Screening Games

Games where an uninformed principal offers a menu of contracts to sort informed agents.

Ask the Game theory assistant 1 min read · Updated September 9, 2026

Definition

Principal offers menu $\{(q_\theta,t_\theta)\}_{\theta\in\Theta}$ satisfying IC ( $\theta$ prefers $(q_\theta,t_\theta)$ to any other item) and IR.

In Rothschild-Stiglitz insurance screening, high-risk types take full insurance and low-risk types accept partial coverage.

The principal designs offers so that each type self-selects into a contract that reveals its type.

Incentive-compatibility and participation constraints shape the menu.

Airline fare classes (fully refundable vs. non-refundable) screen business vs. leisure travelers.

Quantity discounts screen heavy vs. light users.

Taxation principle: any incentive-compatible allocation can be implemented through a price schedule, reducing screening to nonlinear pricing design.

Mussa-Rosen and Maskin-Riley derive optimal screening menus under single-crossing.

Insurance, second-degree price discrimination, optimal income taxation (Mirrlees), and credit rationing.

Dual of signaling — the uninformed party moves first.

Assembled from the ReLU.chat curated knowledge base. These explanations are concise on purpose; check the sources for anything important.