Optimality of sequential screening with multiple units and ex post participation constraints

摘要

We show that in sequential screening problems with ex post participation constraints, optimal contracts elicit the agent's pay-off irrelevant ex ante information when the principal and agent can trade multiple units, in contrast to when they can trade a single unit only. The difference arises because with multiple units, the principal can price each unit differently, giving rise to a larger number of screening instruments. Optimal contracts implement output schedules that are not monotone in the initial information. We identify regularity conditions which ensure that non-monotone schedules are incentive compatible. (c) 2016 Elsevier B.V. All rights reserved.