We consider a dynamic screening model where the agent may go bankrupt due to, for example, cash constraints. We model bankruptcy as a verifiable event that occurs whenever the agent makes a per period loss. This leads to less stringent truth-telling constraints than those considered in the...

Credence goods markets suffer from inefficiencies arising from informational asymmetries between expert sellers and customers. While standard theory predicts that inefficiencies disappear if customers can verify the quality received, verifiability fails to yield efficiency in experiments with...

The paper studies procurement contracts with pre-project investigations in the presence of adverse selection and moral hazard. To model the procurer's roblem, we extend a standard sequential screening model to endogenous information acquisition with moral hazard. The optimal contract displays...

Who does, and who should initiate costly certification by a third party under asymmetric quality information, the buyer or the seller? Our answer ' the seller ' follows from a non-trivial analysis revealing a clear intuition. Buyer-induced certification acts as an inspection device, whence...