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Article
Strategic Ignorance in Sequential Procurement
American Economic Journal - Microeconomics (2019)
  • Silvana Krasteva, Texas A & M University - College Station
  • Huseyin Yildirim, Duke University
Abstract
Should a buyer approach sellers of complementary goods informed or uninformed of her private valuations, and if informed, in which sequence? In this paper, we show that an informed buyer would start with the high-value seller to minimize future holdup. Informed (or careful) sequencing may, however, hurt the buyer as sellers "read" into it. The buyer may, therefore, commit to ignorance, perhaps, by: overloading herself with unrelated tasks; delegating the sequencing decision; or letting sellers self-schedule. Absent such commitment, we show that ignorance is not time-consistent for the buyer but it increases trade. Evidence on land assembly supports our findings.
Keywords
  • informed sequencing,
  • uninformed sequencing,
  • complements,
  • procurement
Publication Date
May, 2019
Citation Information
Silvana Krasteva and Huseyin Yildirim. "Strategic Ignorance in Sequential Procurement" American Economic Journal - Microeconomics Vol. 11 Iss. 2 (2019) p. 131 - 172
Available at: http://works.bepress.com/huseyin_yildirim/24/