Econometrica: Jul 2016, Volume 84, Issue 4
From Bottom of the Barrel to Cream of the Crop: Sequential Screening with Positive Selection
Jean TiroleIn a number of interesting environments, dynamic screening involves positive selection: in contrast with Coasian dynamics, only the most motivated remain over time. The paper provides conditions under which the principal's commitment optimum is time consistent and uses this result to derive testable predictions under permanent or transient shocks. It also identifies environments in which time consistency does not hold despite positive selection, and yet simple equilibrium characterizations can be obtained.
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Supplement to "From Bottom of the Barrel to Cream of the Crop: Sequential Screening with Positive Selection"
This appendix provides information not found within the manuscript.