Pricing, Learning, and Strategic Behavior in a Single-Sale Model

Hector Chade () and Virginia Vera de Serio
Additional contact information
Hector Chade: W. P. Carey School of Business Department of Economics, http://wpcarey.asu.edu/Directory/stafffaculty.cfm?cobid=1039499
Virginia Vera de Serio: Facultad de Ciencias Economicas, Universidad Nacional, http://wpcarey.asu.edu/Directory/stafffaculty.cfm?cobid=2133558

Working Papers from Department of Economics, W. P. Carey School of Business, Arizona State University

Abstract: This paper analyzes an infinite horizon model where a seller, who owns an indivisible unit of a good for sale, has incomplete information about the state of the world that determines not only the demand she faces but also her own valuation for the good. Over time, she randomly meets potential buyers who may have incentives to strategically manipulate her learning process. The Perfect Bayesian Equilibria of the game are characterized, as well as some interesting limit properties when agents become almost infinitely patient. Comparative static results regarding the incentives to experiment are presented, and the expected number of periods until the seller trades is calculated.

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