UCL Discovery
UCL home » Library Services » Electronic resources » UCL Discovery

Consumer optimism and price discrimination

Eliaz, K.; Spiegler, R.; (2006) Consumer optimism and price discrimination. (ELSE Working Papers 226). ESRC Centre for Economic Learning and Social Evolution: London, UK. Green open access

[thumbnail of 14499.pdf]

Download (245kB)


In many principal-agent environments, the two parties hold different prior beliefs regarding the agent's future preferences. These differences may be due to inherent biases such as over-optimism or over-pessimism. We analyze the principal's optimal contract design under the assumption that the agent's prior is private information. In order to screen the agent's prior, the principal devises a menu of contingent contracts, some of which are 'speculative' as they involve betting on the agent's future action. We characterize the optimal menu and show that the characterization enables us to interpret real-life contract design in a variety of economic contexts.

Type: Working / discussion paper
Title: Consumer optimism and price discrimination
Open access status: An open access version is available from UCL Discovery
Publisher version: http://else.econ.ucl.ac.uk/newweb/papers.php#2006
Language: English
UCL classification: UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/14499
Downloads since deposit
Download activity - last month
Download activity - last 12 months
Downloads by country - last 12 months

Archive Staff Only

View Item View Item