Benkert, Jean-Michel (2022). On the equivalence of optimal mechanisms with loss and disappointment aversion. Economics letters, 214(110428), p. 110428. Elsevier 10.1016/j.econlet.2022.110428
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We consider a standard, quasi-linear mechanism design setting in which agents’ outcomes consist of a binary part and a transfer, thus encompassing applications such as auctions, bilateral trade or public good provision. We augment preferences by allowing for loss aversion (Kőszegi and Rabin, 2007) and disappointment aversion (Bell, 1985; Loomes and Sugden, 1986). While the preferences induced by these models only have a trivial intersection given by classical expected utility (Masatlioglu and Raymond, 2016), we show that the optimal mechanisms for the two types of preferences are equivalent across a broad range of problems and thus display a remarkable robustness.
Item Type: |
Journal Article (Original Article) |
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Division/Institute: |
03 Faculty of Business, Economics and Social Sciences > Department of Economics 03 Faculty of Business, Economics and Social Sciences > Department of Economics > Institute of Economics 03 Faculty of Business, Economics and Social Sciences > Department of Economics > Institute of Economics > Economic Theory |
UniBE Contributor: |
Benkert, Jean-Michel Nicolas |
Subjects: |
300 Social sciences, sociology & anthropology > 330 Economics |
ISSN: |
0165-1765 |
Publisher: |
Elsevier |
Language: |
English |
Submitter: |
Jean-Michel Nicolas Benkert |
Date Deposited: |
19 Oct 2022 14:23 |
Last Modified: |
05 Dec 2022 16:26 |
Publisher DOI: |
10.1016/j.econlet.2022.110428 |
BORIS DOI: |
10.48350/173861 |
URI: |
https://boris.unibe.ch/id/eprint/173861 |
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