Investments as signals of outside options


Goldlücke, Susanne ; Schmitz, Patrick W.



DOI: https://doi.org/10.1016/j.jet.2013.12.001
URL: http://www.sciencedirect.com/science/article/pii/S...
Document Type: Article
Year of publication: 2014
The title of a journal, publication series: Journal of Economic Theory : JET
Volume: 150
Page range: 683-708
Place of publication: Amsterdam [u.a.]
Publishing house: Elsevier
ISSN: 0022-0531
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.




+ Citation Example and Export

Goldlücke, Susanne ; Schmitz, Patrick W. (2014) Investments as signals of outside options. Journal of Economic Theory : JET Amsterdam [u.a.] 150 683-708 [Article]


+ Search Authors in

+ Page Views

Hits per month over past year

Detailed information



You have found an error? Please let us know about your desired correction here: E-Mail


Actions (login required)

Show item Show item