Ex Post Private Information and Monopolistic Screening
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 offtheequilibrium path and show that this exacerbates bunching in the monopolistic screening problem.
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Volume (Year): 8 (2008)
Issue (Month): 1 (October)
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References listed on IDEAS
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"Gathering Information Before Signing a Contract,"
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- Cremer, J. & Khalil, F., 1991. "Gathering Information Before Signing a Contract," Working Papers 91-16, University of Washington, Department of Economics.
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9708, Economics Division, School of Social Sciences, University of Southampton.
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- Khalil, F & Rochet, J-C, 1997. "Strategic Information Gathering Before a Contract is Offered," Working Papers 97-15, University of Washington, Department of Economics.
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- Péter Eső & Balázs Szentes, 2007. "Optimal Information Disclosure in Auctions and the Handicap Auction," Review of Economic Studies, Oxford University Press, vol. 74(3), pages 705-731.
- Anke Kessler, 1998. "The Value of Ignorance," RAND Journal of Economics, The RAND Corporation, vol. 29(2), pages 339-354, Summer.
- Chifeng Dai & Tracy R. Lewis & Giuseppe Lopomo, 2006. "Delegating management to experts," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 503-520, 09.
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