Pricing, learning, and strategic behavior in a single-sale model

Virginia Vera de Serio () and Hector Chade
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Virginia Vera de Serio: Facultad de Ciencias Económicas, Universidad Nacional de Cuyo, 5500 Mendoza, ARGENTINA

Economic Theory, 2002, vol. 19, issue 2, 333-353

Abstract: We analyze 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 manipulate her learning process strategically. We show that i) the seller's incentives to post a high price and to experiment are not necessarily monotonic in the information conveyed by a buyer's rejection; and ii) as the discount factors tend to one, there are equilibria where the seller always ends up selling the good at an ex-post individually rational price.

Keywords: Information revelation; Asymmetric information; Experimentation. (search for similar items in EconPapers)
JEL-codes: C78 D82 D83 (search for similar items in EconPapers)
Date: 2001-10-29
Note: Received: January 6, 1999; revised version: July 15, 2000
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