Efficient sequential screening with informational externalities

Boaz Zik ()
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Boaz Zik: University of Bonn

Economic Theory, 2023, vol. 75, issue 2, No 9, 567-590

Abstract: Abstract A seller of an item faces a potential buyer whose valuation of the item depends on two private signals. It is well known that when there are informational externalities and the buyer’s private signals arrive all at once, it is impossible to implement an efficient sale. I show that if the buyer’s private signals arrive over time, then the seller can implement an efficient sale even in the presence of informational externalities. Specifically, I present a novel condition on the relationship between the buyer’s valuation and the social welfare that is necessary and sufficient for efficient sequential implementation.

Keywords: Efficient mechanisms; Sequential screening; Efficient privatization; Interdependent valuations; Multidimensional information; Informational externalities (search for similar items in EconPapers)
JEL-codes: D42 D44 D62 D82 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s00199-022-01416-6

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