Document Type
Discussion Paper
Publication Date
12-2025
CFDP Number
2481
CFDP Pages
55
Abstract
We study mechanism design for a sophisticated agent with non-expected utility (EU) preferences. We show that the revelation principle holds if and only if all types are EU maximizers: if at least one type is a non-EU maximizer, randomizing over dynamic mechanisms generates a strictly larger set of implementable allocations than using static mechanisms. Moreover, dynamic stochastic mechanisms can fully extract the private information of any type who doesn’t have uniformly quasi-concave preferences without providing that type any rent. Full-surplus extraction is possible in a broad variety of non-EU environments, but impossible for types with concave preferences.
Recommended Citation
Mora, Ernesto Rivera and Strack, Philipp, "Information without Rents: Mechanism Design without Expected Utility" (2025). Cowles Foundation Discussion Papers. 2903.
https://elischolar.library.yale.edu/cowles-discussion-paper-series/2903