Investments as signals of outside options


Goldlücke, Susanne ; Schmitz, Patrick W.



URL: http://papers.ssrn.com/sol3/papers.cfm?abstract_id...
Additional URL: http://cepr.org/active/publications/discussion_pap...
Document Type: Working paper
Year of publication: 2011
The title of a journal, publication series: Discussion paper / Centre for Economic Policy Research
Volume: 8366
Place of publication: London
Publication language: English
Institution: School of Law and Economics > VWL, Angewandte Mikroökonomische Theorie (Juniorprofessur) (Goldlücke 2011-13)
Subject: 330 Economics
Abstract: Consider a seller who can make an observable but non-contractible investment to improve an intermediate good that is specialized to a particular buyer's needs. The buyer then makes a take-it-or-leave-it offer to the seller. The seller has private information about the fraction of the ex post surplus that he can realize on his own. Compared to a situation with complete information, additional investment incentives are generated by the seller's desire to pretend a strong outside option. On the other hand, ex post efficiency is not attained whenever the buyer mistakenly tries to call the seller's bluff with a low offer.

Dieser Eintrag ist Teil der Universitätsbibliographie.




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Goldlücke, Susanne ; Schmitz, Patrick W. (2011) Investments as signals of outside options. Discussion paper / Centre for Economic Policy Research London 8366 [Working paper]


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