Essays on Contracts, Mechanisms and Information Revelation

Abstract

This dissertation comprises three essays dealing with topics from microeconomic theory. The first chapter is a contribution to the literature on the economics of privacy. During the last decade, an increasing number of economists have researched the economics of privacy. This economic literature reports an apparent dichotomy between a high degree of privacy concerns across the US population and a low degree of data protecting actions; this dichotomy has been called the privacy paradox. In a natural environment with demand uncertainty and customer entry, I identify customer entry as a new explanation for the behavior of firms and the privacy paradox.<br /> The second chapter is a contribution to the literature on public information revelation prior to an auction. A typical example is a situation where the owner of a company announces the sale of this company (target) via an auction (takeover auction). All bidders share a common interest in the quality of the target, e.g. the target's future cash flows. The potential bidders are asymmetrically and imperfectly informed about the target's quality. Potential bidders are also heterogenous and have some additional private interest in the company, e.g. potential synergies that arise when the buyer merges with the target. Before the auction, the seller can open her books and disclose private and common value information. The main question I address in this chapter is whether the seller also prefers public disclosure of private value information over concealing her information.<br /> The third chapter is a contribution to several branches of the literature on mechanism design: literature on optimal contracts in a principal-agent model with asym- metric information about the agent's type, literature on sequential screening, and literature on multi-dimensional screening. The principal is the buyer and the agent is the seller. Together with Dezsö Szalay, I analyze a screening problem where the agent produces an object consisting of multiple items and has a multi-dimensional type that he learns over time.