Nathan Hancart

In many situations, decision-makers depend on tests to inform their choices. I consider a decision-maker that has access to a set of feasible tests and, prior to making a decision, requires a privately informed agent to choose a test from a menu. By offering a menu, the decision-maker can use the agent's choice as an additional source of information. The decision-maker must accept or reject the agent. The agent always wants to be accepted, while the decision-maker wants to accept only a subset of types. First, I show that the decision-maker does not benefit from commitment in this context. I use this result to show in several economic environments when the decision-maker benefits from offering a choice of test. When the domain of feasible tests contains a most informative test, I give necessary and sufficient conditions for when only the dominant test is offered for any prior and when a dominated test is always part of the optimal menu. I also show when the decision-maker benefits from a menu when types are multidimensional or tests vary in their difficulty.

I consider a model of monopoly pricing where a firm makes a price offer to a buyer with reference-dependent preferences without being able to commit to it. The reference point is the ex-ante probability of trade and the buyer exhibits an attachment effect: the higher his expectations to buy, the higher his willingness-to-pay. When the buyer's valuation is private information, a unique equilibrium exists where the firm plays a mixed strategy and its profits are the same as in the reference-independent benchmark. The equilibrium always entails inefficiencies: even as the firm's information converges to complete information, it mixes on a non-vanishing support and the probability of no trade is greater than zero. Finally, I show that when the firm can design a test about the buyer's valuation, it can do strictly better than in the reference-independent benchmark by leveraging the uncertainty generated by a noisy test.

I provide a sufficient condition under which a principal does not benefit from commitment in economic situations. I focus on situations described by a constrained maximisation problem. I show that commitment has no value when the marginal contribution of the constraints is null in the problem with commitment. This condition also has bite when constraints are binding. I then apply this condition in a mechanism design setting. I show that a designer does not benefit from being able to contract over actions when his preferences are partially aligned with the agent's. Verifying the condition does not necessitate verifying explicitly that the strategy under commitment is a best-response to the information revealed in the economic problem.