Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/217080 
Year of Publication: 
2019
Citation: 
[Journal:] Theoretical Economics [ISSN:] 1555-7561 [Volume:] 14 [Issue:] 2 [Publisher:] The Econometric Society [Place:] New Haven, CT [Year:] 2019 [Pages:] 345-371
Publisher: 
The Econometric Society, New Haven, CT
Abstract: 
We study the informed-principal problem in a bilateral asymmetric information trading setting with interdependent values and quasi-linear utilities. The informed seller proposes a mechanism and voluntarily certifies information about the good's characteristics. When the set of certifiable statements is sufficiently rich, we show that there is an ex-ante profit-maximizing selling procedure that is an equilibrium of the mechanism proposal game. In contrast to posted price settings, the allocation obtained when product characteristics are commonly known (the unravelling outcome) may not be an equilibrium allocation, even when all buyer types agree on the ranking of product quality. Our analysis relies on the concept of strong Pareto optimal allocation, originally introduced by Maskin and Tirole (1990) in private value environments.
Subjects: 
Informed principal
consumer heterogeneity
interdependent valuations
product information disclosure
mechanism design
certification
JEL: 
C72
D82
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc Logo
Document Type: 
Article

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