Pin-Chao Wang

We study mechanism design in a "market for lemons" under Cursed Sequential Equilibrium (CSE). By relaxing the assumption of rational belief formation, χ-CSE  permits trade in environments where standard theory predicts market collapse. Within a menu mechanism framework, we characterize buyer-optimal, seller-optimal, and socially optimal mechanisms. We demonstrate that trade probability and surplus are determined by the degree of cursedness, which dictates the buyer's ability to distinguish seller types. To ensure robustness, we justify our results as the limit of a sequence of strict and intuitively unique equilibrium. Finally, we propose a laboratory experiment to validate the framework’s predictive power.

• Draft available upon request. 

Using a universal stock portfolio from Taiwan, we construct a panel investment network of the wealthiest investors from 2007 to 2021. We find a U-shaped relationship between individual connectivity and age, with the lowest point occurring in middle age. Individuals with higher equity-wealth ranks tend to have better connectivity. We also construct a family network among the top investors and find that it is highly correlated with the investment network.