EconPapers    
Economics at your fingertips  
 

Sequential screening with privately known characteristics of cost distribution

Daniel Danau () and Annalisa Vinella ()

Economics Working Paper Archive (University of Rennes 1 & University of Caen) from Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS

Abstract: We consider a sequential screening problem where, in the contracting stage, the agent has private information on both the expected value and the spread of the unit cost of production. As the principal’s marginal surplus function becomes less concave / more convex in consumption units, information rents and quantity distortions in the optimal contract reflect progressively stronger concerns with the agent being eager to misrepresent the spread rather than the expected value. As long as marginal surplus is not very convex, relevant incentives to lie on each of the two information dimensions taken separately go in the same direction as in sequential screening problems where only the expected value, or only the spread, is privately known. Otherwise, unusual incentives come to matter. None of the contractual solutions, which are found for different principal’s preferences, reduces to familiar sequential screening mechanisms (Riordan and Sappington, 1987; Courty and Li, 2000). The solution is reminiscent of a multidimensional screening mechanism (Armstrong and Rochet, 1999) only if marginal surplus is sufficiently Convex.

Keywords: Sequential screening; multidimensional screening; expected cost; spread; marginal surplus function (search for similar items in EconPapers)
JEL-codes: D82 (search for similar items in EconPapers)
Date: 2015-02
New Economics Papers: this item is included in nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://ged.univ-rennes1.fr/nuxeo/site/esupversion ... 88-a9d5-1272aa457321 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tut:cremwp:201502

Ordering information: This working paper can be ordered from
CREM (UMR CNRS 6211) - Faculty of Economics, 7 place Hoche, 35065 Rennes Cedex - France

Access Statistics for this paper

More papers in Economics Working Paper Archive (University of Rennes 1 & University of Caen) from Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS CREM (UMR CNRS 6211) – Faculty of Economics, 7 place Hoche, 35065 RENNES Cedex. Contact information at EDIRC.
Bibliographic data for series maintained by GERMAIN Lucie ().

 
Page updated 2021-10-21
Handle: RePEc:tut:cremwp:201502