Optimal discriminatory disclosure

Yingni Guo, Li Hao and Xianwen Shi

Journal of Economic Theory, 2025, vol. 224, issue C

Abstract: A seller of an indivisible good designs a selling mechanism for a buyer whose private information (his type) is the distribution of his value for the good. A selling mechanism includes both a menu of sequential pricing, and a menu of information disclosure about the realized value that the buyer is allowed to learn privately. In a model of two types with an increasing likelihood ratio, we show that under some regularity conditions the disclosure policy in an optimal mechanism has a nested interval structure: the high type is allowed to learn whether his value is greater than the seller's cost, while the low type is allowed to learn whether his value is in an interval above the cost. The interval of the low type may exclude values at the top of the distribution to reduce the information rent of the high type. Information discrimination is in general necessary in an optimal mechanism.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0022053125000183
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Optimal Discriminatory Disclosure (2025)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:224:y:2025:i:c:s0022053125000183

DOI: 10.1016/j.jet.2025.105972

Access Statistics for this article

Journal of Economic Theory is currently edited by A. Lizzeri and K. Shell

More articles in Journal of Economic Theory from Elsevier
Bibliographic data for series maintained by Catherine Liu ().