Buyer-optimal extensionproof information

Stefan Terstiege and Cédric Wasser

Journal of Economic Theory, 2020, vol. 188, issue C

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.

Keywords: Information design; Monopoly; Regulation (search for similar items in EconPapers)
JEL-codes: D42 D82 D83 L51 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Related works:
Working Paper: Buyer-Optimal Robust Information Structures (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:188:y:2020:i:c:s0022053118303570

DOI: 10.1016/j.jet.2020.105070

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