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arXiv · 2202.10378

Selling to a principal and a budget-constrained agent

Debasis Mishra·Kolagani Paramahamsa
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Abstract

We analyze a model of selling a single object to a principal-agent pair who want to acquire the object for a firm. The principal and the agent have different assessments of the object's value to the firm. The agent is budget-constrained while the principal is not. The agent participates in the mechanism, but she can (strategically) delegate decision-making to the principal. We derive the revenue-maximizing mechanism in a two-dimensional type space (values of the agent and the principal). We show that below a threshold budget, a mechanism involving two posted prices and three outcomes (one of which involves randomization) is the optimal mechanism for the seller. Otherwise, a single posted price mechanism is optimal.

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Debasis Mishra, Kolagani Paramahamsa. 2024-10-04. Selling to a principal and a budget-constrained agent. https://arxiv.org/abs/2202.10378

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