@article{publications47275,
           month = {September},
           title = {Adverse selection and bounded rationality: an impossibility theorem},
          author = {Takuro Yamashita and Takeshi Murooka},
         address = {Hoboken},
       publisher = {Blackwell Publishing},
            year = {2022},
         journal = {The Japanese Economic Review},
        keywords = {Adverse selection, Bounded rationality, Mechanism design, No-trade theorem, Consumer protection},
             url = {https://publications.ut-capitole.fr/id/eprint/47275/},
        abstract = {We consider an adverse selection environment between an informed seller and an uninformed buyer, where no trade occurs when all buyers are the standard Bayesian-rational type. The buyer may be a ?behavioral? type in that he may take actions different from the rational type. We show that, for any incentive-feasible mechanism with any non-trivial trade, the buyer?s ex-ante expected payoff is strictly negative. Our result implies that whenever trade occurs, some behavioral types must incur losses{--}highlighting a new trade-off between social surplus and buyer protection.}
}