Abstract
The paper studies a repeated buyer-seller relationship under asymmetric information. Instead of assuming game-theoretic rationality, it is assumed that the buyer uses a nonstrategic learning rule to update his beliefs. The seller's optimal pricing policies against this rule are analyzed. It is shown that screening behavior emerges as a result of the seller's long-run optimization problem, although this is not a Nash equilibrium of the one-shot game. Moreover, despite its apparent naiveté the simple rule is optimal for the buyer in the sense that the seller cannot extract more from the buyer than the value of the stream of goods delivered.
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