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From Bottom of the Barrel to Cream of the Crop: Sequential Screening With Positive Selection
Author(s) -
Tirole Jean
Publication year - 2016
Publication title -
econometrica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 16.7
H-Index - 199
eISSN - 1468-0262
pISSN - 0012-9682
DOI - 10.3982/ecta12961
Subject(s) - selection (genetic algorithm) , simple (philosophy) , contrast (vision) , principal (computer security) , consistency (knowledge bases) , econometrics , mathematics , economics , mathematical optimization , mathematical economics , computer science , machine learning , artificial intelligence , philosophy , epistemology , operating system
In 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.