Uncertainty, Asymmetric Information and Bilateral Contracts

Michael H. Riordan

The Review of Economic Studies, 1984, vol. 51, issue 1, 83-93

Abstract: The paper considers a bilateral monopoly with uncertainty and asymmetric information, and characterizes necessary and sufficient conditions for the existence of contracts that are efficient and incentive compatible. These contracts can be implemented by a truthful sequential revelation mechanism. Alternatively, they can be interpreted as specifying a class of payment schedules, designating the seller to choose a schedule from this class, and the buyer to pick a point on the chosen schedule. Requirements contracting is similar.

Date: 1984
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Persistent link: https://EconPapers.repec.org/RePEc:oup:restud:v:51:y:1984:i:1:p:83-93.

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