Advanced Search
MyIDEAS: Login to save this article or follow this journal

Progressive Screening: Long-Term Contracting with a Privately Known Stochastic Process

Contents:

Author Info

  • Raphael Boleslavsky
  • Maher Said

Abstract

We examine a model of long-term contracting in which the buyer is privately informed about the stochastic process by which her value for a good evolves. In addition, the realized values are also private information. We characterize a class of environments in which the profit-maximizing long-term contract offered by a monopolist takes an especially simple structure: we derive sufficient conditions on primitives under which the optimal contract consists of a menu of deterministic sequences of static contracts. Within each sequence, higher realized values lead to greater quantity provision; however, an increasing proportion of buyer types are excluded over time, eventually leading to inefficiently early termination of the relationship. Moreover, the menu choices differ by future generosity, with more costly (up front) plans guaranteeing greater quantity provision in the future. Thus, the seller screens process information in the initial period and then progressively screens across realized values so as to reduce the information rents paid in future periods. Copyright , Oxford University Press.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://hdl.handle.net/10.1093/restud/rds021
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by Oxford University Press in its journal Review of Economic Studies.

Volume (Year): 80 (2013)
Issue (Month): 1 ()
Pages: 1-34

as in new window
Handle: RePEc:oup:restud:v:80:y:2013:i:1:p:1-34

Contact details of provider:

Related research

Keywords:

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Alessandro Pavan, 2007. "Long Term Contracting in a Changing World," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 1493, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  2. Eugenio J. Miravete, 2003. "Choosing the Wrong Calling Plan? Ignorance and Learning," American Economic Review, American Economic Association, American Economic Association, vol. 93(1), pages 297-310, March.
  3. Oksana Loginova & Curtis R. Taylor, 2005. "Price Experimentation with Strategic Buyers," Working Papers, Department of Economics, University of Missouri 0509, Department of Economics, University of Missouri.
  4. Steven Matthews & John Moore, 1985. "Monopoly Provision of Quality and Warranties: An Exploration in the Theory of Multidimensional Screening," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 661, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  5. repec:rje:randje:v:37:y:2006:3:p:503-520 is not listed on IDEAS
  6. Dirk Bergemann & Juuso Valimaki, 2008. "The Dynamic Pivot Mechanism," Cowles Foundation Discussion Papers, Cowles Foundation for Research in Economics, Yale University 1672R, Cowles Foundation for Research in Economics, Yale University, revised Dec 2009.
  7. Marco Battaglini, 2003. "Long-Term Contracting with Markovian Consumers," Theory workshop papers, UCLA Department of Economics 505798000000000048, UCLA Department of Economics.
  8. Andrzej Skrzypacz & Simon Board, 2011. "Revenue Management with Forward-Looking Buyers," 2011 Meeting Papers, Society for Economic Dynamics 87, Society for Economic Dynamics.
  9. Courty, Pascal & Li, Hao, 2000. "Sequential Screening," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 67(4), pages 697-717, October.
  10. 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, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University 303, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
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 in new window

Cited by:
  1. Daniel Krähmer & Roland Strausz, 2014. "Ex Post Information Rents in Sequential Screening," CESifo Working Paper Series, CESifo Group Munich 4739, CESifo Group Munich.
  2. Rahul Deb & Maher Said, 2013. "Dynamic Screening with Limited Commitment," Working Papers, University of Toronto, Department of Economics tecipa-485, University of Toronto, Department of Economics.
  3. Terstiege, Stefan, 2013. "Precontractual Investigation and Sequential Screening," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University 429, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  4. Krähmer, Daniel & Strausz, Roland, 2013. "Ex post information rents and disclosure in sequential screening," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University 406, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  5. Hao Li & Xianwen Shi, 2013. "Discriminatory Information Disclosure," Working Papers, University of Toronto, Department of Economics tecipa-497, University of Toronto, Department of Economics.
  6. Dirk Bergemann & Philipp Strack, 2014. "Dynamic Revenue Maximization: A Continuous Time Approach," Cowles Foundation Discussion Papers, Cowles Foundation for Research in Economics, Yale University 1953, Cowles Foundation for Research in Economics, Yale University.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:oup:restud:v:80:y:2013:i:1:p:1-34. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press) or (Christopher F. Baum).

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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