Working Paper: CEPR ID: DP9927
Authors: Daniel Krhmer; Roland Strausz
Abstract: We study ex post information rents in sequential screening models where the agent receives private ex ante and ex post information. The principal has to pay ex post information rents for preventing the agent to coordinate lies about his ex ante and ex post information. When the agent's ex ante information is discrete, these rents are positive, whereas they are zero in continuous models. Consequently, full disclosure of ex post information is generally suboptimal. Optimal disclosure rules trade off the benefits from adapting the allocation to better information against the effect that more information aggravates truth-telling.
Keywords: information disclosure; information rents; sequential screening
JEL Codes: D82; H57
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| ex ante information is continuous (D84) | principal can extract total surplus without leaving rents to agent (D41) |
| ex ante information is discrete (D80) | principal must concede positive information rents to extract ex post information (D82) |
| ex ante information is discrete (D80) | optimal disclosure of ex post information is not generally optimal (D82) |
| ex ante information is continuous (D84) | full disclosure of ex post information is optimal (D83) |
| discrete ex ante information (D82) | strictly positive information rents for principal (D82) |