Information design in sequential procurement

We analyze the problem of a buyer who chooses a supplier for a two-period production project. The buyer lacks the commitment not to renegotiate the contractual terms in the second period. The prospect of renegotiation makes suppliers cautious about the information revealed in period one. We derive the revenue-maximizing mechanism and highlight the role of information design for its implementation. We show that the buyer can achieve the full commitment surplus with the appropriate information design even without commitment.

Fugger, Nicolas, Vitali Gretschko und Martin Pollrich (2022), Information design in sequential procurement, Games and Economic Behavior 135 , 79-85