The ''new'' Geithner plan

2 commenti (espandi tutti)

You understand correctly, Sandro. If someone says "I am not willing to sell for less than x" (this seemed to be the original quote), it could be due to Knightian uncertainty as others above suggested. This is because there is a difference between "I know the asset is worth x" versus "I am not willing to sell it for less than y". In the first case, I will always accept prices larger than x. A manager who knows the value to be 30, should take 35 or 40 or 30+ε for that matters. If they know the value is 60 they will instead reject all these offers. The paper Valter cited above (this is Bewley's idea, by the way) is based on the premise that behavior cannot be predicted if they feel ambiguity and all they know is that the value is between 30 and 60.

Michele's argument is impeccable: if I know someone will pay 60, then I should just take their offer. This, as far as I can tell, has nothing to do with ambiguity, risk, or anything else. Let me be clear that I have nothing against Sandro's proposed mechanism, and I agree that transparency can only be good. In fact, the questions is: why is the Treasury willing to pay 60? A sucker is born every minute is one theory, I guess. Another theory could be that they are trying to set up an incentive compatible mechanism with agents who perceive ambiguity about the environment, but I do not believe that's the motive, so I will not bore you with that.

Tra parentesi, questa voleva essere una rispota al commento precedente di Sandro, ma sono molto impedito e quindi e' finito come commento a parte. Sorry about that.