Screening Inattentive Buyers
- (pp. 1949-84)
AbstractInformation plays a crucial role in mechanism design problems. A potential complication is that buyers may be inattentive, and so their information may endogenously and flexibly depend on the offered mechanism. I show that it is without loss of generality to consider contour mechanisms, which comprise triplets of allocation probabilities, prices, and beliefs, and are uniquely determined by a single such point. The mechanism design problem then reduces to Bayesian persuasion along the optimal contour. This reduction has significant implications for both the implementation of the optimal mechanism and the revenues that can be achieved.
CitationMensch, Jeffrey. 2022. "Screening Inattentive Buyers." American Economic Review, 112 (6): 1949-84. DOI: 10.1257/aer.20201098
- C11 Bayesian Analysis: General
- D11 Consumer Economics: Theory
- D82 Asymmetric and Private Information; Mechanism Design
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness