On the strategic use of risk and undesirable goods in multidimensional screening
AbstractA monopolist sells goods possibly with a characteristic consumers dislike (for instance, he sells random goods to risk averse agents), which does not affect the production costs. We investigate the question whether using undesirable goods is profitable to the seller. We prove that in general this may be the case, depending somehow on the correlation between agent types and aversion. This is due to screening effects that outperform this aversion. We analyze, in a continuous framework, several multidimensional cases.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Mathematical Economics.
Volume (Year): 47 (2011)
Issue (Month): 6 ()
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Web page: http://www.elsevier.com/locate/jmateco
Principal–agent problem; Adverse selection; Calculus of variations; Nonlinear pricing;
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