Optimal sales contracts with withdrawal rights

Arbeitspapier

We introduce ex post participation constraints in the standard sequential screening model. This captures the presence of consumer withdrawal rights as, for instance, mandated by EU regulation of "distance sales contracts". With such additional constraints, the optimal contract is static and, unlike with only ex ante participation constraints, does not elicit the agent's information sequentially. With ex post participation constraints it is insufficient to consider only local incentive constraints. We develop a novel technique to identify the relevant global constraints.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: SFB 649 Discussion Paper ; No. 2014-045

Classification and Topics

• Classification: Wirtschaft ; Asymmetric and Private Information; Mechanism Design ; National Government Expenditures and Related Policies: Procurement
• Subject: Sequential screening ; dynamic mechanism design ; participation constraints ; Mirrlees approach

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Krähmer, Daniel ; Strausz, Roland
• Event: Veröffentlichung
• (who): Humboldt University of Berlin, Collaborative Research Center 649 - Economic Risk
• (where): Berlin
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/103780
• Last update: 10.03.2025, 11:43 AM CET