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Efficient sequential screening with informational externalities

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  • Boaz Zik

    (University of Bonn)

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.

Suggested Citation

  • Boaz Zik, 2023. "Efficient sequential screening with informational externalities," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 75(2), pages 567-590, February.
    • Handle: RePEc:spr:joecth:v:75:y:2023:i:2:d:10.1007_s00199-022-01416-6
    DOI: 10.1007/s00199-022-01416-6
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    More about this item

    Keywords

    Efficient mechanisms; Sequential screening; Efficient privatization; Interdependent valuations; Multidimensional information; Informational externalities;
    All these keywords.

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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