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Wiley InterScience | |||
  Review of Economic StudiesVolume 73 Issue 4, Pages 1085 - 1111 Published Online: 25 Sep 2006 © 2010 The Review of Economic Studies Limited
Abstract | References | Full Text: HTML, PDF (Size: 186K) | Related Articles | Citation Tracking  Sequentially Optimal Mechanisms Copyright 2006 The Review of Economic Studies Limited ABSTRACTThis paper establishes that posting a price in each period is a revenue-maximizing allocation mechanism in a finite period model without commitment. A risk-neutral seller has one object to sell and faces a risk-neutral buyer whose valuation is private information and drawn from an arbitrary bounded subset of the real line. The seller has all the bargaining power: she designs a mechanism to sell the object at t, but if trade does not occur at t she can propose another mechanism at t+ 1. We show that posting a price in each period is an optimal mechanism. A methodological contribution of the paper is to develop a procedure to characterize optimal dynamic incentive schemes under non-commitment that is valid irrespective of the structure of the agent's type. First version received November 2002; final version accepted December2005 (Eds.) | 
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