Dynamic Adverse Selection with a Patient Seller

Beccuti, Juan; Möller, Marc (2018). Dynamic Adverse Selection with a Patient Seller. Journal of economic theory, 173, pp. 95-117. Elsevier 10.1016/j.jet.2017.10.009

[img] Text
rentandsell_lowprior05_revrev01.pdf - Accepted Version
Restricted to registered users only until 1 February 2020.
Available under License Creative Commons: Attribution-Noncommercial-No Derivative Works (CC-BY-NC-ND).

Download (322kB) | Request a copy
[img] Text
1-s2.0-S0022053117301229-main.pdf - Published Version
Restricted to registered users only
Available under License Publisher holds Copyright.

Download (487kB) | Request a copy

This paper considers dynamic bilateral trade with short-term commitment. We show that, when the seller is more patient than the buyer, there exist systematic differences between the optimal selling and renting mechanisms. While the former consists of simple price-posting, the latter induces the buyer to choose between a secure- and a random-delivery contract. Allowing for mechanisms more general than price-posting reduces the seller's cost of learning the buyer's valuation in the renting case. Renting leads to more learning than selling but only when general mechanisms are available. Our results contrast with the common view that the restriction to price-posting is innocuous and that informational asymmetries are more persistent under renting than under selling.

Item Type:

Journal Article (Original Article)

Division/Institute:

03 Faculty of Business, Economics and Social Sciences > Department of Economics

UniBE Contributor:

Beccuti Vazquez, Juan Ignacio and Möller, Marc

Subjects:

300 Social sciences, sociology & anthropology > 330 Economics

ISSN:

0022-0531

Publisher:

Elsevier

Language:

English

Submitter:

Marc Möller

Date Deposited:

27 Dec 2018 14:17

Last Modified:

27 Dec 2018 17:11

Publisher DOI:

10.1016/j.jet.2017.10.009

BORIS DOI:

10.7892/boris.122193

URI:

https://boris.unibe.ch/id/eprint/122193

Actions (login required)

Edit item Edit item
Provide Feedback