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Regret-Minimizing Project Choice

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  • Yingni Guo
  • Eran Shmaya

Abstract

An agent observes the set of available projects and proposes some, but not necessarily all, of them. A principal chooses one or none from the proposed set. We solve for a mechanism that minimizes the principal's worst-case regret. We compare the single-project environment in which the agent can propose only one project with the multiproject environment in which he can propose many. In both environments, if the agent proposes one project, it is chosen for sure if the principal's payoff is sufficiently high; otherwise, the probability that it is chosen decreases in the agent's payoff. In the multiproject environment, the agent's payoff from proposing multiple projects equals his maximal payoff from proposing each project alone. The multiproject environment outperforms the single-project one by providing better fallback options than rejection and by delivering this payoff to the agent more efficiently.

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  • Yingni Guo & Eran Shmaya, 2023. "Regret-Minimizing Project Choice," Papers 2309.00214, arXiv.org.
    • Handle: RePEc:arx:papers:2309.00214
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    References listed on IDEAS

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    1. Stoye, Jörg, 2011. "Axioms for minimax regret choice correspondences," Journal of Economic Theory, Elsevier, vol. 146(6), pages 2226-2251.
    2. Neven, Damien J. & Roller, Lars-Hendrik, 2005. "Consumer surplus vs. welfare standard in a political economy model of merger control," International Journal of Industrial Organization, Elsevier, vol. 23(9-10), pages 829-848, December.
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