that guides economic decisions? In our laboratory experiment, we find that individuals under-react to increasing the informativeness of a signal, thus undervalue high-quality information, and that they disproportionately prefer information that may...

An agent makes consumption choices in multiple periods. Choice objects vary in type and quality; objects of the same type are inter-temporal substitutes. The current choice set is informative about the distribution over future choice sets. Thus, the presence of unchosen alternatives may...