Strategic Pricing, Signalling and Costly Information Acquisition

Helmut Bester and Klaus Ritzberger

No 2032, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Consider a market where an informed monopolist sets the price for a good or asset with a value unknown to potential buyers. Upon observing the price, buyers may pay some cost for information about the value before deciding on purchases. To restrict buyer beliefs we generalize the idea of the Cho-Kreps 'intuitive criterion'. Then there is no separating equilibrium with fully revealing prices. Yet, as the cost of information acquisition becomes small, the equilibrium approaches the full information outcome and prices become perfectly revealing.

Keywords: information acquisition; price signalling; quality uncertainty (search for similar items in EconPapers)
JEL-codes: C72 D42 D82 G14 (search for similar items in EconPapers)
Date: 1998-12
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Strategic pricing, signalling, and costly information acquisition (2001)
Working Paper: Strategic Pricing, Signalling, and Costly Information Acquisition
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