On the strategic use of risk and undesirable goods in multidimensional screening

DOI10.1016/J.JMATECO.2011.09.004zbMATH Open1231.91121arXiv1006.0310OpenAlexW2193585023MaRDI QIDQ660097FDOQ660097

Authors: Filippo Santambrogio, Aimé Lachapelle 

Publication date: 25 January 2012

Published in: Journal of Mathematical Economics (Search for Journal in Brave)

Abstract: A monopolist sells goods with possibly a characteristic consumers dislike (for instance, he sells random goods to risk averse agents), which does not affect the production costs. We investigate the question whether using undesirable goods is profitable to the seller. We prove that in general this may be the case, depending on the correlation between agents types and aversion. This is due to screening effects that outperform this aversion. We analyze, in a continuous framework, both 1D and multidimensional cases.

Full work available at URL: https://arxiv.org/abs/1006.0310

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zbMATH Keywords

calculus of variationsnonlinear pricingadverse selectionprincipal-agent problem

Mathematics Subject Classification ID

Auctions, bargaining, bidding and selling, and other market models (91B26)

Cites Work

• An algorithm for computing solutions of variational problems with global convexity constraints
• Optimal derivatives design for mean-variance agents under adverse selection
• Ironing, Sweeping, and Multidimensional Screening
• Monopoly and product quality
• Optimal Auctions with Risk Averse Buyers
• Multiproduct Nonlinear Pricing
• Regularity of solutions for some variational problems subject to convexity constraint
• Title not available (Why is that?)

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