IDEAS home Printed from https://ideas.repec.org/a/bpj/bejtec/v8y2008i1n25.html
   My bibliography  Save this article

Ex Post Private Information and Monopolistic Screening

Author

Listed:
  • Krahmer Daniel

    (Free University Berlin, kraehmer@hcm.uni-bonn.de)

  • Strausz Roland

    (Humboldt University of Berlin, strauszr@wiwi.hu-berlin.de)

Abstract

This paper investigates how additional ex post private information by the agent affects the equilibrium outcome of the monopolistic screening model. In general, the principal always weakly benefits when the agent receives additional private information after the contracting stage. Instead, both the agent's equilibrium payoffs and allocative efficiency may, due to the principal's concerns about information rents, increase or decrease. Moreover, we obtain the result that optimal contracts may involve lying off-the-equilibrium path and show that this exacerbates bunching in the monopolistic screening problem.

Suggested Citation

  • Krahmer Daniel & Strausz Roland, 2008. "Ex Post Private Information and Monopolistic Screening," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 8(1), pages 1-27, October.
    • Handle: RePEc:bpj:bejtec:v:8:y:2008:i:1:n:25
    DOI: 10.2202/1935-1704.1458
    as

    Download full text from publisher

    File URL: https://doi.org/10.2202/1935-1704.1458
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.2202/1935-1704.1458?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Cremer, Jacques & Khalil, Fahad & Rochet, Jean-Charles, 1998. "Strategic Information Gathering before a Contract Is Offered," Journal of Economic Theory, Elsevier, vol. 81(1), pages 163-200, July.
    2. Cremer, Jacques & Khalil, Fahad, 1992. "Gathering Information before Signing a Contract," American Economic Review, American Economic Association, vol. 82(3), pages 566-578, June.
    3. Péter Eső & Balázs Szentes, 2007. "Optimal Information Disclosure in Auctions and the Handicap Auction," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 74(3), pages 705-731.
    4. Chifeng Dai & Tracy R. Lewis & Giuseppe Lopomo, 2006. "Delegating management to experts," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 503-520, September.
    5. Marco Battaglini, 2005. "Long-Term Contracting with Markovian Consumers," American Economic Review, American Economic Association, vol. 95(3), pages 637-658, June.
    6. Myerson, Roger B, 1986. "Multistage Games with Communication," Econometrica, Econometric Society, vol. 54(2), pages 323-358, March.
    7. Anke Kessler, 1998. "The Value of Ignorance," RAND Journal of Economics, The RAND Corporation, vol. 29(2), pages 339-354, Summer.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Strausz, Roland & Krähmer, Daniel, 2011. "The Benefits of Sequential Screening," CEPR Discussion Papers 8629, C.E.P.R. Discussion Papers.
    2. Krähmer, Daniel & Strausz, Roland, 2010. "Optimal Procurement Contracts with Pre–Project Planning," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 303, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    3. Daniel Danau & Annalisa Vinella, 2016. "Sequential screening and the relationship between principal's preferences and agent's incentives," SERIES 01-2016, Dipartimento di Economia e Finanza - Università degli Studi di Bari "Aldo Moro", revised Mar 2016.
    4. Bose, Subir, 2014. "Monopolistic screening and uninformed buyers," Economic Modelling, Elsevier, vol. 36(C), pages 348-353.
    5. Krähmer, Daniel & Kováč, Eugen, 2016. "Optimal sequential delegation," Journal of Economic Theory, Elsevier, vol. 163(C), pages 849-888.
    6. Daniel Danau & Annalisa Vinella, 2015. "Sequential screening with privately known characteristics of cost distribution," Economics Working Paper Archive (University of Rennes & University of Caen) 201502, Center for Research in Economics and Management (CREM), University of Rennes, University of Caen and CNRS.
    7. Litterscheid, Sina & Szalay, Dezsö, 2014. "Sequential, multidimensional screening," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100621, Verein für Socialpolitik / German Economic Association.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Daniel Krähmer & Roland Strausz, 2011. "Optimal Procurement Contracts with Pre-Project Planning," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 78(3), pages 1015-1041.
    2. Terstiege, Stefan, 2013. "Precontractual Investigation and Sequential Screening," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 429, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    3. Justin Downs, 2021. "Information gathering by overconfident agents," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 30(3), pages 554-568, August.
    4. Terstiege, Stefan, 2016. "Gathering imperfect information before signing a contract," Games and Economic Behavior, Elsevier, vol. 97(C), pages 70-87.
    5. Krähmer, Daniel & Strausz, Roland, 2010. "Optimal Procurement Contracts with Pre–Project Planning," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 303, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    6. Iossa, Elisabetta & Martimort, David, 2015. "Pessimistic information gathering," Games and Economic Behavior, Elsevier, vol. 91(C), pages 75-96.
    7. von Wangenheim, Jonas, 2017. "Consumer-Optimal Information Design," Rationality and Competition Discussion Paper Series 53, CRC TRR 190 Rationality and Competition.
    8. Terstiege, Stefan, 2012. "Endogenous information and stochastic contracts," Games and Economic Behavior, Elsevier, vol. 76(2), pages 535-547.
    9. Obara Ichiro, 2008. "The Full Surplus Extraction Theorem with Hidden Actions," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 8(1), pages 1-28, March.
    10. Michi Nishihara & Takashi Shibata, 2011. "The effects of costly exploration on optimal investment timing," Review of Financial Economics, John Wiley & Sons, vol. 20(3), pages 105-112, August.
    11. Schmitz, Patrick W. & Hoppe-Fischer, Eva, 2009. "Gathering Information before Signing a Contract: Experimental Evidence," CEPR Discussion Papers 7252, C.E.P.R. Discussion Papers.
    12. Pham, Hien, 2023. "How Information Design Shapes Optimal Selling Mechanisms," MPRA Paper 120989, University Library of Munich, Germany, revised 06 Mar 2024.
    13. Hurkens, Sjaak & Vulkan, Nir, 2006. "Endogenous private information structures," European Economic Review, Elsevier, vol. 50(1), pages 35-54, January.
    14. Daniel Danau & Annalisa Vinella, 2016. "Sequential screening and the relationship between principal's preferences and agent's incentives," SERIES 01-2016, Dipartimento di Economia e Finanza - Università degli Studi di Bari "Aldo Moro", revised Mar 2016.
    15. Mikhail Drugov, 2010. "Information and delay in an agency model," RAND Journal of Economics, RAND Corporation, vol. 41(3), pages 598-615, September.
    16. Eva I. Hoppe & Patrick W. Schmitz, 2013. "Contracting under Incomplete Information and Social Preferences: An Experimental Study," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 80(4), pages 1516-1544.
    17. Szalay, Dezsö, 2009. "Contracts with endogenous information," Games and Economic Behavior, Elsevier, vol. 65(2), pages 586-625, March.
    18. Jacques Crémer & Yossi Spiegel & Charles Zheng, 2009. "Auctions with costly information acquisition," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 38(1), pages 41-72, January.
    19. Hoppe, Eva I., 2013. "Observability of information acquisition in agency models," Economics Letters, Elsevier, vol. 119(1), pages 104-107.
    20. Jonas von Wangenheim, 2022. "Optimal Information Design of Online Marketplaces with Return Rights," CRC TR 224 Discussion Paper Series crctr224_2022_352v2, University of Bonn and University of Mannheim, Germany, revised Apr 2024.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:bejtec:v:8:y:2008:i:1:n:25. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.