From Bottom of the Barrel to Cream of the Crop: Sequential Screening With Positive Selection

Jean Tirole*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

5 Scopus citations

Abstract

In a number of interesting environments, dynamic screening involves positive selection: in contrast with Coasian dynamics, only the most motivated remain over time. The paper provides conditions under which the principal's commitment optimum is time consistent and uses this result to derive testable predictions under permanent or transient shocks. It also identifies environments in which time consistency does not hold despite positive selection, and yet simple equilibrium characterizations can be obtained.

Original languageEnglish (US)
Pages (from-to)1291-1343
Number of pages53
JournalEconometrica
Volume84
Issue number4
DOIs
StatePublished - Jul 1 2016

Keywords

  • Repeated relationships
  • exit games
  • positive selection
  • screening
  • shifting preferences
  • time consistency

ASJC Scopus subject areas

  • Economics and Econometrics

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