Information design in sequential procurement. (English) Zbl 1498.91203
Summary: We analyze the problem of a buyer who chooses a supplier for a two-period production project. The buyer lacks the commitment not to renegotiate the contractual terms in the second period. The prospect of renegotiation makes suppliers cautious about the information revealed in period one. We derive the revenue-maximizing mechanism and highlight the role of information design for its implementation. We show that the buyer can achieve the full commitment surplus with the appropriate information design even without commitment.
MSC:
| 91B26 | Auctions, bargaining, bidding and selling, and other market models |
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