The Scope of Sequential Screening with Ex-Post Participation Constraints

Dirk Bergemann, Francisco Castro and Gabriel Weintraub
Additional contact information
Francisco Castro: Graduate School of Business, Columbia University
Gabriel Weintraub: Graduate School of Business, Stanford University

No 2078R3, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: We study the classic sequential screening problem in the presence of ex-post participation constraints. We establish necessary and sufficient conditions that determine exhaustively when the optimal selling mechanism is either static or sequential. In the static contract, the buyers are not screened with respect to their interim type and the object is sold at a posted price. In the sequential contract, the buyers are screened with respect to their interim type and a menu of quantities is offered. We completely characterize the optimal sequential contract with binary interim types and a continuum of ex-post values. Importantly, the optimal sequential contract randomizes the allocation of the low type buyer while giving a deterministic allocation to the high type. Finally, we provide additional results for the case of multiple interim types.

Keywords: Sequential screening; Ex-post participation constraints; Static contract; Sequential contract (search for similar items in EconPapers)
JEL-codes: C72 D82 D83 (search for similar items in EconPapers)
Pages: 69 pages
Date: 2017-02, Revised 2019-07
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Related works:
Journal Article: The scope of sequential screening with ex post participation constraints (2020)
Working Paper: The Scope of Sequential Screening with Ex-Post Participation Constraints (2020)
Working Paper: The Scope of Sequential Screening with Ex-Post Participation Constraints (2018)
Working Paper: The Scope of Sequential Screening with Ex-Post Participation Constraints (2018)
Working Paper: The Scope of Sequential Screening with Ex-Post Participation Constraints (2017)
Working Paper: The Scope of Sequential Screening with Ex-Post Participation Constraints (2017)
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