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Discriminatory Information Disclosure

Hao Li and Xianwen Shi

American Economic Review, 2017, vol. 107, issue 11, 3363-85

Abstract: A seller designs a mechanism to sell a single object to a potential buyer whose private type is his incomplete information about his valuation. The seller can disclose additional information to the buyer about his valuation without observing its realization. In both discrete-type and continuous-type settings, we show that discriminatory disclosure—releasing different amounts of additional information to different buyer types—dominates full disclosure in terms of seller revenue. An implication is that the orthogonal decomposition technique, while an important tool in dynamic mechanism design, is generally invalid when information disclosure is part of the design.

JEL-codes: D11 D82 D83 (search for similar items in EconPapers)
Date: 2017
Note: DOI: 10.1257/aer.20151743
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