Optimal mechanism for the sale of a durable good

Vasiliki Skreta and Laura Doval

No 13967, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We show that posted prices are the optimal mechanism to sell a durable good to a privately informed buyer when the seller has limited commitment in an infinite horizon setting. We provide a methodology for mechanism design with limited commitment and transferable utility. Whereas in the case of commitment, subject to the buyer's truthtelling and participation constraints, the seller's problem is a decision problem, in the case of limited commitment, the seller's problem corresponds to an intrapersonal game, where different "incarnations" of the seller represent the different beliefs he may have about the buyer's valuation.

Keywords: Mechanism design; Limited commitment; Intrapersonal equilibrium; Information design; Self-generation; Posted price (search for similar items in EconPapers)
JEL-codes: D84 D86 (search for similar items in EconPapers)
Date: 2019-08
New Economics Papers: this item is included in nep-com, nep-des, nep-gth, nep-mic and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Optimal mechanism for the sale of a durable good (2024)
Working Paper: Optimal mechanism for the sale of a durable good (2021)
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