Buyer-optimal extensionproof information

Stefan Terstiege, Cedric Wasser*

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

2 Citations (Web of Science)

Abstract

Motivated by the regulation of product information, we study buyer-optimal information structures under monopoly pricing. The information structure determines the buyer's private learning of his valuation and in consequence the price the seller charges. By adding information, the seller may change the learning in her favor. We introduce the constraint that the information structure be extensionproof: the seller must have no incentive to add information. A two-parameter class of information structures implements every implementable buyer payoff. For some prior beliefs, but not for all, buyer-optimal information also results in efficient trade and in the same payoff for the seller as perfect learning.
Original languageEnglish
Article number105070
Number of pages44
JournalJournal of Economic Theory
Volume188
DOIs
Publication statusPublished - Jul 2020

JEL classifications

  • d42 - Market Structure and Pricing: Monopoly
  • d82 - "Asymmetric and Private Information; Mechanism Design"
  • d83 - "Search; Learning; Information and Knowledge; Communication; Belief"
  • l51 - Economics of Regulation

Keywords

  • Information design
  • Monopoly
  • Regulation
  • DISCLOSURE
  • PERSUASION

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