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

DOI10.1016/J.JMATECO.2011.09.004MaRDI QIDQ660097zbMATH OpenOpenAlexFDO

Authors Filippo Santambrogio, Aimé Lachapelle

Publication date 25 January 2012

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

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

zbMATH Keywords

calculus of variationsnonlinear pricingadverse selectionprincipal-agent problem

Mathematics Subject Classification ID

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

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.

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Cites work

• scientific article; zbMATH DE number 1894735 (Why is no real title available?)
• An algorithm for computing solutions of variational problems with global convexity constraints
• Ironing, Sweeping, and Multidimensional Screening
• Monopoly and product quality
• Multiproduct Nonlinear Pricing
• Optimal Auctions with Risk Averse Buyers
• Optimal derivatives design for mean-variance agents under adverse selection
• Regularity of solutions for some variational problems subject to convexity constraint

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