MICRO THEORY: Dr Changhyun Kwak (Institute of Economics, Academia Sinica)

Bundling under Double-Crossing Preferences

A monopolist sells two goods to a buyer with additive, type-increasing valuations. Furthermore, the valuation for one good increases more convexly than for the other, implying a double-crossing property in the preferences for bundles. We characterize the optimal mechanism by extending the canonical Myersonian approach. Below a critical type, there is at most one interval where the quantities move in opposite directions, with maximal bunching, while above this threshold, the allocations are monotone and maximal separation arises whenever stochastic bundles are used. The screening structure depends on non-local incentive compatibility constraints across the threshold, represented as a majorization constraint.