We study the possibility of achieving efficiency in a dynamic adverse selection market for durable goods. The idea is to use the number of times a car has been traded (``vintage'') as a signal of its quality. Higher-valuation consumers experiment with younger vintages. <br> We first exhibit an...

This paper proposes a model of decision under ambiguity deemed vector expected utility, or VEU. In this model, an uncertain prospect, or Savage act, is assessed according to (a) a baseline expected-utility evaluation, and (b) an adjustment that reflects the individual's perception of ambiguity...

This paper proposes a representation of (possibly) probabilistically unsophisticated preferences whereby (1) beliefs are jointly represented by a finitely additive probability measure and a vector-valued measure; (2) uncertain prospects are ranked according to the difference between a baseline...

We wish to analyze the consequences of strategically sophisticated bidding without assuming equilibrium behavior. As a first step, we characterize interim rationalizable bids in first-price auctions with interdependent values and affiliated signals. We show that (1) every non-zero bid below the...