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Screening Inattentive Agents

By Jeffrey Mensch
Location Bloomfield 527
Academic Program: Please choose
 
Monday 03 June 2019, 11:30 - 12:30
An important aspect of mechanism design problems is the information 

to which the agents involved have access. A potential complication

is that this information may endogenously depend on what options they 

are offered. I model this by considering an optimal mechanism design

problem in which a principal screens agent(s) with uncertain value. The 

agent is inattentive regarding their true value, and decides how to optimally 

acquire information in response to the offered mechanism. I show 

that any implementable mechanism is characterized by a non-participation 

belief, which in turn determines the entire set of possible beliefs and prices 

for every possibly probability of allocation (including those not used in the 

mechanism). For every possible non-participation belief, the mechanism 

design problem then reduces to one of Bayesian persuasion. The optimal 

mechanism is then implicitly determined by choosing the optimal 

non-participation belief. I provide results for optimal mechanisms with

two states in both the single- and multiple-agent cases.