Strategic ignorance in sequential procurement

Published

Journal Article

© 2019, American Economic Journal: Microeconomics. 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.

Full Text

Duke Authors

Cited Authors

  • Krasteva, S; Yildirim, H

Published Date

  • May 1, 2019

Published In

Volume / Issue

  • 11 / 2

Start / End Page

  • 131 - 172

Electronic International Standard Serial Number (EISSN)

  • 1945-7685

International Standard Serial Number (ISSN)

  • 1945-7669

Digital Object Identifier (DOI)

  • 10.1257/MIC.20170076

Citation Source

  • Scopus