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Title: Ex post information rents in sequential screening

Author(s): Daniel Krähmer and Roland Strausz

Publication Date: April 2014

Keyword(s): information disclosure, information rents and sequential screening

Programme Area(s): Industrial Organization

Abstract: We study ex post information rents in sequential screening models where the agent receives private ex ante and ex post information. The principal has to pay ex post information rents for preventing the agent to coordinate lies about his ex ante and ex post information. When the agent's ex ante information is discrete, these rents are positive, whereas they are zero in continuous models. Consequently, full disclosure of ex post information is generally suboptimal. Optimal disclosure rules trade off the benefits from adapting the allocation to better information against the effect that more information aggravates truth-telling.

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Bibliographic Reference

Krähmer, D and Strausz, R. 2014. 'Ex post information rents in sequential screening'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=9927