Dynamic Screening of Buyers With Heterogeneous Purchase Frequency
We consider a dynamic buyer–seller interaction. Instead of the buyer's valuation, it is the frequency with which he needs to trade that is the buyer's private information. The difference matters. With commitment, full surplus extraction is possible, for instance via limited‐time offers. Without commitment, ratcheting is mitigated, as not buying is not necessarily a sign of strength. Because time is informative, the seller learns and may adjust her behavior over time. When finding a suitable alternative seller is easy, she starts with a pooling offer before permanently switching to a screening offer. When finding a suitable alternative seller takes time, she starts with a pooling offer before occasionally experimenting with separating offers.
- DOI
- 10.3982/ecta23049
- Volume
- 94 (4)
- Pages
- 1245-1278
- Language
- en
- Export
- BibTeX
- Sources
- crossref