Centre for Development Economics
Department of Economics
Delhi School of Economics
ANNOUNCE A SEMINAR
by
Debasis Mishra
(ISI Delhi)
with
Sanket Patil and Alessandro Pavan
(Thursday, April 3, 2025, at 2:15 PM IST )
Venue: Amex Room
Abstract:-
We study the design of procurement contracts in environments where the buyer faces uncertainty over the product’s demand and the seller’s cost. The buyer has a belief but does not fully trust it. They first identify all worst-case optimal mechanisms, which deliver the largest payoff guarantee over a set of plausible demand and cost functions. They then select the mechanism that maximizes their expected payoff (under their beliefs) over such a restricted set. We show that robustness calls for an increase in the quantity procured from the least efficient sellers and a decrease in the quantity procured from the sellers with an intermediate cost (relative to the optimal mechanisms in the absence of any uncertainty). The analysis also identifies conditions under which price regulation is superior to quantity regulation, and draws a few policy implications.