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Screening when some agents are nonstrategic: does a monopoly need to exclude?

Authors :
Sergei Severinov
Raymond Deneckere
Source :
The RAND Journal of Economics. 37:816-840
Publication Year :
2006
Publisher :
Wiley, 2006.

Abstract

We characterize the optimal screening mechanism for a monopolist facing consumers with privately known demands, some of whom have limited abilities to misrepresent their preferences. We show that consumers with better abilities to misrepresent information benefit from the presence of consumers who lack such abilities. Whenever the fraction of the latter group is positive, there is no exclusion: the firm supplies a positive quantity of the good to all consumers whose valuations exceed marginal cost of production. Our analysis is motivated by the evidence indicating that some individuals have limited ability to misrepresent themselves and imitate others.

Details

ISSN :
17562171 and 07416261
Volume :
37
Database :
OpenAIRE
Journal :
The RAND Journal of Economics
Accession number :
edsair.doi...........920d4571691012d57a9225ac18154de2