Download This PaperScreening Inattentive Buyers
71 Pages Posted: 8 Feb 2022 Last revised: 14 Apr 2020
Date Written: June 18, 2019
Abstract
Information 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.
Keywords: Rational Inattention, Mechanism Design, Auctions, Information Acquisition
JEL Classification: D44, D82, D83
Suggested Citation: Suggested Citation